Community Land Trusts

A Community Land Trust (CLT) varies sharply from an organization like the Door County Land Trust (DCLT), which is so familiar to county residents. Rather than focusing on preserving habitats and open spaces for future generations like the DCLT, a community land trust focuses on preserving land in communities for specific uses in order to benefit the community as a whole.

Developed in the late 1960s by the Institute for Community Economics (ICE), the CLT model has been adopted by communities across the country (Madison, for example, boasts a very successful CLT). As ICE explains it, “The community land trust model is based on the principle that land is a finite resource that should be held in trust for the community of people who occupy and use it. This community has both a right and an obligation to allocate land use rights fairly to local individuals and groups, and to do so in a way that promotes the long-term interests of the community as a whole.”

In a community land trust, the land is owned by the trust, which oversees the marketing, the selections of occupants, and assisting potential and active occupants — wherever possible — with arranging affordable financing. And while CLTs are typically nonprofit and normally exempt from federal taxes, the land remains on the municipal tax rolls, with property tax becoming a shared cost of the occupants.

The trust is governed by a board of directors, typically made up of one-third land trust members, one-third occupants of the land trust property, and one-third representatives of the “larger public interest.”

The key element of CLTs is the ground lease (typically 99 years in length and fully inheritable), which defines certain restrictions and helps ensure that structures on the land remain perpetually attainable within the local housing market.

For example, a CLT could purchase a five-acre parcel of undeveloped land within a municipality and then work with a developer to erect 10 modest single-family homes. It then markets these homes to potential owners in order to address a perceived need within that municipality and works with banks and other lending institutions to make ownership a reality for appropriate candidates. So if the perceived need is families with school-age children, the CLT restricts the sale of the homes to that target group.

The new occupant, by virtue of the signed ground lease, has full ownership of the home (typically a 99-year, fully inheritable lease) but they do not own any of the land. Normally, the lease requires full-time occupancy and forbids subletting. Occupant/owners are allowed to make improvements to the home as long as they receive approval from the trust. Most importantly, though, the potential capital gains that can be realized by the owner/occupant if they choose to sell the home (with the approval and assistance of the CLT) are capped — normally at 15 percent. And this is the key that ensures the homes making up the CLT are perpetually attainable within the marketplace.

And while the example above demonstrates a CLT’s effectiveness for single family homes, the CLT model has been used by communities across the country for everything from apartments to not-for-profit office space, and from condominiums to business incubators; always keeping — regardless of the use — the spaces monetarily attainable within the municipality’s housing market.