Evaluating the Potential for More Community Land Trusts in the Triangle J Area

Abstract

Policy Problem. There is a lack of housing that is affordable to low-income households. This is true across the United States but it is particularly acute in urban areas experiencing rapid economic growth. The Triangle J area is home to several such growing cities who are struggling to provide space for low-income households as land values rise and housing becomes more inaccessible for more people. The situation is made by worse by the fact that not all existing affordable housing units in Triangle J were designed to be permanently affordable. As such, 3,000 affordable housing units will see their affordability restrictions expire in the next five years.

Replacing units lost through traditional affordable housing practices is extremely costly and ultimately inefficient. There is only so much land that can be developed and replacement affordable housing may not have the same access to amenities as what was lost. Developing permanently affordable housing will ensure that the investments local governments make towards providing housing are not eventually lost at a time when affordable housing is already in short supply.

Policy Question. How can entities like the Triangle J Council of Governments (TJCOG) leverage community land trusts (CLTs) in regions where escalating housing costs are driving up the need for affordable workforce housing? This project seeks to evaluate the potential for CLTs in the Triangle J area based on examples from outside the region and the level of opportunity in Triangle J’s counties.

Results

Inclusionary Zoning is not Required for CLTs to Succeed: Case study CLTs formed and continue to grow without the benefit of Inclusionary Zoning ordinances. Inclusionary Zoning requires housing developers to sell a portion of the homes they develop at affordable rates set by local government. This can make it easier for CLTs to acquire more housing units. However, the case studies demonstrate that Inclusionary Zoning should not be thought of as a necessity for successful CLTs.

Inclusionary Zoning can Optimize the Growth of CLTs: While Inclusionary Zoning policies are not necessary to create sustainable CLTs, they can promote their growth. Unless it is donated land, CLTs must pay the going price for any property they want to acquire. Policies that require more affordable housing development therefore make acquiring land easier for CLTs.

Rental Housing is Still Cheaper to Provide: Every case study CLT provides more rental units than they do homeownership units. This is the case even for CLTs that started off focused solely or primarily on homeownership. Rental units allow CLTs to serve extremely low income populations, but resource constraints are the more immediate reason CLTs provide more of them. There is no feasible way for CLTs to provide homeownership to every household they currently serve with rental housing.

CLTs can be Sustained in Many Contexts: The CLTs in this study are found in areas of relatively high and relatively low opportunity. Some counties are rural or sparsely populated while others are highly urbanized and heavily populated. The CLTs in the study were all formed over ten years ago and have survived such shocks as the housing bubble and now the COVID 19 epidemic.

Educating Relevant Stakeholders on CLTs is Important: A common theme emerged in which poor understanding of the legal basis for CLTs created obstacles for CLTs. Even when CLTs had high level government support, agents on the ground that were only familiar with traditional homeownership believed the model was illegal and opposed it. They were under the impression that ownership of the land could not be separated from ownership of homes on the land.

Traditional Banking Plays a Role in CLT Homeownership: CLT homeowners must still acquire mortgages from banks and lending institutions. CLTs establish relationships with banks and assist potential homeowners in obtaining these loans. This assistance can help prevent predatory lending in CLT homes. However, CLTs are still vulnerable to bank closures and the aftermath of the Great Recession has made acquiring loans for new homeowners more difficult.

Recommendations

Advocate for Inclusionary Zoning Policies and Enabling Legislation: While CLTs can be sustained without mandatory inclusionary zoning policies, they are generally helpful. Care must be taken to design the policies so that CLTs can utilize them. Local governments have some flexibility on this issue in NC, but state legislation clarifying that such ordinances are permissible would help with the rate of adoption.

Raise Awareness about the CLT Model: Despite how long CLTs have been around, it seems many people are unaware of what they are. Unfamiliarity with how they operate in practice is particularly common. CLTs should be promoted as a cost effective tool to provide affordable housing on a more permanent basis.

Expand CLTs Beyond Major Urban Centers: CLTs are highly adaptable and can work in rural and urban settings. Presently, Triangle J only has CLTs in highly urbanized areas. CLTs in more sparsely populated areas can also act as conservation land trusts that protect undeveloped land in addition to affordable housing.

Utilize Existing CLTs as Capacity Builders: Triangle J is fortunate that it already has a couple of well-established CLTs within its borders. The people who work there are experts in running CLTs and they should be encouraged to use their skills to build capacity in areas that lack CLTs.

Methodology

The project uses a mix of quantitative and qualitative methods. First, three case studies are used to demonstrate how regional CLTs have developed in the past. Interviews with individuals involved in the CLTs were used to learn about their origin stories and organizational dynamics. These CLTs can serve as examples for developing successful county-wide and multi-county CLTs in the Triangle J Area.

This report sought to test the adaptability of the CLT model. For that reason, data from the Opportunity Index was used to compare the level of opportunity in the counties the CLTs were located in with their surrounding counties. The same was done for Triangle J’s counties. The opportunity data were collected to demonstrate the kinds of environments that CLTs have successfully formed in. Counties in the Triangle J Area vary in terms of their racial makeup, level of opportunity and population size, among other aspects. The case study data helps to answer the question of whether CLTs could successfully establish and maintain themselves throughout the Triangle J Area.