A CLT is a community-based organization that uses public and private investment to acquire land and provide affordable owner-occupied housing on behalf of a specific community.

Residents can purchase a CLT home, but not the land on which the house sits. Instead, residents enter into low-cost, long-term property leases with the CLT, known as ground leases, typically for a 99-year period. Although CLT residents can never sell the land their home is on, they otherwise have the same rights and responsibilities as other homeowners (maintenance, taxes, etc.). The initial investment to write down the price of the home plus the removal of the land value is what makes the home more affordable for the homebuyer. In exchange for the assistance provided to enable the purchase of a home, they would not otherwise be able to afford, CLT homeowners agree to limit the price at which they can sell their homes. This still enables CLT homebuyers to build equity and eventually purchase a home in the traditional marketplace. However, it also keeps the home affordable to future limited-income households – without requiring the investment of additional public or private subsidies to make the home affordable again.

In 2020-21, a Steering Team worked with a consultant to explore the feasibility of establishing a Community Land Trust in Montgomery County. This is a priority strategy, identified in the NRV Regional Housing Study, to help address the growing demand for more affordable housing in Montgomery County. Town and County staff are now working on a management and operating model for a countywide CLT. The Town sees this as an important affordable housing strategy for providing a housing stock affordable to first-time homebuyers. 

What does it take to manage a Community Land Trust?

A CLT is responsible for ensuring the day-to-day and month-to-month management of a range of critical functions for the effective life of its homes – and beyond. These core functions include:

• Making homes available and affordable and arranging their sale to eligible, qualified homebuyer households.
• Providing ongoing stewardship to CLT homeowners and to the homes they occupy. 
• Managing administration and operation of the Community Land Trust.
• Increasing the local pool of quality, affordably priced, owner-occupied for-sale homes.

Why establish a CLT in Montgomery County?

1. A Community Land Trust Helps Preserve Public Investments in Affordable Housing

   A CLT will help to ensure that whenever public or private funds are used to subsidize the initial affordability of residential units, those scarce subsidies are protected and recycled in those units forever. The CLT Model provides an opportunity for Montgomery County to preserve its investment in housing by developing permanently affordable homeownership and rental opportunities for low-income households. Affordability restrictions under current approaches expire within 99 years for owner occupied homes and 30 years for rental properties. Under the CLT model, the CLT acquires the land and maintains ownership of it permanently. Given that land prices will only continue to rise, this model helps preserve land for affordable housing in perpetuity at present day prices.

2. A Community Land Trust Will Help Protect the Occupancy, Use, Condition & Design of Affordable Housing.

   A CLT will help Montgomery County improve and then maintain the condition and character, along with owner occupancy, of homes in key in-town neighborhoods. A CLT provides an effective, enforceable, and durable mechanism not only for preserving the affordability of housing, but for preserving the occupancy, use, condition, and design of that housing as well. Embedded in the ground lease are provisions typically requiring the housing to be continually occupied as the owner’s principal residence for at least ten months per year; restricting the housing’s use as a sub-leased rental property; requiring the housing to be kept in good repair; and requiring the housing to be maintained or improved in compliance with local building and zoning codes and in accordance with the CLT’s own guidelines and approvals.

3. A Community Land Trust Can Prevent Displacement of Lower-income Households from Their Homes and Neighborhoods.

   A CLT will add at least one new rung into Montgomery County’s housing tenure ladder, which will help bridge the area’s widening gap between market-priced rentals and market-priced homeownership. The goal of a CLT is to help create successful renters and homeowners so that they can eventually enter the traditional housing market.  CLTs allow persons of modest means to move more easily from one form of tenure to another, improving their housing in smaller, more manageable steps. The average length of ownership of a CLT home across the country is 7 years, which means that under the CLT model our community will have a greater ability to help provide opportunities for affordable housing to more people than through our current approach.

4. A Community Land Trust Can Contribute to Individual Asset Building.

   Even though CLT’s own the land, they still provide low- and moderate-income people with the opportunity to build equity through homeownership and ensure these residents are not displaced due to land speculation and gentrification. The resale price restrictions contained in the ground lease stipulate a resale price formula that provides for a fair return (not a “market” return) on the homeowner’s investment. When the homeowner decides to sell, a resale formula is used to determine the resale value. The resale formula that a CLT adopts in pricing the conveyance of its homes from one income-eligible home buyer to another is critical to its success in maintaining affordability and the program’s success long-term. For example, Atlanta’s CLT uses two different formulas, one that permits homeowners to realize 25% of the appreciated value of the home and the other uses average income growth to determine how much equity a homeowner can realize. Land trust housing also protects owners from downturns; foreclosure rates for land trusts have been as much as 90 percent less than conventional home mortgages. This is primarily due to the homeowner’s ability to access an affordable home through the CLT and the CLT’s stewardship efforts to help keep the homeowner stay on track.

5. A Community Land Trust Supports Economic Growth.

   A CLT can help develop housing that is affordable to more segments of our workforce. The availability of appropriate, affordable workforce housing is key to attracting workers, which, in turn, attracts business investment. Increased business investment provides a benefit to the entire County. High housing and transportation costs are negatively correlated with economic growth indicators since they discourage business location and expansion. Having a sufficient housing stock for households of all incomes helps attract workers and businesses. In 2014-2024 our region was projected to create close to 9,400 new jobs and create a demand for approximately 6,100 new households. These workers are younger, on average, with lower incomes and different housing preferences. The greatest demand is for homes priced less than $300,000 or rental units with gross rents less than $1,300, which private developers are currently not supplying. 

6.  A Community Land Trust Can Help Reduce Public Costs.
   The location where people live relative to their jobs determines the need for transportation infrastructure and the public costs associated with transportation. High cost housing in the Towns is encouraging sprawling development and over time will increase infrastructure costs to our localities. Congestion increases pollution, and long commutes affect businesses through lost productivity, greater levels of absenteeism, tardiness, and turnover when a worker leaves in search of a better commute. Addressing the looming housing crisis through public investment in a CLT now will reduce the amount of investment needed later when land and infrastructure costs are that much higher.

Summary of Community Land Trust’s Direct Impact on the Town

• Creates more opportunities to purchase an affordable home within the Towns and County.
• Homeowners can build equity to help eventually enter the unrestricted housing market.
• Protects and leverages limited public and private investments in affordable housing by keeping homes affordable forever, without need for future investment.
• Helps prevent the displacement of our workforce (teachers, police officers, service workers).
• Supports business retention and recruitment efforts, by providing opportunities for employees to live and work in the same community.