Commentary

Virginia now has a statewide community land trust. Can it help solve the housing crisis?

September 29, 2021 12:02 am

A house in Richmond’s Chimborazo neighborhood was renovated for the land trust by Richmond Metropolitan Habitat for Humanity. (Maggie Walker Community Land Trust)

Envisioning the face of the affordable housing crisis in the commonwealth might conjure images of Northern Virginia’s million dollar McMansions or Richmond rowhouses now selling for 24 percent more than last year. 

Few folks would land on Blacksburg — the charming college town in the New River Valley best known as the home of the Hokies. With an average sale price of $435,000 and typical time spent on the market at less than a day, homes in Blacksburg have become nigh impossible to come by. The severity of the crisis has sent local officials searching for solutions, making the town of just 15,000 permanent residents the latest Virginia locality to experiment with a community land trust.

“We actually have a tighter housing market than NoVA and most of that is due to a lack of supply,” said Kim Thurlow who works on housing initiatives for the Town of Blacksburg. “Homes here are being snapped off the market. We are a small college town experiencing really rapid growth due to the university, the former alumni that see our area as a potential investment and of course the innovative businesses that are being spun off from the university. If you’re a first time home buyer, you’re getting squeezed out of town.”

A three-part resident engagement process on housing created consensus around establishing a community land trust (CLT) — a nonprofit corporation that holds land communally and can buy lots, develop housing and keep it affordable indefinitely. Last year a steering team comprising Blacksburg, Montgomery County and Christiansburg developed a business plan, projected how much public funding would be needed and identified the best areas to invest in, but since then their efforts have stalled.

“Unlike in better resourced areas like Richmond and Charlottesville, fundraising capacity within our community is very low,” explained Thurlow. “Operating support for a CLT is not guaranteed here and it’s unlikely that any local fundraising efforts would match the operating costs. There are a number of potential funding sources for the housing development side, but none of them are set up to pay for the operational costs needed to have a staff that would offer support to the homeowner long-term. All of the programs we want to run require manpower.”

Permanently affordable

If the Town of Blacksburg and its allies do pull together a community land trust, it would become just the fourth in the state. In 2008, Charlottesville established the Thomas Jefferson CLT — the first ever in Virginia. Richmond’s Maggie Walker CLT, which will soon sell its 55th home in a few months, followed in 2016. Virginia’s newest CLT is a matter of months old and only expects its first property next month; however, while the state’s first two CLTs focused on servicing specific regions, the Virginia Statewide CLT is hoping to pull in and protect properties across the commonwealth.

“This is the brainchild of a few different Habitat for Humanity affiliates who have been meeting for several years to discuss the ways in which a shared equity model could benefit the work they’re already doing to provide housing access to low- and moderate-income households,” said Julia MacNally — VACLT’s program director. “Rather than form a community land trust that just serves one community, we want this to be a tool that we can mold and shape to fit a lot of communities across the state served by Habitat for Humanity and other nonprofit housing providers.”

The two Habitat chapters which played midwife to the new CLT did so out of a desire to stop playing whack-a-mole with the state’s surging demand for affordable housing. “Fifteen years after you buy, homeowners can sell most affordable units at market rate, so the price can easily go from $200,000 to $600,000 in a place like Loudoun County,” said Erica Sims — the CEO of the Maggie Walker CLT. “If those units had been held by a CLT the affordability would have been permanent.”

CLTs maintain affordability by never selling the land underneath the housing and splitting the earned equity with the homeowner when they sell the structure. Although the model developed in rural Georgia as a way for Black farmers to protect their land from the forced sales and seizures which have long hindered people of color from accruing wealth in this country, CLTs have only recently made their way to Virginia via the movement for affordable housing.

“A CLT is a model that’s trying to separate itself from the housing market because we know incomes are not increasing at the pace of home values,” MacNally said. “The community land trust model creates homes that are not allowed to increase in cost at the same pace as the market. It’s a radical alternative to conventional homeownership and wealth building that is becoming more and more necessary as we see the housing market explode. It’s become untenable for first-time buyers to purchase anything.”

Lacking a CLT, the best Blacksburg’s affordable housing providers have been able to do has been 99-year deed restrictions limiting further sales of affordable units to folks earning 80 percent of the regional average median income or lower. “Legally we can’t do more,” said Thurlow. “While 99 years seems like a long period of time, whoever owns the property at that time will hit a windfall when they can resell it on the open market.”

In a world of limited funding and rapidly growing need, the loss of even one affordable unit is something providers are desperate to avoid. That predicament also explains why CLTs have become so desirable across the commonwealth. “It’s a one-time subsidy that serves homeowners in perpetuity,” Sims said. “You have a home that you make affordable one time and then the CLT resell model ensures these properties stay affordable permanently. Having a system that uses subsidies so efficiently is appealing.”

Hurdles to more homes

Although the CLT model has grown exceedingly popular in housing circles over the last decade, the average number of units held by land trusts nationally is just 10. With nearly six times as many units in its portfolio and another 125 in the pipeline, the Maggie Walker CLT — Virginia’s largest — is doing better than most but still woefully far from meeting the Richmond region’s surging need for affordable housing. If CLTs are so popular and cost-effective, why aren’t they growing faster?

“Our needs are the same as any affordable housing developer: it’s land and money,” explained Sims. “Land is scarce right now for people building million-dollar homes and people building $200,000 homes. How much I have to pay for the land is critical because I’m not only selling a house below market. I’m selling it below cost.”

That’s why Sims was cheered when the City of Richmond approved a proposal in May to transfer 15 parcels of city-owned land to the Maggie Walker CLT for residential development and the creation of community gardens. If Mayor Levar Stoney follows through on his campaign promise to gift an additional 38 properties to the CLT — some of them big enough for large-scale multi-family housing development — the impact could be even greater.

“Municipal contributions of land are so important because that takes one of our biggest costs of providing more affordable housing out of the equation,” Sims said. “It’s a difficult thing for jurisdictions to come to grips with because that land is an asset for them to sell and get money for all the other things they want to do like build schools and infrastructure; however, we provide a return to the community over time far greater than that $50,000 can do in one-time spending.”

A bill from Del. Ibraheem Samirah, D-Herndon, that would have granted land banks a right of first refusal and a one dollar price tag on tax delinquent properties in exchange for developing them into permanently affordable housing failed in the General Assembly this year.

One legislative change affordable housing advocates hope could come down the pipeline this year is a real estate tax exemption for CLTs. “If we buy a lot and we build a house on it, during that time we owe taxes on the lot and on the home which adds costs,” Sims said. “When we sell the home to the homeowner, the homeowner pays taxes on their home like any regular homeowner, but the land underneath should be tax exempt to help reduce our costs and allow us to invest that money into building more units.”

Currently the Maggie Walker CLT enjoys tax-exempt status in the three localities in which it operates thanks to their generosity, but a state law would protect that status should the localities change their mind, and it would also extend that support to other fledgling CLTs statewide. 

Thurlow is interested in any support her steering committee can get — legislative, financial or otherwise — to help stand up a CLT in the New River Valley: “We need a CLT to be that little step stool within our housing ladder to allow people to enter into homeownership and support them enough so they can get into the traditional home market because without that they aren’t going to be able to get there in our community.”

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Wyatt Gordon
Wyatt Gordon

Wyatt Gordon covers transportation, housing, and land use for the Mercury through a grant from the Piedmont Environmental Council and the Coalition for Smarter Growth. The Mercury retains full editorial control. Wyatt is a born-and-raised Richmonder with a master’s in urban planning from the University of Hawai‘i at Mānoa and a bachelor’s in international political economy from the American University in Washington, D.C. Most recently he covered transportation as Greater Greater Washington’s Virginia correspondent. Previously he’s written for the Times of India, Nairobi News, Honolulu Civil Beat, Style Weekly and RVA Magazine. He also works as a policy manager for land use and transportation at the Virginia Conservation Network. Contact him at [email protected]

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