Cooperative housing and community land trusts (CLT) are often posited as alternative paths for achieving community ownership of homes.
But these two housing types can also be combined. Such a combination aims to marry the strong sense of community control that housing co-ops provide with the permanent affordability that CLT ownership helps ensure.
In the United States, such a combination is rare but not unheard of. About 1.8 percent of CLT units are cooperative housing, according to a 2022 census conducted by Grounded Solutions Network, a national nonprofit that supports long-term affordable housing.
By contrast, Canada has a far higher proportion of cooperative housing within a CLT. According to a 2023 census conducted by the Canadian Network of Community Land Trusts, 59 percent of the county’s CLT units were cooperative units.
What’s a Community Land Trust? What’s a Housing Cooperative?
Community land trusts, or CLTs, are nonprofit, community-based organizations that ensure community stewardship of land and support permanently affordable housing. Learn more in this CLT explainer.
Housing cooperatives can be structured as market-rate entities (similar to condominiums), but for affordable housing purposes, they are commonly structured as:
—“Group equity” or “zero-equity” cooperatives, where the cooperative retains 100 percent of the equity.
—Limited-equity co-ops, where most of the equity remains within the cooperative and individual members have limited equity shares.
Community land trusts are growing rapidly in both countries. In the U.S., the Grounded Solutions census estimates that CLTs house nearly 44,000 families. In Canada, a country with about one-eighth as many people as the U.S., nearly 10,000 families live in homes on trust land.
As for the number of CLT co-op residents, the difference is stark: CLTs are home to fewer than 1,000 co-op households in the U.S., compared to nearly 6,000 in Canada.
What drives these divergent CLT housing strategies? And what lessons might CLTs and housing co-ops in the U.S. wish to adopt from their Canadian counterparts?
Housing Co-ops on CLT Land in Vermont
Brenda Torpy, a founding member of Champlain Housing Trust (CHT)—the world’s largest CLT, according to the Vermont Housing & Conservation Board—notes that Champlain Housing Trust is home to 125 units of cooperative housing, which amounts to roughly 16 percent of the national total of CLT co-op holdings.
Developing co-ops has not been easy.
In Vermont, in 1988, housing advocates got the state to pass co-op-enabling legislation: the Cooperative Housing Ownership Act. But securing financing for these types of properties was challenging. Torpy recalls that with a new-build housing co-op project in the early 1990s, “It was very difficult to get balloon financing” to support the organization-wide co-op housing loan. “We made it work,” she adds, with a mix of Section 8, moderately subsidized affordable units, and market-rate housing. “We saw that that functioned a lot better, but the challenge was getting the capital to make it affordable.”
Most of the co-op housing that CHT acquired in the 1980s and early 1990s was not newly built. “People were being displaced,” Torpy recalls. “We were trying to intervene in the market … They were all multifamily, they were all small. A big building would have six units.” The land trust combined the co-ops into a mutual housing federation—nonprofit housing where residents are included on the board—to reduce costs. But, as Torpy relates, “Some things could be combined. But [each co-op] still had to manage [its] own little building.”
In the 1990s, Torpy says, land trust staff “went to each co-op and gave them the option to come back to renting.” All but one house eventually did. But instead of giving up on the housing co-op model, CHT retooled it.
Two key changes helped make the newer co-ops sustainable. One change involved financing: CHT started using low-income housing tax credits to get sufficient equity into the buildings. This also meant building larger multi-unit housing co-ops to spread compliance costs across more housing units. Of the 5 housing co-ops, Torpy says, the largest has 40 units, while others range from 12 to 28 units.
CHT also set up two contracts with each co-op:
- One contract involved management and maintenance similar to rental property maintenance. The contract is voluntary, but all five co-op boards have contracted with CHT because alternatives have proved unsatisfactory.
- The other contract, mandated by the state of Vermont in exchange for the financing it provides, was for CHT to offer education and training for housing co-op board members.
Another important facet of CHT’s approach is to favor zero-equity co-ops rather than limited-equity co-ops. With zero equity co-ops, all equity stays within the overall co-op organization, unlike limited equity co-ops, which split equity between the organization and individual owners. While limited-equity co-ops offer individual owners a modest equity gain, CHT found that they created a barrier to entry for its clients. One co-op, Torpy says, began as a limited-equity cooperative, but members “couldn’t sell … when the share was $5,000.”
Torpy adds that members of a co-op originally organized as a limited-equity co-op before converting to a zero-equity co-op were grandfathered in to preserve the investments of earlier members.
A CLT with Co-Op Housing in Rural Washington
Sandy Bishop, executive director of Lopez Community Land Trust on Lopez Island in Washington state, says the organization has 7 housing co-ops with roughly 60 units of housing total, with co-ops ranging from 4 to 11 units. Bishop says the CLT also has approximately 8 rental units and 1 homeownership unit, but co-ops make up the majority of the CLT’s housing.
Lopez’s numbers may sound modest, but the CLT’s 60-some housing co-op units work out to nearly 8 percent of all CLT-based co-op housing in the U.S. Bishop estimates that 4 percent of residents on the rural island of slightly over 3,000 people live in CLT-leased homes.
Why co-op housing? This was not the vision of the CLT’s founders, Bishop says. The idea, she relates, initially came from a local banker, who asked the Lopez CLT team, “Have you ever considered doing a housing cooperative?”
The reason the banker suggested co-ops was because many Lopez Island residents worked in the cash economy. They wanted to be owners rather than renters, but they lacked the credit records needed to qualify for individual loans. A cooperative, since it is a corporate entity, avoids this problem: The cooperative itself holds title to a balloon loan for the entire property, rather than requiring individuals to secure their own mortgage loans for their units.
“Co-op housing is a third way between a fee-simple community land trust and rental on community land trust land,” Bishop explains. The co-ops on Lopez Island are limited-equity co-ops. Bishop adds that shares cost between $10,000 and $15,000 and earn a modest annual return of 3 percent for resident-owners.
Most buyers cannot afford the outright share cost, but the land trust has developed a buy-in of cash plus sweat equity. Typically, Bishop says, 20 percent of the share is paid for in cash, although some pay up to 40 percent in cash.
Bishop has become a believer in employing co-ops on CLT land. “Co-ops married to community land trust[s] is the best of all worlds,” she says. Co-ops on their own, she argues, tend to underinvest in long-term maintenance. With the CLT, Bishop says the 99-year ground lease creates the incentive “that your improvements will be kept up, and the reserve funds will be adequate.”
A New Model Emerges in British Columbia
Thom Armstrong has been the CEO of the Co-operative Housing Federation of BC for over two decades. The federation is also leading an innovation in the use of the CLT model by forming a land trust as a directly owned subsidiary. By pooling the land holdings of a group of co-ops, the land trust can borrow against the existing co-op housing equity, and leverage those funds to rapidly develop more co-op housing.
Co-ops in Canada, Armstrong emphasizes, typically follow the model that Torpy uses in Vermont. “Virtually all the housing co-ops in Canada are nonprofits, or what Europeans would call rental housing co-ops,” Armstrong notes.
Armstrong explains that these co-ops “developed under a series of federal programs that began in 1973 and tapped out in 1992.” In British Columbia, Armstrong says, there are about 275 housing co-ops that serve over 15,000 families. He adds that overall, there are about 75,000 families housed in other forms of nonprofit-managed housing. Co-ops, therefore, form a sizeable part of the province’s social housing ecosystem—but they’re far from a majority.
In British Columbia, a few housing co-ops have long existed on CLT land. But between 2012 and 2015, Armstrong says, there were a “series of conversations at the municipal government level about how a community land trust model could be used to generate a new supply of affordable housing.”
The co-op housing movement in Canada is really a spectacular example of a disaggregated real estate asset base.”
Thom Armstrong, CEO of the Co-operative Housing Federation of BC
Put simply, whereas the housing co-ops on Lopez Island and in Vermont were largely customer demand–driven, in British Columbia, the co-ops themselves are using a land trust model to directly expand the supply of cooperative housing.
As Armstrong explains, “The co-op housing movement in Canada is really a spectacular example of a disaggregated real estate asset base.” The average co-op size in British Columbia, he says, is 56 units, which is great for building community, but “is dramatically imperfect [as a] real estate asset that you might want to leverage for redevelopment or growth.”
So, what if the co-ops created a land trust that they own through the co-op housing association? Armstrong says that people in British Columbia were heavily influenced by Common Equity Housing South Australia, which is owned by its member cooperatives. As Armstrong explains, “The company owns the land and leases it back to the co-ops that own the company.”
The Co-operative Housing Federation of BC (CHF BC) land trust is legally structured as a wholly owned subsidiary of the federation. Democratic accountability is maintained by the association, whose board is selected by its 276 member co-ops. As in Australia, the land trust enables the co-ops to pool their land and borrow against their land holdings to accelerate expansion.
And acceleration is exactly what has occurred. Just over a decade ago, in British Columbia, there were 5 housing co-ops with 350 housing units on CLT land. Today, the CHF BC land trust has 34 co-ops with 2,800 units of housing—an amount, Armstrong says, that adds up to nearly half of all CLT-based co-op housing nationally.
Expansion is ongoing. Armstong says that an additional 400 units of co-op housing on CLT land are “literally in construction now, and another 700 to 800 [are] in the development pipeline.”
Armstrong explains that the core idea is for member co-ops to focus on what they do best: creating a strong sense of community, and to use the CLT to “aggregate the asset management function,” which helps “give greater comfort to lenders, investors, [and] governments who want to invest in co-op housing but are not totally convinced that it is the best vehicle for providing the long-term asset management.”
Armstrong adds, “The marriage of the community land trust model and the housing co-op volunteer-led governance model is perfectly suited to creating both community and long-term asset management capacity.”
A Broader Canadian Movement
Nat Pace is the network director of the Canadian Network of Community Land Trusts. Pace cautions that while CHF BC land trust is a “very large and powerful member of the network” and is not the only co-op housing federation to use that model, most CLTs in Canada are much smaller and would probably look more familiar to their U.S. counterparts.
Pace offers some examples of this range. In some communities, Pace notes, CLTs in Canada have directly addressed issues of racial justice and reconciliation. In Nova Scotia, for instance, CLTs “are very characterized by being led by African Nova Scotia communities.”
There are, Pace acknowledges, tensions within the Canadian CLT movement. He notes that some ask, “If a CLT is set up as the subsidiary of nonprofit co-op housing membership, is that a community land trust? Are cooperative land trusts a cousin of the CLT?”
That said, the CLT network takes what Pace calls “a big-tent approach.” The questions he asks are, “Is this permanently affordable housing? Is it nonmarket? Is there some sort of ability for those living in the housing to have a say?” The co-op housing model,” Pace says, “does have those elements.”
As for why housing co-ops on CLT land are so common in Canada, Pace says that it has a lot to do with the history of the CLT movement in the country. In the U.S., the CLT movement emerged directly from the Civil Rights Movement. In Canada, Pace says, “The earliest organizations in Canada … were deeply embedded in the cooperative housing world.”
One early CLT forerunner in Canada is the Milton Parc Community (Communauté Milton-Parc) in Montreal, Quebec, which holds a somewhat similar place in the social imaginary of Canadian CLT organizers as the Dudley Street Neighborhood Initiative does in the U.S., where community organizers in Boston’s Roxbury neighborhood gained eminent domain authority to help acquire land for their CLT.
As Dimitrios Roussopoulos, one of Milton Parc’s founders, explains, today 22 organizations cogovern a 6-block neighborhood. Of the 22 groups, 16 are housing cooperatives and the rest are nonprofits, one of which manages 11 commercial properties; the rest offer supportive housing. All 22 groups, in turn, lease land from a member-governed “land trust condominium,” as Roussoupoulos puts it, the result of provincial legislation passed in 1987.
As Roussoupoulos explains, “We wound up owning all the land in one unit. So, the 22 organizations own the buildings, but they don’t own the land. We own the land together. And because we own the land together, we have abolished private property. You cannot buy or sell anything within that six-block area [in] the downtown area of Montreal.” According to Roussoupoulos, there are a total of 645 housing units in Milton Parc, which are home to about 1,700 people.
Years of organizing were required to create this. As Roussoupoulos explains, a community campaign began in the late 1960s to resist a private firm’s effort to demolish the historic neighborhood and, as one account describes, redevelop it with modern construction, including 25-story apartment buildings, a 29-story office building, and a hotel.
Roussoupoulos recalls the campaign’s early days: “We knocked on 800 doors. Over 400 people expressed both alarm and support in terms of launching a campaign to save the neighborhood.” By the late 1970s, community activists had secured low-interest federally guaranteed loans to enable the co-ops to buy the buildings, with the current legal landowning structure consolidated years later.
Roussoupoulos sees a common thread in housing co-ops and CLTs. “Urban land—the land in cities—should be collectively owned,” he contends, “either by the city itself or by community land trusts, or a combination of both.”
A Changing CLT Movement in the US
In the U.S., historic CLTs have largely focused on shared-equity homeownership. As one recent account states, “The CLT retains ownership of the underlying land, while residents own the home. A 99-year ground lease binds the two, ensuring the home remains affordable for every subsequent generation.” By contrast, in the 2023 Canadian census, zero-equity co-ops and rental housing comprise 96 percent of all CLT housing.
The 2022 Grounded Solutions census, however, demonstrates that the CLT movement in the U.S. is shifting. As the authors report, an early 2011 census found that shared-equity homeownership comprised 7,139 out of 9,543 housing units—74.8 percent of the total. By 2022, shared-equity homeownership units had more than doubled to 15,606, but their percentage decreased to 35.5 percent.
As CLTs in the U.S. expand their permanent affordable housing offerings, cooperative models that combine affordability with community control may merit a deeper look.
About the Author
Tags
Comments
3 thoughts on “How CLTs are Powering Co-op Growth in Canada: Lessons for the U.S.?”
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
Thank you, Steve. Great article on many fronts. The Canadian examples from Montreal and British Columbia are especially inspiring to the wider Community Land Trust movement, which has long wrestled with how to achieve scale without sacrificing our commitment to meaningful community control. Scale is not just an appropriate response to today’s need for affordable housing and equitable access to land, but a practical necessity for our ability to finance and sustainably steward these precious community assets over time. The aggregation of individual co-ops in a Community Land Trust supports their local democratic control and empowers them financially to sustain that mission affordably over time.
Really appreciate the article Steve. Thank you. In the majority of the US there are few to no lenders available to limited equity or zero equity cooperatives. If we want to see more cooperative development we need access to secure, low-interest, long-term financing. It’s nearly zero risk investing when cooperatives are coupled with CLT land. The CLT and the cooperative offer lines of defense against foreclosures. In nearly 40 years of cooperative development on Lopez Island we have never even come close to foreclosure and in the beginning we served households at or below 50% AMI. Cooperatives can be empowering and a force for good and stability in any neighborhood, town or island.
It is because of the Canadian Federal government providing 2%, 35 year mortgages and income tested rental subsidy money that so many non profit housing cooperatives were built. Money was also put into non profit development groups to bring people together. Unfortunately, it did not last long enough into the present.
Victoria BC