Friday, November 16, 2018
East Harlem/El Barrio Community Land Trust
East Harlem/El Barrio Community Land Trust

What is a Community Land Trust?

A community land trust (CLT) is a non-profit organization that owns property, traditionally land, and leases it for affordable housing. The deed to the land, the CLT by-laws, and the lease all require that the housing be permanently affordable. The land can never be traded or sold to the highest bidder on the private market.

The CLT owns the land and can lease the land to any one of the following:

  • A non-profit mutual housing association (MHA)
  • A non-profit limited-equity cooperative
  • A non-profit community development corporation (CDC)
  • A one- or two-family homeowner, with resale restrictions
  • A condo association, with resale restrictions

If the building is a Mutual Housing Association, the CLT limits rents that can be charged. If the building is a coop, the CLT requires the coop to limit the resale prices of units. If the leaseholder is a limited-equity cooperative it may also place restrictions on monthly charges and sales prices. If the leaseholder is a non-profit managing rental property, the CLT provides protection for tenants; in places where rents are regulated it adds an extra layer of protection for tenants. CLT rules prevent tenants and owners from selling out to speculators and making windfall profits.

The board of directors of the CLT is usually made up of the following groups:

  • People who live in the housing (tenants or homeowners)
  • Community representatives
  • Public representatives (from local government)

The proportion of members in each group may vary but generally community and public representatives make up the majority of the CLT board. This helps to place a check on the temptation for residents to sell out to the highest bidder, thereby contributing to neighborhood gentrification and displacement. However, residents, as members of the coop or MHA, remain in control of building management. This combination of an independent CLT board and resident control helps to guarantee that the goal of permanent affordability is met while residents retain control of management. It is also important that there be overlap between the directors of the CLT and the residents. For example, in the case of a limited-equity coop, some members of the CLT board will also be on the coop board and some members of the coop board will also be on the CLT board. This overlap helps keep the CLT board informed about building management, and helps residents stay informed about the CLT. This arrangement helps to guarantee that the goal of permanent affordability is met.

How Can Community Land Trusts Help Preserve Affordable Housing in New York City?

New York City is losing more affordable housing than city programs are creating. According to a recent report by NYU’s Furman Center, New York City lost 194,577 affordable apartments between 2002 and 2008, a decline of 16.4%.  One reason for this decline is that public subsidies for most housing programs do not guarantee permanent affordability and end up with affordable units going into the private marketplace. This often contributes to neighborhood change that displaces residents and businesses without providing significant affordable alternatives for them. The housing programs in which the losses have been most significant include the city’s limited-equity coops financed by the HDFC (Housing Development Finance Corporation), the Mitchell-Lama program, and the 1-3 family homes built under the NYC Housing Partnership. Thousands of owner-occupied units have also been lost to the sub-prime mortgage crisis and foreclosures. The last remaining block of affordable housing, which houses some 400,000 tenants, is under the NYC Housing Authority, which is moving towards privatization of its units. The city’s 80-20 and inclusionary zoning programs have failed to create enough affordable units to make up for losses, and those programs would definitely fuel gentrification pressures that make the problem worse.

We propose that the City of New York establish a policy that title to the land on which all existing and newly created affordable housing is located be transferred to community land trusts.  We also propose that all city owned vacant lots and buildings be transferred to a CLT and mechanisms for privately owned property to be “gifted” to a CLT also be created.  We would urge state and federal governments to make similar commitments but the city can and should lead the way. There may be an advantage of having a single citywide CLT in New York City, but this should include strengthening  existing CLTs or the creation of new neighborhood-based CLTs.

CLTs in New York City should be able to take title to foreclosed and distressed properties that are either vacant or occupied. With the bursting of the housing bubble, this inventory of properties is growing. These properties may be rentals, coops, individually owned, or condos. CLTs will take title to the land and lease the buildings to the appropriate entity without displacing residents if they are inhabited. CLTs must be committed to maintaining existing tenants and homeowners needing its protection as occupants. CLTs are able to define affordability to make housing units available to those who most need it, by limiting assistance based on the median income of the census tract where the housing is located instead of the HUD-defined Area Median Income (AMI). They would promote immediate occupancy of vacant units.

CLTs can be adopted by existing non-profit housing developers and community-based organizations. They will require durable partnerships involving government, communities and non-profit developers. A community-based CLT is better equipped to monitor compliance with affordability requirements than public agencies or private financial institutions.

Can It Work in New York City?

There are some 200 CLTs in the nation and the number is growing rapidly. New York City has three functioning CLTs:  Cooper Square and RAIN in the Lower East Side, and the East New York CLT. They have functioned successfully for two decades and received support from the city’s housing programs. The Cooper Square CLT leases over 300 units to the Cooper Square Mutual Housing Association which is in the process of becoming a limited-equity cooperative. The average Cooper Square apartment has been fully renovated and rents to tenants making less than 40% of the Area Median Income.

The CLT model can be dramatically expanded in New York City; support from city government would be a great help. The CLT model can also work if private investors holding distressed properties gift the land to CLTs instead of allowing it to deteriorate further or selling it far below market price to yet another investor who might be unable to guarantee affordability. A citywide CLT could be an option to facilitate property transfers as long as it is undertaken with the participation of neighborhood advocates for the preservation of affordable housing.

Here we present a few possible examples of how CLTs can work in New York City:

  • Vacant lot owned by bank or the city, or investment corp, etc . A bank or investment group owns a vacant lot that was originally taken by the city on a tax lien and has little chance for development as a market-rate project (if it’s taken on a tax lien we should get it regardless of it’s potential as a market rate project or we will only get the worst sites). The land is gifted to a CLT or purchased with support from the city. The CLT develops the land in partnership with a non-profit developer.
  • Vacant building owned by bank or the city, or investment corp, etc .
  • Distressed rental building. Investors who bought a rental building during the height of the real estate bubble face bankruptcy and tenants are struggling with inadequate management. The land is gifted to a CLT or purchased with support from the city. The CLT leases the building to a tenant’s association or limited-equity coop run by residents.
  • Foreclosed property owned by banks, including single-family and multi-family buildings. Homeowners and tenants facing eviction because they cannot afford even a re-structured mortgage can be protected by title transferred to a CLT. A CLT, working with legal defense lawyers, negotiates purchase of the land and leases the unit or units to the homeowner at an affordable price, with resale restrictions.
  • Limited-equity coop with some owners pressing to go private. A CLT assumes title to the land and leases the building back to the coop with resale restrictions. The CLT guarantees that the building will remain affordable in perpetuity.

What is the Potential Impact?

If the East Harlem/El Barrio Community Land Trust were to be expanded, it could:

  • Create a stable source of housing for segments of the population currently excluded from the housing market
  • Prevent displacement of residents currently at risk and thus stabilize the neighborhood.
  • Provide a shared focus for organizing and a framework for collaboration at neighborhood and city levels.
  • Lay the groundwork for a Citywide Land Trust that serves as a “central server” (with local land trust governance); creates subsidiaries to pool some resources; and provides a path to permanent affordability and community planning across the city.

Why Does It Matter?

Unless a dramatically different course is taken, there will be much less affordable housing in the future. Hundreds of units are at risk in the next seven years; twelve thousand are at risk in the next twenty.

Decades of public and community investment in the neighborhood will be transformed into private gains.

The victories won in neighborhood struggles for housing over the last 40 years will be lost.

What Do We Have to Work With?

  • There are many kinds of housing and other community resources that can still be preserved.
  • There are properties that can be developed and put to different kinds of use, including city-owned property
  • There are existing programs that could be utilized and coordinated.
  • There are cross-subsidy strategies that can fund rehab and bring down rents.
  • There are existing subsidies that can be targeted.
  • CLTs can work with all of these resources to ensure long-term affordability and community control.

Risks and Opportunities

  • The City owns buildings and lots on which 615 units of housing could be developed for roughly 1,800 people;
  • There are 96 vacant buildings and 49 vacant lots, both publicly and privately owned;
  • With current zoning, the vacant lots could be built out to 2,132 units of housing for 4,094 people;
  • Can be configured according to Income targets and community needs;
  • Can be developed by RFP or by preferred developer;
  • Vacant lots could also be turned into community gardens.

Opportunities for Property: HDFCs

There are approximately 47 HDFCs (low-income cooperatives) in East Harlem, many of which need access to capital, repairs and technical support, and are vulnerable to being sold to private investors.

Opportunity for Property AND Acquisition: Target Third Party Transfer

  • 162 buildings in East Harlem have tax liens.  56 of these owe more than $10,000 in taxes.
  • Through the Third Party Transfer program some could be transferred to nonprofit permanently affordable ownership.

Opportunity for Property AND Acquisition: NYC Land-Bank

  • A potentially significant and systematized property pipeline
  • Precedents: Nonprofit housing and CLT advocates have worked to shape legislation so that land banks work well with nonprofit developers, by requiring them to operate with transparency and community input (Philadelphia) or requiring them to support “development without displacement” (Atlanta).
  • NYC Land Bank? New state legislation permits municipalities to develop land banks with legal right to clear titles, forgive back taxes, and combine lots: legislation for a local land bank is stalled, and would need to be revised to work well with CLTs…a potential organizing goal.

Funding Opportunity: Cross-Subsidies

  • In East Harlem there are 168 vacant commercial units, on both avenues and side streets, of varying size, whose rents could subsidize low-income tenants.
  • For example: Common Ground Community worked with Ben & Jerry’s to open a scoop shop on 42nd Street that helped to subsidize a supportive housing development.
  • The Mutual Housing Association (MHA) Model can facilitate cross-subsidies across multiple residential buildings

Funding Opportunity: Targeted Subsidies

  • Section 8 could allow the CLT to house lower-income households than it otherwise could.
  • Targeted use of TANF funds for homeless prevention subsidies in CLT housing could make whole projects work for homeless and households at risk of homelessness.
    • The City spends an average of $36,000 a year on shelter stays.
    • Families average 13 months; they are staying homeless longer.
    • Two-thirds of all homeless families have been homeless before.
    • Family homelessness has grown under Bloomberg by 71 percent.
  • If we took the $39,000 the City spends on shelter for each of the 1,494 families in the shelter system from E. Harlem from 2007-2011, we could put a $400 dollar/mo. subsidy for TEN YEARS into housing for 1,225 households (the average length of time a family uses a Section 8 voucher is eight years).
    • With the welfare shelter allowance ($400 for a household of 3 people), this would more than cover average operating costs for an apartment (without debt service.)
    • A smaller subsidy would still meet operating costs and could likely pay for off-site case-management services if needed.

Source: Information and graphics courtesy of the New York City Community Land Initiative (NYCCLI).