Community Land Trusts: The key to affordable housing: Commentary by Senate President Robert Bunda
Nowhere is the need to create a “sustainable” strategy for the future greater than in the area of affordable housing.
A growing number of communities, including resort communities, are using community land trusts to compensate for the skyrocketing costs of housing and the financial disincentives for developers to build affordable housing. Here in Hawaii, land banking has long been used to protect important agricultural and conservation resources. But the use of land banking to address our affordable housing needs is a relatively new twist to an old idea.
Community land trusts can help for-profit developers meet government requirements to include a certain percentage of affordable homes in their projects. Projects that have permanently affordable units have a scoring advantage in competing for Federal Home Loan Bank funds. Community land trusts have benefited from this priority. Community Development Block Grant and federal HOME funds have been primary sources of financing for community land trusts, enabling developers to put together diverse and creative financing packages for such projects.
A community land trust has two key elements. First, ownership of the land is separated from the ownership of the housing unit on that land. Second, when the owner of the unit wants to sell, the trust has the first right to repurchase the unit at a predetermined price. This builds wealth for both the community and the individual homeowner, while keeping the housing permanently affordable for low and moderate-income families.
The trusts usually have a limited equity feature that allows the homeowner to realize a percentage of any appreciation in value upon the sale of the unit. A 25%-75% equity split between the unit owner and the trust is common. Many variations of a community land trust exist, allowing communities to tailor the structure of the trust to meet local needs and requirements. Vermont even allows existing housing to be brought into the trust.
Last session, the Legislature enacted a law about community land trusts, Act 179, that is a starting point. The new law authorizes the State to lease parcels that it deems suitable for affordable housing at $1 per year to community trusts “to develop the parcel with ownership units through self-help development.” Next session we should build on this first step by adopting a comprehensive community land trust statute that authorizes developers to build homes on state land leased to community land trusts for permanently affordable housing.
We must provide affordable housing today without falling into the bottomless pit of never-ending rent and housing subsidies financed by taxpayers. Community land trusts can protect our land and homes from speculation-driven price inflation and provide a sustainable housing solution that avoids trading tomorrow for today and our children’s future for our own.