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Attend a Homebuyer Orientation to learn about the key elements of PCLT's program, and available opportunities. This free one hour class is a required step of our program.
The following
are frequently asked questions and answers about the Community Land
Trust model in general and Portland Community Land Trust in particular.
If you have additional questions, feel free to send us an e-mail
at info@pclt.org or contact our
office at 503/ 493.0293.
1. What is a community land trust?
2. How does PCLT help residents and the community?
3. Who are the members of PCLT?
4. Who makes decisions about PCLT’s activities?
5. How does PCLT home ownership compare with other
home ownership?
6. What is the lease arrangement?
7. If I don’t own the land, but I’m leasing
it instead, can I still get a loan to buy my house?
8. What is the process for selling my home?
9. What about property taxes?
10. How does PCLT acquire property?
11. Who lives in CLT homes?
12. How are CLTs funded?
13. How do CLTs relate to other housing and community
development organizations?
14. What other CLTs are nearby?
15. What happens to the CLTs land and lease agreements
if the CLT dissolves?
16. What kind of support does a CLT provide for first-time
homeowners?
A community land trust is a private non-profit community organization
that safeguards land in order to provide affordable housing opportunities.
The Portland Community Land Trust buys and holds land permanently,
preventing market factors from causing prices to rise. PCLT builds
and sells affordably-priced homes to families with limited incomes—PCLT
keeps the price of homes affordable by separating the price of the
house from the cost of the land. When a family decides to sell a
PCLT home, the home is resold at an affordable price to another
homebuyer with a limited income. PCLT’s goal is to balance
the needs of homeowners to build equity and gain stability in their
lives with the needs of the community to preserve affordable home
ownership opportunities for future generations.
Community Land Trusts (CLTs) across the country share certain basic
characteristics. Here are five:
a. Dual Ownership. Ownership of land
is separated from ownership of homes located on the land. A long-term
land lease defines the arrangement between a CLT and leaseholders
who own their homes and other improvements. The land trust offers
leaseholders security, privacy, stability, and a legacy for their
heirs.
b. Permanent Affordability of Housing.
CLTs protect affordability for future residents by ensuring the
affordable resale of homes and other improvements on their land.
Shared-appreciation provisions in the PCLT lease agreement offer
homeowners a fair return on their investment while protecting the
community's investment of public and private resources (funds as
well as skills) that go into creating a CLT and making housing affordable.
PCLT’s resale formula allows homeowners to sell their homes
for the price they bought it plus 25% of the appreciated value.
c. Commitment to Local Control. CLTs
provide greater local control over land and housing ownership, giving
community members a greater say in land-use decision-making. Like
the more than 100 community land trusts across the country, Portland
Community Land Trust is community based and democratically controlled,
so the community residents—the members—will decide how
the land trust is run.
d. Flexibility. The CLT model is flexible.
In addition to affordable housing, the Portland Community Land Trust
may make land available for community gardens, playgrounds, parks,
local businesses and other community services.
e.An Active Land Acquisition
and Development Program. CLTs are committed to an ongoing
acquisition and development program that seeks to meet diverse community
needs, continuing to grow the stock of homes and land whose affordability
is permanently protected.
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2.
PCLT provides access to land and homeownership for people who cannot
afford what’s for sale on the housing market. PCLT homeownership
provides greater housing security than renting.
Benefits to a Land Trust Homeowner
- Homeownership at an affordable price
- Stable monthly payments
- Security from eviction
- Tax advantages
- Opportunity to build equityOpportunity to
take a leadership role in the organization by serving on the board
of directors or board committees
Benefits to the Community
- Home-buying opportunities for neighborhood residents.
- Preservation of affordable homes into the future
despite rapidly escalating housing prices.
- Opportunity for renters to become owners.
- Wise use of tax dollars (public subsidy).
In addition, PCLT helps buyers gain access to down-payment
assistance and special financing .
Land trust homebuyers generally must be able
to handle monthly mortgage payments and other costs, including home
repairs as needed and reasonable lease fees for use of the land.
In Portland’s current housing market, these monthly costs
of ownership through PCLT are similar to the expense of rent for
an equivalent sized unit.
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All PCLT homeowners are automatically members, and other people
in the community may also join. The members elect a Board of Directors
composed of PCLT homeowners, general members who are not PCLT homeowners,
and people who have a broad view as public representatives. This
partnership of different perspectives ensures community input and
representation. Membership fees are on a sliding scale starting
at $10 per year, so that people with limited incomes can afford
to become members. To become a voting member of PCLT, one needs
to live in the City of Portland, support the creation and preservation
of permanently affordable housing, pay annual dues and attend a
brief orientation session. Non-voting members may be businesses
or individuals, and need only pay annual dues.
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The Board of Directors and the members of PCLT make the decisions
that guide PCLT’s work. Of course, PCLT has to follow local
laws and zoning requirements, but our direction comes from the community.
Ideas for projects, programs, and community services that the land
trust is involved in usually come from community residents, and
are decided by a Board of Directors that is elected by the members.
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Land trust homeownership is essentially the same as other homeownership
except that the land that PCLT homes are located on is owned collectively
by the membership organization. Native Americans traditionally considered
the land to belong to everyone, and the homes to belong to families.
In much the same way, PCLT land belongs to the community-based organization
and the homes are owned by families.
- The homeowner secures a loan from a lender.
- The homeowner accumulates equity.
- The homeowner may will the home to heirs (both
home and lease may be inherited).
- The homeowner may make alterations and improvements.
- The homeowner receives federal mortgage tax deduction.
- The homeowner may enjoy the types of rights
that renters are frequently precluded from—having pets,
planting a garden, repainting the house, etc.
- The homeowner (and all subsequent buyers) must
meet income qualifications.
- The purchase price is lower, usually 20-30% below
the market rate, because the land is already paid for.
- PCLT owns the land, and the homeowner leases the
land from PCLT for a nominal fee.
- The homeowner agrees to live in the home as a primary
residence most of the time.
- The homeowner will sell the PCLT home at
an affordable price, helping the next family of modest means to
become a homeowner.
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Because PCLT owns the land and the homeowner
owns the home, PCLT and the homeowner sign a lease together allowing
the homeowner secure, long-term rights to use of the land. The lease
gives the homeowner use of the land for 99 years at a time. The
lease is renewable, may be transferred to the family’s heirs,
and ensures full rights of privacy. The lease also addresses resale
of the home.
Leaseholders retain nearly all of the rights and responsibilities
that go with home ownership. PCLT control is limited to the following
areas where there is a long-term interest:
- Permanent affordability through a shared-appreciation
resale provision in the lease.
- Owner-occupancy requirement to encourage investment
in maintaining the property and to preclude profiteering (by leasing
the house for more than the mortgage amount).
- Protection of the condition of the land and buildings
for future users by ensuring that the property is adequately insured,
that improvements are permitted, and that environmental contamination
is not introduced to the site.
- Permanent affordability, through the use of a
shared-appreciation resale provision.
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Yes. Across the country, there are dozens of banks, housing finance
agencies and other mortgage lenders who lend to community land trusts.
PCLT buyers have taken out loans with local lenders, including Umpqa
Bank and Key Bank. Washington Mutual and Bank of America are also
approved lenders for PCLT homebuyers.
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When a homeowner wants to move, there are several options. After
giving the community land trust adequate notice, a homeowner may
sell the home to an eligible buyer, transfer the lease, and move
away. As with most community land trusts, PCLT retains the first
right of refusal to buy all improvements on the land. If PCLT exercises
this option, then PCLT buys the house and sells it to a new leaseholder.
The house may also be given to the homeowner’s children or
other heirs.
Since CLT homes are not bought and sold on the open market, each
CLT has a formula that determines the maximum amount to be paid
when a homeowner sells his or her home. The goal of this resale
provision is to give the homeowner a fair return on investment while
ensuring the home will be sold at an affordable price to the next
low-income buyer. Essentially, in exchange for buying the home at
an affordable price, the homeowner agrees to sell the home to the
next buyer at an affordable price. This preserves the affordability
for the next family who will buy the CLT home.
Portland Community Land Trust’s shared
appreciation resale provision allows homeowners to resell their
homes for their purchase price plus 25% of the home’s appreciation,
based on market appraisals.
A resale formula keeps land trust homes affordable for future leaseholders.
If land is removed from the marketplace, but not the buildings that
are on the land, then the speculative value that would have accrued
to the land is merely transferred to buildings on the land. Furthermore,
if housing is in short supply, then residential structures become
the object of intense speculative activity. The real estate market
pushes prices higher, making access to land and housing more difficult
for persons of modest means.
Also, in many cases, the owner has benefited
from various kinds of public or community subsidies made available
with the understanding that the value of these subsidies would remain
in the property. By allowing only a fair return on owner investment,
the CLT makes its homes affordable to future residents of the community
without additional public or private subsidy.
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CLT homeowners typically pay all the taxes associated
with the property (on the land and on their homes). Some PCLT homeowners
have limited tax abatements based on the geographic location of
their home; others pay property taxes in full. As with all homeowners,
the interest portion of the mortgage payment for a land trust home
is tax deductible. If the homeowner itemizes federal income taxes,
the property taxes that are paid are also tax deductible.
CLTs can qualify for exemption from federal and state taxes, but
they usually pay local real estate taxes on the land they own. It
is politically important for the CLT to pay for its share of services
enjoyed by the neighborhood. In some cases CLTs and their residents
may request an assessment based on the resale value of the home
as determined by the CLT's resale formula rather than the market
value of the property.
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PCLT uses a variety of tools to bring land into
trust. PCLT receives some donated property from government entities,
including tax-foreclosed lots and surplus properties. Also, PCLT
buys land under existing homes through its ‘Buyer Initiated’
program. As a nonprofit, tax-exempt organization, PCLT can receive
tax-deductible donations of property or funds to buy property. As
an interim measure, PCLT can borrow funds to purchase land from
local lenders or intermediaries such as the Institute for Community
Economics (which maintains a Revolving Loan Fund that CLTs and other
community development corporations may access).
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People. Families, children, grandparents, young
married couples and singles. PCLT is a tool to help folks with limited
incomes buy a home. PCLT homeowners have steady incomes and access
to credit, but incomes that are not high enough to purchase a home
the traditional way. When incomes do not rise as fast as housing
prices, many people cannot afford a market rate house. Land trust
homeowners share an important goal: to escape a lifetime of renting
by owning a home of their own.
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CLTs receive support from a variety
of sources.
Foundations, businesses and individual supporters.
CLTs rely heavily on private donations, including
contributions from members and supporters, to fund their programs.
Fees for services. CLTs
receive developer fees in their housing development, and a small
monthly “lease fee” from each land trust household in
consideration for use of the land.
Local government. Many
CLTs work in cooperation with local governments in meeting present
and future community needs. Public officials in communities across
the country recognize that CLTs can play an important role as stewards
of community resources, and that property and funds allocated to
a CLT can benefit not only present community residents but future
residents as well. Some CLTs, Portland Community Land Trust included,
have been established with strong initiative and support from local
governments.
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Most CLTs work to support and complement existing
efforts in a community. Since Portland already has several non-profits
experienced at developing affordable homes for sale, PCLT concentrates
on acquiring and holding land in trust, organizing grassroots support,
and working with prospective homebuyers. We work with many different
community partners to provide homes throughout Portland.
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Clackamas Community Land Trust is active in Clackamas
County. Sabin Community Development Corporation has a community
land trust program in Northeast Portland. Clark County, Washington
is in the process of launching a CLT. A little further away, there
are two dozen CLTs in the Pacific Northwest, from the San Juan Islands
in Puget Sound to Leavenworth, WA to Ashland, OR.
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If a CLT dissolves and ownership of the land
is transferred to a new entity with a compatible mission (as required
in the Articles of Incorporation), the new owner is obligated to
honor the long-term lease agreements between the CLT and its leaseholders.
Should the land ever be offered to a non-charitable buyer, land
trust homeowners have the right of first refusal to buy the land
beneath their homes.
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Community land trusts are deeply invested in
the success of land trust homeowners. The homeowners have, after
all, entered into a long-term (99-year!) relationship through the
land lease agreement. A CLT’s ability to provide support depends
on the resources available. Some CLTs provide homeowner training
and assistance. Others have developed home repair loan funds and
have made special arrangements for leaseholders who face unexpected
financial problems.
PCLT provides:
- Education to guide homebuyers step-by-step
through the challenging process of buying their first home
- Support for homeowners through such activities
as tree plantings, landscaping classes, garden construction, and
referrals to community resources.
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