Rationale
Summary: The CLT’s ability to serve individual interests and community
interests that are often in conflict is a key to understanding the model’s
proliferation and appeal. Benefits do not accrue only to a fortunate few at
the expense of the larger community – nor vice versa. Such a “balanced
property arrangement” allows the CLT to be used in many different settings,
addressing a variety of needs. 

BALANCING THE BENEFITS OF RESIDENTIAL PROPERTY
The contractual and organizational mechanisms of the CLT are designed to maintain an
equitable and sustainable balance between the legitimate interests of individuals and the
legitimate interests of a larger community.
The CLT is a “balanced property arrangement,”
allocating the benefits of land and housing more fairly than most other forms of
tenure. The CLT is an alternative approach to the ownership of land and housing. It is designed
to deliver – and to balance – two sets of benefits: those that accrue to persons who own
and occupy a CLT’s resale-restricted homes (individual benefits) and those that accrue to
the advantage of the surrounding community or, more generally, to the advantage of society
as a whole (community benefits).

The community land trust (along with other forms of shared equity homeownership is
committed to correcting this historic imbalance, endeavoring to bring the interests of individuals
and the interests of community into closer alignment. In the CLT, the benefits
derived from owning, using, improving, and conveying residential property are pursued
in relation to one another. Every benefit realized by an individual homeowner is “effectively
balanced” by a corresponding benefit realized by the larger community. Neither is
pursued totally in isolation from the other. Neither is secured totally at the expense of the
other. Expanding affordability for the present generation of lower-income homebuyers,
for example, is balanced against preserving affordability for future generations of lower income
homebuyers. Enhancing residential security for individual homeowners is balanced
against enhancing neighborhood stability and preventing the displacement of
lower-income households. Creating private wealth is balanced against retaining public
wealth. Enabling mobility for individuals who own a CLT home is balanced against improving
conditions for all who inhabit a particular locale.

COMMON REASONS FOR STARTING AND SUPPORTING A CLT
This commitment to a “balanced property arrangement,” to which every CLT subscribes,
provides a multi-faceted rationale for starting and supporting a CLT. Different parts of
this rationale are prominent and persuasive in different communities, depending on the
political, economic, and social conditions within that locale. Different priorities may be
assigned to these reasons by the governmental officials who are funding CLT projects,
the private lenders who are financing them, and the community activists who are promoting
them.
 

Developing Communities without Displacing People
The CLT provides for the revitalization of disinvested or transitional neighborhoods,
while preventing the removal of the low-income or moderate-income people who may
have long lived there. By gaining control of its own land and by ensuring that a portion
of its housing will always be available and affordable for persons of modest means, a
community can attract new investment and new residents without making it impossible
for the community’s present residents to remain. A local CLT can also complement
smart growth policies at the regional level. When established in an inner-city neighborhood
or an inner-ring suburb, the CLT can serve as a bulwark against rising prices and
displacement pressures that often mount when anti-sprawl measures redirect investment
toward the urban core instead of the suburban periphery.
Perpetuating the Affordability of Privately Owned Housing
Housing that is made affordable initially through public subsidies, private donations, or
public measures like inclusionary zoning is kept affordable continually. The ground
lease used by the CLT is an effective, enforceable, and durable mechanism for ensuring
that future generations of low-income and moderate-income households will have access
to the same opportunity for affordable housing that is being created for these targeted
populations today. Furthermore, the administrative systems that a CLT establishes to
monitor and to enforce the affordability, occupancy, and eligibility controls that are built
into its ground lease may also be used to monitor and to enforce similar controls that are
incorporated into the deed covenants of housing that is not on leased land. The CLT can
serve as the long-term steward for any type or tenure of housing for which a public
agency or a private donor has committed itself to ensuring the housing’s continuing
availability and affordability for persons of modest means.
 

Retaining the Public’s Investment in Affordable Housing
Whenever public or private funds are used to subsidize the initial affordability of residential
units (single-family houses, condos, etc.), those scarce subsidies are protected and
recycled in those units forever. In contrast to policies and programs where subsidies are
either claimed by the property’s owner at resale (subsidy removal) or re-claimed by the
public agency that invested them (subsidy recapture), the CLT is committed to locking
those subsidies in place (subsidy retention). When assisted homes are resold, an additional
infusion of public or private monies will usually not be needed. The community’s
investment is neither lost nor diminished.
 

Protecting the Occupancy, Use, Condition & Design of Affordable Housing
The 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 – or embedded in the deed
covenant, if the CLT is also serving as the steward for deed-restricted housing – are provisions
typically requiring the housing to be continually occupied as the owner’s principal
residence for at least ten months out of every 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.
Assembling Land for a Diversity of Development
The CLT assembles land through purchase, donation, or bargain sale and then makes land
available to a wide range of developers for a wide range of uses. The types and methods
of development that can occur on lands that are owned by a CLT are limitless. The
model has the flexibility to combine uses of land, levels of income, types of housing, and tenures of housing within the same project – or in different projects. These projects may
be developed on contiguous parcels of land or may be scattered throughout an entire city,
county, or region.

Enabling the Mobility of Low-income People
Every CLT adds at least one new rung into a locality’s housing tenure ladder, bridging
the yawning gap that has opened up in many parts of the country between market-priced
rentals and market-priced homeownership. Some CLTs fill this gap with multiple rungs,
developing not only detached, owner-occupied houses on lands that are leased from the
CLT, but developing duplexes, triplexes, limited equity condominiums, and limited equity
cooperatives as well. (Some CLTs also develop and manage rental housing.) By
multiplying the choices available to people when they seek to change the type and tenure
of their housing, 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.
As an increasing number of CLTs expand their service area, moreover, developing affordable
housing on a regional basis, mobility can also assume a geographic dimension.
Low-income households can be given both a choice of housing and a choice of place.
CLTs create an opportunity for economic mobility too. A ceiling is imposed on the resale
price of CLT homes in order to preserve their affordability for the next generation of
low-income homebuyers. Despite this limit, the assets of CLT homeowners are enlarged.
Most of them build wealth, as they occupy a CLT home and when they resell. Compared
to the renters they were and the renters they would have likely remained, had they not
purchased a CLT home, most low-income households will be better off financially for
having bought a home through the CLT.

Backstopping the Security of First-time Homeowners
Too many first-time homeowners, especially those of limited income, fragile health, or
physical or mental disability, eventually find they cannot bear the burden of owning a
traditional, market-rate home – at least not by themselves. Too many of them eventually
fail in maintaining and retaining the homes that were theirs, with disastrous results for
those who fall back into renting and for the surrounding community. When a CLT puts
low-income and moderate-income households into homeownership situations, however,
the CLT protects their homes in times of trouble, intervening to cure defaults and prevent
foreclosures. The housing is protected. The households are protected. The lenders are
protected. A CLT remains permanently responsible for the homeownership opportunity
it helped to create, safeguarding everyone’s investment.