Community Property Trusts and Co-Ops

Community Property Trusts and Co-Ops

Help community members set up property trusts and co-ops to create and manage their own affordable housing.

Dudley Square Land Trust, Boston. Photo by Cheryl Senter for Next City.

What's the issue?

Many neighborhoods in the early stages of gentrification have vacant or underdeveloped land that could be used for affordable housing  and other community resources. However, vacant land is often bought up by private developers, who leave parcels vacant and wait for land values to rise. Such speculation drives up housing costs without providing benefit to the community. When developers do build, the housing provided is often too expensive for long-term residents. The more ownership low-income communities have over their neighborhoods, the less vulnerable they are to displacement.  Public and private assistance is often needed to increase collective ownership by low-income residents.

How do community land trusts help?

In order to address these problems, cities should support Community land trusts (CLTs) both financially and legislatively. In densely developed, gentrifying areas, every building sale represents an opportunity to create a limited-equity co-op. In areas that are vulnerable but not yet gentrified, community land trusts can build community wealth and build permanently affordable housing. Cities can even legislate a right for tenants to form a cooperative and buy their housing if displacement is imminent.

CLTs can build community wealth and even create permanently affordable housing in gentrifying neighborhoods. Traditionally, CLTs have formed on undeveloped land. The trust raises public and private money to buy land and build housing on it. These houses are then sold to qualifying low-income families, while the trust retains ownership of the land. CLTs have also been used to support urban farming and small business development, which can enrich vulnerable communities.

"Retroactive" CLTs are rarer and more complex. If a land trust is created retroactively in a gentrifying community, it must buy land that has already become expensive, and may be developed. It might have to negotiate with current residents to place their land in community trust in order to stabilize their home values and ensure long-term affordability. However, there are good examples of how CLTs can work in rapidly gentrifying cities. In Washington, D.C., a new bridge park across the Anacostia River promises to bring pressures to one of the few affordable areas remaining in the city. The developers of the bridge are working with the city to establish a land trust that will buy up to $10 million worth of parcels within a mile of the bridge park. Project leaders estimate that they can create 70 community land trust rental units affordable to people making less than half of the area median income. In this case, a large project can be a source of funding for a CLT.

The San Francisco CLT takes a more incremental approach. It formed in 2003 when low-income residents organized around skyrocketing rents and illegal evictions that landlords were perpetrating in order to convert rentals to condos. Since then, the CLT has acquired 14 small apartment buildings. At first it tried to convert each unit to a limited-equity condominium, but this faced legal challenges. The land trust switched to helping tenants form their own limited-equity housing cooperatives, through which they share ownership of the building. The San Francisco CLT retains ownership and maintenance responsibility for the land.

Low-income families living on land trusts participate in the CLT's governance, giving them a hand in community decision-making. These families enjoy stable housing and the opportunity to build limited equity. Meanwhile, since land has been removed from the for-profit market, it remains affordable for generations of residents to come.

"Balancing Affordability and Opportunity: An Evaluation of Affordable Homeownership Programs with Long-Term Affordability Controls Cross-Site Report," The Urban Institute, 2010.

When and where does this policy work best?

This policy will work best if strong community organizations already exist, or if the City is committed to investing in community capacity-building. Areas with a lot of City-owned land are ripe for community property trusts and co-ops. Additionally, this policy is most effective as a a preventative measure before prices increase dramatically and before a large number of long-time residents are displaced.

Works best for neighborhoods in early-stage gentrification

Works best when neighborhoods are/have...

What are some possible problems and how can we address them?

It may be difficult to implement a CLT after property values have begun to escalate, because the nonprofit trust must raise more funds to buy land. Cities must then choose between making a large upfront investment that will ensure long-term affordability for a few properties, or developing new affordable units elsewhere. CLTs may also need technical assistance from City representatives in making complex real estate transactions.