From Model to Movement:

Shaking the Money Tree

Federal and State Support for CLT Projects and CLT Operations

THE MONEY TREE: Image by Bonnie Acker (c) 2014Every CLT requires an abundance of financial resources to acquire land, to develop housing (and other buildings), to mortgage homes, and to sustain the operations of a nonprofit organization with stewardship responsibilities expected to last forever. The lack of these resources, both equity and debt, was a major impediment to CLT
development in the early years.

Bonnie graphic-rainbowAs public grants and private loans became more available to CLTs in the 1980s the number and size of CLTs began to grow.  Two trends proved especially significant in fertilizing the projects and operations of these young organizations:

  • Federal support for CLTs
  • State support for CLTs

Federal Support for CLTs

With passage of the National Affordable Housing Act (NAHA) in 1990, cities and states began using pass-through funds from the federal government to support the projects and operations of what NAHA called “Community Housing Development Organizations.” CLTs not only had an interest in securing their eligibility for this funding, they also wanted to make sure that the way in which a CLT was defined in federal law was consistent with the way that most CLT were structured and operated.

Bernie Sanders in DCNot trusting the federal bureaucracy to describe accurately the essential elements of ownership, organization, and operation that characterized the “classic” CLT, a decision was made by a small group of CLT advocates to beat HUD to the punch. They asked Congressman Bernie Sanders, who had helped to start the Burlington Community Land Trust when he was Burlington’s mayor, to insert a favorable definition of the Newspaper-Burlingtoncommunity land trust into the Housing and Community Development Act of 1992.  Sanders shepherded this amendment through Congress, seeing it signed into law without modification (Congressional Record – House, October 5, 1992: H11966).

The 1992 amendments to the National Affordable Housing Act did more than provide a standard definition of CLTs. They cracked open the door to federal funding. After 1992, many more CLTs were able to receive designation as a “Community Housing Development Organization“ (CHDO). Many more were able to receive funding from the federal HOME program for their operations and their projects.

Equally important, federally funded technical assistance was made available to CLTs for the first time. In November 1994, the U.S. Department of Housing and Urban Development (HUD) awarded the Institute for Community Economics (ICE) a three-year $470,000 technical assistance grant. With these funds (and with two later TA grants from HUD), ICE seeded CLTs in several states where none had existed, nurtured dozens of CLTs that were just getting started, and helped many existing CLTs to become more productive.  Some of this federal grant was also used to underwrite the 2002 revision and publication of The Community Land Trust Legal Manual.

DC Policy Conference-SarahPage-JulieOrvis-2002Around 1992 as well, at the request of local CLTs and at the urging of ICE, Fannie Mae began developing riders to be used in combination with CLT ground leases. Fannie Mae released a “model lease rider” for CLTs in 2001. As part of the same package, Fannie Mae also published Guidelines on the Valuation of a Property Subject to a Leasehold Interest and/or Community Land Trust. This document provided assistance to lenders and appraisers in valuing CLT transactions.

Despite the fact that few CLT leasehold mortgages have ever been sold to Fannie Mae, the existence of a “model” Fannie Mae rider and Fannie Mae’s promulgation of guidelines for valuing leasehold property helped to boost confidence in the CLT among private lenders, making mortgage financing more widely available for resale-restricted homes on leased land.  Even when a banker did not use Fannie Mae’s rider or take advantage of the special loan product that Fannie Mae later developed for CLTs, there was less resistance to backing a model that Fannie Mae had recognized as a reasonable and bankable approach to homeownership.

State Support for CLTs

VHCB logoIn 1987, the Vermont legislature created a state-funded housing and conservation trust fund to be administered by a publicly appointed body named the Vermont Housing and Conservation Board (VHCB).  The Act establishing both the trust fund and VHCB mandated that any housing assisted by VHCB must remain perpetually affordable to lower-income Vermonters.   VHCB’s funds could also be used to provide capacity funding for the nonprofit organizations providing such housing.

While Vermont was not the first state to create a publicly funded housing trust fund, it was the first state to require permanent affordability for any rental housing or owner-occupied housing being subsidized by its trust fund.  Indeed, most of the state housing trust funds that came into existence in the 1980s and 1990s had affordability requirements lasting no longer than 15 years.  And that was mostly for rental housing.  Continuing affordability for owner-occupied housing receiving support from a state housing trust fund was rare.  Only in Rhode Island did the duration of mandated affordability approach Vermont’s, but the state legislature did not provide for a dedicated stream of revenues for the Rhode Island Housing and Conservation Trust Fund, established by state statute in 1990.

It was due largely to VHCB’s support for permanently affordable housing in general – and for the community land trust model in particular – that Vermont had more CLTs than any other state until the late 1990s.  During this same period, approximately a quarter of all the homes developed and managed by CLTs nationwide were to be found in Vermont.

Another factor in the proliferation and scale of CLT development in Vermont was the willingness of the Vermont Housing Finance Agency (VHFA) to provide mortgage financing for resale-restricted homes on leased land.  For a number of years, VHFA offered a special mortgage product for CLT homes, until the Great Recession brought this program to an end.

Another state that came early to the table, providing both equity and mortgage financing for CLT homes, was Washington.  The Washington State Housing Trust Fund was created the same year as Vermont’s Housing and Conservation Trust Fund.  Although it required continuing affordability of only 15 years in the beginning, the duration was later extended to 40 years for assisted projects and WSHFC logocommunity land trusts were explicitly listed as an “eligible project type” for trust fund support.  Equally significant in Washington, as in Vermont, was the availability of mortgage financing for CLT homes provided by the Washington State Housing Finance Commission.  By 2000, the only state with more CLTs than Vermont was Washington.



  • The Vermont Housing and Conservation Trust Fund Act passes the state legislature.
  • Washington State Housing Trust Fund is created.


  • National Affordable Housing Act of 1990 enacted into law, creating the HOME program and defining Community Housing Development Organizations.


  • Federal definition of the “community land trust” is added by to the Housing and Community Development Act of 1992.  Section 703 of that same Act amends Section 502(a) of the Housing Act of 1949, removing impediments in the home mortgage program administered by the U.S. Department of Agriculture that had made it difficult for CLTs in rural areas to secure 502 loans from Rural Development (formerly the Farmers Home Administration).


  • HUD’s department of Community Planning and Development publishes and distributes “Community Land Trusts and the HOME Program,” CPD Notice 94-42.


  • HUD awards the Institute for Community Economics (ICE) the first of several technical assistance grant to help local CLTs get established or existing CLTs to take advantage of HOME funds.


  • The U.S. Internal Revenue Service issues Revenue Procedure 96-32, describing the “safe harbor” guidelines by which a nonprofit organization can be assured that its projects qualify as charitable and the “facts and circumstances test” by which an organization that does not satisfy the safe harbor requirements may still qualify as charitable because its projects are “reliving the poor and distressed.”


  • HUD’s Office of Affordable Housing Programs publishes Homeownership Options under the HOME Program: A Model for Publicly Held Properties and Land trusts.


  • Fannie Mae publishes a “Uniform Community Land Trust Ground Lease Rider” for use with CLT ground leases when a leasehold mortgage is to be sold to Fannie Mae.
  • Fannie Mae publishes Guidelines on the Valuation of a Property Subject to a Leasehold Interest and/or Community Land Trust.


  • DC-Debbie OMalley in Senators officeICE convenes a national policy conference in Washington DC.  CLT practitioners visit their Congressional Representatives and Senators, educating them about the social benefits and financial needs of CLTs.


  • Fannie Mae issues Announcement 06-03: Selling and Servicing Properties Subject to Resale Restrictions or Located on Land Owned by Community Land Trusts.
  • The executive director of the Washington State Housing Finance Commission, Kim Herman, publishes an article in his agency’s newsletter declaring that CLTs have “come of age.”


  • Fannie Mae revises its selling guide, updating its earlier Community Land Trust Ground Lease Rider (Form 2200 3/06).


  • Kim Herman, “Community Land Trusts Come of Age,” Washington State Housing Finance Commission Executive Director’s Newsletter (April 2006). Available at:
  • James M. Libby, “The Challenge of Perpetuity,” Pp. 552-561 in John Emmeus Davis (ed.), The Community Land Trust Reader (Cambridge, MA: Lincoln Institute of Land Policy, 2010).
  • Edwin Stromberg and Brian Stromberg, “The Federal Housing Administration and Long-Term Affordable Homeownership Programs,” Cityscape: A Journal of Policy Development and Research, vol. 15, no. 2, article 21. (U.S. Department of Housing and Urban Development, 2013).
  • U.S. Department of Housing and Urban Development, “Community Land Trusts and the HOME Program,” CPD Notice 94-42. (Washington, DC: U.S. Department of Housing and Urban Development, 1993).
  • ——-, Homeownership Options Under the HOME Program: A Model for Publicly Held Properties and Land Trusts (Washington, DC: Office of Affordable Housing Programs, Community Planning and Development, 1999).
  • ——-, 2012. Shared equity models offer sustainable homeownershipEvidence Matters. Fall: 19-26.