HOMEfires - Vol. 3 No. 9, October 2001

Information by State  Print version

Q: Are Community Land Trusts (CLTs) automatically considered to be CHDOs?

A: No. CHDO status is not automatically conferred on CLTs.

A community land trust is a unique approach to preserving the long-term affordability of housing costs. CLTs are used mostly in hot housing markets where the price of land is skyrocketing, making homes or rental properties unaffordable. The basic characteristics of a community land trust are: 1) the organization, usually nonprofit, owns the land and leases it to homeowners with a 99-year ground lease; 2) land-leases require owner occupancy and usually a resale provision to ensure sale of the home to another low-income family; and 3) the CLT is governed by a Board of Directors made up of members who represent residents of the CLT homes, members who are not CLT residents but reside in the area of the CLT, and finally members who represent the broader public interest. CLTs are defined in Section 233(f) in the Cranston-Gonzalez National Affordable Housing Act of 1990 (NAHA).

The value of a CLT is its dedication to community control of affordable housing and its long-term solution to affordability. Although most CLTs are developed in areas with high housing costs, they also can be used as a method to preserve affordable housing before costs escalate.

CLTs are eligible applicants for CHDO technical assistance (TA) funds. CHDO TA funds are used to promote the ability of CHDOs to maintain, rehabilitate and construct housing for low-income and moderate-income families and to effectively use HOME program funds and other sources of funding to produce affordable housing, and facilitate the education of low-income homeowners and tenants. CHDO TA funds may be accessed by contacting the local HUD field office.

For the purpose of receiving CHDO set-aside funds to produce HOME-assisted housing, CLTs must undergo the same designation process as any other nonprofit organization seeking CHDO status (See CPD Notice 97-11, "Guidance on Community Housing Development Organizations (CHDOs) under the HOME Program."). However, Section 233(f) of NAHA exempts CLTs from two of the requirements applicable to other CHDOs, stating:

"For the purposes of this section, the term "community land trust" means a community housing development organization (except that the requirements under subparagraphs (C) and (D) of section 104(6) shall not apply for the purposes of this subsection)…."

The exceptions referred to in this section are:

1. a CLT does not have to demonstrate capacity for carrying out activities under the Act; and
2. a CLT does not need to demonstrate a history of serving the local community or communities within which the housing is to be located.

Attachment A of CPD Notice 97-11, "CHDO Checklist," explains the required qualifications for CHDO designation and outlines four categories of documents that nonprofit organizations need to provide to be designated or re-designated a CHDO:

1. legal status;
2. capacity;
3. organizational structure; and
4. relationship with for-profit entities.

A CLT must provide all documentation required in Appendix A to the PJ with the exception of Section II, capacity.