DJC
T H E DA I LY J O U R N A L O F C O M M E R C E ,
WEDNESDAY
March 28, 2012
www.djcOregon.com
P O R T L A N D, O R E G O N
Reprinted from the Daily Journal of Commerce.
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What are community land trusts?
By: Mike Silvey
Community land trusts are not conservation land trusts,
which are used to preserve sensitive natural areas, farmland, ranchland, water resources and cultural resource
landmarks forever. Rather, a community land trust is used
to develop affordable fee housing on land held in trust by a
nonprofit affordable housing corporation.
By holding title to the land, the CLT removes the cost of
the land from the cost of purchasing a home by families of
modest means – generally 80 percent or less of median
family income for the local metropolitan statistical area
based on family size.
The CLT will ground-lease the land held in trust to the
homeowner on a long-term lease – generally 99 years
(unless shorter limits exist in an individual state) with nominal ground-lease payments. Through this method, homes’
market prices can be reduced by 30 to 40 percent or more,
significantly increasing affordability.
So, if a home on a lot approximately 3,000 square feet
would normally sell for $200,000, a CLT home would sell for
between $140,000 and $120,000 or less. This lets many families finance CLT home purchases with mortgage payments,
which oftentimes are less than their former rent payments,
even when the ground-lease payment is included.
Where are CLTs?
CLTs were first organized in the 1960s, but they did not
start to proliferate across the county until the ’80s and ’90s.
According to the National Community Land Trust Network’s
website, there are 254 CLTs around the United States.
In Oregon, there are nine listed CLTs, and three are in the
Portland-metro area: Sabin Community Development
Corporation, Clackamas Community Land Trust and Proud
Ground, formerly known as Portland Community Land Trust.
Sabin primarily provides houses for rent, whereas CCLT
and Proud Ground provide only homeownership opportunities. All three organizations provide educational housing
programs.
How do CLTs develop homes?
Across the United States, more than 5,000 homes have
been developed using the CLT model, and more and more
CLTs are being formed every year.
Additional homes have been developed through various
federal stimulus programs known as Neighborhood
Stabilization Programs 1, 2 and 3. With those federal
monies, CLTs around the country have been able to purchase relatively new single-family homes from banks that
are pursuing foreclosures. They then upgrade the homes
with energy-efficient features.
Buying existing homes and bringing them into the CLT
model is one way, but many CLTs such as CCLT have constructed new homes with energy-efficient features. In
October 2011, CCLT was given a national award by the
United States Green Building Council for its Leadership in
Energy and Environmental Design platinum-rated development of 12 duplex-style townhomes on 0.73 of an acre in
Oregon City.
Historically, Proud Ground has aligned with development partners in the development of new homes and then
brought them into the CLT model. Through this partnership
method, Proud Ground has been able to provide approximately 145 homes.
CCLT has 48 homes, and it has constructed more than
half. Proud Ground is in the process of developing its first
construction project comprised of 12 townhouse units.
Why use the CLT model?
The CLT model makes homes affordable for generations. No other affordable housing programs do that.
CLTs use different methods of ensuring an affordable
price at resale. Some allow families a share of the market
appreciation; some pay equity to the growth in a fixed or
variable index like consumer prices or area incomes.
All are designed to strike a balance between building
equity appreciation for current homeowners, while protecting affordability for generations to come. Over the last four
decades, the CLT model has proven that its homes will
continue to be affordable.
Mike Silvey is a shareholder at law firm Lane Powell, where he
focuses his practice on representing developers, investors and
businesses in all aspects of commercial real estate, including
purchase transactions, loans for acquisition, development and
refinancing, construction agreements, leasing and land use
approvals. Contact him at 503-778-2195 or at
silveym@lanepowell.com.