Reported ArticleCommunity Land Trusts

The Permanent Affordability That Wasn’t: Lessons from the Pythian Building

A high-stakes, high-profile community land trust project once hailed as a triumph in New Orleans ended in disaster for its residents, but it’s important to draw the right lessons about why.

In April 2017, as renovations of the Pythian Building neared completion, a plaque commemorating the building's history was unveiled across the street at Duncan Plaza and the public was given a tour of part of the interior of the building along with a presentation. Photo by Infrogmation of New Orleans, CC BY-SA 4.0, via Wikimedia Commons

Shelterforce · The Permanent Affordability That Wasn't: Lessons from the Pythian Building

In December 2022, Doratha “Dodie” Smith-Simmons and her husband, John, were once again facing eviction. Their rent-restricted New Orleans apartment in the recently renovated Pythian Building was reverting to market rate.

Smith-Simmons is an almost-lifelong New Orleanian. She’s a well-known civil rights activist, was at the March on Washington, joined the local chapter of the Congress of Racial Equality in 1961, and was a founding member of the New Orleans Jazz & Heritage Festival. She’s lived—and rented—in the city much of her life. Housing used to be affordable, she says, but “in recent years, due to Hurricane Katrina and gentrification, the price has gone through the roof.”

Rent and fees already amount to “$845 that I could barely afford to pay,” Smith-Simmons says. “Our only source of income is Social Security checks . . . with very little left over after paying the rest of my bills.” The increase to $1,535 per month would mean she and John would have to move—again.

This wasn’t the first time a rent hike threatened to displace the Smith-Simmonses. The couple, who are now in their 80s, got a similar eviction notice in late 2016 when the American Can Complex (known as the Can) went market rate. The Can had been renovated 15 years earlier using a mishmash of historic tax credits and state- and city-funded tax-exempt bond financing that required 20 percent of the units be reserved for low-income renters for 15 years. When the affordability period lapsed, the owners allowed all 53 of the Can’s rent-restricted units to revert to market rate. The Smith-Simmonses’ rent would have jumped from $750 to more than $1,200 a month plus fees. They, and the rest of the Can’s low-income tenants, had to move or absorb a large increase in their rent.

Getting kicked out of the Can was traumatic, but getting a rent-increase notice from the Pythian was even more jarring. While the Can’s affordability was temporary from the start, the Pythian’s developers had explicitly promised “permanent affordability,” no matter how much time passed or how many times the building changed hands.

In fact, it was the Pythian’s developers who gave some of the Can’s low-income residents a place to go in early 2017. Just before they were supposed to move out, several low-income Can residents got letters from the Pythian’s owner-developer. Smith-Simmons still has hers. “The Pythian is a mixed-income, mixed-use development at 234 Loyola Avenue, currently in renovation, that will be available for residential rental by April 1, 2017. Our building is unique in that it will have 25 units of permanently affordable housing. That means there will be no threat of eviction,” it reads.

Getting that letter “was such a joyous thing,” Smith-Simmons says. “‘Permanently affordable housing’ is underlined,” she says after reading the letter aloud. “That’s what motivated us to move here.”

But just four years after the Smith-Simmonses moved into the Pythian, they found themselves facing a de facto eviction once again. The limited liability company (LLC) that owned the Pythian had gone from three partners to one, and the remaining owner planned to discontinue offering “income-based units.” If the building’s low-income tenants wanted to renew their lease in March 2023, they’d have to pay market rate.

The Pythian’s owner backtracked following a local media outcry. As of this story’s publication, the tenants of the 25 income-based units were on month-to-month leases at their previous rent amounts. But they’ve got no assurance of how long that will last. The promise of permanent affordability, and the residents’ hope for a permanent home, have vanished.

The Pythian’s “Triumphant Return”

New Orleans is acutely short on housing—especially affordable housing. Hurricanes Katrina and Ida obliterated or rendered uninhabitable thousands of units that were never rebuilt or repaired. The city ranks third in the nation in percentage of renter households that spend more than half of their income on housing. Nearly a quarter of the population lives below the poverty line. For Black New Orleanians, the poverty rate is 33 percent.

Into this housing-scarce environment entered Green Coast Enterprises (GCE), an established for-profit development company that specializes in historic renovations, especially those in declining neighborhoods. In 2012, GCE began negotiating to purchase the Pythian, a building pivotal to New Orleans Black history and culture. By that time it had been vacant for a decade.

A dilapidated nine-story building. Columns of light-brown brick alternate with columns of 1960s-era metal cladding in a medium green. Pairs of windows, five across the building, are set into the green and devoid of trim or ornament. The ground floor looks shabby and deserted. There are no people in the photo.
The Pythian Building exterior before the restoration began. The developers removed the metal cladding from the building. Photo by Information of New Orleans, CC BY-SA 4.0, via Wikimedia Commons

GCE masterminded an ambitious and well-publicized plan for the Pythian, recruiting investors and seeking financing through various tax credit programs, grants, and loans (notably: no low-income housing tax credit financing). Not only did the Pythian promise 25 units of “permanently affordable” housing, the project also got significant attention for the potential economic boost it could give the city’s struggling Central Business District. Plans included a food market with multiple vendors, an events space, a health care facility, short-term rentals, and several dozen other apartments without any rent restrictions.

The Pythian renovation totaled somewhere between $35 and $43 million, depending on which news story you cite, and was funded with a complex combination of private equity, historic and New Markets tax credits, and $17 million in debt. (No one with verifiable post-construction financial information would go on record with it; a spokesperson for GCE in a voicemail said that the company is legally restricted from talking about the Pythian.)

But what really made the project stand out, especially for folks who work in the community land trust (CLT) world, was the role Crescent City Community Land Trust (CCCLT) had as a co-developer. GCE and CCCLT’s executive director, Van Temple, began negotiating a partnership in 2012, according to documentation Temple provided. In 2014, GCE and CCCLT purchased the Pythian as equal partners, and it was a big deal in the housing world. “There was a lot of buzz around it early on, like, ‘Holy crap. Look what they’re doing in New Orleans,’” says Jeff Washburne, who ran a large Minnesota-based CLT for more than 20 years and now works with Burlington Associates in Community Development, a CLT consulting firm founded in 1993.

[RELATED ARTICLE: What Are the Three Main Types of Community- or Resident-Controlled Housing and How do They Work?]

The Pythian development plan was both ambitious and unique. Affordable housing projects usually need operating subsidies, but the Pythian was supposed to turn a profit—enough to help the development partners offset the cost of keeping 25 units affordable. While CLTs sometimes develop mixed-use projects, the affordability associated with CLT projects isn’t typically secured by projected profits from associated business ventures (or market-rate apartments, if there are any). That’s where the Pythian differed: Although the project got philanthropic investments to support its affordability, the success of the Pythian depended on the success of the businesses within it.

The project got a lot of folks in the affordable housing world excited. Devin Culbertson, vice president of innovative finance at Grounded Solutions Network, a national nonprofit that specializes in permanently affordable housing models, was one of them. He thought it was “a really interesting model of how a really small land trust could sort of punch above their weight in terms of the unit production, but also in terms of revenue to sustain the organization,” he says. The development would produce a lot of much-needed units, and the commercial spaces would create a self-sustaining revenue stream.

CCCLT’s Role

It wasn’t just the scope of the project drawing attention; it was also the fact that Crescent City Community Land Trust was a small-scale startup land trust with zero experience in multifamily or commercial development. Temple was hired just after CCCLT’s founding in 2011; he was one of just two employees. Although Temple had several years of experience in the CLT field—he’d run a statewide land trust in Delaware prior to joining CCCLT—he had no experience renovating or operating mixed-use developments.

The project got a lot of national funding from foundation partners looking to support the CLT model and facilitate its expansion into this type of larger, self-sustaining project. CCCLT brought its own capital to the deal, as well. The original deal had CCCLT and GCE as equal partners in GCE 234 Loyola, LLC, the entity that would own the land and building. CCCLT invested around $500,000 in up-front cash and promised $2.5 million to the project as a long-term, subordinate loan—which, Temple says, allowed the partners to reserve the option to buy the building while other financing was arranged.

As a condition of this early investment, GCE agreed that the land trust would have the right to record a legal document known as a predial servitude (also frequently called a deed restriction or covenant). The document, once recorded, would enshrine income-eligibility restrictions on 25 Pythian apartments in perpetuity, no matter who owned the building. [Technically, what the draft agreement Shelterforce received specifies is a maximum number of units that can be rented to households earning more than 80 percent of area median income (AMI) and more than 120 percent of AMI, leaving the rest income restricted.] The draft agreement did not specify a particular level of affordability (e.g., 30 percent of income) or other rent-setting methods for the units occupied by those in the target income ranges, though Temple says the co-developers’ intention was that rates would be affordable to renters earning less than 120 percent of AMI.

“What we wanted were more at 80 percent and below, but, still, 120 isn’t bad in downtown New Orleans,” Temple says. Information about how rents were actually set for residents of the income-restricted units is difficult to find, and ERG Enterprises, the entity which retains access to the rent rolls, did not respond to repeated requests for comment.

CLTs typically secure permanent affordability via a ground lease by purchasing and retaining ownership of land, then developing housing on that land that will be sold or rented to low-income families who agree to restrictions on resale prices. Using a deed restriction (instead of a ground lease) as the ownership structure and affordability protection method on the Pythian is unusual, but not unheard of or untested.

Originally, GCE and CCCLT were the project’s sole co-developers. They secured a list of tax credit and other investors, but following a series of funding snafus, architectural setbacks, and other transaction-derailing incidents, the project lost its original lender and some of its investor financing.

“We went through a number of different potential partners on the construction loan, the construction contractor, the many, many variations of the financing package,” Temple says. “When you get into redesigning an old building like that, you might think you’re going to have 70 apartments in the architectural drawings, but those numbers get adjusted [based on cost and structural feasibility].”

Adjusting development plans takes time, and the delays affected tax credit funding. Eventually, the lender the duo had secured to finance the redevelopment dropped out. They found a new lender, but that lender wanted the LLC to bring an equity investor into the deal. So, to keep the project going, GCE and CCCLT took on a third partner: ERG Enterprises, an area real estate investment firm run by a local hand surgeon turned commercial developer.

Temple says he was wary of ERG’s involvement from the beginning. “They were not the first financial investor partner being considered for the deal,” he says. “They were the last.” The LLC partners and their attorneys explored multiple financing structure options and approached several banks, trying to make the deal pencil out without bringing in an equity investor.

You’ve got to be really careful when you’ve got a for-profit investor at that level. They’re the one with the profit motive, and it’s not unusual for them to finagle around and get attorneys and try to steal the deal.

Van Temple

“You’ve got to be really careful when you’ve got a for-profit investor at that level,” he says. “They’re the one with the profit motive, and it’s not unusual for them to finagle around and get attorneys and try to steal the deal. It’s just not uncommon in real estate.” Temple had departed CCCLT by the time ERG came on but says that the impression he got from “all the other for-profit investors . . . was that their primary interest was to make money . . . and they may be good-hearted, but they are mainly profit motivated.”

So, bringing ERG into the deal wasn’t ideal, but it meant GCE and CCCLT got their construction loan—while ERG got a $20 million stake in the Pythian. By the time the building opened its doors after an “arduous” 5-year renovation, it was lauded as “the triumphant return of the Pythian.”

Temple wasn’t there to see it. He resigned from his job with CCCLT in 2015 to follow his wife on a career move. His departure inspired a wave of turnover on the nonprofit’s board of directors. The remaining board was tasked with finding a new executive director while navigating an intricate real estate deal. The board chose Julius Kimbrough, who came from the banking industry but had no experience with establishing or operating any type of CLT.

Both Kimbrough and Temple say the development partners agreed that Kimbrough, as CCCLT’s legal representative, would file the servitude agreement when the construction loan was refinanced into a long-term loan. This timing was appropriate because the construction lender wouldn’t agree to the deed restriction. “All parties agreed that the title would be reopened at mortgage refinance time. Which is indeed a normal time within commercial real estate transactions to conduct all kinds of necessary business like installing new covenants, ownership changes, etc.,” Kimbrough wrote in an email. (Neither GCE’s co-founder, Will Bradshaw, nor anyone from ERG Enterprises would comment for this story.)

Temple says that before he handed the wheel to Kimbrough, he explained in depth the intended ownership structure and emphasized the importance of recording the servitude agreement. Temple still believes the deed restriction, had it been filed, would have had the power to protect the units’ affordability. (He also acknowledges that the co-developers’ plans could have been renegotiated following his 2015 departure.)

“This certainly was an ambitious project, and it was a complex project,” he says. “But I don’t think it was a poorly structured deal.”

And Its Spectacular Loss

Unfortunately for the residents in the rent-restricted units, the Pythian’s return went from triumphant to tenuous. And for the tenants in the now-shuttered food market, it’s been financially tragic.

The ground-level food hall struggled from the get-go. It opened on shaky footing after construction and commercial lease-up delays, then faced pandemic-related economic setbacks, foot traffic loss when a nearby Hard Rock Hotel collapsed during construction, infighting among the for-profit owners, and accusations of mismanagement. The disputing parties (the two for-profits) ended up in arbitration and both exited the original deal without admitting legal wrongdoing. The food hall closed its doors in late 2022, putting several local vendors out of business. It remains vacant.

“That Pythian Market was the ‘make or break’ in that particular project,” says Oji Alexander, executive director of People’s Housing+, or PH+, a homeownership and wealth-building nonprofit that was created in 2023 when CCCLT merged with two other local affordable housing nonprofits (Alexander wasn’t involved with CCCLT during the Pythian deal). Leaning on the food market’s potential profitability proved a weak spot in the business plan.

Interior of a sunlit restaurant with counter and stools at far end, tables along the window on the right, and a condiments counter in the center. The tables are full of people eating, and two people stand at the far counter. In the foreground is a back view of someone speaking to a child. A large banner hangs over the center of the room, which reads "14 Parishes/Jamaican Restaurant/Since 2016"
The interior of the Pythian Market food court inside the ground floor of the Pythian Building, July 2018. The market has since shuttered. Photo by Infrogmation of New Orleans, CC BY-SA 4.0, via Wikimedia Commons

The development partners’ disputes compounded the project’s economic woes. The for-profit development partners began accusing one another of mismanaging project funds. In the end, the entire ownership structure disintegrated over the course of several contentious months in 2022 as the for-profit partners underwent mediation, and finally arbitration. Kimbrough also resigned his executive director position at CCCLT during the dispute—leaving the small nonprofit leaderless, with no staff, and helmed by a volunteer board. In October 2022, ERG Enterprises—which had the cash and time to wait for both smaller, less cash-flush partners to fold under the weight of a depreciating asset, mounting bills, and a protracted legal fight—bought out CCCLT’s stake in the LLC that owned the Pythian. GCE also relinquished its stake in the LLC through an arbitrated agreement.

This internal breakdown meant the construction loan wasn’t refinanced into a permanent loan while CCCLT was still involved. CCCLT relinquished its interest in the Pythian project for an undisclosed amount—before it could legally file the covenant and without any assurance the other owner(s) would do so when the refinancing eventually happened.

That was the defining moment. The deed restriction that would have protected the income targeting wasn’t recorded with the parish clerk. Ownership (and control) of both the land and the building went to ERG Enterprises. Kimbrough says CCCLT, which was running out of money without realizing any return on its investment in the Pythian, had little choice but to sell and had no legal right or method to preserve the affordability—even though its investment had been made entirely for that purpose.

“We sold our interest in the property because we couldn’t keep up in the legal fight that the bigger dogs were in,” Kimbrough says. “[CCCLT was] never in a position to withstand any significant economic shocks for long as an owner of the building.”

Today, ERG is the Pythian’s sole owner. Founder Eric George in 2023 told nola.com he “vowed to protect the below-market apartments,” but he has no legal obligation to do so (and ignored several requests from Shelterforce for comment, including a list of specific questions about his past intentions and future plans). In any case, the building is for sale, with no mention of the affordable units in the listing and a suggestion that the building is well positioned to be converted into a hotel or short-term rentals.

The bottom line: the Pythian’s promise of “permanent affordability” is permanently lost.

Punching Above Their Weight

Washburne says he isn’t surprised that the proposed ownership structure didn’t pan out. As a small nonprofit navigating a large, complex redevelopment like the Pythian, “if you’re not watching the ball,” he says, “you’re going to get squashed.”

Washburne recalls going out to lunch with Temple more than once while the project was in development. “He would talk about this thing, but it always felt a little squishy to me. It just felt very, kind of, theoretical, and it felt like he was still in the phase of trying to sell it, trying to make the whole thing work.” Washburne conceded that when a CLT is trying to get a project funded, it’s not that unusual to lean into the strengths and downplay the what-ifs. “I totally get the other side of this, where so many projects we were able to pull off just because we willed them into existence. You get out there. You start leaning into it.”

But CCCLT had nowhere near the institutional experience Washburne’s organization had, and Washburne says even he and his team would have found the Pythian project “intimidating.” Several other CLTs Shelterforce spoke with for this story agreed with Washburne’s reactions. It’s worth noting that all those who thought their CLT had the legal and real estate expertise to undertake a project of this size have a significant budget, many years of expertise, and a crackerjack legal team—or, often, all three. PH+, into which CCCLT merged, is planning to ramp up its project size slowly, says Alexander, focusing development for the next “five to seven years in the 2- to 20-unit space. I think you’ve got to work your way into these larger developments,” he says.

One of our biggest problems in this business is people who actually do have some power … refusing to use it . . . . You know who is even smaller in that scenario? Those residents.

Andreanecia Morris, HousingNOLA

Washburne blames the error on the CLT’s inexperience rather than on ineptitude or ill intent on anyone’s part. He says even if Kimbrough could have stopped the affordability loss, he’d “inherited something that was way bigger than it ever should have been,” Washburne says. “He’s trying to pick this thing up and run with it, and that’s a huge project to be involved in.”

But not everyone is so forgiving of Kimbrough’s choice to sell CCCLT’s interest in the deal.

Temple argues that Kimbrough wasn’t powerless; he could have refused to sell until it was possible to file the agreement, even if the land trust was in financial crisis. Then, “all he would have had to do is file the deed restriction and CCCLT could have dissolved, could have gone away, like it ended up doing [anyway],” Temple says. “The building could have been sold again to another group; that deed would have carried forward.” 

Andreanecia Morris, executive director of HousingNOLA, a nonprofit focused on improving housing policies and equity in New Orleans, agrees with Temple. She says she knows that CCCLT’s choices were limited, and that the fledgling nonprofit was under a lot of pressure. CCCLT was “stuck in the middle” while the “for-profits were at war with each other,” Morris says. “That said, here’s the thing: You’re the person who’s there. This is the opportunity for you to . . . make it real clear where you stand. But if you just say, ‘We’re out. Y’all fight it out,’ whose responsibility are the people? Clearly not the white-boy for-profits’.”

“What we needed them to do was to stand firm,” Morris concludes. “One of our biggest problems in this business is people who actually do have some power—not a lot of power, but some power—refusing to use it . . . I get it. You feel like you’re an ant amongst elephants. I don’t care. You know who is even smaller in that scenario? Those residents.”

Kimbrough in an email wrote that he doesn’t know what terms CCCLT agreed to when it sold its interest in the LLC. “There was no staff at CCCLT when the Pythian buyout was struck with GCE. That buyout happened after I left and before the merger, when the board of directors was running CCCLT,” he wrote. “Given everything that has happened since with The Pythian, I think we do know the most important term or CCCLT goal that the organization was not able to secure: the legal enshrinement of permanent affordability.”

Trust the Model; Double-Check the Process

External economic forces, internal mismanagement, inexperience, naiveté, badly timed leadership turnover, and misplaced trust were all at least partially to blame for the loss of permanent affordability at the Pythian. What wasn’t to blame was the land trust structure, Washburne says. It’s important to make that very clear, because otherwise, “you start to lose the public confidence in the land trust [model] because of situations like this.”

“If they slip up, it’s really easy for people to point fingers at the land trust model and say, ‘See? It didn’t work,’” Washburne says. “But I would put the land trust model up against any other sort of affordable housing approach and say that it exceeds [it] in the benefit to the community.”

So, what lessons can CLTs take from the Pythian redevelopment affordability disaster?

First, the CLT’s legal mechanisms for achieving and maintaining permanent affordability must be crystal clear—and enforceable. Kimbrough notes that no one involved in the Pythian had really thought through the legal path that it would take to make sure the goal of permanent affordability didn’t get sacrificed when the going got tough. “No one had done that,” he says. “Not the CLT. Not the other developers. No one.”

Second, those legal protections must be solid before the project hits a point of no return. “If you can’t own the land, if you’re not the majority partner, then you need to get the covenants in place,” Alexander says. “That is the piece that was missing from the Pythian. That was the piece that would have protected the tenants regardless of ownership, because when you get these covenants in place, they stay with the land regardless of who owns it.”

PH+ is currently working on a project with two governmental partners and a for-profit partner. The project is a mixed-use development in a historic former firehouse building that’ll eventually create seven permanently affordable units on the upper floors and a 65-seat early childcare facility on the ground floor. Although the group is still hashing out the development and operating mechanics, Alexander says the deal’s legal structure will be such that “there will be a point where we cannot move forward without those covenants in place.”

By the time Kimbrough took the executive director position at CCCLT in late 2015, the co-developers were about 2 to 3 months out from closing on the construction loan. At this point, the affordability promise remained a “handshake deal” between the previous CCCLT leadership and GCE, with no affordability restrictions formally recorded in exchange for the CLT’s investment in the deal. “The CLT in this case just never had any power. We were along for the ride,” Kimbrough says.

Relying on good intentions and handshakes is insufficient. “Is there going to be some decision-making capacity?” Alexander recommends asking. “Are we putting ourselves in a position where we’ve got absolutely no leverage? If something goes wrong, are we just at the whim of the folks with the money?”

On that note, another thing CCCLT was missing in the Pythian deal was quality, reliable, and independent legal advice. When Kimbrough took over, CCCLT and GCE shared an attorney. “I hired a different lawyer,” he says. “But there were deal terms that were already set. CCCLT and the board had already agreed to many things.”

Elizabeth Bridgewater, executive director of Windham & Windsor Housing Trust in Vermont, says highly competent, detail-oriented legal counsel is key to any CLT’s success. Her organization owns and operates 945 units, primarily as rentals, across several different types of properties and in partnership with several legal entities. She says Windham can only develop complicated real estate projects because the organization has a cadre of attorneys behind it. “The bank has their own attorneys. We’ve got our attorney representing us. There’s the tax credit organization; they’ve got their attorney in the mix,” she says. “Some of them had more than one attorney on the call. So there’s a lot of legal eyes looking at these deals.” The specific deal Bridgewater is describing? One transaction in which a town government entity sold a single-family home to the land trust. The selling price: $1.

There’s one other important thing that could have protected CCCLT as the smaller partner in a complicated deal: a workable operating agreement. Transactional parties can “negotiate whatever [they] want in those partnerships and operating agreements, as long as it’s legal,” says Alex Cabral, senior principal of innovative finance at Grounded Solutions. “A lot of these partnership agreements or operating agreements are what define the relationship, the ownership, the roles, the contribution between the partners. The title and affordability are important, but also even before construction starts and these agreements are made, it’s really important that lawyers think of every downside scenario.” These details were never hashed out in the Pythian project.

The operating agreement must be clear enough to survive a leadership transition as well. When Temple left CCCLT a few months before the renovation was complete, several of the organization’s board members left at the same time (common during nonprofit leadership changes). And while Kimbrough arrived at the organization with plenty of experience at developing affordable housing in New Orleans, the land trust model was new to him—meaning none of the development partners had CLT expertise or a comprehensive set of documents that could have guided Kimbrough through the mess he was walking into.

Having an operating agreement in place that outlines the financial risk and how it’s going to get shared is certainly important in these deals, Bridgewater says. She also recommends attaching to the agreement an inventory of what the affordability deed or covenant should contain or protect. Then, of course, have it scrutinized by an attorney—one who represents the CLT.

That way, “it’s very clear that this is the template that we’re going to use so nobody can claim they didn’t understand what it meant,” Bridgewater says. “If it were me doing this work, I wouldn’t want to just rely on the assumption that they know what I’m talking about. I would want to do a lot of education around what ‘permanent affordability’ means and how it works.”

Partners, Planning, Protection

Kimbrough wonders if, given the size and wealth imbalances involved in the Pythian transaction, CCCLT ever had much power at all. He suspects the nonprofit would have been pushed out even if it had done everything right. “The technical stuff that we should have negotiated up front would have given us a stronger [position],” he says, but argues that “given the wealth that our partners had . . . we still probably would have been displaced.” 

Alexander points out, however, that size isn’t everything. Nonprofits do bring negotiating tools to transactions and shouldn’t sell themselves short. “Nonprofits have access to funding that for-profit developers don’t,” he says, noting that many for-profit developers actively seek out access to deals supported by those funds. But he still cautions that nonprofits “have to be careful of picking our poison, choosing our partners wisely.” 

Grounded Solutions’ Culbertson concedes that CCCLT was severely underpowered in the Pythian deal, acknowledging that “in the good ol’ USA, anyone can sue you at any time for any reason,” and so “cash, liquidity, and size can be a factor.” But he emphasized that “we’ve found ways to partner with large, for-profit contractors, lenders, and investors as an industry.” In fact, he says, safely partnering with large for-profits that can build at scale is exactly what the CLT industry needs to do “to meet the scale of the need. We’re not going to be able to do that with small nonprofits alone.”

Culbertson suggests that CLTs not think of for-profit developers as if they’re operating in some other sphere. “Almost every partner is a for-profit partner—the contractors are for profit; in most deals, the unit owners are profit-motivated in terms of trying to gain some equity for themselves or their family. So I just wouldn’t want folks to think categorically about for-profit developers as a different kind of partner. With every deal, every partner, we should be focused on making sure the documents are right and explicit and recorded in the right order.”

Culbertson also argues that despite the Pythian deal’s raft of issues and disappointing outcome, “we need to be realistic about the fact that folks are going to make mistakes.” He also stresses that CLTs should continue trying to scale from small, single-family endeavors to larger and more ambitious variations of the land trust ownership model.

“Failure is absolutely a part of innovation. It can’t happen otherwise,” he says. “If we’re never making a mistake then we’re never trying anything new and we’re never going hard after the mission.”

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