Affordable Housing - Notes from Dec 7th 2009 Meeting
The following are notes about Community Land Trusts from Vicki De Boer's presentation at the Dec 7th 2009 public CHI meeting at Mansons Hall.
Enlightened self-interest is a philosophy in ethics which states that persons who act to further the interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest.
June 2008
Community Housing for Small Communities- Hornby Island Conference
3 day event with charge for attendance.
Included meals catered by island caterer who also sponsored the event.
Key speakers:
Sandy Bishop from Lopez Island community Land Trust
Lisa Byers from Opal community Land Trust
Nancy deVaux from San Juan Community Home Trust (rental)
In attendance:
Gabriola Island 3
Denman Island 5
Hornby Island 17 (some as ‘spectators’ as well as paying participants)
Saltspring 3
North Pender 1
Quadra 1
Galiano 1
Satura 1
VIREB (Government Chair Liaison)
Capital Region Senior Manager, Housing Secretariat
Hornby:
ISLA – Island Secure Land Association
All three speakers chose Community Land Trusts as organizational body but each chose different housing models.
1. Individual ownership of homes (oldest CLT)
2. Co op model for ownership of homes (next oldest CLT)
3. Affordable rental homes (newest CLT and experiencing some growing pains) Rental housing takes way more administration than ownership and more $ to keep happening.
Land Trust Options:
Land Trust owns the land and services, builds the homes then sells the homes only to pre qualified buyers and leases the land the homes are on plus charges utilities fee for water and sewer.
This can be single family homes or strata town homes/apartments.
Applicants can put ‘sweat equity’ into the construction of the homes to keep costs down. Also volunteers can assist with the construction on many levels. Homes are sold at cost to construct. They may be sold fully finished or the buyers can do finishing/decorating.
OR
Land Trust owns the land and services and leases plots for occupancy. This model is not recommended as you lose quality control of the homes. If you go this route have ‘Building Restrictions’ included in the Ground Lease for quality control of the over all development.
OR
Exception would be a modular home park set up where the Land Trust sets up the pads and the occupants bring in the homes. Land Trust can set criteria on the age/type of modular or mobile home is acceptable.
How does the Ground Lease work?
The Ground Lease covers maintenance expenses (similar to strata fees), insurance, upkeep of common grounds, administration fees plus debt servicing on the land.
Utilities fee is charges to maintain water system and community septic system and have a contingency fund on hand in case costly repairs are needed.
Owners are responsible for upkeep of the homes and lease land surrounding the homes. There needs to be guidelines set to control the aesthetic integrity of the neighbourhood with a minimum standard set on individual home appearances. In other models additions were prohibited because quality control was not possible.
How do you control resale and keep the homes affordable with the Land Trust model?
The ground lease is tied to consumer price index for resale of the homes. The owner can get back the $ on their investment but can not sell at ‘current market value’. There is a complicated formula to control inflating the prices on resale. Mortgage expenses and improvements have to be taken into account. The objective is to keep the homes affordable forever not just the first time they sell. Buyers have to understand this going in to it and accept the fact that they get their investment back but do not make a profit.
http://www.opalclt.org/
Opal Community Land Trust
http://www.hometrust.org/
San Juan Community Home Trust
http://www.lopezclt.org/
Lopez Community Land Trust
A Community Land Trust (CLT) is a non-profit organization that owns land which it makes available on a long-term basis for a specific community use, such as affordable housing. It is a democratically-controlled entity with open membership and a board of directors comprised of CLT residents, housing industry representatives, and other community interests.
CLTs are distinguished from other housing non-profits by their expressed purpose to obtain land and make it available in perpetuity for affordable housing purposes.
The overriding purpose of the community land trust is to purchase or otherwise obtain land and even existing housing and make these resources available for the development or preservation of housing affordable to the CLT's members.
**Community Land Trusts are very flexible in development choices. They can be set up for individual ownership of homes, co op ownership of homes, affordable rentals where the CLT owns the dwellings or any combination of these models. They can also incorporate cottage industry, agriculture or ecosystem protection in their design.
The CLT may choose to own both the land and the housing upon it and rent it to low-income tenants. Many non-profits also do this but there are no legal restrictions other than those pertaining to their financing that would bind them to retaining housing for the targeted income group after the financing restriction expire.
Obtaining the land:
A CLT can obtain property in several ways. These include: gift of land which could be tax deductible on the part of the donor; partial gift when the owner sells the property at a reduced price; land conveyed by Government; and direct purchase of property. Direct purchase of property may be financed through formal grants and loans.
Organization and Structure:
Governing Body
A community land trust is a non-profit "organization created to hold land for the benefit of the community and of individuals within the community." It is a democratically controlled organization with an open membership -- participants in a CLT development automatically become members -- and a board of directors that generally adheres to this model:
one-third trust land residents;
one-third other community residents; and
one-third public interest representatives.
Board members are elected by the membership for specific terms, thereby giving the membership active control of the organization. It is the membership that decides the purpose(s) for which the CLT's land will be used. The board composition and the open membership make this an intensely grass roots organization.
Financing the operation of CLTs:
The operation of the CLT must be largely covered by the fees that it charges its lessees for the use of its land. This fee generally covers three items, namely: pass-through costs such as property taxes, insurances and other assessments; administrative costs such as salaries; and land use cost which is optional but may be used to cover debt servicing for land purchased. The fees should not be of a magnitude to significantly affect the affordability of the housing units.
Lease fees have been generally proven to be insufficient to cover the cost of CLTs therefore it is common for other sources of funding to be sought. At the start-up stage provision of seed money by government and contributions of money and time by the CLTs’ local supporters are prevalent. These contributions may be supplemented by grants from foundations.
Utilities fee:
In rural areas most homes are serviced by individual wells, septic systems and driveways. With rural CLTs development and ongoing maintenance is looked after by CLTs and the home owner pays a utilities charge to cover ongoing expense of maintaining the utilities.
