The Community Land Trust (CLT model was developed by the Institute for Community Economics (ICE) in the 1960s. Since that time, more than 120 CLTs have been established in the U.S. with assistance from ICE. The 1992 Federal Housing and Community Development Act defined the CLT and provided specifically for funding and technical assistance through HUD. With this support, ICE is currently assisting a growing number of CLT start-ups, including Yellow Springs Home, Inc.
In brief, Community Land Trusts are community-based membership organizations whose missions include permanent stewardship of land for community benefit and perpetual preservation of the affordability of housing on that land. CLTs make it possible for lower income people to own homes on land that is leased from the CLT through long-term (typically, 99-year) renewable ground leases. The lessee leases the land but owns and holds the deed to his or her home. One way to understand this concept is to think about condominiums. Residents buy and own the condominium, but own neither the building nor the land on which it is located.
In recent years, local municipalities have recognized the usefulness of CLTs
in meeting escalating housing needs. Some CLTs have been established with
strong initiative and support from local governments. A number of
municipalities have allocated Community Development Block Grants and HOME
funds as well as other available resources to CLT programs. Some have
allocated city-owned land. State housing financing agencies are increasingly
interested in making financing available for housing on CLT land, and
several state legislatures have appropriated special funds to finance
acquisitions by land trusts.
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The ground lease is the legally binding agreement that gives the
lessee/homeowner the right to use the land. It describes in full the rights
and responsibilities of the lessee and the CLT, as well as the restrictions
that govern the relationship. The lease is designed to balance the interests
of the lessee as a home owner with the long-term interests of the CLT and
the community in which it is located. There are a number of critical
agreements that are defined by the ground lease. These include:
Each CLT designs its own resale formula in an effort to strike a balance of allowing a fair return for the seller of a home and the goal of limiting resale prices to a level that will ensure continued affordability. There are a number of formulas used by CLTs to determine the resale price and the amount of appreciation that is allowed to the CLT lessee selling his/her home. Home Inc. has decided to use the most commonly used resale formula, the appraisal-based formula. Using this method, the maximum resale price is established by allowing a homeowner to recover the original purchase price of the house plus 25% of the accrued market value at the time of the resale. It works like this: