The NMCDC’s Land Stewardship Program preserves and develops permanently affordable homeownership opportunities in Missoula’s Northside, Westside and Downtown neighborhoods using a Community Land Trust model.
The North-Missoula Community Development Corporation is one of only a few Community Land Trusts (CLT) in the state of Montana that develops and maintains permanently affordable housing. There are many benefits to having a Community Land Trust. These include:
- Promoting neighborhood preservation, revitalization and stability;
- Creating and maintaining housing that will remain affordable; and
- Providing access to land and housing for people of modest means.
Community Land Trust (CLT) Basics
What is a community land trust?
A community land trust (CLT) is a nonprofit, community-guided organization that works to provide permanently affordable homeownership opportunities that are reserved for income-qualified buyers. A CLT creates additional housing opportunities by either purchasing land with existing housing or constructing new housing on vacant land. The ownership of land and the home is then separated, with NMCDC retaining ownership of the land, and the homes (improvements) on the land being sold to income-qualified buyers. Rather than owning the land and the home, homeowners are granted long-term renewable and inheritable rights to the land. This relationship between the homeowners and the CLT means the homes are affordable to people who would otherwise be unable to purchase a home. CLT residents benefit from stable monthly payments, residential security, and the opportunity to build equity. There are over 250 CLTs in the nation today, in cities, suburbs, and rural areas.
How CLTs lead to increased and permanent affordability
To achieve and maintain attainable home prices, three important mechanisms are involved: (1) removal of land cost from the price of the home, (2) investment of subsidy in the home to bring down the price and (3) the resale formula that keeps the home affordable from one buyer to the next.
Land costs have been appreciating at a high rate in the Missoula area and removal of land cost from the price of the home is the first mechanism that significantly lowers the price of the home. When a homeowner purchases a home, they also enter into a Ground Lease with the NMCDC that leases the land under the house at a low fee of $30/month. The Ground Lease gives the person who occupies the land the perpetual use of the land, which cannot be ended unless the homeowner fails to pay the fee or uses the land in a harmful way. To the outside observer, it appears that the lessee is the landowner. The lessee’s right to act like the day-to-day owner of the land is theirs to control. The NMCDC Ground Lease is renewable and inheritable and runs for seventy-five year periods. Perpetual leasing of land is not a new idea. It has been used in some New England farming communities for many decades. Long-term land leases are also common on railroad lands and State lands, where individuals own structures on leased land. The Ground Lease also defines the second mechanism, a Resale Formula, which continues the affordability of the home into the future.
A Community Land Trust owner agrees upon purchase to follow a defined process at resale. The lease contains a resale formula that defines the maximum resale price. An owner cannot exceed that price when selling the home. This allows a CLT owner to retain their earned equity but caps the unearned equity that can be gained over time. The formula-based resale price ensures that the home stays affordable for the next owner.
Community Land Trusts – A Viable Missoula Solution for Permanent Affordability
Since initial home sales in NMCDC’s Community Land Trust in 2002, 42 income restricted units, have served 87 households. These buyers have been majority heads of household female and a total of 14 children have been served at time of purchase (many of our households also grow in size after purchase, but the NMCDC does not track this data.)
The sales prices of NMCDC’s CLT homes, while increasing, has remained below the increase in median house prices. This demonstrates the effectiveness of the initial subsidy invested in the creation of below market rate housing, secured for 80% AMI households, both over time and through multiple re-sales. While, the Missoula housing market experienced a decline in housing prices during the late 2000s, NMCDC homes remained below market value, and the gap between the CLT homes and market rate homes widens as the median price and strength of the housing market increases.
If you think you might qualify and are interested in one of our CLT properties, please download the NMCDC Homebuyer Application and get in touch!