Lately there is no shortage of bad news about Missoula's housing market: escalating rents, a population influx outstripping housing starts, and skyrocketing land prices that have all but bound the hands of affordable housing developers.
But a simple, innovative approach to development known as Community Land Trusts (CLTs) could potentially revolutionize Missoula's housing market, enabling low- and moderate-income people who might not otherwise qualify for loans to become home owners.
CLTs are touted for preventing urban sprawl and the displacement of residents due to neighborhood gentrification, while simultaneously maintaining property values and giving residents a voice in how their neighborhood grows.
|Photo by Chad Harder|
Americorps volunteers make their way through a bed of Cosmos at the Fort Missoula Community Garden plots. Cooperative projects such as this are just one of the many potential benefits of a community land trust.
Sound too good to be true? Not according to Allison Handler, an assistant planner with the Missoula Office of Planning and Grants, who is spearheading an effort in her free time to introduce CLTs to Missoula.
"There are a bunch of us in town who have been talking about, wouldn't it be great to have a community land trust in Missoula?" says Handler. "What would it look like? Where would it be, and who would it serve?"
As Handler explains, a CLT is a non-profit, membership-based organization that holds land for the benefit of the community. The trust buys or acquires land in order to build or rehab residential or commercial development. The trust then sells the building, but retains ownership of the land under it. The result is that a purchaser need only come up with the cost of the house itself, thereby removing the market value of the land from the equation.
The trust sets an income eligibility for its buyers, say, 80 percent of the median income. The buyer and the CLT then sign a long-term lease that grants the buyer full use of that property. (In Montana, land trust leases run 75 years and are both renewable and inheritable.) The lease allows the buyer virtually all the rights and responsibilities of land ownership, such as planting trees and gardens, building fences or other improvements, and paying property taxes.
When the owner is ready to sell the house, the CLT has first "right of refusal" to buy it back. The resale price of the home is fixed by formula, which varies from trust to trust. Essentially, the home owner is allowed to recoup his equity in the house, plus the value of any improvements, and a small percentage of the difference between the original selling price and its fair market value.
For example, if a land trust home was originally purchased for $30,000 and is now appraised at $50,000, assuming the trust allows the owner to keep 25 percent of the difference, the house can only sell for a maximum of $35,000.
"The model is designed to allow the homeowner who bought the house to make a little bit of equity, and to allow the next person to still have that affordable price," says Handler. "So it provides long-term affordability for the community."
As homes change hands, says Handler, the percentage of personal income required for the next buyer to get into ownership generally decreases over time, thus growing a stock of permanently affordable housing. This approach could be particularly effective in Missoula, where housing costs in the past 10 years have far outstripped wages.
Moreover, CLTs help keep money in the community by cutting down on absentee landlords who often take rent money out of state, or sell their land to the highest bidders when land prices rise. CLTs, on the other hand, are run by a local board of directors open to the community, providing a democratic voice in which land gets developed and how.
The concept of allocating land for communal use is virtually as old as the hills. Modern CLTs have their origins in India, where communities deed land to poor farmers to help them survive. Oftentimes, however, farmers would fall into debt and eventually lose their land. In response, a land reform effort arose that gives farmers a "Gramdan," or "village gift"-land that can be farmed or grazed but not sold, remaining forever a community resource.
In the United States, CLTs first took root in the mid-1960s as a way to stem the loss of farmland by Southern black farmers. But in the 1980s, as the national housing crisis became more acute due to double-digit interest rates and an explosion in the speculative real estate market, the concept was applied to affordable housing.
Nationwide, there are 90 CLTs in 32 states and the District of Columbia, providing nearly 5,000 housing units, according to Julie Orvis of the Institute for Community Economics, a national nonprofit organization that provides technical support for community land trusts. Currently, a CLT operates in Bozeman, and two homes built in Missoula by Women's Opportunity and Resource Development use a similar model.
One feature of CLTs is their adaptability to the particular needs of a community. As Handler points out, CLTs can also provide commercial property, parks, open spaces, community gardens and cottage industries, in addition to single- or multi-family housing. Land can be acquired in a variety of ways, including municipal donations, public and private grants, urban development projects and outright purchases.
"What we're talking about doing in Missoula isn't going to be duplicative of what's already happening [elsewhere]," Handler says. "We have a lot of housing organizations that are doing a great job here. But this is a tool that isn't being taken advantage of yet."