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Chicago Community Land Trust (CCLT)

City of Chicago, Cook County

Finance

Chicago Community Land Trust (CCLT) provides long-term affordability protection for affordable units created through city programs.

In 2009, CCLT closed on three affordable units in this building located at 4150 N. Kenmore.

Policy background

Due to its strong housing market and desirable location, in 2006 the City of Chicago established the Chicago Community Land Trust (CCLT) as a tool to preserve the long-term affordability of homes created through city programs. Chicago is the largest city in the U.S. to establish a municipal, citywide community land trust. CCLT is a nonprofit corporation and is staffed by the City’s Dept. of Planning and Development (formerly Dept. of Housing). It has a board of directors whose members are appointed by the mayor and approved by the City Council.

In 2004, with a technical assistance grant from the U.S. Dept. of Housing and Development (HUD), the City’s Dept. of Housing (DOH) began exploring the creation of a community land trust for Chicago. DOH worked with consultants from Burlington Associates as well as a larger advisory council to determine the best approach. DOH also reached out to stakeholders across the city and invited nonprofit developers, housing counseling agencies, lenders, foundations, planners, attorneys and government officials to participate in the advisory council. After weighing several options, they decided to establish a citywide land trust and utilize the deed covenant as their main tool to preserve long-term affordability.

In exchange for upfront subsidies that make these homes affordable, homeowners must agree to resell their CCLT properties only to other low or moderate-income families at an affordable rate. This initiative not only provides a permanent pool of affordable homes, but also helps sustain mixed-income communities and protect residents from foreclosure.

How it works

Through various city programs, individuals and families can buy homes at affordable rates. Most of the CCLT units are generated through the City’s inclusionary zoning requirement, the Affordable Requirements Ordinance (ARO). In general, units are placed in the CCLT if the affordable price is at least $25,000 below market value.

The initial homebuyer signs a deed covenant with the CCLT when purchasing the home. It is a 99-year agreement that mandates that if the home is sold, it must be resold to another income-qualified buyer at an affordable rate. CCLT homeowners receive pre-purchase homeownership counseling, CCLT training and post-purchase support. They pay a $25 monthly administrative fee, and must maintain the home as their primary residence. To protect the viability of both the homeowner and the home, the CCLT must approve any refinancing or construction on the home that requires a permit. Due to the long-term affordability requirement, property taxes are assessed based on the affordable resale price rather than market value. This is one of the program’s major benefits because it creates greater stability for low and moderate-income homeowners.

If the homeowner wishes to sell the property, he or she must inform CCLT, which has the first option to purchase the home and find another income-qualified buyer. The seller will receive the maximum resale price, as calculated in the deed covenant, which equals the initial investment (first mortgage and down payment) and a share of the market appreciation. The original subsidies and remaining market equity stay with the home to keep it affordable for the next buyer. If CCLT does not purchase the home, the homeowner must sell it to another income-qualified buyer at or below the maximum resale price.

Contact

Department of Planning and Development, City of Chicago
312-744-4190, www.cityofchicago.org

  • Goal

    To provide long-term affordability protection for affordable units created through city programs.

  • Target

    Low-to-moderate income families. Each city housing program has different income requirements, but most serve families that earn 100 percent area median income (AMI) or less (about $72,400 for a family of four in 2014).

  • Success

    As of April 2014, CCLT had 69 deed-restricted units and had educated more than 1,000 prospective buyers about the program.

  • Lessons learned

    Due to Chicago’s large size and high number of condo units, the CCLT’s quasi-governmental structure and Deed Covenant mechanism work best to preserve affordability. Other cities with land trusts have set up separate nonprofits, use different contractual models to take land ownership or support local nonprofits to run the program, and these might work best for smaller cities and communities.

    Because the number of units generated through the City’s inclusionary zoning policies has not been as high as expected due to the market slowdown, CCLT has focused its efforts on developing a strong stewardship program. CCLT homeowners receive a monthly newsletter and can access a wide range of post-purchase educational opportunities, including workshops on weatherization, basic home maintenance and estate planning. These efforts have helped the CCLT emerge from the housing crisis with a foreclosure rate of only 1.4 percent.