A counterweight to foreclosure crisis: community land trusts?

As home foreclosures put a drag on the US economy, 250 community land trusts across the US use one-time taxpayer subsidies to help low-income homebuyers and stabilize communities.

|
Mary Claire Carroll/The Champlain Housing Trust
Bob and Lynne Robbins of Jericho, Vt., credit Champlain Housing Trust with helping them remain homeowners.

Bob and Lynne Robbins of Jericho, Vt., have an unusual perspective on the foreclosure crisis claiming homes nationwide. It might have claimed theirs, too, but for the efforts of a program here that is seen either as an innovative solution to affordable housing or one short step away from socialism.

The Champlain Housing Trust enabled the Rob­bin­ses to find a house they could afford, to secure a loan, and to survive the recession – without missing a single mortgage payment.

"I can't imagine the last few years if we hadn't had this place," says Lynne of their 1,100-square-foot ranch-style home.

At a time when foreclosures continue to be a drag on the US economy, the Champlain Housing Trust offers a counterweight. It is the largest and most successful of nearly 250 community land trusts (CLTs) nationwide – ventures that seek to solve the problem of low-income housing by breaking the boom and bust cycles of the free market. Often financed at least in part by public money, CLTs buy land, build houses, and then subsidize the sale of houses to low- and middle-income consumers.

To critics, CLTs unwisely spend public dollars for real estate projects that could go bust. To supporters, they are a success story: The foreclosure rate for CLT homeowners was one-tenth the national average in 2010 and has dropped in the past five years, says the Na­tion­al Community Land Trust Net­work.

"It's about stabilizing communities and building strong local economies," says Jerry Mal­don­ado of the Ford Foun­dation. "When municipal budgets are stretched thin, CLTs give them a bigger, longer-term bang for their buck."

CLTs collect land through purchases, donations, or other means. Their rules then help keep housing costs down.

•Applicants must qualify as low-income.

•The CLT covers down payments for qualifying applicants. Because homeowners must pay that money back when selling the house, it can be offered to the next buyer, so the subsidy is a one-time expense.

•The CLT does not sell the land, lowering the price for the house and providing income for the CLT if the value of the land rises. (The land is leased to the buyer for a nominal monthly fee.)

•The home buyer must secure financing through traditional channels, but CLTs use the land equity to help keep down mortgage calculations.

•Homeowners are allowed to recoup the cost of the house and all capital investments, but 75 percent of any additional profits go to the CLT to be reinvested.

For the Champlain Housing Trust, this has meant housing prices nearly half those of the market rate. The low prices not only increase affordability, but also act as a buffer against a downturn, since prices on the open market need to drop significantly before CLT homes lose value.

In such cases, the CLT – usually run by a board that is one-third residents, one-third public officials, and one-third members of the surrounding community – may ask the lender to restructure the home-owner's mortgage. In extreme cases, the CLT may encourage the owner to sell to prevent a default.

But defaults and foreclosures can happen – sometimes at the expense of the CLT itself. Manos Unidas, a land trust in Philadelphia, collapsed after homeowners defaulted.

This raises a concern for John McClaughry of the Ethan Allen Institute, a free-market public policy organization in Vermont. He worries about how CLTs are run. "The CLT's viability is critically dependent either on homeowners maintaining their payments, or outside money diverted into the trust to keep it going. I have a problem with governments bailing out CLTs with taxpayer dollars." [Editor's note: Context has been added to clarify the quote that appeared in the original version.

But Vermont remains a supporter. Gov. Peter Shumlin last month announced that $1.3 million of a federal block grant would go to the Champlain Housing Trust – along with two other groups – to redevelop property in Shelburne.

Meanwhile, in Atlanta, planners of the $2.8 billion BeltLine redevelopment project have adopted the CLT model. "The questions became: How do you stabilize neighborhoods devastated by foreclosure? And how do you design a program resistant to foreclosure?" says Tony Pickett, director of the Atlanta Land Trust Collaborative. "We needed a program that could work in both the good times and in times when people may be reluctant to buy or not able to qualify for a mortgage."

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to A counterweight to foreclosure crisis: community land trusts?
Read this article in
https://www.csmonitor.com/USA/2012/0307/A-counterweight-to-foreclosure-crisis-community-land-trusts
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe