Community Land Trusts: Permanently Affordable Housing

Community land trusts offer a model for affordable housing that's economically sustainable in the long term. As a vision for Globeville/Elyria-Swansea takes shape, time is of the essence in increasingly pricey Denver.
Most affordable housing won't be affordable forever.

Over the decades, requirements for subsidies will be met, charters and deed restrictions will expire and properties will become market-rate housing. In many places, including Denver, it's disappearing at a faster rate than new units are built.

Community land trusts (CLTs) counter this trend by separating ownership of land and housing. The trust owns the land and sells the houses on the dirt, keeping appreciation low with restrictions that allow for truly permanent affordability. There are about 200 CLTs in the U.S.

In Denver, the nonprofit Colorado Community Land Trust (CCLT) has developed single-family homes and townhomes in Lowry since 2004. And 14 more are on the way for Lowry at Boulevard One, the final phase of the former Air Force Base's redevelopment.

"We were created by the Lowry Redevelopment Authority to fulfill their home ownership requirements," explains CCLT Executive Director Jane Harrington. "Over time, we have developed 186 homes."

The units at Solis will be priced from $147,000 to $167,000.The organization has recently moved beyond Lowry with three new homes in the Speer neighborhood and 11 townhomes under construction at the Solis project in Cole. Buyers can make no more than 80 percent area median income (AMI), and include nurses, teachers and "twentysomethings to retirees," says Harrington.

Of CCLT's portfolio, about a third of the units have been resold at least once. Sellers historically have gotten about 25 percent of appreciation; a new model phases it in, escalating from 10 percent in the first year to 20 percent over time.

It's working. In Lowry's Maple Park development, for example, a two-bedroom townhome that sold for $135,000 in 2004 went for $175,699 in 2017. That's less than half of the estimate for a comparable market-rate unit in Lowry. "It's still affordable," says Harrington, noting that the foreclosure rate for CLT housing is negligible.

But 200 permanently affordable homes is a drop in the bucket, especially considering the current demand for affordable housing. "Our average time on market is overnight," says Harrington.

That's complicated by the fact that owners of CLT housing aren't apt to sell in a boom time, she adds. "People have a tendency to stay put. It's hard to move up because of what real-estate prices are."

And these projects need subsidies in the tens of thousands of dollars per unit. "We sell them for less than what it costs to build," says Harrington.

At Solis, about $80,000 in grant money subsidizes each unit, which will be priced at $147,000 to $167,000 when they hit the market in late 2017. (The PAULS Corporation provided the funding in accordance with the city's now-defunct inclusionary housing ordinance to offset the lack of affordable units at Laurel, a 71-unit condominium project in Cherry Creek.)

In CLTs we trust

Often called the first CLT, New Communities of Albany, Georgia, was an outgrowth of the civil rights movement. in the 1960s While it was itself the victim of discriminatory lending practices and folded in the early 1980s, it helped prove the model for such standout CLTs as Champlain Housing Trust in Burlington, Vermont, and Dudley Street Neighborhood Initiative near Boston that are alive and well today.

"Community land trusts, unlike other affordable-housing tools and models and programs, really create permanent affordability," says Tony Pickett, vice president of master site development at Denver's Urban Land Conservancy (ULC).

"We're really decoupling the cost of the land from the cost of the house," adds Pickett, who serves on the board of the Grounded Solutions Network, a national organization that promotes affordable housing. "The cost of the house is reduced from the beginning."

To date, ULC has taken the tenets of a land trust and focused on multi-family rentals, schools and retail and office space on its land. The nonprofit is now exploring the possibilities of a CLT in the Globeville and Elyria-Swansea neighborhoods in north Denver. This would represent its first foray into the more traditional CLT model of homeownership.

If ULC moves forward, the initiative would involve buying existing single-family residences. "We can build units, but we can't build them fast enough," says Pickett. "If we don't go in early to protect affordability, there will be none for the future."

He describes a possible "scattered-site model" where the properties need not be contiguous. "There's a tipping point number [of homes]. Some amount of real estate makes the land trust viable. It's a few hundred homes, not 50." Such an investment would likely occur over a years-long timeline, Pickett adds. "It's not an all-at-once program."

ULC has contracted Burlington Associates of the Vermont city of the same name to evaluate the potential of a CLT in Globeville and Elyria-Swansea.

The author of The Community Land Trust Handbook (1982), John Emmeus Davis, co-founder of Burlington Associates, started working with Burlington's then-mayor, U.S. Senator Bernie Sanders, in the mid-1980s. Sanders wanted to establish a CLT in the city's Old North End neighborhood and contracted Davis to help establish a framework.

"We had an older inner-city neighborhood that was deteriorating," says Davis. Sandwiched between downtown and the University of Vermont campus, the Old North End featured mill housing from the 1800s and "dilapidation, displacement and gentrification" was extreme.

In Burlington's Old North End, Bright Street Housing Co-op includes 40 affordable cooperative homes in three buildings.Davis helped launch Burlington's CLT, now the Champlain Housing Trust, and subsequently worked for the city from 1986 to 1996. Starting with $200,000 in funding and a resale program, the trust snowballed into one of the largest CLTs in the country. By the time Davis left, the CLT expanded from existing single-family homes and duplexes into new condo builds and rental apartments. It now includes about 2,800 units of housing, a notably large number for a city of about 50,000 people.

Even at that scale, it's not a panacea. "We did not solve the housing problem in Chittenden County," says Davis. "What we did do is create a portfolio of permanently affordable housing."

He says that required dedication on the part of Sanders and local leaders who have followed. "We made a commitment," says Davis. "All of the money the government was going to invest was going to go into permanently affordable housing."

Burlington would incentivize developers with density and subsidies, he adds, but the term of affordability would be non-negotiable: forever.

Davis likens losses of affordable housing to a leaky bucket. "People understand water doesn't rise in a leaky bucket," he says. A city will have to constantly build new affordable units if there's no permanence to the affordability.

Case in point: Developers build about 1,200 units of affordable housing in Colorado every year, but 3,000 units come off of deed restrictions and become market-rate housing.

"Everyone at every political level counts the number of units of affordable housing built," says Davis. "They almost never count the number we lose." And the bucket continues to leak.

"Everybody's politically invested in the ribbon-cutting," he adds. "Once you create affordable housing, your job isn't done. Your job is just beginning."

When it comes to CLTs, the politics are less controversial than one might expect. "Even though it was started under the Sanders administration and seen as progressive policy, there's an acceptance of that ethos across the political spectrum," says Davis. "There's a fiscally conservative mentality when you say, 'Buy it once.'"

Challenge and opportunity

Davis points to Sawmill Community Land Trust in Albuquerque, with nearly 100 homes and three apartment buildings on 93 reclaimed industrial acres, and City of Lakes Community Land Trust in Minneapolis as models for Globeville and Elyria-Swansea.

In Denver, Davis says he hopes to deliver a final report with a feasibility assessment of a CLT in Globeville/Elyria-Swansea to ULC in June. "We're still gathering data and interviewing people," he says.

But he's quick to note the biggest factors as time and money. "The pressures are pretty obvious," says Davis. "Denver's got  an enormously strong real-estate market and any neighborhood that's adjacent to downtown is feeling pressure in rents."

He points to the redevelopment of the National Western Complex as a coming catalyst in the area. "It's an extraordinary project," says Davies. "But I don't think they've prioritized the negative externalities of the long-term economic impact on the neighborhood." The influx of jobs, he says, will likely lead to increased displacement.

"Your biggest challenge and great constraint on what you can do is time," says Davis. "You really don't have the leisure to sit around for two years to discuss what the ideal anti-displacement strategy would be. The advantage in Albuquerque and Burlington and even Boston is we were able to spend a year carefully planning the community land trust."

The goal, he says, is to build "an island of affordability that can never be washed away." And the mere presence of a CLT forces landlords in the surrounding market-rate waters to compete in terms of quality and price. "There's a reason why being a slumlord is profitable," he notes.

ULC's Pickett is bullish a CLT could buffer the rising cost of housing in Globeville and Elyria-Swansea. "We feel it's something that could have a big impact in Denver," he says. "This is something we see as a solution for involuntary displacement."

They only have to look to the neighborhood just to the southwest for an example: The majority of units at CCLT's Solis project in Cole will be owned by people who previously resided in the neighborhood.

CCLT's Harrington thinks the CLT model can be leveraged to further benefit in the city, but is encountering familiar barriers. "We're looking for more opportunities," she says. "We would love to expand in the Denver metro region and we've had numerous conversations with people about it. It's really tough because land and construction costs are so high right now."

She sees an opportunity for more funding from the city's new affordable housing fund, projected to raise about $150 million in the next decade. "The longer you keep a unit affordable, the more money you can get," says Harrington. "We have high hopes."

But she's also quick to note that launching a new community land trust is a pricey proposition. "Lowry spent a lot of money creating us, all legal expense," says Harrington. "Our earned income is land-lease payments, plus we get a fee every time a unit is sold. We have to backstop that with grants from foundations and banks."
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Read more articles by Eric Peterson.

Eric is a Denver-based tech writer and guidebook wiz. Contact him here.
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