All real estate professionals know that our housing system was predicated on a model to create and generate private wealth. That model has placed 96.3% of our total housing stock throughout the country into privately owned housing. The problem? Only 63.4% of that housing is actually owned by homeowners. This percentage reflects the lowest rate of homeownership in this country since 1967.
So what about the other 36.6% of the population who are not homeowners? These people, almost entirely low-income people, are forced into the rental market where they struggle to afford monthly payments with the stagnant wages they earn. In fact, nearly 25% of all renters spend 50% of their monthly income on monthly rent. (All financial experts recommend that 30% of income is spent on housing costs.)
This current housing system in the US, rooted in the commodification of land and housing and in speculation, is not our only option. New York City is, in fact, one of 250 US cities set to try one of these options this month. The option? A Community Land Trust.
A Community Land Trust (CLT) is a classic public/private partnership that enables local residents to purchase housing instead of renting housing. Public and private funds and efforts are joined together to buy land parcels, usually vacant or existing properties, and put into community ownership via a non-profit organization. Cost guidelines are set by the community and then pegged to median incomes of people within the community land trust (CLT), not by market rates. The set cost of a housing unit is determined by 1/3 of the local median wage, multiplied by the standard 25 year fixed mortgage rate and then a front-end deposit rate of 10% is added.
CLT member democratically determine what kind of housing unit(s) get built on the land. The value of the land is kept steady…it does not fluctuate with market up’s and down’s. If the local resident/owner decides to sell the unit, the same above equation is used to determine the price of the unit…again, the purchase price is not affected by the up’s and down’s of housing prices.
The New York City Interboro CLT model initiated its efforts with +$1.6M from the Citi (as in Citi-Bank) Community Development Fund and has created a wide swath of non-profits, such as Habitat for Humanity, for additional resources. The Interboro CLT has enabled a firm base for low income people to, now that steady, stable housing is secured, guild their savings in order to invest in other necessities such as education, health care, etc. that often fall prey to high rental costs.
Additional options that may offer low-income people the opportunity to secure affordable, permanent, inclusive, community controlled housing are
- Limited Equity Co-ops (CEL) – member residents secure an ownership share and reside in buildings that are owned by the CEL. Owner residents pay a monthly fee to cover property taxes and operating costs. CELS are made possible by a combination of collective purchasing, low-interest mortgages and the assistance of a non-profit(s). Owner residents are protected from eviction by a 99-year lease.
- Tenement Syndicates (originated in Europe and confined to Europe) – A Tenement Syndicate is usually defined as a solidarity or dual ownership network. It is managed by two entities…tenants organized by individual housing projects who decide issues such as rental costs and what building renovations are necessary) and a business syndicate that manages all operational issues and financial loan packages. The underlying principal is that “no one is alone…the larger syndicate exists to support the buildings in which the people reside.”
- Mutual Aid Housing Co-ops (MHAC) first established in Latin America – MHACs exist and are maintained by groups of families who come together to collectively seek out land to build and maintain their housing. Everyone actively participates in order to save some 15-20% labor costs. The Federacion Uruguaya de Cooperativas de Vivienda por Ayuda Mutua is he largest and oldest MHAC in the world. It consists of +500 housing developments and 25,000 families and has expanded to 17 countries.
Much more information about community controlled, affordable, permanent and inclusive housing for ALL people is available by going to the Right to the City Alliance. Tony Romano is the Alliance’s director of organizing and strategic partnerships.