The Land Trust Model.
TTH, Inc. is a private, nonprofit 5O1(c)(3) corporation created to hold land and to preserve affordable housing for Lawrence residents with low and moderate incomes. TTH is a membership nonprofit. Each year the membership votes for its Board of Directors and this Board includes leaseholders and representatives of the neighborhoods that are served.
TTH has adopted the classic community land trust (CLT) model. The “classic” CLT – as that model has been described by The Institute for Community Economics over the last 30 years and as it has been defined in federal statute since 1992 – has ten distinctive features:
1. Nonprofit, Tax-Exempt Organization
2. Dual Ownership
3. Leased Land
4. Perpetual Affordability
5. Perpetual Responsibility
8. Tripartite Government
9. Expansionist Acquisition
10. Flexible Development
1. Nonprofit, Tax-Exempt Organization:
A Community Land Trust is an independent, not-for-profit corporation, legally chartered by its home state. Most CLTs target activities and resources charitably, such as providing housing for low-income people or eliminating neighborhood blight, which qualifies them for 501(c)(3) tax-exempt designation from the IRS.
2. Dual Ownership:
A nonprofit corporation (the CLT) acquires parcels of land throughout a targeted geographic area to permanently retain ownership of these parcels. Any building already located on the land or later constructed on the land is sold to an individual homeowner, a cooperative housing corporation, a nonprofit developer of rental housing, or some other nonprofit, governmental, or for-profit entity.
3. Leased Land:
Although the CLT plans never to resell its land, it grants homeowners exclusive rights to the building through a long-term ground lease. This two-party contract between the land owner (the CLT) and a building’s owner protects the lessee’s (the building owner) interests in security, privacy, legacy, and equity, as well as enforcing the lessor’s (i.e., the CLTs) interests in preserving the appropriate use, the structural integrity, and the continuing affordability of any buildings located upon its land.
4. Perpetual Affordability:
The CLT retains an option to repurchase any buildings on its land should the building owners choose to sell. The resale price is set by a formula, contained in the ground lease, designed to give present low-income homeowners a fair return on their investment, while giving future low-income homebuyers affordable housing opportunities. By design and by intent, the CLT is committed to preserving the affordability of housing (and other structures)—one owner after another, one generation after another, in perpetuity.
5. Perpetual Responsibility:
The CLT does not disappear once a building is sold. As owner of the land under multiple buildings and as owner of an option to repurchase those buildings, the CLT has a continuing interest in what happens to the buildings and to those who occupy them. Should property owners allow their buildings to become a hazard, the ground lease gives the CLT the right to step in and to force repairs. Should these property owners default on their mortgages, the ground lease gives the CLT the right to step in and cure the default, forestalling foreclosure. The CLT remains a party to the deal, safeguarding the structural integrity of the building and the residential security of the occupants.
The CLT operates within the physical boundaries of a targeted locality. It is guided by—and accountable to—the people who call that place their home. Any adult who resides on the CLTs land and any adult who lives within the geographic area deemed by the CLT to be its “community” can become a voting member of the CLT.
Two-thirds of a CLT’s board of directors are nominated by, elected by and composed of people who either live on the CLT’s land or people who reside within the CLT’s targeted “community” but do not live on the CLT’s land.
8. Tripartite Government:
The board of directors of the “classic” CLT is composed of three parts, each containing an equal number of seats. One-third of the board represents the interests of people who lease land from the CLT (“leaseholder representatives”). One-third represents the interests of residents from the surrounding community who do not lease CLT land (“general representative”). One-third includes public officials, local funders, nonprofit providers of housing or social services, and other individuals presumed to speak for the general public (“public interest representative”). Control of the CLTs board is diffused and balanced to ensure that all interests are heard but that no interest is predominant.
9. Expansionist Acquisition:
CLTs are not focused on a single project. They are committed to an active acquisition and development program, aimed at expanding their holdings of land and increasing the supply of affordable housing under their stewardship. Most CLTs do their own development with their own staff. Others leave development to nonprofit or governmental partners, focusing their own efforts on assembling parcels of land and preserving the affordability of the housing upon it.
10. Flexible Development:
The CLT is a community development tool of great flexibility, accommodating a variety of land uses and a diversity of building tenures and types. CLTs around the country construct (or acquire, rehabilitate, and resell) housing of many kinds: single-family homes, duplexes, condos, coops, SROs, multi-unit apartment buildings, and mobile home parks. CLTs create facilities for neighborhood businesses, nonprofit organizations, and social service agencies. CLTs provide sites for community gardens and vest-pocket parks. Land is the common ingredient, linking them all.