April 14, 2016
Bernie Sanders is a housing affordability hero to a group of people in Burlington, VT. As Mayor of Burlington, Bernie was able to get the city to seed the founding of the Burlington Community Land Trust (BCLT) with a $220,000 grant. Sanders was at first skeptical about the limited equity concept the BCLT promoted. But he came to see the Community Land Trust (CLT) as both a means of achieving permanent affordability as well as a new model of land tenure for America. Now he admits that helping to found the BCLT was “the best thing I ever did as Mayor.”
Burlington Community Land Trust has since expanded into three counties around Burlington (Chittenden, Grand Isle and Franklin) and changed its name after its merger with an affordable rental non-profit in 2006 . It’s now the Champlain Housing Trust. With over $309 million in assets, CHT is the largest CLT in the nation. Its 2015 Annual Report shows that it owned 389 buildings (2227 units) of affordable rental housing, 33 commercial/industrial buildings and the land under 570 single family shared-equity homes. And it’s adding more units every year. This year, they are in process of developing another 160 permanently affordable units in a larger 700 unit development on the Burlington waterfront. In all, they control an impressive 7.6% of the Burlington area’s total housing stock.
How it works:
Community Land Trusts are nonprofit organizations, with a board composed of representatives of the public, members of professions with technical expertise, and the tenants of the CLT. The CLT obtains land through a number of means (purchase, donations, foreclosures, etc.) and removes it from the private, commodity speculative market. If there are not already buildings on the land, the CLT may build and either lease or sell the buildings with restrictive covenants. The CLT retains ownership of the land and sets a formula for shared equity as the properties appreciate. This formula is applied when the home on the property is sold.
As explained by Daniel Fireside writing in Dollars & Sense: When a normal home is offered for sale on the usual terms, it does virtually nothing to make the overall housing market more affordable. A land trust home, by contrast, creates a permanently affordable property because the land it sits on is removed from the speculative market. Most of the appreciation is retained by the housing trust (and by extension, the community), rather than the individual. In this way the trust model creates a bridge between purely public and purely private property.
This limited equity model still allows a reasonable return. In Burlington, the 233 homeowners who have resold a CHT home have realized, on average, a 31% annualized IRR [internal rate of return]! The model also allows the CLT to intercede in the case of a foreclosure. A study by the Lincoln Institute of Land Policy showed that, as of 2010, homeowners within a land trust were 10 times less likely to default on their homes than their private-market counterparts.
A New Model of Land Tenure
The original impetus behind the CLT movement was to create a new institution to keep housing permanently affordable. The first people I ever met living in a CLT in the 1980s were NOT low-income, rather middle-income professionals who saw the CLT as a better way to live while also making a statement that we need a new model of land tenure. I believe the CLT is the best tool for transforming our housing system. By taking the land under housing off the private, commodity, speculative market, it helps to change the concept of housing from a commodity to be bought and sold for a profit. Instead it encourages us to see it as a social good that everyone needs and deserves. Involvement in the CLT also gives both renters and homeowners a say in how properties are managed. And it gives them a sense of community with all members of the CLT.
CLTs can work in both hot and cold markets. John Davis, former Chair of the Board of the Institute for Community Economics¹ and now a CLT consultant, says in an interview he did for Democracy Collaborative with Steve Dubb in 2011:
Most housing and community development programs in the United States have been designed as if there is no business cycle. What community land trusts are particularly good at is preventing the loss of homes, homeowners, and public investment at both the top and the bottom of the business cycle. We run counter to the threats and dangers that a fluctuating economy imposes on low- and moderate-income people.
Proud Ground – The Portland Region’s Community Land Trust
Proud Ground (a merger of Portland Community Land Trust and Clackamas Community Land Trust). It currently focuses on helping a limited subset of moderate-income people get into homeownership. (See Oregonian OpEd: One Way to Turn Moderate Income Portlanders into Homeowners by PG’s Diane Linn and Roger Henshaw). It has partnered with Bank of America to do an important study, Solving the Affordable Homeownership Gap that gives data about an out-of control housing market that is has largely been taken over by an investor class. To me, this study helps to demonstrate how unsustainable the current housing system is and why we need more systemic solutions than simply getting a few more people into such an anxiety-inducing system. Nonetheless, Proud Ground has many ways to get involved in making housing more permanently affordable on its website.
Achieving Housing Affordability for the Long-Term
To achieve real housing affordability for all in the Portland region, we will need to move beyond promoting the Community Land Trust model solely for the moderate-income and solely for homeownership. We will need to take a cue from Champlain Housing Trust and push Proud Ground to serve both rental and owner properties and to gain far more foothold in the Portland area market. It may be a long-term process, but we can take heart from the progress that Champlain Housing Trust has made in Burlington since 1984–nearly 8% of all housing. Various levels of local, regional and state government and private foundations, institutions and individuals owning property will need to partner with Community Land Trusts to change our housing model.
Ultimately, changing our housing model won’t just happen in Burlington or in Portland. Although I do believe strongly that we all need to work for change from the bottom up, it will help greatly to have a supportive federal government to promote and achieve this concept nationwide.
Put a Bern on Housing Affordability²
There is already a National Community Land Trust Network (now Grounded Solutions Network) that has been bringing leaders from CLTs across the nation together to discuss issues and best practices in CLTs for many years. They also push for policy change. Intersections 2016 claims to be “the only national conference dedicated to permanently affordable housing and the creation and preservation of just, equitable and inclusive communities across the country and around the globe.” The conference is expected to draw more than 350 professionals to Park City, Utah, September 26-29, 2016.
Grounded Solutions Network is likely our best chance to help us understand and then achieve change that needs to happen at the federal level. Meanwhile, let Bernie know you want him to repeat “the best thing I ever did as Mayor” on a larger scale–for ALL OF US. Let’s work to put a Bern on housing affordability.
¹Founded in 1979, the Institute for Community Economics (ICE) pioneered the modern community land trust (CLT) model, Today ICE is a federally certified Community Development Financial Institution (CDFI) offering loans and more to create community land trusts. I worked for ICE in the 1990s.
²Most Portlanders will likely appreciate the take-off in my title on Portlandia’s “Put a bird on it.” A national audience may not.
Many thanks to Chris Donnelly of Champlain Housing Trust for spending nearly an hour on the phone with me answering my questions.
Another article worth reading: How Bernie Sanders Made Burlington Affordable by Jake Blumbart in Slate Jan. 19, 2016.
So, if Portland already has Proud Ground, what is the ask here? Could they be doing a better job? If so, what limitations are preventing them from doing so?
Regarding Portland’s Proud Ground, the ask is that they focus on rental housing too, not just homeownership and that they be more forthright that the community land trust is a new model for land tenure in the US–not just a way for a few more moderate income people to get into a housing system that is taking us over a cliff. Co-written with a Bank of America VP, there was nothing in Proud Ground Executive Director Diane Linn’s’s recent OpEd in the Oregonian to even begin to suggest that the CLT is a means towards deep and systemic change in our housing system and needs to be embraced by the next generation.
The real ASK here is to get Bernie Sanders to talk about this while he has the national stage. He could do an immense amount to boost the community land trust movement right now–and to support it in national housing policy.
From my CNU Pro-Urb colleague, Prof. Peter Dreier
Today’s [May 8] Wall Street Journal reports on a new Furman Center (NYU) study showing the growing rent-income squeeze among middle class renters in cities across the country. In Boston, for example, median asking rents have increased at an annual rate of 13.2% since 2010, far outstripping the 2.4% average annual increase in income. Even in Atlanta, historically one of the most affordable cities for middle-class families, a rapid rise in rents has taken its toll on those families. But it is absurd to say, as the WSJ story does, that: “Rising rents in cities across the nation are hurting the poorest residents, but those who are higher on the income ladder might be bearing the brunt of the pain.” The reality is that the current housing crisis is a disaster for both the poor AND the middle class. Rather than pit their pain against each other, we need a united movement and policy agenda to address the housing crisis. This should include:
· more and stronger local rent control laws,
· more local inclusionary zoning laws (that require developers to incorporate low and middle-income housing in otherwise market-rate developments),
· more federal subsidies for mixed-income “social” housing (what Americans call “public” housing, but not just reserved for the very poor) that is permanently affordable and outside the speculative market (limited-equity co-ops, community land trusts, etc),
· more federal housing vouchers to help families pay the rent, and
· adding a housing supplement (varied by regional housing costs) to the popular Earned Income Tax Credit.
Unfortunately, none of the presidential candidates have spoken much, on the campaign trail, about the housing crisis, even though housing is the best budget item for almost all American families. This is particularly surprising with regard to Bernie Sanders, whose housing policies when he was mayor of Burlington, VT were among the most progressive and effective in the nation.
[See this link to Peter’s fine article in The Nation: https://www.google.com/url?hl=en&q=http://www.thenation.com/article/bernies-burlington-city-sustainable-future/&source=gmail&ust=1463680412504000&usg=AFQjCNFWOW83HKj3b2URiYvhCIlJHTjK_g%5D
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