Mayor's task force member Michael Lewis says community land trusts promote affordable housing
Author and community-development consultant Michael Lewis says human nature is an often underappreciated factor driving the housing-affordability crisis.
People like to make a lot of money when they sell their homes in a dramatically rising market. So they’ll take the cash and put it in their pockets rather than offer a discount to the purchaser. And over time, rising prices make it increasingly difficult for middle-income first-time buyers to purchase a home. Here in the Lower Mainland, this cycle of rising prices has dealt large numbers of people out of the housing market.
Lewis, a member of the Mayor’s Task Force on Housing Affordability, has proposed a way around this. The East Vancouver–based executive director of the Canadian Centre for Community Renewal told the Georgia Straight that community land trusts in other cities and towns have kept the price of housing down by limiting the financial return for sellers. For this to work, a nonprofit corporation acquires and holds the land over the long term. Anyone who buys a home on the property must agree to a covenant setting rules about future sale prices.
“Sometimes, it’s a percentage linked to inflation,” Lewis said. “Sometimes, it’s linked to a modest percentage of increase that’s built right into the covenant. Sometimes, it’s built on ensuring that the house is still affordable to the area’s median income.”
Preventing the homeowner from selling at the market rate keeps a lid on housing-price increases. The task force’s interim report, which was released this month, raises the possibility of creating such a community land trust in Vancouver, which would be managed by an independent board of directors.
“The City’s role would be to remove obstacles to the success of such an approach, offer policy support as needed, and partner where appropriate,” the report states. “Typically a land trust could acquire and assemble land, and also be the beneficiary of revenue streams generated by the selective sale of land and assets.”
Lewis, coauthor of The Resilience Imperative: Cooperative Transitions to a Steady-State Economy (New Society Publishers), said that Whistler has already gone part way down this road by creating a housing authority. It oversees municipal land used for rental and owned dwellings. “They put a deed on the covenant and limited the return for anyone that was on the sales side,” he stated.
In several American towns and cities, officials have gone further by creating more than 250 community land trusts. Lewis cited the Vermont town of Burlington as one example where more than 2,000 units of rental and ownership housing have been created under this mechanism over the past 30 years. He also pointed to Atlanta, Chicago, and Irvine (in California) as three other U.S. cities where this is taking place.
“It reunites the ‘I’ with the ‘we’,” Lewis said. “So you have a means by which the democratic organization, which is multistakeholder, can in fact own the land and use it with a mandate to maintain it for affordability. They’re also used in terms of agriculture in a lot of different situations.”
He suggested that it would be worth exploring whether a community land trust in Vancouver could obtain status as a registered charity from the Canada Revenue Agency. If that were permitted, people who donated property to the organization would be eligible for a tax credit.
Lewis also noted that when the U.S. housing market collapsed three-and-a-half years ago, there was a far lower percentage of foreclosures and mortgage delinquencies in connection with community land trusts than in the rest of the home-mortgage market. By locking in affordability, he believes, cities can help protect the public interest by reducing citizens’ exposure to volatile housing prices.
“That’s why I’m quite happy to see that the discussion within the [mayor’s] task group at least got this on the table for further work,” Lewis said.
Follow Charlie Smith on Twitter at twitter.com/csmithstraight.
Comments
9 Comments
jack1001
Jun 27, 2012 at 5:21pm
It's not a right to live in Vancouver. If you don't have enough money then you should have paid more attention in school and stop your wining. The total gentrification of Vancouver is absolutely necessary. It's time to leave to Surrey deadbeats
Jaye Sunsurn
Jun 27, 2012 at 7:10pm
While the idea of a land trust is interesting, this kind of goes against getting into the housing market at all. If I have something of indeterminate value, I will sell it for a price I hope I can get for it. If I can't sell it, due to no buyers wanting to pay the price I initially indicated, either I hold on to it or I lower the price. The value which is given to a home that taxes are based upon is not always what people should value the house at. People are far too tied to this number, along with the city in which a house falls into because a higher number = more city revenue. However this isn't the real concern Vancouver has high rates in part because people are still buying homes from the market. If no one was willing to buy in at the amount offered, a glut would eventually happen and people who are desperate to sell would trend the market downwards. But there are many people living in Basement rentals who given any real shift downward in the market would buy in, this would buoy the market from ever really crashing. The only real way for the market to really shift down hard would be for the businesses to move away from Vancouver due to it being too difficult to make a profit here.
Mountain Due
Jun 27, 2012 at 8:03pm
I think that those who live off the backs of tenants shouldn't be allowed to live in Vancouver. Take away their ski passes and tell them to get a job like the rest of us. Collecting a cheque every month does nothing to benefit society.
tom 52
Jun 27, 2012 at 8:44pm
Jack - such a view is short sighted. The economic and social interest of the entire community is served by ensuring people have an opportunity to live close to where they work. And, incidentally, I have a lot of smart family and friends in Surrey. You are revealing yourself to be the deadbeat.
tom 52
Jun 28, 2012 at 8:06am
Jaye your comments are thoughtful and interesting. The key to the community land trust model, as I understand it, is its capacity to preserve affordability over time. Its application from a home ownership point of view is to preserve affordability for people who otherwise would be unable to have any ownership interest. Because the value of the land is taken out of the equation, their is an income saving aspect. The deed or lease to the home owner is the means to create the quid pro quo; the home owner must accept a limited return. As for buying and selling, there is no problem. There are always waiting lists for people that would prefer stability rather than a speculative housing market where the costs bar entry to a large number of average income earners. As for renters, the community land trust model can in fact improve the affordability of rents over time, an income saving impact rather that an equity creating impact as in the case of CLT ownership models.
Nona-999
Jun 29, 2012 at 10:22am
To say that it is not a "right" to live in Vancouver - who does have a right to live in Vancouver? Personally, my having been born and raised in this city - where my parents, brothers, nieces, cousins, aunts & uncles live; where I went to school, university and earned myself a degree and then further contributed to the local economy by staying and working at a well-paying job DOES earn me the right to live here. The issue here is affordability - not many can afford homes worth close to a million dollars - nor do many people want to inundate themselves with that kind of debt to get the proverbial dream home with the white picket fence & so forth.
I think people need to be a little less greedy and think about the bigger picture. What kind of city do we all want Vancouver to be? You want it to be like Hong Kong - where money & affluence & what you own is all that matters? Or do you want it to be balanced, family oriented, multicultural and able to support many levels of income? Personally, those people who serve my coffee @ the local coffee shop (I think) must be seriously resourceful - because I don't know how they afford to live in this city making min wage!
Not to mention - single parents, those who work at lower paying jobs. Our local economy needs to be able to support these people - otherwise we don't have someone to make our coffee.
tom 52
Jun 29, 2012 at 4:44pm
I am with you Nona. Well said
Steven M
Jul 1, 2012 at 11:41am
"I think people need to be a little less greedy and think about the bigger picture."
People do think: they think, "I'd like to move to Vancouver", and then they do.
teshakalea
Aug 11, 2012 at 3:19am
The tougher mortgage rules just unleashed last week may discourage more Canadians from getting into the housing market,
but international investors are not bothered much, if at all.
The condo markets in both Vancouver and Toronto are both prime draws for the international crowd,
may of which plunk down a hefty 20 percent down payment, making them exempt from the new government rules.
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