Building Better City-CLT Partnerships A Program Manual for Municipalities and Community Land Trusts John Emmeus Davis Rick Jacobus Maureen Hickey © 2008 Lincoln Institute of Land Policy Lincoln Institute of Land Policy Working Paper The findings and conclusions of this paper are not subject to detailed review and do not necessarily reflect the official views and policies of the Lincoln Institute of Land Policy. Please do not photocopy without permission of the Institute. Contact the Institute directly with all questions or requests for permission. [email protected] Lincoln Institute Product Code: WP08JD1 i Abstract The number of community land trusts (CLTs) in the United States has grown rapidly in recent years, due largely to the expanding investment and involvement of local govern- ment. Municipalities are supporting CLT start-ups, CLT projects, CLT operations, and the equitable taxation of resale-restricted CLT homes. This city-CLT partnership is still evolving, however, with municipal officials and CLT practitioners still exploring the most effective ways of working together. The present manual is necessarily a work in progress, documenting the “best” practices devised to date. These are practices that use public resources to expand a CLT’s holdings, while respecting what makes a CLT unique and while addressing a municipality’s reasonable concerns about a CLT’s performance and sustainability. ii About the Authors John Emmeus Davis was one of the co-founders of Burlington Associates in 1993. He previously served as the housing director and enterprise community coordinator for the City of Burlington, Vermont. He has worked as a community organizer and nonprofit ex- ecutive director in East Tennessee and as a technical assistance provider for community land trusts and other nonprofit community development organizations throughout the United States. Davis has taught housing policy and neighborhood planning at New Hampshire College, the University of Vermont, and the Massachusetts Institute of Tech- nology. He is currently serving as Dean of the National CLT Academy and is a visiting fellow at the Lincoln Institute of Land Policy in 2007-2009. Rick Jacobus has 15 years of experience in housing and community development, in- cluding as a senior program officer for the Local Initiatives Support Corporation and as director of neighborhood economic development for the East Bay Asian Local Develop- ment Corporation in Oakland, California. He joined Burlington Associates as a partner in 2004, assisting in the development of community land trusts and inclusionary housing programs on the West Coast. Jacobus has served as a lecturer in the Department of City and Regional Planning at the University of California at Berkeley. He is currently a visit- ing fellow at the Lincoln Institute in 2008-2009. Maureen Hickey is the Senior Planning and Financial Analyst for Harvard University's Allston Development Group. She previously served as an Associate in Burlington Asso- ciates in Community Development. iii Executive Summary The CLT movement is young, but growing rapidly. There are now over 200 community land trusts in the United States. None of them existed in 1970. Half of them did not exist in 2000. The growth is continuing. Nearly twenty CLTs are being started every year, either as internal programs of an existing organization or as new nonprofits started from scratch. CLTs are now holding land, developing housing, revitalizing neighborhoods, stewarding assets, and capturing value for the benefit of future generations in 40 states and the District of Columbia. The recent proliferation of CLTs has been fueled, in large measure, by the investment and involvement of local governments in starting, expanding, and sustaining CLTs. Such municipal support has increased dramatically during the past decade. Especially in juris- dictions where a city, county, or town has put a social priority on promoting homeowner- ship for lower-income families, while placing a fiscal priority on protecting the public’s investment in such housing, CLTs have become favored partners of local government. Municipal resources are offered to a community land trust because municipal officials are convinced of the CLT’s worth and committed to its projects. They have the same stake in seeing the CLT succeed as the CLT’s own staff. The challenge lies in finding the most supportive and productive ways of putting these resources to work. Too many munici- palities, without meaning to do so, have structured their assistance, regulated the CLT’s activities, or taxed the CLT’s homes in such a way as to undermine the productivity and sustainability of the model they have decided to support. By contrast, other municipali- ties have gone out of their way to understand the peculiarities of this new model of re- sale-restricted, owner-occupied housing and, where necessary, have made adjustments in their programs, regulations, and taxes to help the CLT to thrive. We have documented both kinds of practices in the present report: those that accidentally impede the CLT and those that seem to us – and to many of the municipal officials and CLT practitioners whom we interviewed – to have the greatest potential for establishing a CLT, expanding its portfolio, sustaining its operations, and preserving the affordability of its homes. The city-CLT partnership is still evolving; so is the national consensus about which practices might be the “best” when it comes to supporting a CLT. By presenting our findings as a Working Paper, we hope to spur a wider conversation among municipal officials and CLT practitioners about what is working – and what is not. Over the com- ing year, we shall solicit their comments and criticisms with an eye toward refining the recommendations contained of this Working Paper. By the end of 2009, we shall publish a substantially revised Program Manual that can be used by municipalities and CLTs to build better partnerships. i Table of Contents Executive Summary .........................................................................................................i Municipal Support for Community Land Trusts: In Search of Best Practices..................1 The Rationale for Municipal Support...........................................................................2 The CLT: Classic Features and Common Variations....................................................6 Balancing the Reasonable Concerns of Municipality and CLT: In Search of Best Practices....................................................................................................................11 Seeding the Model: Municipal Support for CLT Start-ups............................................ 14 A Start-up Checklist .................................................................................................. 14 A Menu of Municipal Support...................................................................................16 Balancing the Concerns of Municipality and CLT ..................................................... 21 Building the Portfolio: Municipal Support for CLT Projects......................................... 27 Structuring Homeownership Subsidies ......................................................................27 A Menu of Municipal Support for Homeowner Projects ............................................ 30 Balancing the Concerns of Municipality and CLT ..................................................... 36 Sustaining the Organization: Municipal Support for CLT Operations ........................... 44 The Need for Operating Support................................................................................44 Menu of Sources of Operating Support......................................................................45 Balancing the Concerns of Municipality and CLT ..................................................... 51 Taxing the Property: Municipal Assessment of CLT Homes......................................... 56 Effect of Property Taxes on Affordability.................................................................. 56 Menu of Municipal Options for Taxing CLT Homes .................................................57 Balancing Concerns of the Municipality and CLT ..................................................... 61 Regulating the Program: Municipal Oversight of CLT Activities.................................. 67 Menu of Municipal Oversight....................................................................................67 Balancing the Concerns of Municipality and CLT ..................................................... 79 Planning for the Worst: Municipal Contingencies for CLT Failures..............................82 Failure to Act in Protecting the Occupancy and Condition of CLT Homes.................82 Menu of Measures for Dealing with a CLT Failure....................................................83 Preferred Elements of City-CLT Regulatory Agreements .......................................... 86 Balancing the Concerns of Municipality and CLT ..................................................... 87 Reflecting on the Future: Trends and Challenges in the City-CLT Partnership.............. 93 From City-as-Supporter to City-as-Instigator.............................................................93 From City-as- Participant to City-as-Governor .......................................................... 95 From CLT-as-Developer to CLT-as-Steward.............................................................99 Appendix: Persons Interviewed or Consulted