About Community Land Trusts (CLTs)
Saratoga Community Housing is based on a traditional Community Land Trust model. A Community Land Trust (CLT) is a non-profit organization created to hold land for the benefit of a community and those individuals within the community. It is democratically structured with an open membership and a board of trustees elected by the membership. The board typically includes residents of trust owned lands, other community members and public-interest representatives. Board members are elected for limited terms, so that the community retains ultimate control of the organization and of the land it owns.
The CLT acquires land through purchase or donation with an intention to retain title in perpetuity, thus removing the land from the speculative market. The land then may be used to provide housing opportunities for individuals and families who would otherwise be squeezed out of the housing market due to their income level. The CLT may provide homebuyer subsidies to reduce the home’s price to substantially less than the prevailing market price. CLT homeownership is a proven model that is highly successful across the nation.
Frequently asked questions about Community Land Trusts (CLTs):
What is a Community Land Trust?
A CLT is a nonprofit organization that acquires and holds land for the purpose of providing housing at affordable prices. What makes the CLT model unique is that the housing remains affordable forever giving future homebuyers an opportunity to purchase a home at a reasonable price rather than the prevailing market price.
Why do we need Community Land Trusts?
Over the last decade, housing costs in Island County have skyrocketed. Unfortunately, incomes have not kept pace. Everyday people, from hardworking families to seniors living on fixed incomes, cannot afford to own a home in the community in which they work. CLTs make home ownership possible for the limited income resident’s generation after generation.
How do Community Land Trusts work?
CLTs sell homes to people who are creditworthy but whose incomes are so limited they are closed out of the traditional real estate market. While buyers own the home, the land beneath their home belongs to the CLT and is leased to them for a nominal fee through a long-term, renewable and inheritable lease.
How does the Community Land Trust keep the housing affordable forever?
CLTs create opportunities for home ownership based on a shared appreciation model. Community investment in partnership with the homebuyers allows the buyer to purchase the home on CLT land at a price well below the market value. In exchange, homebuyers agree to a resale formula that enables them to capture a fair share of the homes appreciation rather than profiting from the current market value. In practice, the resale formula allows for a one-time investment from the community that is maintained over the life of the home, benefiting homebuyers many times over and eliminating the need for future subsidies.
What happens if the homeowner wants to sell their home?
When homeowners sell their homes, the resale price is based on a predetermined formula designed to provide a fair and reasonable rate of return on the investment, while at the same time keeping the home’s price within reach for future homebuyers of modest means.
HOW INDIVIDUALS AND FAMILIES BENEFIT:
CLTs enable people to become homeowners:
CLTs provide access to a housing market that increasingly excludes individuals and families with limited incomes.CLTs get people into the door of an attainable home. The original investment from the community makes possible a transition from renting to owning, and the equity built through ownership can be applied to future home purchases in the traditional market.
CLTs homeowners build equity:
The CLT model, in which homeowners sell their homes according to a resale formula, provides a fair and reasonable rate of return on the homeowner’s investment.Homeowners regain their initial investment, equity they have accumulated by paying the principle on their mortgage plus a fair share of the appreciation of their home.
CLTs promote healthy families:
Housing gives people an opportunity to build better lives. CLT housing provides security, stability, tax benefits and a chance to build equity so families can stay together, stay strong and be successful. The stable and secure housing made possible by CLTs enables many individuals and families to invest in their own future, improve their financial status and positively contribute to the economic development of the community.
CLTs support and educate homeowners:
Homebuyers become members of the CLT when they start the homebuyer process. Membership offers opportunities for leadership development by giving homeowners a voice in the governance and direction of the CLT. Owning a home is a lot of work. CLTs help first-time homeowners meet the challenges by offering homebuyer education and home maintenance and repair workshops. The CLT Staff holds member meetings, assists with loans, provides credit counseling and more.
HOW COMMUNITIES BENEFIT:
CLTs foster stable communities:
Safe and stable housing is the foundation of every community. With CLTs, the community owns the land, ensuring it will always be used to benefit the community. CLTs strengthen communities by providing a permanent stock of affordable, owner-occupied homes, allowing people who work in the community to live there as well.
CLTs preserve resources:
CLTs are serious about sustainability. CLT Communities are designed to make the most of the land while preserving green space. Also, when people can live where they work, commuting and its negative effects on both the individual and community are reduced. CLTs protect residents from displacement. Rising property values often force low and moderate income individuals and families to move out of the area. CLTs protect residents from this displacement, and promote strong community ties and the connection that comes from putting down roots.