Do Community Land Trusts (CLTs) pay local property taxes?
YES. Property taxes are paid either by the homeowner or the CLT, via an agreement between them. The state assesses the fair market property value in CLT homes by taking into account any limitation on resale prices set forth in the CLT ground lease. If CLTs operate rental housing for low-income persons, they may be eligible for a tax exemption, yet are required to make Payments in Lieu of Taxes (PILOT) to the City just like any other non-profit low-income rental-housing provider. Where CLTs control land for conservation or preservation purposes, they can apply for an exemption from property taxes, if certified as environmental land trusts by the state.
Source: Md. Tax-Property §§7-202(b), 7-304, 7-503, 7-504, and 7-506.2.
Do CLT’s Negatively Impact Neighbors’ Property Value?
No. State law says that any land trust-related sale will be marked as “non-arms length” to ensure that the property will not be considered as a comparable in the appraisal of any surrounding property. In short, the transaction will be handled the same way that a “non-arms-length” sale between a parent and child is handled: not included for appraisal purposes and with no impact on the value of surrounding properties.
Source: Md. Code Real Prop. §14-509(b) and §§14-501 et seq.
Can CLTs own and control rental property?
Yes. While most CLTs deal with homeownership, several operate rental properties as well. In fact, CLTs often partner with other developers to use Low-Income Housing Tax Credits as a means of financing larger rental developments. Unlike traditional rental property operators, the community membership of the CLT makes the rental property effectively accountable to the community—not to an absentee landlord. Also, the ground lease arrangement with CLTs gives tenants the added security that rent increases will be limited and that forced eviction will not occur for economic reasons, because community interest, not profit, guides CLTs.
Do CLTs solve the problem of making low-income housing profitable?
No. Housing people with limited or no-incomes is almost impossible for those seeking private profit. CLTs are similar to non-profit community development corporations (CDCs) and non-profit developers in their quest to obtain public funds, grants, and financing for affordable housing. Given the drop in federal funds for community development and low-income housing, this has become increasingly difficult and complex. Some funds also make it difficult to finance permanently affordable low-income housing. Because of their community-based mission and their ownership of property, CLTs work to craft financing packages that avoid partners interested solely in profit, and thus sidestep or re-craft financing arrangements that involve the pressure to flip affordable housing to market-rate housing at some future point. Because CLTs are governed by a community-based Boards of Directors, they are in good position to mobilize political, economic, and social power to change funding dynamics.
How Are CLTs funded and how do they sustain themselves?
Like most non-profit organizations, CLTs rely on a mix of monies. Fees from CLT residents, while minimal, can provide steady and substantial funding once the CLT achieves a significant portfolio of properties. Until them, CLTs rely on foundation grants, donations, low-cost private and public financing, and public funds. In Baltimore, the Housing Roundtable is calling upon the city to provide $20 million annually in public funds to support CLTs. The Roundtable also is calling upon the city to support community leadership development and leadership succession in community groups that establish CLTs.
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