Sound it Out: what is a community land trust?

Soundside is a show built around YOU – our listeners.

Every other week, we bring you a segment called "Sound it Out," to broadcast your thoughts about the show and answer questions about stories we've covered.

Today, we're diving back into a conversation we had last week with Joshua McNichols about how the small Whidbey Island town of Langley has rolled out a slew of zoning reforms, meant to encourage the production of new homes. You can check out that story here.

We received a question from Anne, who asked:

Architect Ross Chapin used the term community land trust. Exactly what is that? Can people own equity in their homes? Equity they can pass on to their families? Where around here are community land trusts and how do they work?

We reached out to Kathleen Hosfeld, the executive director of Homestead Community Land Trust, which is based in Seattle and serves King County. Hosfeld is also vice president of the board for the Northwest Community Land Trust Coalition.

Hosfeld answered our questions, but started with what a community land trust is not:

"This is not a 'land trust' that is a tax shelter. Nor is it a conservation land trust, which is primarily used to hold land to prevent it from being developed," Hosfeld explained. "A community land trust is a private, nonprofit, community governed and or membership corporation that exists to acquire, hold, develop, lease, and steward land for the benefit of low income households and communities."

In other words, a community land trust builds and subsidizes affordable homes. The people who buy those homes own them, but the land trust owns the land those homes are on — the homeowners just lease it.

That means those homes are kept affordable. If the people who bought a home later need to move, the resale price of the home is controlled by the land trust. For the Homestead Community Land Trust, that means selling to another person or family who earn less than 80% of the area median income.

This isn't a new idea. As Hosfeld explains, these organizations were designed to help historically underserved populations.

"They were created by civil rights era leaders in the Deep South, out of concern for the difficulties that African Americans were experiencing with land ownership," Hosfeld said.

"It was very difficult for black Americans to own homes or land. And even if they did, it was very difficult for them to retain ownership of that land for variety of reasons," she added. "So this model was created to make it easier for them to own land, collectively. At the same time, they could own appreciating assets on the land, primarily homes, that would build equity and allow people to build assets.

"The same model would become a platform for other cooperative initiatives that would benefit low and moderate income communities, such as farming or offering lower cost business spaces and that type of thing."

But times change. As of last month, according to both Redfin and Realtor.com, the average home price in King County was just north of $800,000. That's far more than homes typically cost when land trusts were first developed.

Hosfeld said that just makes land trusts even more vital.

"The point of the model is to create access to a first-time home buying opportunity for someone who is income qualified, that they could not achieve on their own. We hear a lot about people saying, 'You should just bootstrap your way to homeownership,'" she said.

"That's something that you can do when the gap between what's available on the market, and what you can afford is $50,000. But when the gap between what you can afford and what's on the market is $400,000 or $500,000, you're not bootstrapping that."

So, a community land trust model can get a person into home ownership who probably would not get there otherwise. But a home is also meant to be an investment — something that is accruing value, and can later be sold or passed on to a future generation. Which, gets to one of our listener, Anne's, excellent questions:

Can these home owners own equity in their homes? Equity they can pass on to their families?

"One of the hallmarks of the community land trust model is to make sure that homes stay affordable over successive resales," Hosfeld said.

"We call that permanent affordability. So the way that works is when someone buys into our program, they get that very below market rate price. But in exchange for that, they agree to restrict their equity gain on the home to a formula that allows them to build wealth, build assets every year that they own the home.

"But it also keeps the resale price of the home within that formula, which will remain affordable. So that when they go to sell to the next income qualified household, they're passing on or paying forward on affordable price to that next generation owner," Hosfeld said.

In our original story with Joshua McNichols, discussing the folks who are considered low-income and looking for the housing in Langley, we talked about service jobs — bartenders, cooks, waiters, etc..

But Hosfeld pointed out, there are a lot of people who fall into that category of 60 to 80% of average median income here in King County — people you might not think of.

"When we use that term, low- and moderate-income, people get a picture in their mind that's not actually accurate to what's happening or who we're serving," she said.

"The people that we serve in our program are nonprofit employees, teachers, firefighters, health technicians, transit drivers, the people that restore power during a storm. And what people don't quite get is that these are good jobs with good wages. It's this egregious mismatch between incomes and housing prices, that makes this model necessary and and makes it really useful to communities that are experiencing this type of housing crisis."

If you have a question about a show segment we've aired, please reach out to us by emailing soundside@kuow.org, or call and leave a voicemail at 206-221-3213.

Joshua McNichols contributed to this report.