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FAQs about CLTs

Questions and Answers about Community Land Trusts. Interest in community land trusts is growing in Seattle and across the United States. As community leaders and activists explore how to use community land trusts to solve housing affordability and housing equity issues, this Q&A provides essential information about what they are and how they work.

Interest in community land trusts is growing in King County and across the United States. As community leaders and activists explore how to use community land trusts to solve housing affordability and housing equity issues, this Q&A provides essential information about what they are and how they work.

What is a Community Land Trust?

A community land trust is a private, non-profit, membership-based organization established to acquire and hold parcels of land in perpetuity and to lease such parcels for housing, most often homeownership, and other community purposes that benefit low- and moderate-income families and communities.

The essential features of United States’ community land trusts are defined in the federal Housing and Community Development Act of 1992 (Section 213). This includes that the community land trust is a membership organization and that the community land trust’s lessees represent a third of the members of the governing board.

Individual community land trusts across the United States adapt this basic model to their needs and circumstances.

How Does Community Land Trust Homeownership Work?

Homestead serves households who make less than 80% of area median income. Homestead secures public and private funds to lower the cost of each home to the buyer to well below market rates . The home price is determined to be affordable to the target market when not more than 35% of an income-eligible homebuyer’s income is used to pay for housing costs. These funds can take the form of City, County, State and Federal funds, bank Community Reinvestment Act grants, corporate and charitable foundation gifts, below market land, and the gifts of individual donors. The buyer pays for and owns the home (structure and improvements) on the land. Homestead continues to own the land under the structure and leases it to the homeowner for a small monthly fee. The home appreciates at a rate of 1.5% compounded per year in order to keep the home affordable to future low-income buyers while the homeowner gains equity in the form of that increased value, principal paydown and mortgage interest tax breaks. They do not have to sell their home if their income increases after purchase. They can own as long as they wish, and can bequeath the home and the leasehold interest in the land to their heirs. If they sell their home, whenever they decide to sell it, they do so to another income qualified buyer at an affordable price based on the resale formula.

When You Say You Serve People Who Make Less than 80% of Area Median Income, What Does That Mean in Annual Salary?

Our homeowners make between 50% and 80% of area median income as determined by the Housing and Urban Development (HUD) a federal government entity.  HUD calculates of 80% of Area Median Income for a family of one at $50,400. For a family of four it is $72,000. For comparison, according to Salary.com, a King County school teacher’s salary starts at $50,000, medical assistant $37,000; police patrol officer $57,000, dental assistant $39,000, a Paramedic $44,630.

How Much Investment Does It Take to Make a Home Affordable?

Total costs for a nonprofit organization to build a home – usually in a subdivision or townhome project – are $400,000 to $450,000. The affordable price for our buyers averages at $225,000. This means we need to raise $175,000 to $225,000 for every home to make it permanently affordable.

Where Does the Public Investment Come From to Make Homes Affordable?

In King County the main sources of funds to make homes affordable include the King County Housing Finance, City of Seattle Housing Levy, State of Washington Housing Trust Fund, federal “sweat equity” funding from Housing and Urban Development, bank community reinvestment fund grants, private foundations and philanthropists.

Who Owns the Land in a Community Land Trust?

Parcels of land stewarded by the community land trust are owned by the community land trust. To the extent that such land may have been purchased using public or other funds, the community land trust typically will have legal obligations to its funding partners. As there are typically three or more sources of tax-based funding used to create the affordability of homes in a community land trust project no one government entity can be said to have sole authority or control over the community land trust. It is a common misconception in Seattle that community land trusts are “owned” by the City of Seattle.

Does Each Development/Property/Address Have to Have its Own Community Land Trust?

No. This is one of the most common myths about community land trusts. A community land trust is an organization, a legal entity, not a development or a piece of property. Homestead Community Land Trust (one entity) owns the land under and stewards the affordability of over 214 homes, which includes several multiunit developments. Community land trusts are organizations established to steward multiple homes, developments and projects. The largest community land trust in the United States, Champlain Housing Trust in Vermont, stewards 565 owner-occupied homes and 2,200 apartments spread over three counties.

What are Community Land Trust Values?

We don't "have" a community land trust. We are a community land trust. A community land trust is not just a legal structure or type of nonprofit, although it is that too; it is a deeply democratic way of being and way of doing that emphasizes equity and justice.

  • Social justice. Lifting up people and places that have been left behind by inequitable housing policies, discriminatory practices or runaway real estate prices.
  • Land reform. Expanding the supply of "community-owned" (via non-profit ownership) land, removing such acreage permanently from the speculative market.
  • Housing reform. Expanding the supply of permanently affordable homes.
  • Place-based development. Place making in neighborhoods, villages, cities, and towns, promoting not only the development of affordable housing, but also the provision of other facilities, activities, and services that enhance the quality of life in a place of residence.
  • Community engagement. Engaging place-based communities in planning and guiding the trajectory of their own development.
  • Democratic governance. Involving the people who live on and around its lands in guiding and governing the organization itself.

How Does the Community Exercise its Voice in a Community Land Trust?

As a community land trust, Homestead is distinguished from housing entities that otherwise provide for permanent affordability of homes in our commitment to democratic and community-based governance through our membership. A community land trust by definition has a Board structure that includes representation of lessee members (our own homeowners), as well as representatives of the communities in the area we serve. Our bylaws call for membership participation in governance and ascribe meaningful decision-making authority to members. These are demonstrations of Homestead’s commitment to community ownership and accountability.

What Was Homestead Founded to Do?

Homestead Community Land Trust's articles of incorporation establish our purposes for benefiting low- and moderate-income people through housing and development of land. Among our first four purposes are

  1. acquiring, improving and preserving housing for low and moderate income people,
  2. leasing or selling homes through our shared equity model,
  3. acquiring and developing land in ways that support the development and improvement of low- and moderate-income neighborhoods and communities, and
  4. supporting and developing community-based, democratically controlled organizations that will improve housing, land, and other activities.

How Does Homestead Keep Homes Permanently Affordable?

Public and private investments close the gap between what homes cost to build or acquire and what modest people can afford. We use voluntary agreements to restrict resale prices after initial purchase to perpetuate affordability.  Putting homes or land in the land trust without public investment does not necessarily make a property affordable or keep it affordable. It is the initial investment that creates the affordable price, and the owners’ agreement to resale restrictions that keeps the home permanently affordable.

Why Do We Call Community Land Trust Homeownership a "Pay It Forward" Model?

Public investment puts the price of the home within reach. And then our homeowners themselves keep homes permanently affordable by agreeing to "pay it forward" when they go to resell their home. They can own their home as long as they wish, but when they sell, they do so at a formula price that keeps the home affordable to the next modest income person. This pooling and sharing of resources has created over 200 homes that are affordable to low-income homebuyers and will remain affordable permanently as an asset to our community.

What do People Mean When They Call CLT Homeownership a "One and Done" Model?

“One and Done” refers to the fact that once the public investment is made to create the affordability of the home at the first sale, it is usually unnecessary to increase or add to that investment at subsequent sales. If the initial price of the home is truly affordable to start with and subject to a formula resale price at all subsequent sales, the home stays affordable in perpetuity. Additional public investments can then be used to create additional homes, not to replace homes that may have been affordable at the first sale but were sold at market-rate to the next buyer.

Why is CLT Homeownership an Important Part of a City's Housing Strategy?

Many of our homeowners pay less per month for their mortgage than they would pay in market rate rent (the ultimate rent control). And unlike rent payments, a mortgage payment accrues equity and ownership increases housing stability. The typical net worth of a renter is $2,000 compared with $160,000 of a homeowner (US.gov). Without equity, people are rental dependent, and subject to displacement. The equity that people build in just five years of ownership can be the path to other opportunities. Cities that care about giving residents a path to self-sufficiency as well as affordable housing can use community land trust ownership programs to achieve both objectives while making efficient use of public funds. Creating a growing inventory of permanently affordable homes benefits the community by creating ownership opportunities for households shut out of the market and by reducing displacement.

Why is Affordable Homeownership an Important Part of an Equitable Housing Strategy?

A root cause of racial and ethnic disparities of homeownership is structural racism embedded in federal, state, regional and municipal housing policies. The larger system of overt racial discrimination in housing -- discriminatory FHA insurance policies, bank redlining, and restrictive neighborhood covenants - may be a thing of the past. But its legacy lives on – homeownership rates of African Americans are 41.5% compared with 72.1% for whites (U.S Census 1st Qtr 2016). Further the net worth of whites is 13 times that of African Americans (Pew Research) because the principle means of wealth creation in our society is homeownership. Community land trust homeownership puts homeownership within reach of those who have been historically shut out of ownership.

How Do I Become A Member of Homestead?

Information on how to become a member of Homestead is available here on our website. Membership is only $25 OR 3 hours of volunteer service per year completed before January. We hold our annual meeting in January and want to verify members eligible to vote prior to the meeting. Non-homeowner membership is renewed every year.

What Can I Do to Support Homestead?

For additional information about how to support Homestead financially, as a volunteer or through advocacy work, please contact Executive Director Kathleen Hosfeld, kathleen@homesteadclt.org, 206-323-1227 Ext. 113