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The CLTs use the land both for housing and for public spaces in the network, such as parks, gardens and public centers, for example for recreational purposes.
Provide access to homeownership to underserved minorities.
Help minority communities create generational wealth and equity in their ownership.
Reduce chargebacks and foreclosures.
Homeowners own the land on which their space is located.
There is a limit to resale gains when an owner makes the decision to sell.
CLTs have to compete with nonprofit housing organizations for limited resources.
While network land trusts (CLTs) can acquire assets at market prices, there are other, less expensive routes to homeownership. For example, CLTs seek gifts or donations of property from individuals, businesses, and government organizations. Additionally, CLTs can take advantage of what is called a discount sale, in which the CLT will pay a portion of the fair market price (FMV) of the assets and the trader writes off the unpaid portion of the price as a tax deduction. .
Housing is affordable when the monthly charge does not exceed 30% of the owner’s gross income. CLTs have several tactics to keep housing costs affordable within the community. One of the most important is the resale formula.
The resale formula allows the CLT to limit the resale value of any home in the network. The owners continue to accumulate some net worth, but the values are not emerging to the point where they are out of monetary success for everyone else in the network. hopes to support. As a result, resale costs are almost lower than the actual cost of the home on the market.
CLTs also facilitate long-term affordability by keeping network ownership out of the mainstream real estate market. Even when a CLT makes the decision to stop operations and dissolve, it cannot simply put its assets up for sale. Instead, you’ll have to move ownership to some other charity, for a similar purpose. If there is no appropriate beneficiary for the land, the property regularly reverts to the state.
To achieve their purpose of providing affordable housing to underserved communities, CLTs have a maximum source of income requirement. Generally, the pre-tax income source of CLT buyers cannot exceed 80% of the average household income source in the domain. around the CLT (published through the US Department of Housing and Urban Development [HUD]).
CLTs are one of many strategies that can reduce the racial wealth gap by helping minority communities build wealth. CLTs enable low-income families, historically overrepresented among minority communities, to build generational wealth through home equity. By removing barriers to ownership and adding upfront and overhead cost cuts, CLTs provide underserved communities with more opportunities for homeowners and build their equity.
As with any other type of homeownership, loans and defaults are an unfortunate reality in CLTs. However, CLTs require the use of a popular loan with express needs in the event of default.
Under the popular loan, lenders will have to notify the CLT when a resident defaults on their loan and give the CLT the opportunity to default. In the case of seized properties, the CLT has the option of acquiring the seized building. The seizure has no effect on the ownership of the land, which at all times remains in the hands of the CLT.
Frame. “How Community Land Trusts Work (An Affordable Housing Option)”.
Virginia State Community Land Trust. ” Frequently Asked Questions. “
National League of Cities. ” Community Land Trusts: A Guide for Local Governments. » Pages 44-45.
Skagit Startup Trust. “History of Community Land Trusts and Local History. “
Georgetown Climate Center. “Community lands = resilience. ” Page 1.
Burlington Associates in Community Development. Community Land Trust Frequently Asked Questions”. Page 2.
U. S. Department of Housing and Urban Development. ” Barriers to Affordable Housing. “
Florida Housing Coalition. ” Land Leasing and Resale Formulas: The “How” of Community Land Trusts. »
National League of Cities. Community Land Trusts: A Guide for Local Governments. Pages 8-9.