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.