A Community Land Trust (CLT) is a nonprofit, community-based organization designed to make sure that land in a community is used to fill needs determined by that community. In a CLT whose goal is affordable housing, the house is owned by a community member and the land is owned by the CLT and leased to the homeowner.
When the owner is ready to sell the house, it is sold at a set price determined by the guidelines of the CLT. The community member still builds wealth from selling the house, but the guidelines of the CLT keep the cost of housing affordable for the next resident. CLTs can also be used to purchase and create shared spaces such as community gardens, art installations, apartment buildings, etc. For more information on how they work, take a look at this half hour video.
How a CLT Works
The CLT buys land and maintains ownership of it permanently.
A community member buys the house from the CLT. The cost of the house is set by the CLT and is usually below market value, making it affordable.
The land itself is owned by the CLT and leased to the homeowner.
When the community member sells (at a price set by the CLT), they earn a set portion of the increased property value.
The remainder of the profit from the sale of the house is kept by the trust to reinvest in other properties.
Why a CLT Matters
Development of affordable housing for the community
Makes it easier to go from renting to ownership
Helps ensure that properties in a community are meeting the needs of the community.
Helps slow down gentrification
A proven way to build generational wealth
Why is MECCA exploring the idea of a Community Land Trust (CLT)?
MECCA’s mission is to empower and engage residents and businesses across MorningSide, East English Village, and Cornerstone Village with the knowledge, skills, resources, and support to revitalize our communities in a sustainable way for future generations. A Community Land Trust is one possible vehicle toward an important aspect of this mission: affordable, sustainable housing within our three neighborhoods.
If created, the CLT will be a separate organization, different from MECCA. Some of our programs - workforce development training (e.g., home rehab skills), development without displacement, resident empowerment and engagement - could support the efforts of a CLT. The CLT itself will be formed as its own entity, not managed by MECCA but rather run by the CLT board and other community member volunteers.
As residents within the MECCA area, we see ourselves as a catalyst for this conversation. So far, we have hosted talks from experts, hosted public discussions about CLTs, and sent information to every house in our neighborhood about CLTs. Check out our talk with Eric Williams from the Detroit Justice Center about Community Land Trusts! We want to hear from you about whether or not you think a Community Land Trust is a good fit in our neighborhoods!
History of Racial Discrimination as a Barrier to Home Ownership
Home ownership by Black people in Detroit has historically been impeded by redlining practices and housing discrimination together with underlying systemic racist attitudes and policies. Most recently, so-called ‘reverse redlining’ and other predatory practices have resulted in a disproportionate percentage of Black families losing their homes to foreclosure during the 2008 housing crisis.
A 2016 analysis from The Center for Investigative Reporting found that in the Detroit metropolitan area, Black applicants were almost twice as likely to be denied a conventional home purchase loan as white applicants.
Out of the hundreds of complaints received by the Fair Housing Center of Metropolitan Detroit, a nonprofit that investigates discrimination claims in the tri-county area, the number one complaint remains racial discrimination. (Reference: Black flight to suburbs masks lingering segregation in metro Detroit)
In 2007, Black people made up 82% of Detroit’s population and received 75% of all Detroit home loans and 75% of all loan dollars. By 2017, Black people only received 48% of all home loans and just 34% of loan dollars despite still being 79% of the population. (Reference: Whites get half of mortgages in Detroit, nation’s largest majority black city)
This article describes how CLTs can help cities heal from the legacies of segregation and racial disparities in home ownership!
#1 I am a homeowner with three kids and I am looking to build our family’s wealth over generations! How would a CLT impact me and my family?
CLTs are shown to increase occupancy, diversity, and stability in neighborhoods, thereby increasing the desirability of your neighborhood. This can in turn increase your home value.
You will have more diverse neighbors, more occupied homes, and more stable neighborhoods.
CLTs build community in your neighborhoods - which is its own kind of wealth.
#2 I am a current homeowner that wants to invest in my community! Could I put my home into a CLT and how would that work?
Yes! You can sell your home to the CLT through what is called a bargain sale. You would pay for a market appraisal of the property. Then the actual price that is paid by the CLT for the property would be lower than the property’s appraised value. The difference between the sales price and the appraised value can be claimed by the former owner as a charitable contribution to a 501(c)(3) organization i.e. the CLT.
#3 I am someone who has only been able to afford to rent. I see the housing prices in our neighborhoods going up and wonder if I will ever be able to afford a home here. How would a CLT help me?
One of the goals of CLTs is to preserve the affordability of homes in our community by controlling the sale and resale prices of the properties.
Because you are only buying the house, not the land, the barrier to entry is lower.