community land trusts
DESCRIPTION
Community Land Trusts. and the Future of Housing Finance. Community Land Trusts and the Future of Housing Finance. Community Land Trusts, 2008. Burlington Associates in Community Development. Community Land Trusts and the Future of Housing Finance. Number of CLTs in the US. - PowerPoint PPT PresentationTRANSCRIPT
CommunityCommunity Land TrustsCommunityCommunity Land Trusts
and the Future of Housing Financeand the Future of Housing Finance
Community Land Trusts, 2008Community Land Trusts, 2008
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Number of CLTs in the USNumber of CLTs in the US
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
CLT Organizational StructureCLT Organizational Structure
Typically, CLTs are nonprofit, 501(c)(3) community-based organizations
Variations include CLTs structured as subsidiaries of established nonprofit community organizations or programs operated within the corporate structure and governance of these organizations
The mission, charter and business plan for CLTs are focused on long-term operations and sustainability
Typically, CLTs are nonprofit, 501(c)(3) community-based organizations
Variations include CLTs structured as subsidiaries of established nonprofit community organizations or programs operated within the corporate structure and governance of these organizations
The mission, charter and business plan for CLTs are focused on long-term operations and sustainability
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
CLT Governance StructureCLT Governance Structure
LeaseholdersLeaseholders CommunityMembersCommunityMembers
Public Interest RepresentativesPublic Interest Representatives
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
CLT Board of DirectorsCLT Board of Directors
CLT Mission and OperationsCLT Mission and Operations
CLTs acquire land through donation or purchase
removing this land from speculative market
placing long-term control of this land in the hands of the local community
allowing community to control long-term use, disposition and affordability of buildings located on CLT-owned land
CLTs acquire land through donation or purchase
removing this land from speculative market
placing long-term control of this land in the hands of the local community
allowing community to control long-term use, disposition and affordability of buildings located on CLT-owned land
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
HOMEHOME LANDLAND
CLT Separates Ownership of Land From HomeCLT Separates Ownership of Land From HomeCLT retains ownership of landCLT retains ownership of land
Homebuyer buys - and owns - her homeHomebuyer buys - and owns - her homeCLT leases land to homeownerCLT leases land to homeowner
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
CLT Ground LeaseCLT Ground Lease99-year, inheritable and renewable
Essential functions:
Conveys to homeowner exclusive, durable, enforceable leasehold interest in land
Prescribes mutual accountability between CLT and homeowner
Stipulates restrictions on homeowner’s use, occupancy and transfer of leasehold estate
99-year, inheritable and renewable
Essential functions:
Conveys to homeowner exclusive, durable, enforceable leasehold interest in land
Prescribes mutual accountability between CLT and homeowner
Stipulates restrictions on homeowner’s use, occupancy and transfer of leasehold estate
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Major Contribution #1: Permanent Housing Affordability
Major Contribution #1: Permanent Housing Affordability
Subsidy is structured neither as grant nor as a subordinate “soft second” debt to homebuyer
Subsidy is used to write down purchase price of home to limited-income homebuyer
Subsidy is locked into the home by limiting the price for which homeowner can sell her home
through resale formula in ground lease
Subsidy is structured neither as grant nor as a subordinate “soft second” debt to homebuyer
Subsidy is used to write down purchase price of home to limited-income homebuyer
Subsidy is locked into the home by limiting the price for which homeowner can sell her home
through resale formula in ground lease
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
$25,000$25,000
$50,000$50,000
Growing Affordability GapsGrowing Affordability Gaps$$$$
TimeTime
Market Price$200,000
Market Price$200,000
Affordable Price$175,000
Affordable Price$175,000
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
require growing levels of subsidy require growing levels of subsidy
Market PriceMarket Price
Affordable PriceAffordable Price
Subsidy RecaptureSubsidy Recapture
$$$$
TimeTime
Affordable Price$175,000
Affordable Price$175,000
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
still leaves growing gapsstill leaves growing gaps
$50,000$50,000
$50,000$50,000
$40,000$40,000
$90,000$90,000
$90,000$90,000
New subsidy requiredfor each buyerNew subsidy requiredfor each buyer
Market PriceMarket Price
Affordable PriceAffordable Price
Subsidy RetentionSubsidy Retention
$$$$
TimeTime
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
creates permanently affordable housingcreates permanently affordable housing
$50,000$50,000
Resale priceremains affordablewithout any new subsidy
Resale priceremains affordablewithout any new subsidy
Market PriceMarket Price
Affordable PriceAffordable Price
CLT Resale Formula: ExampleCLT Resale Formula: Example
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Original appraised value (land & improvements) $200,000
Minus affordability subsidy ($50,000)
Original CLT purchase price $150,000
CLT homeowner’s share of appreciation 25%
Appraised value (land & improvements) at resale $300,000
Increase in value during ownership ($300,000 - $200,000) $100,000
Seller’s share of appreciation ($100,000 x 25%) $25,000
Resale price to next CLT homebuyer ($150,000 + $25,000) $175,000
Outcomes: CLT HomeownershipOutcomes: CLT Homeownership
Limited-income households are able to purchase homes and build equity
Affordability is assured for subsequent homebuyers - without additional subsidy
Public/private subsidy is protected and leveraged
Favorable loan-to-value ratios for mortgage lenders, as CLT affordability subsidy is structured as equity
Limited-income households are able to purchase homes and build equity
Affordability is assured for subsequent homebuyers - without additional subsidy
Public/private subsidy is protected and leveraged
Favorable loan-to-value ratios for mortgage lenders, as CLT affordability subsidy is structured as equity
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Major Contribution #2: Backstopping CLT Homeowners
Major Contribution #2: Backstopping CLT Homeowners
Unlike typical nonprofit homeownership efforts, the work of CLTs work is not finished when homeowner moves in
Ground lease contractually obligates a long-term, mutually-accountable relationship between CLTs and their homeowners
CLTs commit to providing ongoing backstopping assistance to their homeowners
Unlike typical nonprofit homeownership efforts, the work of CLTs work is not finished when homeowner moves in
Ground lease contractually obligates a long-term, mutually-accountable relationship between CLTs and their homeowners
CLTs commit to providing ongoing backstopping assistance to their homeowners
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Backstopping CLT HomeownersBackstopping CLT Homeowners
Monitor and enforce lease compliance
Monitor and support homeowner progress and success
approve all mortgage financing
collect ground lease fees
reserve right to step in and cure mortgage default on part of borrower
Provide additional support and assistance
Monitor and enforce lease compliance
Monitor and support homeowner progress and success
approve all mortgage financing
collect ground lease fees
reserve right to step in and cure mortgage default on part of borrower
Provide additional support and assistance
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Outcomes: CLT Backstopping Outcomes: CLT Backstopping
There has been literally no fallout from the subprime crisis among CLT portfolios
According to Mortgage Bankers Association, 2008 nationwide foreclosure rate was 3.3%
Nationwide CLT survey showed that 2008 foreclosure rate among CLT homeowners was 0.52%
There has been literally no fallout from the subprime crisis among CLT portfolios
According to Mortgage Bankers Association, 2008 nationwide foreclosure rate was 3.3%
Nationwide CLT survey showed that 2008 foreclosure rate among CLT homeowners was 0.52%
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
Benefits of CLT Homeownership for Mortgage Lenders
Benefits of CLT Homeownership for Mortgage Lenders
Standardized ground leases and other documentation among CLTs
Favorable loan-to-value ratios
Backstopping support by CLTs for CLT homeowner/mortgagee dramatically decreases likelihood of foreclosure
Standardized ground leases and other documentation among CLTs
Favorable loan-to-value ratios
Backstopping support by CLTs for CLT homeowner/mortgagee dramatically decreases likelihood of foreclosure
Community Land Trusts and the Future of Housing FinanceCommunity Land Trusts and the Future of Housing Finance
Burlington Associates in Community DevelopmentBurlington Associates in Community Development
CommunityCommunity Land TrustsCommunityCommunity Land Trusts
and the Future of Housing Financeand the Future of Housing Finance
Michael BrownBurlington Associateswww.burlingtonassociates.com