Descripción de las Brocas Usadas en el Campo

Karl Fitzgerald

If land is recognised as an essential part of the commons and that rising housing prices are primarily caused by locational (read land) scarcity, then a modern city should act to ensure the naturally rising value of land is shared amongst the community.

On the long road to significant Land Tax reform, many see Community Land Trusts (CLTs) as a micro version of this macro vision. CLTs are a form of housing where the Trust owns the land and members own their home.

In its purest sense, CLT members can freely sell their home, but the land remains with the Trust. With land prices averaging around 70% of a mortgage, this offers a similar sized reduction in interest fees. In considering land as a gift of the commons, banks or those lucky enough to own land have no economic or ethical right to profit off something they played no part in creating.

Establishing Community Land Trusts

There are varying formulas for members to pay for the land. Typically a large government or philanthropic grant is given to buy the land. CLT’s must ensure they purchase at a time in the real estate cycle that reflects the reality of local wage earners. Buying at the peak of the market is a recipe for failure or slow growth for the Trust. The US CLT model typically sees a formula comparing the median income to median house price and ensuring sales prices are some 20 - 30% below median market rates.

Examples And Links

• The Champlain Housing Trust of Burlington, Vermont is the largest CLT in

America and most likely the world. They have over 2,200 properties under management, of which 1/3 are rental properties and 2/3 are owned by the Trust member (house only). Bernie Sanders, as Mayor of Burlington, helped catalyse this group with a $200,000 investment in 1984.

• The growth of CLTs is accelerating with the UK building from zero to 175

CLTs post millennium. Much of this growth has occurred post-GFC, with recognition that the lower overall financial burden saw a 82 % lower foreclosure rate on US CLT properties than in the wider property market.120 The UK growth is impressive, with 527 homes delivered to date and,

another 2500 homes in the pipeline.

http://www.communitylandtrusts.org.uk/_filecache/fa6/54b/274-final- ncltn-report-of-the-trustees-201415.pdf

• St Clements is the first London-based CLT. It is offering a 3BR apartment for

£235,000. According to home.co.uk, the average asking price for such a home is £623,000. A detailed application process is needed to choose the lucky first entrants to this CLT.

http://www.londonclt.org/where/applications/

• The Fairhope CLT (Alabama) was established in 1894 with the purchase of

2,200 acres. This has doubled over the last 122 years to a holding of 4,400 acres with 3,400 leases. Their financial standing is very stable, with the trust collecting some 20% of all rates paid for the local council.

http://www.fairhopesingletax.com/fairhope-history/ Critical Issues

Concern arises that the CLT growth is too slow. Over 35 years the modern CLT movement quantifies at just 25,000 homes. Much of this relates to the poor financial architecture of the median resale formula. The ‘CLT classic’ formula sees significant revenues only paid to the trust when a member sells their

property. In a successful community, who wants to sell? A minor body corporate fee keeps the administration office ticking, but there is no financial surplus to invest in new homes or buy land at the right time. Under these conditions, CLTs must curtail their growth agendas, instead relying on government handouts for growth opportunities. This is part of the reason that the Champlain Housing Trust has only added on average 71 properties per year to their portfolio over 31 years. That ratio is obviously even lower for Fairhope.

120 _{http://www.lincolninst.edu/pubs/PubDetail.aspx?pubid=1846&URL=Outperforming-}

Of significance is that the resale price, whilst 20 - 30% less than neighbouring properties, still includes a substantial proportion of the land price. If we accept that land is a gift of the commons, why should we have to pay any interest to the banks for it? This places unnecessary interest and general repayment burdens on the purchaser.

The classic CLT model has still been hugely successful. They prove that land can be held in perpetuity with housing prices aligned more closely to wage growth rather than demand pricing based on expected future capital gains.

Policy Recommendations

• Yearly land valuations must be calculated so that yearly land leases

reflect market rates

• Community banking and ethical superannuation companies canvassed

for possible support

• The CLT board must be comprised of the wider community who have a

strong understanding of the economic justice principles undermining the trust. This is to safeguard against insiders voting against their own financial interests

• The constitution must have the financial formula set in stone to minimise

watering down

• The constitution must include the need to expand the base for affordable

housing

• A refined CLT model is needed to acts as a counter-weight to land prices