Community Land Trusts A Presentation for the annual PEARLS Symposium and Ideas Exchange Apalachicola, FL April 14, 2018 Presented by: Ashon Nesbitt
Our Thanks to the Florida Housing Our Thanks to the Florida Housing Catalyst Program Catalyst Program Sponsored by the Florida Housing Finance Corporation
Meet the Team Ben T oro- Ashon Gladys Pamela Jo Jaimie Spears Nesbitt Cook Hatley Ross
Community Land Trusts Most familiar and effective form of subsidy retention
What is a Community Land Trust? • The vehicle of separating land…
What is a Community Land Trust? … from the building
What is a Community Land Trust? .. And…the nonproft that holds title to the land and leases the improvements subject to restrictions Ground Lease that keep the improvements afordable in perpetuity
What is the Purpose of a CLT? • T o provide an alternative to renting through an alternative form of homeownership. • T o make homeownership more afordable • T o keep the home afordable forever
How Does it Work? • A CLT acquires and retains ownership of land for the beneft of the community and sells or rents the improvements to income eligible households • Homebuyers purchase the house and have the right to use the land by virtue of a 99 year lease agreement with the CLT
Key Benefts for the Home Buyer Price of the home is now more • afordable MORTGA Staying in the community • GE without being a renter means: Mortgage payments instead of rent • payments Mortgage interest payments are • deductible
Key Benefts for the Home Buyer (continued) Return of equity upon resale • Financial stability— able to save without fear of • rent increases or loss of housing BUT…. The buyer of a CLT home is a homeowner, • which means he/she is responsible for all homeowner expenses- such as maintenance and repairs.
Key Benefts for the Public • Permanent stock of afordable housing is created • A nonproft is providing stewardship to help the homeowner to be successful • Reduces the rental crisis by moving renters into CLT homeownership
And….. Reduces the amount of subsidy needed to serve the same number of households • Understanding Subsidy Retention Video
Understanding Subsidy Retention
Key Provisions of the Ground Lease • Income eligibility restrictions • Use restrictions (primary home) • T axes – 193.018 F .S. • Inheritance - yes (with caveats) • Ground lease payments • CLT right to repurchase
And….. • Resale Formulas- an agreement as to how the CLT (the nonproft) and the CLT homeowner share in the sales price paid by the next buyer • Appraisal-Based Resale Formula • Fixed-Rate Resale Formula • Indexed Resale Formula {Covered in detail later}
CLT s can be used for Rental • Permanent affrrability vs expiring LURA • Minimum Afordability Periods • SHIP/SAIL 15 years • LIHTC 50 year • other FHFC programs vary • HOME 5-20 years
Homebuyer Education
Homebuyer Education for the CLT homebuyer • What are the CLT homebuyers’ responsibilities? • Making monthly lease payment to CLT • Making monthly mortgage payment to bank • Paying tax bill for land and improvement (on resale restricted value)
Homebuyer Education for the CLT homebuyer • What are the CLT homebuyers’ responsibilities? • Making repairs – no landlord to call • Receiving CLT approval before making certain improvements • Notifying CLT when they intend to sell.
Homebuyer Education for the CTL Homebuyer • CLT homebuyer must understand the diference between fee simple and CLT homeownership • Specifcally, understanding what money to expect upon resale • And that depends on the resale formula • So…ensure that the CLT homebuyer understands the resale formula that your CLT is using
Lending for Community Land Trust Homeownership
CLT Lending - Specifcally • Major advantages to CLT loans : • Extremely low foreclosure rate • Right of repurchase • Ability to sell on secondary market (FNMA lease rider) • Major challenges: • Reluctance of lender involvement (lack of understanding and program uniformity) • Lack of scale • FHA pull-back • Portfolio loans
Lenders that work with CLT s in Florida
Starting a Community Land Trust
How to Start a CLT • Do you need a new organization? • Incorporation of a 501(c )(3 ) • Board Composition- What’s Best? • Membership Organization- Works well
Income and T enure T argeting: What is the an unmet need? Need: Very-Low Income Need: Very-Low Income Rental Housing Ownership Housing • Potential role of Local • Potential role of Local Government: Donate surplus Government: Donate land to CLT surplus land to CLT • Potential role of CLT: Serve • Potential role of CLT: as developer or hold ground lease for land on which rental Serve as developer is developed and hold ground lease • Alternate potential role of for land on which CLT: Provide homes are developed homeownership option for lower-income renters to free up rental housing
Key to the Success of the CLT Partnership and support of the local government • Donation of land to the CLT • A highly functioning nonproft with the ability to provide a pipeline of qualifed home buyers • A fully informed and engaged community of prospective home buyers • A fully informed and engaged lending community • Financing from federal, state, and local sources
Local Government Incubation Example: Bright Community Trust • Began as Pinellas Community Housing Foundation, Inc. in 2008 • For the beneft of the Housing Finance Authority, who was its sole member • Pinellas BOCC authorized HFA to utilize 99-year ground leases • Means for HFA to implement 99-year ground lease to create permanent afordability • Housed and stafed by the Housing Finance Authority for frst four years of operation, then went independent
Existing Nonproft Example: Heartfelt Florida Housing • Founded by Habitat for Humanity of South Palm Beach County in 2010 • Formed as separate nonproft (separate Board) • Housed and stafed by Habitat • Membership open to community as well as lessees
New Nonproft Example: South Florida Community Land Trust • Originally established in 2006 • Regionally focused, serving Broward and expanding into Miami-Dade • Rental makes up majority of current portfolio • Rental income serves as source of operating income for CLT
Community Land Trusts in Florida
Considerations for Franklin County • What are the main barriers to homeownership for low-income renters? • Future of Local Economy • Zoning and Land Use • Existing capacity of nonprofts and potential for partnerships • Example: SOS for construction/historic preservation and Franklin Housing for homebuyer education/stewardship • Shared Equity Option
Community Land T rust as More Than Housing • Cooperative homeownership to incubate small businesses • Facilitating the build up of new industry • Historic preservation • Sustainable construction • Food production • Creativity to attract nontraditional funding • Idea: US Dept. of Labor Youth Build Grant • Summer 2018 release • Between $700,000 to $1.5 MM • Requires 25% match of nonfederal funds
Florida Community Land Trust Institute Primer Highlights: • 2015 update • CLT overview and articles • Model ground lease • Sample SHIP strategy
The Florida Housing Coaliton’s ten offes The Florida Housing Coaliton’s ten offes fover every region of the state fover every region of the state
FHC Statewide Annual Conference AUGUST 27-29, 2018 Rosen Centre Hotel, Orlando Members Receive $200 Discount To become a member, contact Johnitta Wells at wells@fhousing.org .
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