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New York Is Funding A Community Land Trust To Help Low-Income Residents Buy Homes

Through the innovative housing model, the city’s Interboro CLT will create a pipeline of permanently affordable units from which residents can start to build wealth.

New York Is Funding A Community Land Trust To Help Low-Income Residents Buy Homes
“When it comes to a place like New York, we need all the affordable housing and homeownership models we can get.” [Photo: Daryan Shamkhali/Unsplash]

New York City’s housing crisis has been ongoing for so many years–and become even more rampant in the decade since the financial crash–that finding a solution can often feel impossible, despite Mayor Bill de Blasio’s focus on doing so. Rent-stabilized apartments are disappearing at an alarming rate; developers aren’t building enough new affordable units, claiming the lower rents will accrue too slowly to recuperate the costs. And market-rate housing values are rising so steeply that the traditional way of determining affordability—linking the cost to a fraction, usually 40%, of the market rate—renders those units still far too expensive for low-income New Yorkers to afford, both as renters, but especially as owners. In 2014, only 9% of the homes on the market were affordable to the 51% of New Yorkers earning less than $55,000 per year.

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But there is a way that many housing advocates argue would ensure that a portion of its housing stock remains genuinely affordable and accessible to prospective homeowners, and that is by establishing a different kind of ownership structure, called a community land trust.

CLTs are nonprofits that use public and private funds to buy up properties and place them into community ownership. Instead of determining affordability as a fraction of the market rate, CLTs sell units to owners at a rate equivalent to one-third of the local median income, ensuring that they will remain accessible to low-income residents.  Whenever a unit within a CLT is sold, owners must follow the same pricing principle to keep the unit affordable over time.

There are around 250 CLTs in the U.S., but the model is still quite uncommon and has been slow to take root in New York City, despite its proven track record of maintaining affordability. Now, a $1 million contribution from Citi Community Development, has helped establish the first New York City-wide CLT, Interboro CLT. The CLT will help facilitate property ownership among low-income New Yorkers, who often struggle to pay rent month-to-month in their increasingly expensive city.

Support for Interboro CLT–and a handful of smaller NYC-based CLTs–has been brewing since last year, when Citi Community Development provided initial seed funding to set up the CLT. Citi is one of the largest financers of affordable housing in the country, and “when it comes to a place like New York, we need all the affordable housing and homeownership models we can get,” Bob Annibale, global director of Citi Community Development and Inclusive Finance, tells Fast Company.

This past summer, the New York City Department of Housing Preservation and Development announced that it will be distributing a grant of $1.65 million among four local CLTs, including Interboro. The funding came out of settlements with banks negotiated by Attorney General Eric Schneiderman, whose office worked with the nonprofit Enterprise Community Partners to allocate the funds.

But almost needless to say, a quarter of $1.65 million would not be enough for a CLT to buy up the necessary property to take root, especially not in New York. The funding from the AG’s office represented necessary state-level support for the still-unconventional housing model, and the additional commitment from Citi toward the Interboro Growth Fund will solidify its place in the city by providing the CLT with sufficient equity to begin sourcing other loans and investments, Annibale says. The timeline and exact amount of necessary funding to start development on the CLT are still being worked out, according to Matt Dunbar, VP of government relations and advocacy for Habitat for Humanity New York City. But Interboro’s first stage will involve developing 250 affordable units, and it will eventually become one of the largest CLTs in the country.

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Interboro CLT has partnered with a wide variety of housing nonprofits, including the Center for NYC NeighborhoodsHabitat for Humanity New York CityMutual Housing Association of NY, and the Urban Homesteading Assistance Board. This structure is quite unusual for a CLT, which generally has a more limited number of partners, but “it’s very New York,” Annibale says, and allows the CLT to extend across the five boroughs. Many of Interboro’s partners already own or oversee units that they will cede to Interboro CLT; others will help to facilitate loans for redeveloped or newly constructed units. The partners, Dunbar says, are still in the process of integrating their existing programs with Interboro.

By working with a wide swath of nonprofits and collecting a wide variety of units across the whole city under a CLT, Annibale says Interboro is setting itself up to “be a vehicle that works across various geographies, and will, as a result, be more inviting to future partners and property developers to join.” And because the CLT will foster a new network of property owners across the city, it will help to advance economic opportunities for lower-income New Yorkers. Between 2013 and 2016, the median net worth of homeowners rose an average of 15%. Renters’ net worth in the same time frame fell by 5%. Enabling homeownership for low-income New Yorkers, Annibale says, will provide a firmer base from which they can build savings and invest in other necessities like education, health, or other personal needs that often fall prey to the high costs of renting. As Interboro expands its reach across the city, its partners are hopeful that it will become an important part of the city’s effort to increase equity and opportunity across the socioeconomic spectrum.

About the author

Eillie Anzilotti is an assistant editor for Fast Company's Ideas section, covering sustainability, social good, and alternative economies. Previously, she wrote for CityLab.

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