Legend Homes recently sold the last of 85 homes it built within a subdivision in Portland, Ore., called New Columbia. And because some of those houses are on land owned by the Portland Community Land Trust (PCLT), buyers could purchase them at prices 40 percent below market rate.
The concept behind Community Land Trusts (CLTs) is to create a permanent stock of affordable housing. A trust owns the land under a house and offers buyers 99-year leases. By removing the land cost from the selling price, the house becomes significantly less expensive. The leases also limit what owners can resell their homes for.
There are about 200 CLTs nationwide (versus fewer than 100 a decade ago), including a citywide trust that Chicago's Mayor Richard Daley established in December 2005 to oversee all affordable housing development there. Florida has 30 CLTs, compared to three CLTs two years ago, says Jamie Ross of the Florida Community Land Trust Institute in Tallahassee, which provides technical assistance to trusts in that state. The Institute was instrumental in last year's passage by Florida's legislature of a bill that created incentives for affordable housing, “most of them through CLTs,” Ross says. For example, developers might donate land to CLTs in exchange for expedited permitting. Her group is now working on reforming how homes on CLT-owned land are assessed for property tax.
CLTs are also helping cities reclaim some of their most blighted areas. The Dudley Street Neighborhood Initiative formed a CLT known as Dudley Neighbors in the 1980s to improve what at the time was 1,300 parcels of vacant land in the middle of Roxbury, Mass. The CLT became legendary for its use of eminent domain in the early 1990s to acquire land in the devastated Roxbury, Mass. neighborhood, where over the past 13 years it has built 178 housing units, with 50 more under construction. Last June, it negotiated a favorable deal that lowered leaseholders' annual property taxes to $500. Jason Webb, Dudley Neighbors' director, says his group is talking with Boston officials about applying the Roxbury model citywide.
The North Portland, Ore., dilapidated and crime-ridden Portsmouth neighborhood was transformed by the New Columbia project that HUD funded through its Hope VI program, which is designed to “deconcentrate” poverty by redeveloping sites for mixed-income housing. A dozen of nearly 400 homes within that subdivision are on land owned by PCLT. Allison Handler, its executive director, says PCLT buyers received $55,000 grants, funneled through the city's housing authority, to purchase houses from builders active there, including Legend Homes. Buyers paid $130,000, but builders received $185,000 (a combination of what the buyer paid and the HUD subsidy, a price the builders and developers had reduced from the $225,000 market rate). “It was a complex way to ensure that some homes at New Columbia would remain affordable in perpetuity,” explains Handler.
Jim Chapman, Legend Homes' president, says his company entered this project with the objective of “doing something for the community.” It turned out okay, business-wise, too. “I wish we had 100 more lots right now,” he says.
Learn more about markets featured in this article: Portland, OR.