As community land trusts gain ground as an effective approach to build more equitable communities and curb displacement of working class people, many communities are still fighting for the opportunity to establish a CLT. See below for news from around the world:
London, Kenya, Switzerland, Uruguay, and Bolivia
Crown Heights, Brooklyn:
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.
Now that CLTs are defined in Montana, those of us who work to provide affordable housing here, with very limited resources to do so, will have an easier time facilitating CLT development. We can point to Montana State Law to explain how CLTs work. Our hope is that an increase in understanding about CLTs will lead to an increase in permanently affordable housing, which will result in an increasingly equitable Montana.
Thank you to those who helped make HB200 law!
A Report on the “Rethinking Property” Visit and Working Session
In early October, Trust Montana co-hosted a free public presentation and a community working session, bringing Jim Oldham from Equity Trust over to Montana from the East Coast. The goal was to offer free information to the public about Community Land Trusts (CLTs), and then gather a smaller array of Missoula-area stakeholders in order to begin a discussion about CLTs as a solution to some of Missoula County’s pressing problems surrounding land access. The events served to expand the community conversation about farmland and affordable housing stewardship in Missoula County. We are pleased with the amount of people who attended, and we’re pretty excited to continue this conversation.
To facilitate the session and bring in new ideas, Trust Montana, the North-Missoula Community Development Corporation (NMCDC), the Community Food and Agriculture Coalition (CFAC), Alternative Energy Resources Organization (AERO), the University of Montana Environmental Studies Program, the Missoula County Community and Planning Services office, the Western Montana Growers Co-op, and the City Open Space Program pooled resources to bring Jim Oldham to our state. After giving the free presentation in Missoula (available to watch online here after November 15th), co-facilitating the working session, and leading a workshop for Environmental Studies students, Jim joined the AERO for their Annual Expo in Kalispell, where he spoke on two panels about farmland preservation and affordability. We kept him very busy while he was here.
What is Equity Trust?
Equity Trust is a small national non-profit based out of Massachusetts committed to promoting equity in the world by changing the way people think about and hold property. Equity Trust helps communities to gain ownership interests in land and other local resources. In other words, they help communities utilize tools like the Community Land Trust in order to gain control of land and steward it into the future — for an array of vital community resources.
The Working Session – Just the Beginning!
The working session on October 7th started what proved to be a content-rich and lively conversation.
In addition to the sponsors, attendees included staff from the Human Resource Council, local real estate agents, staff from the MSU Extension Office, local farmers, a developer, an attorney from a local conservation land trust, and a representative of the Missoula Organization of Realtors.
The session lasted two hours – just enough time for everyone to throw their concerns about both farmland preservation and Missoula’s current housing crisis into the middle of the table, discuss over cups of hot coffee, and ask Jim Oldham some questions about the specific capabilities and limitations of Community Land Trusts. An important aspect of Jim’s advice and approach is that CLTs are just one option for addressing the issues at-hand, and that the model of CLTs is made up of specific characteristics that help set CLTs apart from other land trusts:
The Underlying Key: Land is a finite resource. CLTs collectively steward land, and generally operate under these three characteristics:
1. Land is owned by a CLT, held in trust and permanently removed from the speculative market.
2. The relationship between the CLT landholder and the lessee (the farmer or low-income homeowner who owns the improvements on the land) is managed by a 99 year ground lease which can be designed for particular incomes and can prescribe certain practices.The CLT is community-controlled through its membership and governance structure – the key to this is open membership, and a strategically holistic board makeup. The board is in place to balance the competing needs between the community as a whole and the individual lessees. The board is elected from the wider community.
3. Generally, there is a seat reserved on the board for each of the varying areas of expertise that are needed for the board to function properly.
– This includes community members that are lawyers, university faculty, county/city government employees or elected officials etc. Holding all these different partners together helps strengthen the long term stewardship capability of the CLT.
For curious people, here’s a re-cap of the conversations started at the working session:
Question: Are we doing everything we can to keep existing housing affordable?
The basis of the CLT model when applied to housing: Adding protective restrictions to housing as it enters the market.
Related to the question of: Do affordable housing and farmland preservation have to be mutually exclusive? Building housing on all the remaining farmland doesn’t necessarily mean there will be affordable housing. Other components are needed in order to ensure housing is affordable.
Zoning for clustering, and in-fill development helps communities create and maintain affordability.
Question: How do CLTs plan for perpetuity?
– Build permanence into the structure and the ecosystem via organizational partners
– Give permanent board seats to partner organizations and city government people
– Build the buy-in for the long term from the entire community – promote successes
Comment: The next Missoula Open Space Bond is supposed to focus on agricultural land specifically, and at the same time, County and Community Planning Services has committed to re-examining zoning for clustered development – can we have agricultural land written in as a consideration of this zoning?
(This means reconsidering some type of regulatory protection as well as looking at the CLT option.)
Comment: Building more housing doesn’t solve affordable housing by increasing inventory
Comment: Perhaps, but there is an inverse relationship between inventory and housing prices currently, with housing prices very high and inventory low, so it would be helpful to see some studies about this relationship –
Suggestion: Shelterforce Magazine has a good article about this subject.
Most studies seem to show that supply-side attempts have not provided affordable housing on their own. The risks taken by developers means they generally try to make as much profit as they can. Density bonuses help a bit, but all the affordability is now gone from the projects in Missoula that were built using past density bonuses – except in the case of NMCDC’s CLT homes that were built using the density bonus – because they are resale restricted using the ground lease.
Comment: In the 1990s, developers approached the affordability problem by developing small-house small-lot projects, and as a result, for a number of years afterwards, new small projects were cheaper than existing inventory. We need a new approach again, with CLTs as a piece of the puzzle – a tool that addresses the cost of land by taking it out of the cost equation.
Comment: We could do a lot of great projects, but doesn’t solve the structural problems – CLTs and policy need to complement each other.
Also – there is a wage gap in the community – why not address this too if we’re going to talk about affordability?
Comment: Struck by how little the community knows about the existing CLT projects and the successes – we need to promote the NMCDC more in Missoula and build on what that organization has done.
Question: How is affordability decided?
HUD: 30 percent or less of a household’s gross income should be spent on housing.
Question: We’ve talked about CLTs for housing, but how is the lease fee set up for farms and farmers?
There is an agreed-upon expectation that fulfills the promise the CLT makes to the community: the promise of the land being permanently protected as farmed property, and leased by a viable business that will grow food for the community. It is important to assess the agricultural value of land and come to an agreed-upon lease fee between the CLT and the lessee. The terms and restrictions are also negotiated specifically for each property and farmer lessee. At the minimum – the lease fee paid to the CLT must cover land ownership costs (some CLTs pay taxes on their agricultural parcels even though they are non-profit organizations).
Comment: Could the lease fees feed back into the open space bond? This could help the community support the bond and CLT more.
Another aspect to look into: In some states, organizations can apply resale restriction overlays and affirmative farming overlays without actually owning the land – not completely clear whether it’s legal to use these mechanisms in Montana – Hermina from Trust Montana is looking into this.
What Happens Now?
The two hour work session invited many different community perspectives, feeding a lively discussion about the root causes of, and potential solutions to, Missoula’s land and housing access issues. The Community Land Trust is just one viable tool that can be used to make communities more inclusive, and a lot more people in Western Montana know about CLTs thanks to Jim’s visit.
One thing everyone seemed to agree on at the working session: Missoula County needs viable farmland AND more affordable housing. The popular assumption that those two things are inherently mutually exclusive is challenged by the CLT model’s application for both housing and farmland, and by the complex relationship of supply and demand: more housing doesn’t necessarily equal more affordable housing.
The working session attendees seemed intrigued by the discussion of the model and interested in the ways it can be married with agricultural protection policies, density bonuses, and even inclusionary zoning (although, admittedly, mention of inclusionary zoning made some attendees look a bit uncomfortable).
The staff of Trust Montana and the NMCDC have high hopes for continuing this conversation with the varied stakeholders who, when gathered together in the same room, appear to have a lot of the same hopes for Missoula County’s future. As an organization that works statewide, we are learning a lot during this Missoula County-specific process, and will plan to apply what we’ve learned all across our gigantic state. Sending big thanks to Jim and all of our organizational partners!
Working Session Attendees and Affiliations:
Elizabeth Erickson (City of Missoula Open Space Program)
Colin Bangs (Missoula Growth Policy Advisor, Developer, Missoula Organization of Realtors)
Bob Oaks (Trust Montana and North-Missoula community Development Corp.)
Christine Dascenzo (Missoula County and Community Planning Services)
Hermina Harold (Trust Montana and North-Missoula community Development Corp.)
Sarah Mulligan (Portico Real Estate)
Mike Nugent (Missoula Organization of Realtors)
Neva Hassanein (UM Environmental Studies Program)
Shera Carlascio (Human Resource Council)
Fred Stewart (Missoula area Orchardist)
Josh Slotnick (UM Environmental Studies)
Jill Davies (Farmer, Director of Sustainable Living Systems, Board Member of Trust Montana)
Kristin King-Ries (Community Food and Agriculture and Garden City Harvest Board Member)
Alice Jones (Lands Attorney – Five Valleys Land Trust)
Jean Duncan (Alternative Energy Resources Organization Member)
Seth Swanson (MSU Extension Office)
Bonnie Buckingham (Community Food and Agriculture Coalition)
Jim Oldham (Equity Trust)
Rachel Gooen (Fifth House Consulting)
Save The Date: October 6th, 2016
Trust Montana is co-sponsoring a visit from renowned Community Land Trust expert Jim Oldham. Jim will give a free presentation at the UM Campus (see below announcement), participate in a working group session for Missoula area affordable housing and farmland conservation stakeholders, teach a workshop at the University of Montana Environmental Studies Department, and participate on a panel at the AERO Expo in Kalispell.
Click here for more information about Equity Trust.
Great News: After a long process, Trust Montana has finally received its IRS determination letter, and we officially good to go as a stand-alone nonprofit.
The IRS has granted us tax-exemption status for the full range of our land stewardship activities, state-wide.
Thanks for your support in our fledgling stage. Now, on to the next.