A community land trust is a community-based, non-profit organization that buys land on behalf of the community and holds it in trust. By taking the land out of the market and capturing the equity gain for the community, the land trust builds community wealth. Most community land trusts lease homes out to residents using a model that enables residents to gain a minority share of the equity gain, but keeping most of the gain in the trust, thereby ensuring affordability for the future members. Land trusts also serve to shield the community from both land speculators and the dislocating effects of gentrification.
The most common type of land trust in the United States comes from the environmental movement, which has used the trust mechanism (often known as “conservation trusts”) to preserve open space. In a conservation trust, the homeowner cedes (either by sale or donation) certain development rights to the trust. A community land trust, which most commonly aims to preserve affordable housing, operates in much the same way — only in this case the restriction concerns a formula that restricts the price for which a seller may sell her home, thereby limiting the accumulation of private equity and preserving affordable housing for the next generation of buyers.
With a community land trust, the buyer receives a 99-year lease with a restricted deed, which requires that the buyer give the trust the option to buy the house back at a price set by a predetermined formula. The formula varies, but typically the seller gets the value of the principal payments and down payment plus 25% of the accumulated equity, while the trust retains the other 75% of the accumulated equity. As a result, the land trust can re-sell the property at a below-market price, keeping the housing affordable and stretching affordable housing dollars farther. For the same reason, a community land trust serves both as an effective barrier to gentrification and as an important mechanism to build wealth in low-income communities. Basic sector statistics are below:
Community Land Trusts: Key Statistics
|Estimated number of community land trusts, 2011||242|
|Housing units, 1991||fewer than 2,000|
|Housing units, 2010||9,543|
|New housing units, 2010||640|
|Total residents in land trusts, 2001||11,947|
|Estimated growth rate, 2002||5.2%|
|Percentage of residents with income less than 50% of area median||82%|
|Percentage of residents who are non-white||31%|