New Program Aims to Help Community Land Trusts Get to Scale

home with solar panel on roof
Solar & Efficient Northern Communities Land Trust Homes in Duluth. Photo credit: Clean Energy Resource Teams, via flickr, CC BY-NC 2.0.

Can community land trusts become more than a boutique housing solution? A program announced today aims to do just that.

Funded with $1 million from Citi Community Development, the Citi/Grounded Solutions Community Land Trust Accelerator will pair technical assistance for land trusts with an Accelerator Fund that will give capital grants to high-capacity land trusts in hot markets. Grounded Solutions Network, a national organization that supports permanently affordable housing solutions, will be managing the Accelerator.

Community land trusts (CLTs) provide one form of permanently affordable, shared-equity homeownership. A community-controlled organization retains ownership of the land, and sells the homes to qualified low-income buyers with a 99-year ground lease. In exchange for the below-market price, the buyers agree to a resale formula that balances permanent affordability over time while allowing them to build some equity as well. The land trust stays involved, assisting homeowners through financial rough spots and acting as a steward of the community asset. Grounded Solutions Network represents the more than 225 CLTs in the U.S. that own around 20,000 rental units and 15,000 homeownership units.

Giving permanent affordability a boost and help to break into escalating markets is important and timely work, says Tony Pickett, executive director of Grounded Solutions. Generations of federal policies have “led us to the place that we are at today in terms of lack of affordable housing,” says Pickett. “We’re going to need some period of time and some specific and focused policies to change that trajectory.”

“We can’t lose any more homes out of the affordability pool,” is how Peter Elkowitz of the Long Island Housing Partnership, which runs the community land trust for Long Island, puts it.

Community land trusts, says Pickett, are ready to be part of that long-term solution. “We’ve come from just piloting and experimenting to a point where we have some proven success and have a track record to rest upon,” he says. “The scale of displacement that we’re now seeing in most of the major markets is compelling us all to step up and see how to implement the model at a larger scale.”

“For many first-time homebuyers, homeownership is increasingly elusive,” says Bob Annibale, global director of Citi Community Development and Inclusive Finance. “Together with Grounded Solutions Network, we aim to work with municipalities, community development organizations, and residents to accelerate the growth of CLTs across the U.S. By ensuring CLTs have the access to the expertise and capital they need to grow, we will enable low-income, first-time buyers to fulfill their dreams of homeownership, both now and for generations to come.”

The combination of technical assistance and capital “is exactly what we need,” to scale up CLTs, says George McCarthy, president and CEO of the Lincoln Institute of Land Policy, a longtime supporter of CLTs. He hopes the dedicated technical assistance can help community land trusts develop more scalable business models, and that the capital “is a catalyst for public funding to move into CLTs as well. What we don’t have is dedicated public funding to support CLTs.” McCarthy says he hopes the Accelerator Fund can be “a signal to other funders, especially CRA lenders,” and possibly start a shift toward those lenders seeking their CRA credit from investing in CLTs, not just low-income housing tax credits.”

Why a CLT-Specific Fund?
Photo courtesy of Albany CLT

Land trust homes stay affordable over time, thanks to their resale formula, and viewed long-term, CLTs are a fiscally responsible approach to affordable homeownership since the initial subsidy funds stay with the home, which stays affordable in perpetuity instead of being lost at the first sale. CLTs have been around for decades, and performed amazingly well as bastions of housing stability during the foreclosure crisis, but their growth has been slow.

Because the new fund’s grants will stay in the deals as equity, they will not only enable CLTs to compete for land in high-cost markets, but will also help make those homes affordable to start with.

Emily Thaden of Grounded Solutions, in an article for Shelterforce coming out in May, writes that a shortage of funds that can be used to initially write down the cost of the homes has been one of the major factors keeping the model from growing. Public funds, she notes, often prioritize programs that will create more units initially for the same amount of money, overlooking the long-term return on initial public investment of the CLT model.

That can make it hard for CLTs to compete, and it’s one reason a CLT-specific funding source is so valuable.

It’s not the only one. “CLTs are not a known mechanism in certain areas,” notes Elkowitz of the Long Island Housing Partnership (LIHP), meaning that CLTs, especially when they are expanding into new geographies, need to set aside funds for marketing and education, including educating the mortgage lenders they want their buyers to be able to borrow from. (Thaden notes challenges accessing mortgage financing as one of the other major barriers to CLT growth, though the new Duty to Serve regulations from Fannie Mae and Freddie Mac are one step in the right direction.)

LIHP is also trying to develop single-family homes with accessory apartments, which requires some advocate and policy support to get overlay zoning districts in place. Citi’s funding, similar to what the Accelerator Fund will provide, has allowed LIHP the opportunity to explore and realize creative strategies like this, says Elkowitz.

That is closely related to the value of the technical assistance component of the accelerator. Getting to build on the experiences of CLTs in other places through a national network with deep expertise is crucial for new CLTs and those that want to take their work to the next level, says Christie Peale, director of the Center for New York City Neighborhoods (CNYCN), which is one of four partners in Interboro CLT, a new collaborative citywide CLT in New York City that has been receiving Citi support throughout its formation. “You need local strength, but you need to build momentum,” says Peale. “It was so powerful to be able to connect to that larger framework [through Grounded Solutions], all the different ways that people have used the model. . . . I think stewardship is where we had the most excitement. They have huge expertise around stewardship.”

CNYCN also experienced the power of having technical assistance combined with capital. “In a relatively short period of time, we’re going to have hundreds of units in permanent affordability,” says Peale, which creates momentum throughout the rest of city to support permanent affordability, and even encourages the incorporation of permanent affordability into other city programs.

Accelerate!

For several years Citi has supported CLTs directly in New York City, on Long Island, and in Miami with both technical assistance and capital funding. Their experiences in those relationships were models for the Accelerator, which Citi is funding with $1 million. Grounded Solutions will be selecting the participants.

Technical assistance and capital funding have not been particularly closely coordinated to date, Pickett notes, and one of the things that excites him about the Accelerator project is the opportunity to do that. “This is a unique opportunity to see both of those together support an organization that’s already functioning and come to an outcome that’s tangible in a very reasonable period of time,” he says. “We need to be focused from a strategic standpoint on aligning all of those tools and resources to get the impact that we’re seeking.”

Of course, everyone involved knows that $1 million will not solve the housing crisis, no matter how it is deployed. Grounded Solutions and Citi “have a shared vision around this not just being a single, one-off initiative,” says Pickett. “We want this to be a catalyst for a much larger effort. If Citi’s money in the various markets will attract and leverage additional support for the CLT model, that’s exactly what we want to see.”

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