Community Land Trusts A Presentation for the annual PEARLS Symposium - - PowerPoint PPT Presentation

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 Catalyst Program Our Thanks to the Florida Housing Catalyst Program Sponsored by the Florida Housing Finance Corporation

Meet the Team

Gladys Cook Pamela Jo Hatley Ashon Nesbitt Ben T

• ro-

Spears Jaimie 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 that keep the improvements afordable in perpetuity

Ground Lease

What is the Purpose of a CLT?

• T
• provide an alternative to renting

through an alternative form of homeownership.

• T
• make homeownership more

afordable

• T
• keep the home afordable forever

How Does it Work?

• A CLT acquires and retains ownership
• f 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

• Staying in the community

without being a renter means:

• Mortgage payments instead of rent

payments

• Mortgage interest payments are

deductible

MORTGA GE

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 Rental Housing

• Potential role of Local

Government: Donate surplus land to CLT

• Potential role of CLT: Serve

as developer or hold ground lease for land on which rental is developed

• Alternate potential role of

CLT: Provide homeownership option for lower-income renters to free up rental housing

Need: Very-Low Income Ownership Housing

• Potential role of Local

Government: Donate surplus land to CLT

• Potential role of CLT:

Serve as developer and hold ground lease for land on which homes are developed

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
• perating 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 fover every region of the state The Florida Housing Coaliton’s ten offes 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 .