Have you ever heard of a Community Land Trust?
Virginia now has two CLTs operating in the state: the Thomas Jefferson Community Land Trust, which serves the Greater Charlottesville MSA (City of Charlottesville and the Counties of Albemarle, Fluvanna, Greene, Louisa, and Nelson) and now the Maggie Walker Community Land Trust in the City of Richmond.
The Maggie Walker CLT was created in an effort to help address the issue of tax delinquent properties in the City of Richmond by converting these properties into affordable homes for members of the community to purchase.
Maggie Walker CLT Board Chair and Housing Virginia Board member Laura Lafayette commented in the Richmond Times-Dispatch this past July: “We see the CLT as a mitigating force against gentrification, a tool to preserve mixed-income homeownership opportunities, and we’d also like to see the CLT acquire properties in high-opportunity neighborhoods.”
A Community Land Trust is an innovative strategy to preserve housing affordability of for-sale homes permanently. The Trust (a non-profit organization run by a Board of Directors) owns the land and enters a 99-year ground lease agreement with the home purchaser, who owns the house and any improvements on the land.
“We make housing affordable to low- and moderate-income families at less than 80 percent of the area median income by removing the cost of the land from the cost equation,” Thomas Jefferson CLT Board Chair Frazier Bell was quoted as saying in Cville Tomorrow last month. Each CLT has its own qualifying income thresholds for home-buyers participating in the program to best serve the region in which it operates.
When the homeowner is ready to sell their home to another income-qualified buyer, they sell the house (and any other improvements) while the land remains in ownership of the CLT.
One common misconception about CLTs is that the homeowner cannot build equity with an arrangement where they do not own the land. Both the Maggie Walker CLT and the Thomas Jefferson CLT have resale formulas in place that allow the homeowner to retain a portion of equity resulting from an increase in value combined with all of the equity gained through the repayment of loan principal. The formula balances the goal of contributing to wealth accumulation by the homeowner with the goal of keeping the home affordable to future buyers.
To learn more about Community Land Trusts, visit the Thomas Jefferson Community Land Trust website and resources, or take a look at this opinion/commentary piece from Oct. 9th in The Daily Progress.