Community Land Trusts and Co-operative Place Making

Pat Conaty - Co-operatives UK

Seoul Metropolitan Government

South Korea

17 March 2015

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Co-operative Place Making: A Creative Idea

Co-operatives: circa 1 billion members internationally and providing services weekly to 3 billion people

Co-operatives: have transformative potential through public-social partnerships between citizens and the state

Democracy: co-operative membership is growing while political party and trade union membership is declining

Social Economy sector including both social enterprises and co-operatives are growing fast in South Korea

Energy

Reframing Finance

Democratizing & Localizing Ownership

Co-operative Place Making Priorities Towards more Self-Reliant and Resilient Cities

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KE

Y F

UN

CT

ION

S

BASIC NEEDS:

Food Shelter

Community Land Trusts

Unaffordable Cities – ‘Generation Rent’

Public sector employees (UK) – 60% earn under £16,000 yearly and average 2014 house prices were over 15 times this level

1996 – 2007: UK house prices rose by 204% and wages by 94%

Mortgage deposits: typically today £7,500 to £15,000

Market madness: Average national rent (2014) £720 per month and average national mortgage £658 per month

Community Land Trusts in UK, USA and Canada offer solutions

Affordable Housing in Britain

Main providers:

(i) Municipal and district government: major provider but housing stock has been sold since 1980s and stock increasingly transferred to social landlords (including ALMOs)

(ii)Housing associations: the favoured non-profit provider – build mainly for rental or shared ownership. This sector includes a small housing co-op movement

(iii)Community Land Trusts – new entrant with potential and new vehicle for intermediate market

Community Land Trusts: Mutualising Land

1. CLTs own land under a non-profit multi-stakeholder democratic governance model for improving and preserving the affordability of housing for renters and owners

2. Home ownership option – CLT owns land, individuals own homes. Lease agreements include resale formula, equity share or deed covenants to preserve affordability.

3. Rental option – CLT owns land. CLT can own housing or lease land to a housing non-profit or a co-operative.

4. Other applications: managed workspace, community buildings, urban farms, community supported agriculture and for co-operative energy.

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Community Land Trusts Today

• USA: first CLTs in 1970s - but most projects since

1995 (250 CLTs nationally)

• Scotland: community land buy-outs in rural areas

in 1990s with support from Scottish Parliament

since 2003 (25 CLTs)

• England: national demonstration project since

2006, mostly rural (40 CLTs set up) – CLTs

recognised in law (2008)

• Belgium and Canada: CLTs rather new

CLT Pioneer - Scotland

Isle of Eigg Heritage Trust – Land for People

(i) Community buy-out of the island for £1.5 million: struggle for decades with absentee landlords

(ii) CLT established in 1997 – has developed community owned businesses: including shop, tourist facilities, workspace, hydro power plants and wind farm (energy now 98% renewable)

(iii) Successful struggle led to Community Land Unit and Land Reform (Scotland) Act 2003 giving communities a pre-emptive ‘right to buy’

Cornwall CLT – Public Social Partnership

CLT Umbrella for Cornwall county: 105 homes on 12 sites:

1. Technical expertise partnership with Cornwall Rural Housing

2. Pre-development finance: Revolving Loan Fund partnership with the local government and loans at zero interest

3. Construction finance: Revolving Loan Fund capital from the Public Works Loan Board at 3.5%

4. Division of labour: Cornwall Rural Housing develops the rental housing and Cornwall CLT and six local CLTs co-develop the housing for sale

5. Cornwall CLT and 9 local CLTs (one federation): 100 more homes under development

Burlington, Vermont A made in the U.S.A Land Reform Story

• CLT started in 1984 with a $200,000 grant from the city

• Now over 2300 units under Champlain Housing Trust

• Affordability of portfolio has increased by 20% over 25 years.

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THE CLT Putting More of the Gains in the Market Price

onto the Community Balance Sheet

Community Control of Land Preserves Affordability

Source: Champlain Housing Trust

CLTs: Greater Affordability Over Time- Rental and Ownership Units

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50% AMI 60% AMI 70% AMI 80% AMI

1984

2002

2009

Over 25 years, homes in the Burlington CLT rental units and owned-occupied units became

MORE affordable.

CLT’s Perform Better than Private Property in a Crisis

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National Community Land Trust Network (NCLTN) and Mortgage Bankers Association (MBA) data for mortgage delinquency and foreclosure, 4th quarter 2009

National Community Land Trust Network (NCLTN) and Mortgage Bankers Association (MBA) data for mortgage delinquency and foreclosure, 4th quarter 2009

Source: Champlain Housing Trust

Reclaiming Finance

Democratizing & Localizing Ownership

Vancouver: The Second most Expensive Urban Housing Market in the World

What role for resilience?

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KEY FU

NC

TION

S

BASIC NEED

Reclaiming the Commons

Vancouver: Co-operative Place Making Introducing the CLT as a Proven Innovation

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Evolution of a Public-Social Partnership

City of Vancouver

Head lease (99 years)

Housing agreements (Affordability obligations)

Vancity

Owner/Operator Agreements Sub-leases

Fraserview Co-

op

(79 units)

Fraserview Co-

op

(82 units)

Total of 161 units

over two sites

HFBC Housing

Society (114)

Katherine

Sanford Housing

Society (48)

Social Purpose Developments

Vancity CHF BC Terra Housing

Project consultants

Architects

Contractors

Legal advisors

Community Housing Land Trust Foundation

Tikva Housing

Society (16)

Tikva Housing

Society (16)

Site #1 Site #3 Site #2 Site #4

Vancouver CLT 355 Homes

Vancouver CLT 355 Homes

Resilient Cities through Co-operative Place Making

Housing that is 25%-60% below the market price Use of Public and Community Assets for Community Benefit Surplus generated equally shared by city and CLT Must be reinvested by both partners in affordable housing A Public-Social Partnership that demonstrating that Reclaiming the Commons is positively practical

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CLT Development Steps

The Commonwealth Wheel: SELF-OP

1. Social (community and stakeholder engagement) 2. Environmental (site selection, planning, design) 3. Legal (company type, leases, tenure, etc) 4. Financial (pre-development, development, etc) 5. Operational (Directors, staff, agents, etc) 6. Physical (procurement, development partners, etc)

Delivering Affordable Housing

Intermediate market housing

Social Housing Rent to

purchase models Equity purchase models

Outright Sale

£10,000 £14,000 £18,000 £22,000 £26,000 £30,000

Levels of household income

A typical CLT is currently about delivering intermediate market homes but sustainable communities are about more than affordable housing!

Securing land and Local Planning

Permission

• Local Government Act - Section 106 agreements: to secure planning this encourages developers to provide land or a ‘commuted sum’

• Rural exception sites: allows land to be accessed at near agricultural prices for meeting local needs for housing development

• Urban areas in England and Wales – difficulties to get national policy support but this is being achieved across Wales and in some English cities: Bristol, Liverpool and Middlesborough

Local Housing Needs Survey

Methods to appraise the local rural market:

(i) Local housing market price appraisal

(ii)Waiting lists and municipality data assessment

(iii)Local door to door surveys in target local areas

including public meetings on affordable housing

development and local needs

(iv) Analysis of demand and affordability by age groups,

income levels, for particular property sizes and for

tenure (to rent or to buy)

CLT Appraisal Process

Pre-development Feasibility Work

• Market appraisal and affordability design & selection criteria: through housing needs survey

• Site selection: through options appraisal

• Costs appraisal including Sustainable construction methods and viable options

• CLT model: options appraisal

• Outline financial model for preferred site

• Report for the planning authority and target funders (national government and lenders)

CLT Type: Issues and Options

1. Objective: to preserve affordability in the long term locking in the land assets and a resale formula

•Equity purchase (common form)

•Rent to equity

2. Obstacles: Right to Buy legislation - leasehold enfranchisement and ‘Rule against Perpetuities’

•Mutual Homeownership Society (Co-op model)

•Declaration of trust (to be tested)

Mutual Homeownership (MHOS)

• Housing Co-operatives owns the dwellings

• Separate CLT company owns the land and provides

a lease to the Housing Co-operative

• New members make a 5% deposit

• Mortgage is corporate

• Full repairing lease based on 30% to 37% of

household income

• Lease payments convert to equity stakes

• Co-op pays members leaving their equity less 10%

Stages of the CLT Journey

Detailed Plannin

g Intro

Cost of scheme

Building the

model T

im

e

Completed Scheme (Occupancy) Construction

Feasibility day one day of advice to help you identify the steps to take

Technical assistance grant a small grant to fund initial costs

Pre-development finance funding your project prior to planning permission

Development finance funding the costs of construction

You can apply directly to any part of the fund

Support from The CLT Fund

Construction Detailed planning Occupancy Building the

model

High Risk

Low Risk

Grants, donations, equity

Gifts in kind

Unsecured loans

Senior debt

Work at risk declining risk, increased amount of money required

Matched finance – a summary

SELF–OP: Resources and Funding

Key elements:

1.Land at very low-cost is essential

2.Sweat-equity: expertise from professional stakeholders

3.CLT Fund: Technical help and feasibility grant

4.CLT Fund: Pre-development risk finance

5.CLT Fund: portion of construction finance (30%)

6.CLT equity: for bridging funding and risk capital (grants, share issue, retained funds, etc)

7.Construction finance: social banks

8.Long-term finance (part sale): banks and building societies

9.Long-term finance (rental): Community Land and Finance

Lessons Learned

1.The Commonweath Wheel works across the full range of co-operative place making situations

2.Has demonstrated that the process can be codifed from small to larger projects for knowledge transfer and dissemination

3.Greatly simplifies the process for participants – both community groups, service providers and local government

4.Community Land Partnerships can provide a co-operative place making framework

5.Tool is extendable to other applications: energy, workspace, urban farms/gardens

6.Honest Broker – for all the talents and a transparent, empowerment tool, seeking mutual stakeholders to utilise.

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Mutual Home Ownership CLT – CDS Co-ops

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CDS Co-ops: MHOS lease to equity shares

Total net household income 14,406 16,688 18,845 23,108 26,318 32,738

35% of net household income for housing costs 5,077 5,841 6,596 8,088 9,211 11,548

Less revenue costs payable for all members

(i) Management 33 33 33 33 33 33

(ii) Maintenance 53 53 53 53 53 53

(iii) Service costs 18 18 18 18 18 18

Net monthly payment for corporate mortgage loan repayment

319 382 445 570 663 850

Capital value of corporate loan serviced 64,336 77,190 89,892 114,997 133,900 171,707

Number of equity shares funded by monthly payment 64 77 90 115 134 172

Add equity shares paid as 5% deposit 7 9 10 13 15 19

Total equity shares owned 71 86 100 128 149 191

Monthly cost of each additional equity share 4.95 4.95 4.95 4.95 4.95 4.95

CDS Co-operatives - MHOS

Limited equity return

•71 shares = £13,314

•86 shares = £16,271

•100 shares = £18,919

•128 shares = £24,217

•149 shares = £28,190

•191 shares = £36,136

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LEEDS Project - Lilac

Community Land Trust Benefits

Subsidiarity: a vehicle for resilient, democratic and decentralised societies

Climate change: can unite a wide diversity of joint action on low-carbon solutions (housing, food, energy, recycling, green jobs, etc)

Economic security: can collectivise risk and provide affordable housing, green energy and food

Social capital and partnership: requires creative community, business, municipal and social finance collaboration

Community Land Trusts and Local Food

1. Intervale in Burlington, Vermont: has developed a CLT for local food on 200 acres of dumping ground (6 ft of rubbish) – now a ‘city garden’ of a dozen community farms supplying 7% fresh food for town of 35,000.

2. Evergreen Co-ops in Cleveland, Ohio: Green City Growers – largest city farm in the USA with 3 acre greenhouse and 10 acre site growing 6 million heads of lettuce and 300,000 pounds of herbs yearly through a worker co-op in the city’s poorest inner city area

3. Community Land Advisory Service: new project of the National Federation of City Farms and Gardens and now underway in England, Wales and Scotland to create Community Land Banks for community gardens and food growing in cities, towns and villages

Housing Opportunity: Ageing energy inefficient housing disrepair

Public-Social Partnership models in Action 1.KfW bank: ‘green lending’ through Co-op and municipal banks at 2.65% - 250,000

jobs created and €1 billion invested annually

2.Evergreen Co-ops, Cleveland: Ohio Co-operative Solar: combined green housing retrofit and solar energy fitting for homes and public sector buildings: Social investment capital at 1% for worker co-op start ups

3. NeighborWorks (USA) assisted 1.2 million low-income households since 1991

– more than 230 urban and rural delivery networks in 4,400 local communities

– have mobilised investment of $18.1 billion since 2001

– Model being replicated in the UK with local government partners

Duplex Title

33 International Institute for Self-governance

Roads, water,

Sewerage,

electricity,

phone, shops

bus services

schools,

factories,

hospitals,

offices &

entertainment

Roads,

water,Sewers

electricity,

phone, shops

bus services

schools,

factories,

hospitals.

Roads,

water,Sewers

electricity,

phone, shops,

bus services

schools.

Roads,

water,Sewers

electricity.

Roads, water.

Village

Township

Suburban

Centre.

Regional

Centre.

Central

Business

District

Two components of property LLvaluePPu 1. Investment on the site & site specific amenities; 2. External investments servicing the site

Two different types of property rights required for efficient and equitable resource allocation: 1. “Dynamic Lease (DL)” or Strata title for space occupied, & 2. Equity in Community Land Bank (CLB) capturing external values

Public Investment Impact Public Investment Impact

Co-operative Land Bank

1.Extension of London Jubilee line (11 stations) in 1999

2. Cost of public investment by taxpayers: £3.5 billion

3. Urban land value uplift: £13.5 billion

4. Co-operative Land Bank (CLB) is an urban district CLT

5. CLB can self-finance affordable housing, renewable energy and workspace for an Eco-town (5000) or a new city

6. Precedents: Letchworth Garden City (33,000) and Irvine CLT (USA) – both similar size for the master plan

7. Commons Sense (2013): Co-operatives UK report

CLT Networks and Case Studies

For further information on Community Land Trusts see case studies at:

UK: See http://www.communitylandtrusts.org.uk/ncltn

USA: see http://www.cltnetwork.org/