Trust in the Land

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Waning Crescent of the Flower Moon

“Over 200 LEED-certified new homes are being built by the Dorchester Bay Economic Development Corporation under the auspices of…Dudley Neighbors Inc., Boston’s two-decade-old community land trust — a burgeoning affordable housing strategy where residents buy the homes but not the land underneath, thus reducing the price.”   This from the Land Institute website yesterday.

Another memory jogger.   25 years ago I worked in a small University of Minnesota and hospital dominated neighborhood of Minneapolis called Cedar-Riverside.  A grand plan for very dense housing proposed by Keith Heller, a UofM economics professor and Gloria Segal, a Minnesota DFL heavyweight would have buried the community with housing for more than 25,000 people.  That would have meant fitting a city the size of Andover on a plot of land that is a small neighborhood by Minneapolis standards, a plot of land those 25,000 + would have shared with Augsburg College, St. Mary’s Hospital, Fairview Hospital, and the University’s West Bank campus which included the Wilson Library, two towers of classroom space and a performing arts center.

Citizens of the neighborhood fought back, filed an environmental impact lawsuit, a notion then in its infancy, and won.  The settlement of that lawsuit provided the neighborhood with several million dollars to use in developing the community at a level consistent with the residents wishes.  We pursued several innovative community development strategies in those days.

Among them was a land-trust.  This was well in advance of the land-trust referred to in the Land Institute quote.  It worked like this.

We developed different housing options, mostly townhomes, all as co-operatives, that is, resident managed and jointly owned.   These were limited-equity co-ops, meaning you paid a small fee up front to join the co-operative, usually around a $1,000 and when you moved you sold your unit back to the co-op and received your fee back in return.  This idea had two positives from a community development perspective.  First, it allowed low-income people entree to a self-governing living situation (no landlord or they became the landlord).  Second, it discouraged speculation in the individual units which would make the units affordable over time.

The land-trust was a guard against a problem that had occurred in the 70’s in some cities. Community based developers would build low-income housing units as co-ops, then turn the whole project over to the co-operative.  As time went by and the property values increased, the co-op and its land would become more and more valuable.  Eventually, a for-profit developer would make the co-op and offer they couldn’t refuse and the co-ops would sell out.   This removed the housing from the ranks of affordable housing, defeating the original purpose in its construction.

The landtrust prevented that in two ways.  First, the land was  held in trust by a third party, usually a land trust corporation controlled by a community development corporation or the community development corporation itself.  This made every transaction for the whole a three party negotiation with the land-trust holding veto rights.  Second, a clause in the contract stipulated that if the land ever was sold, it triggered a penalty which equaled the interest on all the years since the projects completion.

A secondary aspect of the land-trust was its ability to lower the overall cost of the housing by taking land out of the total development equation.

No good deed goes unpunished, however, and I imagine the good folks in Boston will find similar problems to those that have developed in Cedar-Riverside.  Turns out everyone wants a piece of the increase in home value pie.  Tenants became incensed when all they got back was their original fee instead of an inflation or value multiplied amount.  Co-ops also vary a good deal in the people who come to share responsibility for them.  Sometimes general management was an issue, too.  Still, in my mind, the land-trust remains a sound tool for developing and maintaing housing affordable to all.

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