Commercial community land trusts
What is it?
A community land trust (CLT) is typically a nonprofit corporation that owns property and holds it in perpetuity for the benefit of the community. CLTs have historically been used to guarantee permanently affordable housing and can be an effective tool for equitable development in both hot and cold real estate markets. In the classic CLT model, homes are sold at below-market rates to low- and moderate-income families who typically would not be able to buy market-rate homes, and the CLT leases the land to the owner on a long-term basis. The resale value of the home is capped to maintain affordability while enabling the owners to build assets and wealth. There are an estimated 220 CLTs in the United States, with a proven track record of housing stabilization. Many CLTs have used this structure to provide permanently affordable rental housing and other community amenities in addition to single-family homeownership.
The CLT model has also been adapted for commercial use for the benefit of independent, locally owned businesses. In gentrifying neighborhoods, non-profit organizations and small businesses operated by people of color and low-income entrepreneurs are at risk of displacement due to rising rents. In these neighborhoods, commercial CLTs can serve as a strategy to protect affordability, support entrepreneurs of color, and retain local businesses and organizations that represent and foster the unique cultural character of the community. In disinvested neighborhoods, a lack of available commercial spaces can be a barrier to local residents who would like to establish businesses and other community amenities. In such cases, commercial CLTs can be a strategy to drive revitalization and build community wealth.
In addition to the PolicyLink resources listed on the right, see Grounded Solutions Network, Democracy Collaborative, Lincoln Land Institute, and the Institute for Local Self-Reliance for more information about community land trusts for commercial use.
Who implements it?
- Elected and appointed city officials can allocate resources, donate public land or use eminent domain to acquire it, plan for business retention, zone commercial areas in ways that would discourage national brands from displacing local business, and work with state officials to craft laws making their efforts work more efficiently and effectively.
- Business leaders can organize support for such efforts through chambers of commerce and other business associations, support political leaders' efforts, and provide resources to seed commercial CLTs and related efforts.
- Foundations can provide resources and other support to establish or expand CLTs for non-residential use (including outreach efforts to effect necessary planning and zoning changes). They can also encourage individual donors to donate real property to CLTs.
- Community-based organizations and other advocates can organize local business representatives, help them advocate with government and other stakeholders, and serve as liaisons to ensure community input in the design and implementation of commercial CLTs.
While residential CLTs are generally designed to benefit low-income households, commercial CLTs are designed to protect local businesses and cultural institutions from unaffordable commercial rents or eviction. While there may be overlapping goals — small businesses may be owned by low-income residents, for example – the underlying policy concerns are different.
- Existing CLT infrastructure: Commercial CLT models have developed organically out of traditional CLTs with the insight that equitable economic development and community stability should go hand in hand with the creation and preservation of affordable housing. This means that an existing legal and organizational infrastructure is already in place for commercial-focused programs and supports.
- Property taxation: High-value tax assessments can result in higher-than-expected costs for commercial properties.
- Ground lease limitations: Courts tend to disfavor lease terms that are indefinite or unusually long. Residential CLT ground leases are often established for a term of 99 years. Some jurisdictions might require shorter lease terms or special provisions for non-residential properties.
- Governance: CLTs are generally membership organizations with a tripartite board structure consisting of 1/3 CLT residents, 1/3 dues-paying members from within the CLT's service area, and 1/3 public representatives and people with specific technical capacities. If an existing CLT takes up a significant portfolio of nonresidential properties, this governance structure might need to be adjusted to account for the new mix of leaseholders.
- Land acquisition: I Cities can support commercial CLTs by either offering donated land, discounting vacant lots or abandoned properties, or otherwise providing acquisition financing support for non-residential real estate to promote business or other community development.
- Zoning: In conjunction with a commercial CLT, small-scale commercial zoning in neighborhoods at risk of gentrification can help to prevent small business displacement. Large chain retail businesses require larger storefronts than small businesses need. By using a small-scale zoning approach to storefronts, city governments can right-size commercial spaces to support existing and new small businesses. Such policy efforts might focus on "Historically Underutilized Business Zones" identified by the Federal Small Business Administration where local small businesses can access set-aside federal contracting opportunities, or other planned commercial districts.
Where is it working?
The commercial CLT model has only been implemented in a handful of places, but shows strong potential as a tool for local business stabilization and retention. In most instances, it has been adopted by existing CLTs as an extension of their affordable housing focus. A strong equity-centered approach to developing a commercial CLT should be coupled with strong anti-displacement protections for renters and low-income homeowners, center the needs and desires of neighborhood residents, and prioritize entrepreneurs of color and the cultural anchors of a community.
- The Crescent City CLT in New Orleans acquires and redevelops vacant commercial or mixed-use buildings on key commercial corridors, to reduce blight and foster the development of vibrant commercial corridors where local businesses can grow without fear of displacement. By providing stable, quality commercial space, the CLT supports local business development to generate economic activity and job creation. It helps new commercial tenants engage with community members and the local business community in order to maximize the potential for local hiring and place-based economic change. These developments will often serve mixed incomes, with some affordable spaces and some market-rate spaces for both commercial space and housing (in mixed-use buildings).
- In Albuquerque, the Sawmill community is one of the oldest Latinx neighborhoods in the city, where resident organizing around public health issues and environmental justice culminated in the formation of the Sawmill CLT in 1996. Its flagship development, Arbolera de Vida, targets first-time homebuyers who earn 80 percent or less of the area median income (AMI) and includes three apartment complexes that cater to renters with incomes between 40 and 60 percent of AMI. Sawmill CLT has also created 16 commercial spaces for small businesses on the ground floor of its 62-unit residential building, the Artisan. The CLT plans commercial development and job-intensive economic development on this inner-city site, a seven-acre brownfields parcel.
- In San Francisco, the Japantown Task Force has been assessing the feasibility of establishing a community land trust to help preserve the cultural and historical integrity of the Japantown community through acquisition and preservation of key commercial properties and other community assets. Only three Japantowns remain in the United States; as Miriam Axel-Lute explained, in San Francisco "many of the businesses that give the storied neighborhood its cultural theme are on month-to-month leases with an absentee landlord." The Task Force has been developing a business plan identifying the mission and business model, corporate structure, and organizational operating plan for the Japantown Community Land Trust.