Community Land Trusts
From: Tom Hammer (thammer302yahoo.com)
Date: Wed, 3 Dec 2003 21:44:22 -0700 (MST)
I searched this list's archives on this subject and
didn't find anything more recent than 1996 or so.

One of our local members just sent us the note which
follows.  Is his information correct?  Do any other
cohousing communities use this model? What are the
primary advantages/disadvantages?  If other groups
have chosen not do use a CLT model, why not?  Did I
ask enough questions?

Thanks,

Tom Hammer
for Concord Village

 re: nonprofit structuring:

  Structuring decisions can greatly influence things
down the road, I 
think.  For example, a community doesn't have to be a
single-tax village 
like the Ardens to have its land held in a non-profit
community land 
trust (CLT).  If the CLT is tax-exempt, this might
drastically reduce the 
tax burden faced by individual members, since the
value of the land 
(and other CLT assets, which might include the
community center) might not 
be subject to various taxes (e.g. property tax).  This
might be 
especially true in a place like PA, where large
community expenses like 
schools enjoy relatively low state support (compared
with Delaware, for 
example).  In many CLTs, the residents maintain
fee-simple ownership of 
their houses and other land improvements while the CLT
holds the land; 
their houses sit on a 99-year inheritable leasehold. 
The premiere source 
in the US for CLT info (and below-market-rate
financing for startups) is 
of course the Institute for Community Economics in New
England 
(Springfield, MA, I think -- I'm sure they have a
website, which maybe you've 
discovered)?  For some years I was a depositor in
their revolving loan 
fund, which now holds and manages several hundred
million dollars, I 
think.

A signal advantage to CLTs is that they can boost
affordability.  With 
a reduced tax burden, lower interest rates, and
especially since only 
the improvements change hands (you are buying the
building, not the 
relatively expensive land under it), purchase prices
and operating costs 
can drop dramatically over the lifetime of the CLT. 
Many CLTs in the 
past have had to choose to make voluntary donations to
local governments 
since their land, like that of hospitals and other
public/nonprofit 
institutions, is not conventionally part of the tax
base!

One lesser-known issue affecting any preservationist, 
democratically-controlled property holding (including
CLTs) is that over time, 
surrounding development may raise the value of
neighborhood property so much 
that initiatives may arise within the group to sell
the land for 
development and relocate elsewhere.  This isn't
necessarily an unhealthy thing, 
but it certainly can change the aspects of
"permanence" and 
"sustainability".  In such a situation, it may also be
appropriate to sell or 
donate development rights (for the open space at
least) to a local 
conservation trust; and this can in turn help reduce
whatever assessable value 
the property(ies) face for tax purposes.

It's worth ascending my soapbox one more time to
underscore how 
important it is for the group to surface and solidify
its core values bearing 
on these points.  I think that once a structure is
chosen, a group is 
pretty much confined to its parameters unless you want
to undertake the 
much harder (and more limited as to options) task of
restructuring 
further down the road.

Pardon me for spouting off about this if you've heard
it all already.

Cheers --

Dave Nuttall


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