The function of a dynamic CLT requires active community involvement and supervision. The following steps can help ensure resident protection, participation, and permanent affordability:

Determining Geographic Scope
Acquisition for Community Use
Use
Ownership

Determining Geographic Scope

How a CLT's territory is defined is shaped by the immediate interests of its founders, the location and nature of community housing needs, the location of project opportunities, and the roles and service areas of other housing and community development organizations in the general area.

There is a wide variation in the geographic scope of CLT programs.  Some serve entire metropolitan areas, often including surrounding suburbs.  Others serve particular neighborhoods.  Each type has a somewhat different character, and places different emphases on the two aspects of the model.

• The larger scale CLTs create and preserve an adequate supply of affordable housing within the large areas they serve.  The location of this housing within the area tends to be determined by the location of the best opportunities for affordable housing development within the larger area.  Such organizations are often the products of initiatives by local governments and major institutions within the areas they serve.  Geographically diverse memberships reduce the ability of any one neighborhood to control its land.  These organizations' primary emphasis is on the model's approach to ownership as a means of preserving a supply of affordable housing.  They tend to operate on a macro level to address problems of gentrification.
• Neighborhood-based CLTs tend to reflect the grassroots concerns of particular communities .  They naturally have a more narrowly focused, block-by-block concern with the ways in which their own neighborhoods are developed and with the effects of this development on existing residents.  They tend to operate on a micro level, acquiring specific properties on particular blocks to preserve a certain number of units of affordable housing while preventing the displacement of their residents.

These two types of CLT operation are not mutually exclusive.  Some CLTs have combined strategies to improve a specific neighborhood (without displacing its lower income residents) while expanding a citywide or county-wide pool of permanently affordable housing.  The CLT model is a flexible tool that can manage the long-term effects of development within a community.

Land Acquisition for the Community Use

In most cases, CLTs acquire property in the same ways as do other nonprofit organizations. As tax-exempt organizations, they sometimes receive gifts of property from individuals or corporations and often acquire city or county-owned property from local governments. But in many cases, they purchase property in the open market - often with the help of funding from public sources.

A few CLTs, like the one in Albuquerque, have launched their programs with the development of a single large parcel of land. Most have acquired many smaller properties, one at a time, throughout a neighborhood or city or rural area. The CLT treats land and buildings differently.  Sometimes CLTs buy undeveloped land and arrange to have new homes built on it; sometimes they buy land and buildings together.  CLT land is held permanently - never sold - so that it can always be used in the community's best interest. Buildings on CLT land may be owned by the residents.

Use

CLTs serve inner-city neighborhoods, small cities, clusters of towns, and rural areas. A CLT working in a small city neighborhood may be the sole local housing group, though it may collaborate with citywide and regional organizations. Other CLTs, serving larger geographical areas, work closely with a variety of local organizations. CLTs may develop housing themselves or may hold land beneath housing produced by other non-profit (and sometimes for-profit) developers. It is possible for CLTs to provide any type of housing for which there is a need in the local community and for which there is an opportunity to create permanent affordability for lower income households.

• A CLT may build new homes, rehabilitate older homes, or acquire existing housing that needs little or no renovation.
• Some CLTs have bought mobile home parks to provide long-term security for mobile home owners.
• In addition to providing affordable housing, CLTs may make land available for community gardens, playgrounds, economic development activities, or open space, and may provide land and facilities for a variety of community services.
• In rural areas, CLTs may hold land for gardens, farming, timber and firewood, and may hold conservation easements to protect open space and ecologically fragile areas.

A CLT can work with various ownership structures for multi-family buildings. To ensure long-term affordability:

• the CLT itself may own and manage a building as rental housing;
• another nonprofit may own it, or
• the residents may own it as a cooperative or as condominiums.

CLTs can provide a variety of training opportunities and other services to first-time homeowners, and can provide crucial support if homeowners face unexpected home repairs or financial problems. In these cases the CLT can often help residents to find a practical solution, and may help to make necessary financial arrangements.

The CLT provides access to land and housing for people who are otherwise priced out of the housing market. Some CLT homes provide rental housing, but, when possible, the CLT helps people to purchase homes on affordable terms. The land beneath the homes is then leased to the homeowners through a long-term (usually 99-year) renewable lease. Residents and their descendants can maintain their housing indefinitely.

When CLT homeowners decide to move, they can sell their homes. The land lease agreement gives the CLT the right to buy each home back for an amount determined limited by the CLT's resale formula. Each CLT designs its own resale formula - to give homeowners a fair return for their investment, while keeping the price affordable for other lower income people.

Ownership

The land lease requires that owners live in their homes as their primary residences. When homes are resold, the lease ensures that the new owners will also be residents - not absentee owners.

CLT homeowners and their descendents have a right to occupy and use the leased land for as long as they wish, provided that they abide by the terms of the land lease. These terms place some limitations on the resale of the home- preventing resale to a household that does not qualify as low or moderate income, and limiting the sales price to keep it affordable. The lease lays out a "resale formula" that determines the maximum allowable price.

Each CLT - given its own goals and local circumstances - designs its own resale formula to set maximum prices that are as fair as possible to the seller while staying affordable for the next buyer. There are several types, but the majority of CLTs use what are called "appraisal-based" formulas. These formulas set the maximum price as the sum of what the seller paid for the home in the first place plus a certain percentage of any increase in market value (as measured by appraisals). Variations on these and other types of formulas are possible. It is wise to examine the possibilities before deciding on a formula.

The ground lease requires that owners continue to live in the home as their primary residence. If owners want or need to move away permanently, they must sell the home. The lease does not allow them to continue as absentee owners. Subleasing is permitted only for limited periods with the consent of the CLT.

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