Real Ideas for Fighting Displacement Part 2: Community Land Trusts

One of the biggest problems we see around development in Somerville is that the path of development is shaped not by the residents and homeowners, but instead by the real estate developers who come in and put high cash bids on properties. If you own a home here, you have received many pieces of mail, phone calls, and even in-person door knocking asking to buy your house – and if you rent, trust me when I say your landlord has gotten plenty of those offers.

The result of this is that most homes that hit the market – and many that never even go on the open market – go through a middleman step of being purchased by a developer, rehabbed (brought up to “luxury” status), and then remarketed as a finished product. This simultaneously displaces the current residents and puts the price range forever out of reach for the former tenants – working-class and middle-class people here in Somerville.

How We Can Stop It

When it comes to gentrification, this process is the worst outcome; it only does the exact thing we want to prevent. If we want innovative and community-serving development solutions that don’t displace residents, we need to present an alternative path. That’s where Community Land Trusts enter the equation.

A Community Land Trust is a non-profit organization set up to help people buy homes affordably in their community. The way it could work here is that a potential purchaser works with the Community Land Trust to make an offer on a property. The purchase is split: the new homeowner will buy the structure itself, and the Community Land Trust purchases the land underneath it.

An Example of How It Works

In Somerville, this would mean a dramatic reduction in the cost of housing and enable many people who are currently renters to become homeowners. Recent listings in Ward 2 show “pre-rehab” 2-family homes going for $950k-1M. One nearby case that I’m looking at today (pictured here) is pretty standard: 3beds/1bath and 2beds/1bath units in a 2-family for $950,000. Looking at the Somerville Assessor’s Database, we can see that the land underneath it is valued at $390,000.

A person buying this building would be looking at a big, hard-to-get Jumbo mortgage that would not qualify for many assistance programs, and the cost would be about $4,000/month for just the mortgage. That’s developer territory – and in order to make money a buyer is going to rehab the property and remarket it at luxury rates as soon as possible.

But when you get the Community Land Trust involved, things change dramatically. Buying the property as a tenant association working in conjunction with the land trust means the cost to the new occupants would be just $560,000. Split that across two units equitably based on living area and bedrooms, and we’re looking at just $308,000 for the 3BR unit, and $252,000 for a 2BR unit.

Those are mortgages for homes at just $1,200/month and $1,000/month. $1,000/month for two bedrooms… in Somerville! This isn’t a fantasy – this is something we can do. Even with homeowner’s insurance and property taxes, this is truly affordable housing for the middle class.

The homes still sell at market rate – the owner doesn’t lose anything in the sale.
The homes go to working class people who can now afford to stay in Somerville.

What Happens in the Future?

A home purchased in cooperation with a Community Land Trust generally comes with some terms attached, particularly when it comes to resale. The point of the CLT is to keep prices affordable forever by removing the property from the speculative investment market. When a property goes up for sale – because a family outgrows it, for example – the sale isn’t at “market rate”. Instead, the housing unit is sold at the rate of inflation plus any value of improvements made to the property (home renovations) and a small percentage for the homeowner’s stewardship and care of the property. In some cases the CLT can purchase the home and simply lease it at affordable rates instead.

This means homes remain affordable forever thanks to the covenants attached to a transaction made in cooperation with a Community Land Trust.

Community Land Trusts Stabilize Our Neighborhoods

This is a way of approaching housing as a right to affordable shelter that creates stable communities instead of a get-rich scheme that displaces residents and encourages gentrification.

There are a lot of different ways to manage Community Land Trusts and the devil is in the details, as always. But we’re got lots of great examples to pull from and I have confidence that we can structure one that works for Somerville.

Community Land Trusts aren’t new. In fact, they’ve been around since the 1980s in urban areas of the United States. Bernie did it as Mayor of Burlington. This is an approach we can start using right now in Somerville. It pairs very well with a Tenant Right of First Refusal Law and it’s something I’ll be pushing to establish starting my first day in office as your Alderman.

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