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Wednesday, December 19, 2007

Community Land Trusts and Building Wealth

Anthony Flint
Lincoln Institute of Land Policy
At Lincoln House, December 2007 Issue

One of the big reasons Community Land Trusts are known for providing sustainable affordable housing is that the purchase of a home - exclusive of the land it sits on - cannot be treated as an ordinary real estate investment: deed restrictions prevent buyers from turning around and selling the home for a big profit. But that's also a potential downside, because a home is a great way for low- and moderate-income families to build wealth. Many housing advocates prefer reliance on subsidies to allow first-time buyers to benefit from the investment in a home in the traditional fashion.

An interesting fact emerged, however, in the wide-ranging discussion of CLTs at Lincoln House Nov. 27, that cast new light on this seeming dichotomy. Some buyers in the Dudley Street Neighborhood Initiative CLT in Roxbury, Mass. Have been able to save enough money on housing to afford a down payment and purchase of a market-rate house nearby in the community. "Those homes are being purchased as an investment," said John Barros, executive director of the Dudley Street Neighborhood Initiative.

Although it may be counter-intuitive, John E. Davis, visiting fellow at the Lincoln Institute and partner in Burlington Associates in Community Development LLC in Vermont, said it was perfectly acceptable to have buyers in CLTs earn enough money to make such an investment - or turn their CLT home over to a son or daughter who may be a high-income professional who just wants to spend less on mortgage payments. "We're looking for permanently affordable housing, not permanently eligible applicants," Davis said.

There are an estimated 200 CLTs nationwide. A recent Lincoln Institute survey drew responses from 120 of them that provide nearly 7,000 units of rental or ownership housing. Davis said he believes there are probably about 10,000 units in CLTs today.

The Nov. 27 Lincoln Lecture, The National Status of Community Land Trusts with Local Examples: A Panel Discussion , was attended by more than 50 people, and featured Davis, Barros and Yesim Sungu-Eryilmaz, research associate at the Lincoln Institute in the Department of Economic and Community Development, and discussion moderated senior fellow Rosalind Greenstein.