Community Land Trust
Frequently Asked Questions
What is a Community Land Trust (CLT)?
CLTs are private not-for-profit organizations created to own land for the benefit of the community. CLTs provide and preserve permanently affordable housing on this land.
How do CLTs benefit the Community?
Housing has always been America's greatest asset building strategy. For most American families, their investment in homeownership is their single most important source of wealth creation. Similarly, public sector investment in housing also generates valuable community assets. Most homeownership subsidy programs use public money to build what is almost entirely private wealth. The homebuyers can realize significant growth in the value of their homes over time, but none of that value is available to help other families in the future and, the public sector must invest new money for each family assisted into homeownership. Subsidized rental housing generally offers the resident families no real opportunity to build individual assets. By holding land for the benefit of the community, CLTs counter increasing housing costs that are driven by rapidly appreciating land values. In addition, by focusing on preserving existing housing stock CLTs help preserve the character of existing neighborhoods. Finally, through the resale restrictions, CLTs maximize the cost effectiveness of the public and private investment used to make homes affordable to the first buyer, providing a fair return to the homeowner while ensuring continued affordability for succeeding buyers. Properties can include a variety of housing, such as single-family homes, duplexes, town homes, condominium units, small multi-unit buildings, as well as undeveloped land.
How does CLT home ownership compare with other home ownership?
CLT homeowners enjoy most of the benefits of traditional homeownership, but in exchange for buying the home at an affordable price there are some differences:
The homeowner has a mortgage with a bank
The Homeowner accumulates equity
The home can be inherited
The homeowner pays property taxes
The homeowner can make alterations and improvements
The homeowner receives federal mortgage tax deduction
The purchase price is lower, usually about 20-50% below the market rate because CLT will write down the price
CLT owns the land under the home
The homeowner leases the land from CLT for a nominal fee
The resale price of CLT homes is based on a formula designed to ensure the continued affordability of the home
What is the process for reselling the home?
When a homeowner is ready to sell, the home must be sold to the CLT or an income qualified buyer at a formula price that gives owners a fair return on their investment, while keeping the homes affordable for future buyers.
Under the formula, the owner will receive a portion of the appreciation in the market value of the property (the home and the land) during the period of ownership. The resale price is based on the cumulative appreciation of median incomes in Orleans Parish, during the period that the owner has owned the home.
How do property taxes work on CLT properties?
CLT homeowners pay all the taxes associated with their property, based on the resell value of the property. As it is for all homeowners, the interest portion of mortgage payments is tax deductible from federal income tax. For homeowners who itemize federal income taxes, property taxes are also tax deductible.
Who will live in CLT homes?
The CLT will give priority to low-and moderate-income individuals and families.