Community leaders and residents seeking to foster neighborhood stability and long-term affordability have several emerging models for community land ownership at their disposal. Among these, Community Land Trusts (CLTs) and Community Investment Trusts (CITs) stand out as distinct approaches, each with unique governance structures and mechanisms for achieving community benefit. While CLTs primarily focus on securing affordable housing, CITs aim to build local wealth through commercial property investment.

Understanding the differences between these models, including their governance, how they ensure long-term affordability or economic benefit, and their specific advantages, is crucial for evaluating their suitability for local neighborhood development. This comparison will help clarify how these models operate and how other shared equity models relate to CLTs.

Community Land Trusts (CLTs): Governance and Affordability

Community Land Trusts (CLTs) are nonprofit, community-based organizations designed to acquire and hold land permanently for the benefit of the community. They are a proven model for communities to control land and development, providing lasting community assets and shared equity homeownership opportunities, according to the Grounded Solutions Network. CLTs develop various projects, including rural and urban agriculture, commercial spaces, affordable rental and cooperative housing, and the conservation of land or urban green spaces.

A defining characteristic of CLTs is their governance structure. They are typically governed by a tripartite board of directors, which includes CLT homeowners, other community residents, and public representatives, as noted by the National League of Cities. This structure ensures balanced representation and embeds community building and collective decision-making into the trusts themselves, emphasizing self-determination, according to the Brookings Institution.

CLTs secure long-term affordability by separating land ownership from homeownership. The CLT owns the land, while homeowners purchase the structures on that land and lease the land from the trust through a long-term ground lease. This ground lease includes a resale formula that caps the price when the owner decides to sell, preserving affordability for future low-income buyers, as explained by the Lincoln Institute of Land Policy. For instance, the City of Lakes CLT's resale formula allows owners to benefit from 25 percent of the increase in value while capping the price to maintain affordability, according to the National League of Cities. This mechanism ensures perpetual affordability, resisting gentrification and displacement, and capturing the public's investment for long-term community benefit, as highlighted by the National League of Cities. However, this model limits the total equity an owner-occupier can accrue, and the land itself always remains in trust, which is a trade-off compared to traditional housing markets, the Brookings Institution points out.

Community Investment Trusts (CITs): Economic Benefit and Engagement

Community Investment Trusts (CITs) represent an emerging model for community ownership, distinct from CLTs in their primary focus and mechanism. While CLTs concentrate on affordable housing and land stewardship, CITs aim to build local wealth and shape local economic development, particularly through commercial property investment. Steve Dubb, writing for Shelterforce, describes CITs as vehicles that vest a significant share of building ownership in hundreds of residents, often through small, regular deposits.

The core mechanism of a CIT involves creating pooled investment funds or direct ownership structures for commercial retail spaces. Residents can invest small amounts, sometimes as little as $10 a month, into these trusts. These investments allow residents to participate in and benefit from local commercial real estate, earning dividends and contributing to local economic growth. This model ensures that agency stays local with the people in the community, according to Dubb. The focus is on providing financial returns to investors and fostering local economic development, rather than directly creating affordable housing units.

Comparative Analysis: CLTs vs. CITs

Community Land Trusts and Community Investment Trusts offer distinct pathways for community empowerment, each with unique objectives and operational models. While both aim for community benefit, their primary mechanisms and assets under control differ significantly.

CLTs are nonprofit, community-based organizations that acquire and hold land permanently for community benefit, focusing on creating and preserving long-term affordable homeownership and other community assets. Their governance is characterized by a tripartite board, ensuring balanced representation of homeowners, community residents, and public representatives, as noted by the Grounded Solutions Network and the National League of Cities. Affordability is secured through a long-term ground lease and a resale formula that limits equity gain for individual homeowners, ensuring perpetual affordability for future low-income buyers, according to the Lincoln Institute of Land Policy. The trade-off for homeowners is limited equity accrual, as the land remains in trust, as the Brookings Institution explains.

In contrast, CITs are a newer model, often structured as diversified funds or direct ownership of commercial retail space, as described by Steve Dubb in Shelterforce. Their primary focus is on using local ownership to build wealth and shape local economic development, particularly through commercial property investment. CITs allow residents to invest small amounts in commercial properties, earning dividends and participating in local economic growth. This model provides a financial return to investors and fosters local economic development, but it does not directly address housing affordability in the same way CLTs do. The emphasis is on investment and dividends, which indirectly supports community wealth.

Here is a comparison of Community Land Trusts and Community Investment Trusts:

Dimension Community Land Trust (CLT) Community Investment Trust (CIT)
Model Type Nonprofit, community-based organization that acquires and holds land permanently for community benefit. New model for community ownership, often structured as diversified funds or direct ownership of commercial retail space.
Primary Focus Creating and preserving long-term affordable homeownership and other community assets, resisting gentrification and displacement. Using local ownership to build wealth and shape local economic development, particularly through commercial property investment.
Governance Structure Tripartite board of directors, typically composed of CLT homeowners, community residents, and public representatives. Specific governance structures can vary, but the model emphasizes local agency and community engagement in investment decisions.
Mechanism for Affordability/Benefit Owns the land and leases it to homeowners via a long-term ground lease, which includes a resale formula limiting equity gain for perpetual affordability. Allows residents to invest small amounts in commercial properties, earning dividends and participating in local economic growth.
Community Control/Engagement High degree of community control over land and development decisions through its governance structure and mission. Fosters local agency and community trust through pooled investment funds that actively shape local economic development.
Key Trade-offs Limits the total equity an owner-occupier can accrue; land always remains in trust. Focuses on financial returns and economic development; does not directly provide affordable housing units.

Other Shared Equity Models

Beyond CLTs, other shared equity models also aim to preserve affordability and provide community benefits, though they differ in their mechanisms and governance. These models often relate to or differ from CLTs in how they manage land ownership and ensure long-term affordability.

Deed-restricted, below-market-rate homeownership programs, for example, share many goals with CLTs but typically operate without the ground lease or the tripartite governance structure that provides community control, according to the National League of Cities. These programs are often run by municipalities as part of inclusionary housing initiatives or by nonprofit housing organizations like Habitat for Humanity affiliates. In such programs, municipalities may require developers to convey a portion of units to income-qualified purchasers at affordable prices.

Limited Equity Housing Cooperatives (LEHCs) and Resident Owned Communities (ROCs) are other forms of shared equity. An LEHC might own a multi-family building that sits on CLT-owned land, illustrating a potential partnership, as noted by the National League of Cities. ROCs, specifically, help preserve the affordability of manufactured home parks by reducing the risk of rapid rent increases or eviction for homeowners who lease the land their homes sit on. In ROCs, each household shares ownership of the cooperative and can vote on decisions related to the park's governance and operation, according to the National Housing Conference. While these models offer shared ownership and some level of community control, they may not always involve the permanent separation of land and housing ownership that is central to the CLT model for perpetual affordability.

Conclusion: Evaluating Models for Neighborhood Development

Community leaders and residents have powerful tools in Community Land Trusts (CLTs) and Community Investment Trusts (CITs) to shape their neighborhoods. CLTs offer a robust, proven model for achieving long-term affordable housing and resisting displacement by permanently holding land in trust and controlling resale prices. Their tripartite governance ensures broad community representation in decision-making. While CLTs limit individual equity gain, they prioritize housing as a collective good and provide a stake in neighborhood development for those otherwise priced out, as highlighted by the Brookings Institution.

CITs, on the other hand, provide a mechanism for local residents to invest directly in commercial properties, fostering local economic development and building community wealth through dividends. This model empowers residents to actively shape their local economy and benefit financially from its growth, as Steve Dubb explains in Shelterforce. However, CITs do not directly address housing affordability in the same way CLTs do.

When evaluating these options, community leaders should consider their primary objectives. If the goal is to secure and preserve long-term affordable housing and ensure community control over land use, CLTs offer a direct and effective solution. If the focus is on building local economic power, generating wealth for residents through commercial investment, and fostering local agency, CITs present a compelling, albeit newer, model. Understanding these distinct approaches and their respective trade-offs will enable communities to select the most appropriate model, or combination of models, to achieve their specific neighborhood development goals.

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