Land Banks & Land Trusts

Land Banks & Land Trusts

Lesson Objectives

• Learners will understand land trusts and land banks and the distinctions between them
• Learners will understand the advantages and disadvantages of both
• Learners will be able to evaluate the extent to which both can be applied to their organizing focus

Community Land Trusts (CLTs)

Community Land Trusts: What Are They?

• Permanently transfers land into a trust for common benefit
• Governed by a community-controlled board:

• Lessees (usually residents of the CLT housing but also sometimes included commercial venders or nonprofit entities operating on CLT land)
• Community members (neighborhood residents and stakeholders within the service area)
• And members-at-large (advisers and consultants)

• New units come into a CLT by:

• Partner with a developer
• Convert existing houses
• Serve as a preservation purchaser

Community Land Trusts: What Are They?

The Need

• Historical:
• Redlining
• White flight
• Blockbusting
• Abandonment of the city by the working class

• Recent/Current:
• Great Recession
• Affordability
• COVID-19 leading to many foreclosures
• COVID-19 leading to unprecedented back rent, causing tenants and landlords to default on their properties

The CLT Ground Lease

• An approximately 20-page lease between the CLT organization and the CLT homeowner that details all the rights and responsibilities of both parties.
• It typically has a term of 99 years and is recorded in the public records.
• It sets forth the restrictions that apply to the CLT program, including:

• Resale restrictions on homes
• The types of improvements the CLT homeowners can make to the home
• Who can inherit the home
• Who pays the property taxes on the home and the land
• The monthly ground lease and stewardship fees

Building Equity: The CLT Resale Formula

1. The CLT resale formula restricts the resale price in order to keep the home affordable for future homeowners
2. Designed to strike a balance between homeowners gaining equity at resale while preserving affordability of homes
3. There are different models that the CLT can choose from

• Dudley Neighbors, Incorporated (DNI) is a CLT created by the Dudley Street Neighborhood Initiative (DSNI)
• Started in the late 1980s
• Dudley residents were able to establish community control over 1,300 parcels of abandoned land known as the “Dudley Triangle”
• The City of Boston adopted the community’s comprehensive development plan and granted the power of eminent domain over much of the privately-owned vacant land

Case Study 1: Dudley Neighbors, Inc (Boston)

Dudley Neighbors Incorporated

Case Study 2: Oakland CLT (Oakland)

• CLT partnered with Hasta Muerte, a coffee shop that was looking to buy the building it was renting
• Utilized a unique grant and loan free funding method of community donations, cash equity, and private offerings
• They took this route because of criticism that a CLT’s dependence on grants and loans from institutions that want to see financial returns can muddy community vision
• Hasta Muerte understands this way of funding is not always sustainable

Paul Chinn / The Chronicle

• Homeowners can apply for a Homestead Exemption
• Homeowners can pass on their property to an heir
• Outstanding financial and human resources support, which resulted in CLTs having a tenth of the national foreclosure rate during the Great Recession
• Providing permanently affordable housing
• Useful in strong (gentrifying), weak (disinvestment) and mixed housing markets

What Are The Benefits of a CLT?

What Are The Tradeoffs?

• CLTs may not have enough capital to make land purchases
• Fundraising can consume a CLT to the point where the community vision is lost
• Balancing community organizing and the role as a developer; “biting the hand that feeds you”
• It can limit the amount of equity a homeowner can build on the leased land

Land Banking

Land Banking 101

• Land Banks are governmental entities or non-profit corporations
• Focused on converting vacant, abandoned, and tax delinquent properties into productive use
• They’re created as public entities by a local ordinance
• Land banking programs can also be developed within existing entities, such as redevelopment authorities, housing associations, or planning departments

Case Study 3: Cook County Land Bank Authority (Chicago)

• CCLB acquires properties that sit vacant, abandoned, and tax-delinquent for years and sells them at below-market rates
• Qualified community-based developers rehab the homes and sell them to homeowners
• Like most land banks, CCLBA removes barriers like back taxes, code violations, old mortgages
• It allows for the redevelopment of blighted areas
• It generates economic opportunities for “mom and pop” developers

Case Study 4: Philadelphia Land Bank (PLB)

• Pushed by fair housing advocates
• Their main objective was to use the land bank to transfer property over to community land trusts within the city
• Established on Jan 13th, 2014 but is slow-moving
• Affordable housing advocates stressed that elections are an opportunity for education and commitment

A woman walks through a Philadelphia neighborhood. (AP Photo/Matt Rourke)

• A land bank can transfer its vacant land and properties to a CLT
• They revitalize foreclosed structures
• Allows for quick improvements to blighted areas
• Land is not given out to the highest bidder. Buyers’ proposals are usually assessed against a rubric of uses relevant to the area and neighborhood
• Useful in weak (disinvested) or mixed markets

What Are the Benefits of a Land Bank?

• Short answer: Yes.
• Long Answer: It’s difficult.
• Different bureaucratic redundancies can cause conflict

• i.e. in Philly, the Land Bank, Public Property, and Philadelphia Redevelopment Authority all having land to sell
• These departments all came into conflict

• City counsel members were reluctant to give up direct control of their vacant land

Can You Use CLTs and Land Banks Together?

Land Banks: What Are The Tradeoffs?

• Erasure of back-taxes through donating properties (exploitation)
• Improper vetting of buyers
• Land flipping
• Abuse of power (see next slide for potential example)

Land Banks: What Are The Tradeoffs?

• Issues:
• Land banks might support developers over the community
• Example:
• Daniel Murray says his home was seized by Detroit’s Land Bank Authority
• The Detroit Land Bank (DLB) stated Murray didn’t live there, but many neighbors signed affidavits that he did
• Critics said that the Detroit land bank’s issues reflect a lack of expertise to manage a large-scale demolition program

Land Banks: Do They Work?

• What are the performance indicators? Ask yourself these questions to determine success of a particular land bank:
• Are the vacant properties being sold, being constructed for moderate- and low-income families?

• Do the properties being built fit within the community vision developed during the inception of the land bank?

CLTs: Do They Work?

• Is the CLT shying away from confrontational organizing?
• Have they stayed true to the community vision outlined during the inception of the CLT?
• Does the community feel ousted or included?
• If the CLT was created as a sole tool, is it creating affordable housing?
• Do CLTs still encompass the “community” aspects within them?
• Does the CLT understand development is not its only purpose?

Can CLTs Build Intergenerational Wealth?

• Short answer: They can.
• Long answer: It’s not nearly enough
• Redlined communities still have lower values, and these areas are where CLTs are likely to pop up

• CLTs don’t change the system

• Suggestions for wealth-building:
• Taxing assets and other forms of income for reparations

• Fixing the biased credit score system
• Enforcing the Fair Housing Act

What do you think? How else can intergenerational wealth be build in communities of color?

Resources

• CLT Community Financing Strategies

• Organizing and the Community Land Trust Model

• Additional Articles on Community Land Trusts and Land Banks