What is a Community Land Trust?
A community land trust (CLT) is a nonprofit, tax-exempt community-based organization that holds land in trust and stewards the use. Community land trusts use the land to meet community needs; this flexible model can be modified to address housing affordability, as well as for gardens, rental or retail spaces, even historic preservation, as examples. To meet these goals into the future CLTs retain permanent ownership of the land.
When homes are sold the CLT and the new owner enter into a long-term (usually 99-year), renewable and inheritable ground lease for the home owner’s exclusive use of the land. When the home is going to be sold, the resale formula agreed to in the ground lease is used to set the seller’s return. This formula allows the seller to earn a portion of increased property value. The remaining increase in value is retained by the CLT and allows it to continue to offer the house to lower to moderate-income households one sale after another.
Separating the land ownership from the “improvements” and having a resale formula removes the market forces that often make prices rise above what community members can afford. CLTs take a long-term approach to meeting community needs and land ownership. There are currently more than 250 community land trusts across the United States.
Why TCLT Benefits Flagstaff
Finding an affordable home is a challenge for many Flagstaff residents. Land prices are high and demand exceeds the supply. As a result, it is very difficult for many residents —from working people, to families and retirees—to buy a home of their own, especially a historic home in an established neighborhood.
Surprisingly, some of our most valued citizens like firefighters, police officers, teachers, nurses, office staff, small business owners, and others who provide vital services are unable to purchase homes in Flagstaff. This erodes our community and forces people to have to move to other towns that are more affordable.
The Townsite Community Land Trust (TCLT) addresses this issue by separating ownership of the home from the land. The community directed nonprofit owns the land and sells the homes at an affordable price to eligible and financially qualified permanent Flagstaff residents. Home owners accept certain restrictions such as a limited return on future sales in order to make the home ownership opportunity available to all future buyers.
TCLT focuses on the restoration and maintenance of Flagstaff’s historic buildings and character. Through TCLT, Flagstaffs historic structures become valuable community assets as permanently affordable homes.
Land costs are excluded from home price
One reason houses in Flagstaff are expensive is because of the land. The CLT model takes care of that by the tax-exempt nonprofit retaining ownership of the land. The qualified household buys only the house. The homeowners enter into a 99-year, renewable, and inheritable ground lease, giving them exclusive use of the land under their home.
Home prices are subsidized to create more affordability
Lower-to-moderate income citizens of Flagstaff contribute in many ways to the vitality and diversity of our community, but they cannot purchase even a modest home in Flagstaff. By becoming members and donating funds, the rest of our community can support this initiative to help create affordable homes.
Homeowners receive built-in savings
The TCLT model is built to help homeowners save money through energy efficiencies and tax advantages from being an owner-occupied historic property, allowing owners to build personal savings.
Participation in community stewardship
Stewardship of the properties and the households is the reason CLT homeowners are statistically more successful regarding staying in their homes than conventional homeowners, even during difficult financial times.
Ability to set down roots in Flagstaff
Many people play vital roles in our community, but the housing market makes it difficult for them to put down roots.
This starts with education about CLT ownership and buying through TCLT before they purchase. And after they’re moved in, there are annual check-ins to help with physical maintenance and financial success. The whole point is to invest in Flagstaff home owners and their ability to be active community members.
Why TCLT Benefits Homeowners
Additional benefits of TCLT Home Ownership
Lower Purchase Prices
- The price is non-negotiable so no realtor is needed
- Because TCLT has subsidized (lowered) the price at least 20% below fee simple appraisal buyer does not need to pay for private mortgage insurance
- The cost of TCLT homes is lower because Townsite CLT owns the land under the house–holds it in trust for the community
- Buyers sign a 99-year, renewable, and inheritable ground lease for exclusive use of the land
- Stewardship by TCLT protects the community’s investment
- Stewardship by TCLT protects the home owner’s investment
- Return at sale is based upon the Resale Formula described in the Ground Lease. The amount is guaranteed when the homeowner maintains the property, irrespective of the conventional real estate market
- The resale formula is designed to insure the community investment to lower the price does not need to be repeated with future sales
- Affordability remains with the house from one buyer to the next
Lower Utilities and Taxes
- Each home restoration includes energy-efficient upgrades, so our home owners enjoy lower utility bills
- Owner-occupied registered historic homes can request from the County to have significantly lower property taxes – which are paid on only the house. For more information, click here
Safer Home Buying
TCLT homeowners build equity at the rate of 1.5% compounded annually. This fixed rate resale formula allows the owner to grow the money tied to the home but also leaves the affordability that allowed them to buy the home for the next household.
This resale formula was chosen to incentivize long-term residency, something needed in our historic neighborhoods.
Our resale formula
- Keeps homes affordable for future buyers
- Allows homeowners to earn a profit
- Encourages long-term ownership
|Annual Interest Rate
||1.5% Compounded Annually
How Do I Calculate Compound Interest?
Compound interest (or compounding interest) is interest calculated on
- The initial principal
- The accumulated interest of previous periods of your deposit or loan
- Use this calculator to help you find potential compound interest
What Will I Earn Back on Resale?
- Your down payment
- The equity your have built through monthly mortgage payments
- Minus repairs necessary to make the house move-in ready for the next owner
How TCLT Works
TCLT acquires historic properties, renovates them for contemporary livability and energy efficiency, while preserving their cherished historic character. TCLT is governed by a tripartite board made up of TCLT home owners, neighbors, and professional advocates.
Read more about the Board of Directors.
Owners of TCLT homes agree to use the property as outlined in the ground lease, pay a small monthly ground lease fee and contribute to a home repair loan fund. Properties are stewarded by the organization, as needed. A fixed-rate formula ensures owners a fair return upon resale and guarantees that homes remain affordable for all future buyers. TCLT homes must be owner occupied throughout the year.
Once a home has been purchased, TCLT helps homeowners achieve long-term stability through regular stewardship which includes:
- An annual survey of the property exterior
- Referrals to financial counseling services, such as budgeting and foreclosure prevention, if needed
- Special activities for each property. For example, the 4 Square property has community gardening days
- Annual letter estimating your property’s value if sold
- Invitations to TCLT opportunities such as trainings on saving money and investing
- Invitation to TCLT annual meeting
- Opportunity to serve on TCLT’s tripartite Board of Directors
Potential buyers apply to purchase a home by:
- Attending the required Orientation Class
- Meeting income eligibility and other qualifications
- Participating in required homebuyer education
- Completing the application process; among additional requirements
Who is a Part of TCLT
Flagstaff residents and everyone who values Flagstaff’s history and future.
Board of Directors
TCLT is governed by a three-part Board of Directors:
TCLT homeowners or other people with lower incomes; TCLT neighbors; Professional advocates.
This mix of community members ensures that we address the range of community interests. But the mix also provides the support necessary to make our organization thrive!
Ellen came to TCLT in 2014 to assist in the development of the Townsite Community Land Trust. She has worked on many of the organizational documents and helped get the interim board established. An interest in alternate housing and intentional communities was sparked during her involvement in the early 80’s at Arcosanti, an urban architectural project in central AZ. Ellen and her husband are currently renovating their 102 year old home in the Townsite Historic District, valuing the conservation of historic properties. After retiring from work in the environmental field (recycling, composting and water conservation), Ellen looks forward to being more involved in the community and pursuing her interests: woodworking, weaving and travel. She is also a board member of the Pine Forest Charter School.
Duffie has always lived in historic neighborhoods. She likes to be where the ghosts are. She learned to love architecture and explore communities during long walks around Cincinnati with her father. Flagstaff has been her home for 38 years. Duffie spearheaded creating Flagstaff’s first and currently only local Historic Residential District for the Townsite neighborhood. She is conducting the Townsite Oral History Project. Those two projects led her to found Townsite CLT. She holds degrees in Studio Art, Geography, Applied Cultural Anthropology and Museum Studies. Since finishing an MA she has continued her education with courses in Community Land Trusts, and Historic Preservation. Duffie and her family live in a 1940s Townsite neighborhood house constructed with ammunition boxes discarded by the Navajo Ordnance Depot west of Flagstaff. She served on the Southwest Oral History Association Board and the Arizona Historical Society Northern Chapter Board of Directors. She is currently on the Northern Arizona Pioneers’ Historical Society Board of Directors.
Charlie Silver came to Northern Arizona in 1976 to film and document the building of a community school house on the Navajo Nation. Three years later he moved to Northern Arizona full time, eventually migrating from the Navajo Nation, to Winslow, to Flagstaff. Charlie has worked in Flagstaff’s last sawmill, construction, as a wildlands firefighter, set up many of the City of Flagstaff’s first computers, as a librarian, and as an intellectual property liaison for a major US Corporation. He can often be found at City Council meetings monitoring issues especially around the City’s zoning code, development activity, affordable housing, and social justice. Charlie, was a co-recipient with Duffie Westheimer, of the 2017 Livable Community Award sponsored by Friends of Flagstaff’s Future. He is or has also been on the Boards of The Literacy Center, Friends of the Flagstaff Public Library, and Stand Up for Flagstaff.
Eric Souders is an Accredited Wealth Management Advisor at Ascendant Financial Solutions. He is concerned about the wealth inequality and neoliberalism that is shaping our local and national economies. He is an outspoken supporter of Flagstaff’s increased minimum wage ordinance and a strong proponent for socially responsible investing. He has been a board member of Friends of Flagstaff’s Future and Willow Bend. Additionally, for many years, he has been the 4H llama project leader as well as the llama superintendent at the Coconino County Fair.
Marilyn Weissman has lived in Flagstaff for 25 years. She became involved with the TCLT through her work as the Land surveyor for TCLTs 4 Square project. She has been active on both sides of development issues in Flagstaff, as a Professional Land Surveyor working on various development projects and as a former board member and president of Friends of Flagstaff’s Future.
Christine Graham, a native of Tucson, first came to Flagstaff in her teenage years to attend the summer music camp at Northern Arizona University, where she later earned a bachelor’s degree in Vocal Performance. Back then she was a resident of the Townsite neighborhood, and is thrilled to return to her old stomping grounds almost three decades later as an Assistant Professor at the University. She spent the years in between attaining a graduate degree in Seattle, Washington, followed by a career as a professional opera singer in Germany. Graham represents the homebuyers on the Board, and enjoys exploring on the Urban Trails, visiting the Farmers’ Market, and going out downtown, when she is not teaching and performing on campus.
Megan spent most of her life in the midwest, earning a Bachelor’s and a Master’s in Microbiology along the way, before coming to Flagstaff in 2017 to take on a job at the Translational Genomics Research Institute. She fell in love with the city and it’s surroundings immediately, and with the help of TLCT was able to carve out a place to call home. When Megan isn’t at work, she’s most likely to be found on the side of a mountain, or snaking her way down into the canyon. Megan is grateful for the opportunity to serve on the TCLT board, and looks forward to spending many, many more years enjoying and helping to preserve Flagstaff.
Who is Eligible and Financially Qualified to Purchase a TCLT Home?
Our goal is to help members of our community whose income limits their ability to buy a home in Flagstaff, Arizona.
- Be 18 years or older
- Be a US citizen or permanent legal resident
- Live in the TCLT home full-time as their only residence
- Have not owned a home in the last three years
- Have lived in the Flagstaff metropolitan area for one year or
have worked in the Flagstaff metropolitan area for two years
Source, City of Flagstaff, Flagstaff Metropolitan Planning Organization
- Your gross income is less than 125% of the Flagstaff Area Median Income
Residents must have an income no more than 125% of the Flagstaff Area Median Income (AMI) for the latest year published. The Department of Housing and Urban Development (HUD), Arizona Department of Housing, and the City of Flagstaff determine AMI. Here is the current AMI for Flagstaff.
2019 Flagstaff Area Median Income (AMI)
Notes: 80% income category provided by US Dept. of Housing and Urban Development;
The 100% – 150% are rounded to the nearest $50
Source: City of Flagstaff
TCLT screens applicants based on their income and assets.
- Income: If your annual gross income is at or below 125%, then you may qualify to purchase a TCLT home
- Assets: However, if you also have assets like investments or savings that put your income over that 125%, then you may not qualify–most retirement investments that restrict use of the funds are excluded from this total
- You qualify for a fixed-rate loan for a CLT (lease-hold) property
- You can pay the minimum of a 3% down payment
- Your front-end ratio (housing costs-to-income) does not exceed 28%
- Your back-end ratio (debt-to-income) does not exceed 35%
- Your savings is between 8% and 250% of your household income after buying the house
I’m not sure if I am eligible or qualify.
Please check with us if you think you may be eligible and qualify, but you are not sure. For example, if your income is low, but you have saved significant funds for a down payment, you may qualify. For some situations services such as down payment assistance may be available.
Flagstaff’s Housing Solutions of Northern Arizona offers housing assistance programs. See their programs here.
How can I become a TCLT Homeowner?
Steps to become a TCLT homeowner:
Step 1: Explore the Model by attending a TCLT Orientation Class and decide if this model makes sense for you and your family
- Understand the ground lease, and be willing to abide by its terms
- Understand the resale formula that gives you a limited return on your investment when you sell
- Attend the TCTL Orientation Class and pick up an application
Step 2: Determine If You Are Eligible and Qualified
- Do you meet all the eligibility requirements?
- Do you meet the financial qualifications?
If you aren’t sure, contact us. We’ll either confirm your eligibility and financial qualifications, or we can help you make a plan to become eligible and qualified.
Step 3: Apply
- Obtain a pre-qualification letter for a fixed-rate CLT eligible (lease-hold) mortgage
Contact our loan specialist to see if you qualify:
- Complete the application
- Contact TCLT if you need technical support
- Use the application checklist to ensure that the application is complete before submitting–only complete applications received by the deadline will be considered for the current home(s)
Step 4: Application Evaluation and (possible) Interview
- Submit a complete application to TCLT, PO BOX 234, Flagstaff, AZ 86002 by the deadline written on page 1
Evaluation and Interview
- TCLT evaluates all applications equally
- You may be contacted if additional information is required, or for an interview
- Our goal is to notify all applicants of their status within a month
- If we cannot move you forward to purchase a home, we may ask you if you’d like to be on the wait list for future homes
Step 5: Purchase the Home
- Sign the purchase agreement
- Open an escrow account with earnest-money (part of down payment)
- Work with lender to secure CLT (lease-hold) loan
- Complete the Housing Solutions online Homebuyer Course (everyone named on deed)
- Perform desired inspection
- Obtain homeowners insurance as outlined in ground lease
- Review ground lease with an attorney
Step 6: Celebrate and Join the Neighborhood
- Get to know your house!
- Meet your neighbors!