Land trust could spur revitalization in key areas

A nonprofit community land trust could provide a boost to revitalization efforts in Henrico County.

During a Henrico Board of Supervisors work session Feb. 26, officials from the Maggie Walker Community Land Trust described how the nonprofit organization could help with the county's revitalization initiative, which is aimed at enforcing codes to address zoning, building and environmental violations, with a particular focus on dilapidated houses.

If approved, the trust would be another tool for the revitalization of two specific areas of Henrico County: Highland Springs and the Laburnum Gateway (the area surrounding the Richmond Raceway).

A community land trust operates as a nonprofit that bears the cost of the land that a home or building sits on. By owning the land as a nonprofit, it doesn't pay the real estate tax. A homeowner will own only the building or home and could do so at a significantly lower cost than what he or she would pay for the home and land together.

When the homeowner sells the house, he or she splits the equity (any increase in market value of the home) 50/50 with the trust. The trust does not add its share of the equity to the sale price, in order to help keep the cost of the next purchase lower.

Equity can be added to a home in various ways. For example, if a homeowner buys a house with a yard and then adds a deck and a fence, the home may increase in value. Being able to buy affordably-priced homes may spur homeowners to take such measures to enhance those homes and their properties, trust officials believe.

Although homeowners would not pay for or own the land, they could potentially end up paying the real estate taxes, depending upon how their individual deals are structured.

“At every turn, we want them to be clear about what they are getting into, because it’s not the typical homeownership model,” said Laura Lafayette, the board chair of the Maggie Walker Community Land Trust.

Fostering ‘successful homeowners’
The Maggie Walker Community Land Trust was formed in 2016 in Richmond and the following year earned permission from the city to become a land bank, receiving blighted or vacant properties and making them productive.

Land trusts have been used in the past to encourage home buying. They operate on a concept Maggie Walker Community Land Trust Executive Director Bob Adams calls “perpetual affordability.”

The idea is that a trust is structured for long-term profits. By encouraging home-buying, the trust is helping homes contribute to the surrounding community in some way – even when the economy is not doing well – instead of failing to generate profit and degrading over time.

“In a downturn, you can think about that difference between the price of a CLT (community land trust) house and the market rate value of that house as being a cushion that protects CLT homes to a much greater extent than traditional market rate houses,” said Adams.

His point: the ebbs and flows in land trust deals are not as extreme because of the split equity.

According to Adams, homeowners in a land trust do not live in their homes for as long as traditional homeowners do.

“Assuming that turnover, every five and-a-half, six years, at the end of 15 years, maybe we have 200 or 250 homes in the CLT program, but we have assisted 900 families during that time,” said Adams. “The beauty of that is that it frees up that home more quickly for the next family that needs it.”

According to the National Association of Realtors, since 2014, the average is almost 10 years for all families. The reason for selling a home varies, but typically, once the circumstances for a family that uses a trust program change, they will move on to a more desirable home.

The trust would serve people 115 percent below the average median income and would counsel potential homebuyers to ensure that they understand the contracts into which they are entering.

“We have no reason to be anything but transparent and helpful, because we want people to be successful homeowners,” Lafayette said.