House Bill 200 Has Been Signed into Law!
After much deliberation by the Montana Legislature, a bill defining Community Land Trusts has finally become law. The Governor signed House Bill 200 on April 20th. The bill was sponsored by Representatives Dave Fern and Frank Garner, with some well-timed support from Senator Margie MacDonald.
So, according to Montana State Law, what is a Community Land Trust?
“Community land trust” means a nonprofit organization exempt from taxation under section 501(C)(3) of the Internal Revenue Code that holds title to land beneath individually owned housing units for the purpose of preserving affordable housing.”
Educating the legislators about CLTs was a lot of work! Our unique model of permanently affordable housing proved to be a confusing subject. Trust Montana and Northwest Montana CLT staff, experienced CLT realtors from Missoula and Kalispell, and representatives from the Red Lodge Area Community Foundation worked to explain the CLT model to legislator after legislator. In the final vote in the Senate, the bill passed by just one vote. This bill had no fiscal note (aka, it doesn’t cost anything). Some legislators were confused by the tax exempt status of some land when it is owned by a non-profit, some were bothered by resale restrictions, and others just didn’t want to provide a “handout” to Montanans with limited means. The bill simply provides a definition of CLTs in the statute so that lenders, title companies, realtors, and home buyers can more easily understand how it all works.
During this legislative session, we’ve learned a lot about the difficulties of explaining our model. Here’s an elevator speech:
CLTs provide opportunities for people to purchase homes at an affordable price by:
1) subsidizing the homes just once,
2) keeping the cost of the land out of the price of the home by holding the land in trust, and
3) entering into long term ground leases with homeowners that limit the amount of equity a homeowner can take out of the home at resale (current limit for Trust Montana is 1.2% flat rate increase per year of ownership – so it’s not market-driven).
These homes act as an alternative to renting, and a stepping stone to market-rate home ownership. A single infusion of subsidy into a CLT home benefits the initial home buyer and all subsequent buyers: when CLT homeowners sell, they are required to sell to another low-to-moderate income household. Most CLT homeowners earn enough equity from their sale for a down payment on a market-rate home.
There are currently three nationally-certified CLTs operating in Montana:
The North-Missoula Community Development Corporation has operated a CLT for affordable housing and commercial space for 15 years. The Northwest Montana CLT in Kalispell has been operating since the recession. Trust Montana is relatively new, statewide, and is chartered to hold land for a variety of community uses including farming, housing, and commercial development.
Between Missoula and Kalispell, CLTs have provided over 150 families with the opportunity to own a home when they would otherwise be renting. Trust Montana is currently working to develop its first affordable housing project, in Red Lodge. There is also a new CLT start-up in Big Sky. Community groups in Paradise Valley, Seeley Lake, the Bitterroot Valley, and Billings are looking into CLTs to solve their affordability issues. Nationally, CLTs are being utilized to revitalize low-income neighborhoods without gentrifying them.