The proliferation of informal and illegal forms of access to urban land and housing has been one of the main consequences of the processes of social exclusion and spatial segregation that have characterized intensive urban growth in developing countries. Given the absence of adequate housing policies and the failure of the land market to offer sufficient, suitable and accessible housing options, millions of urban poor have to create their own shelter, either by invading private or public land or by buying land illegally and constructing their own housing. This phenomenon has attracted the attention of many researchers, policy makers and others worried about the grave socioeconomic, environmental and political implications for the urban poor and society at large.

Peruvian economist Hernando de Soto is one of the most influential contemporary ideologues addressing this complex issue. His ideas and proposals regarding large-scale regularization programs, most recently presented in his book, The Mystery of Capital, have received extensive media coverage and have raised the level of public debate. His influence can be measured by the fact that an increasing number of countries and cities, in Latin America and elsewhere, have introduced regularization policies based on his ideas, and these programs have already had a significant impact on international and institutional approaches to property reform and good governance. In many countries, politicians who were never particularly interested in urban development concerns have now become vigorous defenders of de Soto’s ideas. Why?

A Review of Urban Settlement Trends

Before addressing de Soto’s work directly, a brief summary of the current situation is in order. In Latin America, the urbanization process has been especially significant: 380 million people, some 75 percent of the total population, lived in urban areas in 2000, making it the most urbanized region in the world. While the globalization of urban land markets has intensified in Latin America, the region has also seen poverty escalate. It is estimated that between 40 and 80 percent of the population lives illegally because they can neither afford nor gain legal access to land near employment centers. As a result, illegal tenure arrangements have become the main form of urban land development.

The violent evictions and forced removals of the 1970s have been gradually replaced by a relative tolerance of illegal occupations, culminating in some cases with the official recognition of such settlements. Responding to growing social mobilization, public administrators and policy makers in several countries have struggled to formulate regularization programs aimed at both upgrading informal areas and recognizing the land and housing rights of the dwellers, thus legalizing their status.

Most land tenure regularization programs have been structured around two intertwined objectives: to recognize security of tenure and to promote the sociospatial integration of informal communities within the broader urban structure and society. The definition of what constitutes security of tenure has varied in both theory and practice. The UN Global Campaign for Securing Tenure for the Urban Poor, for example, seeks to protect dwellers against eviction and achieve other basic objectives, such as contributing to sustainable livelihoods; improving access to basic services; securing urban citizenship; producing certainty and incentives for investment; mobilizing disparate communities; and empowering women.

Generally speaking, regularization programs in Latin America have been more successful in upgrading settlements through public investments in urban infrastructure and service provision than in legalization programs. The definition of the nature of the rights to be attributed to dwellers has varied greatly, ranging from titles (such as freehold and leasehold) to contracts (such as social rent and other rental mechanisms) and precarious administrative permits (such as temporary licenses and certificates of occupancy). Experiences based on the transfer of individual freehold titles have been largely unsuccessful, given the many existing legal, technical and financial obstacles.

de Soto’s Contributions to the Debate

Although he has claimed that he initiated the debate, de Soto instead has made an undeniably important contribution to a long-standing discussion of the need to confront the phenomenon of urban informality and illegality through public policies aimed at legalizing informal settlements and other extralegal economic activities. Since the 1970s, this debate increasingly has involved planners and policy makers, but de Soto has repackaged the discussion and, to some extent, contributed to widening its scope and reach.

What makes de Soto’s ideas so appealing is that, perhaps better than anyone else, he has been able to emphasize the economic dimension and implications of urban illegality. Most of the academic research, social mobilization and policy-making on the matter of informal settlements and land regularization have been supported by a combination of humanitarian, ethical, religious, sociopolitical and environmental arguments. de Soto’s approach, on the other hand, has stressed the significant impact that comprehensive regularization programs could have on the overall urban economy by linking the growing informal extralegal economy into the formal economy. Moreover, he has argued that such public policies can be instrumental in reducing social poverty.

In his view, small informal businesses and precarious shanty homes are essentially economic assets, “dead capital,” that should be revived by the official legal system and turned into liquid capital so people could gain access to formal credit, invest in their homes and businesses, and thus reinvigorate the economy as a whole. He has estimated the amount of dead capital in the developing world at about US$9.3 trillion, a staggering figure that has drawn the attention of many influential politicians, land developers, government officials and financial organizations (Bourbeau 2001). His argument has been summarized as follows:

“Most of the poor already possess the assets they need to make a success of capitalism…But they hold these resources in defective forms…They lack the process to represent their property and create capital…They have houses, but not titles…. It is the representation of assets in legal property documents that gives them the power to create surplus value” (Mammen 2001).

In his first book, The Other Path, de Soto advocated the formalization of informal settlements. In his new book, The Mystery of Capital, he has taken this argument one step further, advocating that property ownership is the reason “why capitalism triumphs in the West and fails everywhere else,” which is also the subtitle of the book. de Soto offers a three-part argument:

• People need to feel secure of their legal tenure status so they can start investing in housing and business improvements;
• Security of tenure and resulting access to credit can only be provided by the legalization of informal settlements and businesses;
• The way to proceed is to provide universal title ownership through individual freehold titles, with clear titles and enforceable rights, to enable third world countries to leverage themselves and thus eradicate poverty.

The recognition of property ownership in de Soto’s proposal is important because it would entail access to credit and finance. He argues that European countries and the U.S. improved their property systems, allowing economic actors to discover and realize the potential of their assets and thus to be in a position to produce the kind of noninflationary money necessary to finance and generate production. Following that logic, national and international organizations have proposed, and even imposed, the full legalization of businesses and the unqualified recognition of individual freehold titles for urban dwellers in some informal settlements as the “radical” way to transform decaying urban economies.

Critiques of de Soto’s Assumptions

Appealing as his ideas are, there are many flaws in de Soto’s arguments. Now that the dust raised by the initial media attention to his book has started to settle down, the debate has become increasingly critical. Such an appraisal is especially important because the regularization programs inspired by his ideas have had a significant impact on the daily lives of millions of people.

To begin with, there has been increasing criticism of de Soto’s methodological approach that led to the highly unlikely estimated figure of existing dead capital. Some analysts have pointed out that his grasp of the role and social construction of individual property ownership in European and U.S. economic history is not entirely correct (Payne 2001). Others have criticized de Soto for oversimplifying, if not totally misunderstanding, the complex dynamics of both informal and formal urban land markets (Bourbeau 2001). I have stressed the specific, perhaps unique, role of land ownership in developing countries, especially in Latin America, where historically the combination of weak capital markets, highly inflationary economies and deficient social security systems has turned land value appreciation into a fundamental capitalization mechanism, thus generating a culture of speculation that has long supported a heritage of patrimonialism and political clientilism. This process has, in its turn, deeply affected the conditions of access to urban land and housing and the spatial distribution of public equipment and services, as well as generating urban illegality.

Another related critical argument is that de Soto has failed to recognize that the poor, despite their poverty, have already amassed assets through access to credit, albeit not from formal institutions. In fact, de Soto has failed to provide evidence that banks and other official financial and credit institutions would be prepared to give systematic credit to the poor, even though there is historical evidence to the contrary. For example, in de Soto’s country of Peru very few people have been able to access official credit following a massive regularization program (Riofrio 1998; Calderon 2001). Moreover, existing research in Colombia and other Latin American countries has indicated that the poor would not even be interested or willing to obtain official credit, given the socioeconomic and fiscal implications of this process (Gilbert 2001). Recent studies also have questioned the urban and socioeconomic sustainability of settlements in Mexico, Peru, El Salvador and elsewhere that have been legalized by programs inspired by de Soto’s ideas (Duhau 2001; Kagawa 2001; Zeledon 2001). Such programs have focused exclusively, and artificially, on the formal legalization of informal settlements and have not included adequate upgrading and other socioeconomic programs, thus failing to promote any sociospatial integration.

From my perspective as a legal scholar, I see three main flaws in de Soto’s argument. First, while discussing the importance of legalizing informal settlements, he has failed to question the very nature of the legal system that has generated urban illegality in the first place. I believe that the discussion of laws and legal institutions has to be supported by a critical understanding of the nature of the law-making process, the conditions for law enforcement, and the dynamics of the process of social construction of urban illegality. In particular, I have argued that the legal treatment of property rights should be taken out of the narrow, individualistic context of civil law so the matter can be interpreted from the socially oriented criteria of redefined public urban law (Fernandes 2001).

In this context, far from being radical, de Soto’s argument is a very conservative one. His work has failed to qualify the discussion on property rights, and he seems to assume that there is a universal, a-historical, “natural” legal definition of such rights. However, in Latin American countries and elsewhere in the developing world, the state has treated differently the different forms of property rights (financial, industrial, intellectual, etc.) and the social relations around them, allowing for varying degrees of state intervention in the domain of economic property relations. It is only for a very specific form of property rights, land and real estate, that the state has failed to affirm the notion of the social function of property versus the dominant individualistic approach given to such rights by anachronistic civil legislation (Fernandes 1999). The historical and political factors that have allowed classical legal liberalism to survive in Latin America have to be addressed before any comprehensive legal reform, such as that proposed by de Soto, can be implemented. The intimate though dialectically contradictory relationship between legality and illegality cannot be ignored (Fernandes and Varley 1998). Such a critical approach to law would certainly serve to dismiss de Soto’s claim that formal, unqualified individual ownership can be used against crime and terrorism.

A second flaw is that research in many developing countries has indicated that, given a combination of certain social, political and institutional conditions, residents in informal settlements can share an effective perception of security of tenure, have access to informal (and sometimes formal) credit and public services, and invest in housing improvement, even without having legal titles (Payne et al. forthcoming).

Third, and more important, existing research has shown that while the recognition of individual freehold titles can promote individual security of legal tenure it does not necessarily entail sociospatial integration. Unless titling is undertaken within the context of a broader set of public policies that address urban, politico-institutional and socioeconomic conditions, legalization programs may actually aggravate the processes of exclusion and segregation. As a result, the original beneficiaries of the programs might not be able to remain on the legalized land, although that should be the ultimate objective of regularization programs, especially on public land.

Moreover, regularization programs have had little impact on social poverty, in part because the traditional banking and financial mechanisms have not embraced them, as de Soto has claimed. The root of the problem runs deeper because regularization programs have a remedial nature. They can only have a more direct impact on urban poverty if they are part of a broader set of preventive public policies aimed at promoting overall urban reform and supported by socioeconomic policies aimed at generating job opportunities and income. There is a fundamental role for the market economy in this process, but it also requires systematic intergovernmental relations, public-private partnerships, and above all renewed social mobilization. Furthermore, de Soto has failed to consider the essential gender and environmental implications of land legalization.

To prevent the production of these perverse effects, we must identify and understand the factors that have contributed to the phenomenon of urban illegality. These include not only the combination of land markets and political systems but also the elitist and exclusionary legal systems still prevailing in Latin America. To legalize the illegal requires the introduction of innovative legal-political strategies to promote the articulation of individual land tenure with the recognition of social housing rights compatible with keeping dwellers in their existing settlements. Housing rights cannot be reduced to individual property rights.

New tenure policies need to integrate four main factors: legal instruments that create effective rights; socially oriented urban planning laws; political-institutional agencies and mechanisms for democratic urban management; and inclusionary macro-socioeconomic policies. The search for innovative legal-political solutions also includes the incorporation of a long-neglected gender dimension and a clear attempt to minimize the impacts such policies have on the land market. The benefits of public investment should be captured by the urban poor, not by traditional and new private land developers, as has happened frequently in settlements regularized according to de Soto’s proposals.

In conclusion, I would argue that regularization programs should be group specific, taking into account the local historical, cultural and political contexts as well as the existing forms of tenure arrangements, both legal and customary and formal and informal. Public administrators and lawmakers should refuse the pressure to homogenize land and property laws. Individual property ownership will always be an attractive option that should be considered, but there are many other legal-political alternatives.

Hernando de Soto is absolutely right when he questions the legitimacy of exclusionary legal systems. However, while he has uncritically assumed that legitimacy would result from the widespread recognition of individual ownership, other research has proved that this is not necessarily the case. He is generally right when he says that lawyers lack an understanding of the economic process. However, many observers believe that his own understanding of the economic process may be deeply flawed, and that he could also learn a thing or two about the legal process.

Edesio Fernandes is an attorney, urban planner and lecturer in the Development Planning Unit of University College London. He is also coordinator of IRGLUS-International Research Group on Law and Urban Space. This article is based in part on his ongoing research and a lecture he presented at the Lincoln Institute in October 2001.

References

Bourbeau, Heather. 2001. Property wrongs: How weak ideas gain strong appeal in the world of development economics. Foreign Policy (November/December):78-79.

Calderon Cockburn, Julio A. 2001. Comparative analysis of the benefited and non-benefited population by the national formalization plan, in Has the well-being of the population improved?: A balance of the main social policies and programs. Lima: National Institute of Statistics and Information (INEI): 65-92.

Duhau, Emilio. 2001. Impacts of regularization programs: Notes on the Mexican experience. Paper presented at the Lincoln Institute workshop on Informal Land Markets: Land Tenure Regularization and Urban Upgrading Programs (October).

de Soto, Hernando. 1986. The Other Path. London: I.B. Tauris & Co Ltd.

_____. 2001. The Mystery of Capital. London: Bantam Press.

Fernandes, Edesio. 1999. Redefining property rights in the age of liberalization and privatization. Land Lines (November) 11(6):4-5.

_____. 2001. Law and the production of urban illegality. Land Lines (May) 13 (3):1-4.

Fernandes, Edesio and Ann Varley, eds. 1998. Illegal Cities: Law and Urban Change in Developing Countries. London: Zed.

Gilbert, Alan. 2001. On the mystery of capital and the myths of Hernando de Soto: What difference does legal title make? Paper presented at the N-AERUS Workshop in Leuven, Belgium (June).

Kagawa, Ayako. 2001. Policy effects and tenure security perceptions of Peruvian urban land tenure regularization policy in the 1990s. Paper presented at the N-AERUS Workshop in Leuven, Belgium (June).

Mammen, David. 2001. Roundtable discussion for the International Division of the American Planning Association. Interplan (June):2-9.

Payne, Geoffrey. 2001. The mystery of capital: Why capitalism triumphs in the west and fails everywhere else. Habitat Debate (September) 7 (3):23.

Payne, Geoffrey, et al. Forthcoming 2002. Land, Rights and Innovations: Secure Land for the Urban Poor. London: International Technology Development Group (ITDG).

Riofrio, Gustavo. 1998. Why have families mortgaged so little? Paper presented at the Lincoln Institute workshop on Comparative Policy Perspectives on Urban Land Market Reform in Latin America, Southern Africa and Eastern Europe (July).

Zeledon, Aida. 2001. De facto and legal regularization programs in El Salvador. Paper presented at the Lincoln Institute workshop on Informal Land Markets: Land Tenure Regularization and Urban Upgrading Programs (October).

High land costs are an obstacle to developing and securing affordable housing for lower-income families. One way to address this issue is to purchase a house without the land, and a community land trust is one mechanism that allows this arrangement. This article reports on a roundtable attended by researchers, policy analysts, technical assistance providers, funders, and community land trust staff members to discuss the community land trust model and related research needs.

The community land trust model is an extremely attractive mechanism for maintaining and expanding the stock of affordable housing. Currently there are approximately 160 community land trusts operating in every region of the country. These community land trusts are nonprofit, community-based organizations whose mission is to provide affordable housing in perpetuity by owning land and leasing it to those who live in houses built on that land. In the classic community land trust model, membership is comprised of those who live in the leased housing (leaseholders); those who live in the targeted area (community members); and local representatives from government, funding agencies and the nonprofit sector (public interest) (Burlington Associates 2003).

A lease within a community land trust also includes a resale formula intended to balance the interests of present homeowners with the long-term goals of the community land trust—balancing the interest of homeowners and the interest of the community land trust to provide affordable housing for future homeowners.

This article addresses some of the questions surrounding the community land trust model;

• Do community land trusts provide long-term affordable housing?
• Do community land trusts contribute to individual asset building?
• How effective are public and nonprofit sector funds when used to produce community land trust housing?
• Do community land trusts provide access to urban services and/or regional opportunities for leaseholders?
• Do community land trusts contribute to community building?
• Why have some community land trusts excelled and others failed?

This article also examine the Sawmill Community Land Trust, located near downtown Albuquerque, New Mexico. In partnership with the City of Albuquerque, Sawmill Community Land Trust’s has created a permanent stock of affordable housing in the neighborhood with housing units as well as a plaza, park, community center, commercial space and open space connected with trails. The plan calls for expanding the Sawmill Community Land Trust model to other neighborhoods to ensure a permanent stock of affordable housing and a mixed-income community for the long term.

For many households experiencing lagging wages or underemployment, the purchase and financing of a house is increasingly difficult. High land costs are another obstacle to developing and securing affordable housing for lower-income families in some markets. One way to address this second issue is to purchase a house without the land, and a community land trust (CLT) is one mechanism that allows this arrangement. This article reports on a roundtable attended by approximately 25 researchers, policy analysts, technical assistance providers, funders and CLT staff members to discuss the CLT model and related research needs. The December 2004 program was sponsored by the Lincoln Institute in partnership with the Institute for Community Economics (ICE), based in Springfield, Massachusetts.

What are community land trusts and How Do They Function?

The community land trust model has evolved in the United States over the last 40 years (ICE 1991). Currently there are approximately 160 CLTs operating in every region of the country and in 38 out of the 50 states and the District of Columbia. These CLTs are nonprofit, community-based organizations whose mission is to provide affordable housing in perpetuity by owning land and leasing it to those who live in houses built on that land. Complementing their status as nonprofit corporations, as defined in the U.S. tax code, and their formal rights and responsibilities codified in the ground lease, CLTs are governed by a board of directors with membership from the community. In the classic CLT model, membership is comprised of adults who live in the leased housing (leaseholders); adults who live in the targeted area (community members); and local representatives from government, funding agencies and the nonprofit sector (public interest) (Burlington Associates 2003).

The community land trust and the homeowner agree to a long-term ground lease agreement (typically 99 years) that spells out the rights and responsibilities of both parties. Among the homeowner’s rights are the rights to privacy, the exclusive use of the property, and the right to bequeath the property and the lease. The CLT has the right to purchase the house when and if the owner wants to sell.

The community land trust’s abiding interest, as the landowner, as the party with the option to purchase the improvement, and as a community-based organization, is to maintain a stake in the relationship long after the original house purchase and lease signing. For example, if buildings become deteriorated, the CLT can force repairs; if the homeowners are at risk for default the CLT can and does act to forestall the default.

The ground lease also includes a resale formula intended to balance the interests of present homeowners with the long-term goals of the community land trust. The intent of affordability in perpetuity is in conflict with the desire of most owner-occupants in the U.S. to reap real estate gains. Thus, the resale formula is designed to balance the interest of individual homeowners to benefit from the use of their home as a real estate investment and the interest of the CLT to provide affordable housing for future homeowners.

Research Agenda

The community land trust model is an extremely attractive mechanism for maintaining and expanding the stock of affordable housing. While the stories one hears from and about CLTs are encouraging and inspiring, little research exists regarding their effectiveness. Furthermore, despite their many attractive attributes, CLTs are neither well known nor extensively used in the U.S. During roundtable discussions, the participants exchanged perspectives and identified six clusters of questions that would constitute a short-term CLT research agenda to help inform future action.

Do community land trusts provide long-term affordable housing?

The separation of ownership of land and buildings is the mechanism by which long-term affordability is achieved. Much of the value in structures comes from their functionality, the materials used and the level of maintenance. These are the contributions of the builder and owner. Much of the value in land comes from its location with respect to natural elements, urban services such as transportation and public schools, and disamenities such as solid waste dumps or prisons. Many of the factors that contribute to land value increases are due to the economic expansion that occurs in metropolitan areas. In strong markets the pace of value increases in land exceeds that of structures. Thus, if the land is excluded from the price of housing, affordability ought to be assured over time. Research is needed to evaluate the effectiveness of the CLT tool in providing long-term housing affordability and to evaluate CLTs as compared to other affordable housing programs.

Do community land trusts contribute to individual asset building?

community land trust housing provides residents with shelter, security of tenure, access to credit and access to urban services, among other benefits. However, individual real estate profits are limited by the design of the resale formula, which varies among CLTs. Outcomes also will vary with real estate cycles in particular cities and regions. A second question, then, has to do with the degree to which the limitation on real estate profits limits individual asset building. It is possible, for example, that the security of tenure and the predictability in housing costs provided by the CLT allow individuals to pursue other, non-real estate strategies for asset accumulation.

How effective are public and nonprofit sector funds when used to produce community land trust housing?

In most cases, community land trust housing requires subsidies for the purchase of land and/or house construction. Grants typically come from government sources or private foundations. One of the premises of the CLT model is that these subsidies are recycled later to reclaim the value of the subsidies and to benefit future homebuyers. Public subsidies are no longer needed when a CLT house is sold under the resale formula. However, it is not known how efficient subsidies are when used to develop CLT housing and how the subsidy capture mechanisms work.

Do community land trusts provide access to urban services and/or regional opportunities for leaseholders?

Quality of housing in the U.S. is closely related to residential location. However, location influences more than simply house quality; it also affects the existence and quality of job opportunities and urban services such as access to transportation, health care, libraries and public schools, all of which have direct and indirect effects on quality of life and life chances.

Researchers looking at regional policy solutions are particularly interested in whether and how community land trusts influence this access to urban services. Economists use the term “spatial mismatch” to refer to the imbalance between the location of many employment opportunities in the suburbs and the location of unemployed jobseekers in the city centers. Many participants at the roundtable were interested in exploring the degree to which CLTs facilitate bridging this mismatch because of their specific location within a region, their connections to other organizations in the neighborhood and region, or employment and training programs offered to support CLT residents.

Do community land trusts contribute to community building?

Community land trusts are unique among U.S. community-based organizations in that their concerns are geographically focused and include economic relationships, the governance structure of the organization, and the provision of direct services. In some communities CLTs are connected to other organizations serving the same community or the same constituency. Much of the literature on neighborhood development and revitalization focuses on the importance of “social capital” to people and their community. Do CLTs contribute to this connective tissue of neighborhoods? How and why? Some CLTs operate across a number of communities and thus have a more regional focus. This difference among CLTs will lead us to consider questions of scale and community definition.

Why have some community land trusts excelled and others failed?

There is great variation in community land trusts across the country. The largest, Burlington Community Land Trust in Vermont, has 370 single-family homes and condominiums and 270 rental apartment leases; other CLTs may have just a handful of units available for lease. Some CLTs have been able to grow significantly while others have not, and some have ceased peration altogether. There are many possible reasons for this variation in success, including staff resources and skills; differences in mission; financing arrangements; ability to receive donations of land; and the strength or weakness of the local land and housing market.

Future Activities Regarding community land trusts

The Lincoln Institute is interested in community land trusts because they provide a window that encourages a deeper understanding of the significant role that land plays in social and economic development and the mechanisms by which it occurs. The roundtable participants hope that investigation into this research agenda would accomplish a number of objectives.

First, new research would spread knowledge of community land trusts to practitioners in fields ranging from urban development to housing policy, neighborhood planning, community organizing, regional sustainability and equity. Second, among policy analysts this research will improve our understanding of the strengths and weaknesses of the CLT model and the contexts in which it is most useful and successful. For CLT members, leaseholders, staff and board members, the findings will provide an understanding of their locally based work within a national context. For funders and lenders the investigations will provide an empirical base from which to make future funding decisions.

This work will be conducted by the Lincoln Institute, the Institute for Community Economics, representatives of organizations who attended the roundtable and others who become engaged in these issues. For example, the National Housing Institute already has begun a study of shared equity home ownership. We expect that documenting, investigating and analyzing the history of CLTs and individual experiences will provide a better understanding of the role of land in housing affordability.

Sawmill Community Land Trust

Sawmill Community Land Trust (SCLT) is located near downtown Albuquerque, New Mexico, adjacent to Historic Old Town, which has become a leading tourist attraction. Gentrification has increased the housing prices in the Sawmill neighborhood, and vacant industrial land has increased from $1.05 per square foot in 1996 to its current high of $4.10 per square foot. A home that sold for $26,500 in 1981 cost $125,000 in 2000 and $175,000 in 2004. From 2000 to 2004, real increases in a single-family home (land and housing) in the neighborhood increased by 31 percent.

Founded in 1996, SCLT evolved from existing community organizations that had been working for years to protect the character of the ethnically diverse Sawmill community and address environmental and pollution problems caused by a particleboard factory on the site. SCLT’s main focus has been to create a permanent stock of affordable housing in the neighborhood.

In partnership with the City of Albuquerque, which acquired the 27-acre former industrial site, SCLT developed plans for 196 housing units of various types (live-work lofts, single-family detached houses, townhouses, duplexes, senior apartments and condos) as well as a plaza, park, community center, commercial space and open space connected with trails. All of the 26 homes built in the first phase of development have been sold, and construction of a second housing phase will begin soon. SCLT has led a cooperative effort to develop a metropolitan redevelopment plan for the surrounding 510-acre Sawmill/Wells Park area. The plan calls for expanding the SCLT model to other neighborhoods to ensure a permanent stock of affordable housing and a mixed-income community for the long term.

Rosalind Greenstein is senior fellow and co-chair of the Lincoln Institute’s Department of Planning and Development. Yesim Sungu-Eryilmaz is a research assistant in the Lincoln Institute’s Department of Planning and Development.

References

Burlington Associates in Community Development, LLC. 2003. Key features of the “classic” community land trust. Burlington, VT: Burlington Associates.

Institute for Community Economics (ICE) 1991. The community land trust legal manual. Springfield, MA: ICE.

Resources

Burlington Community Land Trust

Fannie Mae Corporation (search for the link to CLTs)

Institute for Community Economics (ICE)

Policy Link. See Equitable Development Toolkit and link to CLT case studies.

National Housing Institute (NHI)

In 1921, a loquacious, part-time public servant named Benton MacKaye proposed, in the Journal of the American Institute of Architects, the creation of an “Appalachian Trail,” an effort that he saw as “a project in regional planning” (MacKaye 1921). His vision evolved over several decades until, under the leadership of a lawyer named Myron Avery, the nonprofit Appalachian Trail Conference helped to bring into being a continuous system of locally, state and federally owned lands, managed cooperatively by a collection of volunteers, nonprofit organization employees and National Park Service personnel (Bristow 1998). The A.T., as the trail is often called, today stretches from Springer Mountain in Georgia to Mt. Katahdin in Maine, and the idea of extending the trail into Canada has been discussed repeatedly.

The initiative first proposed by MacKaye more than 80 years ago has proved to be a landmark in conservation innovation, characterized by: novelty in its design and implementation; lasting significance to landscape planners around the world; measurable effectiveness in trail upkeep and monitoring, achieved through collaborative efforts along the trail’s 2,100-mile length; transferability to other projects, such as the Pacific Crest Trail; and an ability to endure as a symbol of what can be accomplished, across ownerships and political boundaries, to achieve conservation-oriented purposes—primarily recreational purposes in the case of the A.T.

Despite the example provided by the Appalachian Trail and similar initiatives, regional planning generally fell out of favor during the last half of the twentieth century. While greenways, trail systems, water resource management districts and habitat conservation areas have appeared on the North American landscape from time to time, broadly defined efforts to form cross-sectoral, cross-boundary districts for the achievement of conservation objectives are not standard practice today in the United States and Canada.

However, prodded in part by the insight of biodiversity scientists that large, unfragmented corridors will be necessary for the long-term survival of some species living in the wild, enthusiasm among land conservation professionals for “landscape-scale” initiatives has reemerged in recent years. Accordingly, those concerned with such widely varying purposes as biodiversity conservation, the future of working farms and forests, the protection of water resources, the provision of outdoor recreational opportunities, and economic development linked to both natural and cultural amenities have shown a renewed interest in conservation initiatives of relatively large scale and comprehensive scope. At gatherings of conservation volunteers and professionals, such as the annual Land Trust Alliance Rally, multiple, well-attended sessions are devoted to the consideration of landscape-scale initiatives and planning techniques.

With this fresh interest in regional land and biodiversity conservation efforts in mind, the Lincoln Institute, with the support of the U.S. National Park Service Conservation Study Institute (NPS CSI), the Golden Gate National Parks Conservancy (GGNPC) and the Quebec-Labrador Foundation (QLF), invited more than two dozen senior executives of public, nonprofit, academic and private sector organizations to the Presidio of San Francisco for a two-day conference in June 2003. The purposes of the meeting were to: advance our emerging understanding of what, in concept, landscape-scale initiatives are, and why they may be necessary; better understand how such concepts are (or are not) being realized in the field; and identify which innovations and advances appear necessary to more fully realize such large and comprehensive initiatives.

The Necessity of Landscape-scale Initiatives

The broad concept of a landscape-scale conservation initiative, as framed by the conference steering committee, includes three basic ideas: (1) such initiatives should encompass some regional system of interconnected properties; (2) such efforts are in some way organized to achieve one or several specific conservation objectivescooperate or collaborate in some concrete fashion to achieve those objectives. Several individuals at the conference thoughtfully articulated the necessity for landscape-scale initiatives. Chip Collins explained that conservationists who were once focused on success in “conserving individual tracts of land” now see many of the efforts launched over the past 50 years as “piecemeal and incomplete, often failing to comprehensively address the inputs that affect ecosystems and their component parts.”

Ted Smith, in explaining why the Kendall Foundation has made philanthropic investments in landscape-scale initiatives, noted: “Ample evidence convinces us that land fragmentation is a threat to most species…. We are seeking to promote reconnections along, [for example], a large stretch of the Rockies at a scale that reflects the needs of keystone species…. Because fragmented land ownership works against nature, we are funding conservation strategies that embrace approaches to integrating the management of public and private lands. Not surprisingly, private lands often hold the greatest biological wealth and represent key corridors for wildlife movement.”

While present-day discussions of landscape-scale initiatives may sometimes start with biodiversity concerns, they frequently go well beyond that focus. Nora Mitchell stated: “To protect remaining wild lands and sustain working landscapes, many conservation efforts today operate at the landscape scale. To be successful at this large scale, these efforts must integrate ecological, cultural and recreational values with economic and community development. As a result, the practice of landscape-scale conservation is complex and challenging… It requires working across political and ecosystem boundaries, adopts an interdisciplinary perspective, and involves the collaboration of many organizations.”

It is important to note that landscape-scale efforts may be directed not only toward relatively undeveloped and rural landscapes, but also to urban environments, reflecting, as Reed Holderman pointed out, “the diversity of relationships that exist between people and land.” In urban settings, the purpose may be as much about providing essential ecosystem services (for example, flood control and water purification) or recreational opportunities as they are about protecting wildlife habitat.

In short, landscape-scale conservation initiatives call upon our limited human capacities to understand and manage complex systems, as we are challenged to steward natural and built physical systems over long periods of time. Douglas Wheeler, former California Secretary of Resources, reminded the group that we are also challenged to build enduring “institutional ecosystems” that will sustain focus on achieving key conservation objectives across decades and the tenures of multiple political administrations.

Implementation of Landscape-scale Concepts

Participants had several opportunities to consider the effectiveness of landscape-scale conservation initiatives in practice, through both pre-conference field trips and case studies examined during the meeting. Field trips included visits to rural and urban protected landscapes in the San Francisco metropolitan area that help to comprise the region’s assemblage of “green matrix” sites. Subsequent case study discussions focused on the San Francisco Bay area; the Yellowstone to Yukon (Y2Y) Initiative stretching from the state of Wyoming to the Yukon Territory; and a recent effort to encourage sustainable agricultural practices into the Cerrado region of Brazil. Given the relatively recent reemergence of interest in landscape-scale regional conservation efforts, their inherent complexity, and the range of possible conservation objectives that they might entail, it was not surprising that many of the initiatives we considered were seen more as “works in progress” than as successfully completed projects.

San Francisco Bay

Within the patchwork of protected landscapes distributed across the San Francisco Bay region, the most prominent property is the Golden Gate National Recreation Area (GGNRA), a regional-scale National Park Service unit first established in 1972. It now stretches from the Santa Cruz Mountains in the south, to prime parkland on both sides of the Golden Gate Bridge, to the Marin Headlands and northward. Billed as “the largest urban parkland in the world,” the GGNRA, at 75,500 acres (more than 30,500 hectares), offers such gems as Crissy Field, a breathtakingly beautiful bayside tidal marsh and educational center located within the Presidio of San Francisco on a former military airstrip.

Brian O’Neill and Greg Moore relayed the story behind the establishment of the 30-year-old GGNRA and the recently completed Crissy Field Center. Their story is a model case history of how, working together with the help of funding from both the federal government and private philanthropic sources, their organizations have brought to life a highly valuable recreational, educational and ecological resource for Bay-area citizens. In addition to enticing visitors, ranging from local school children to great blue herons and peregrine falcons, to make repeated visits to the site, the public, private and nonprofit partners at the Crissy Field site have recently linked food service operations at the park with the noted agricultural resources of the region. Visitors to the Crissy Field Café and Bookstore today can dine on some of the best organic produce grown in the Bay area, helping to build important ties between the area’s spectacular scenic amenities and its working farms.

Lands protected by the federal government within the GGNRA are complemented by extensive protected landholdings in the area that are owned by other governmental units, including: the State of California and various county and local governments; the academic sector, including the University of California and Stanford University; the nonprofit sector, including the Peninsula Open Space Trust (POST) and the Marin Agricultural Land Trust (MALT); and the private sector, including agricultural lands under conservation easements held by both public and nonprofit entities.

While the region’s array of protected landscapes is indeed impressive in scale and distribution, enduring coordination among the managers of these lands, for the purpose of achieving specific conservation objectives, is often lacking. For example, the manager of a local nonprofit land trust was asked if strong bonds around achieving biodiversity conservation or water quality objectives linked the management of agricultural properties protected by land trusts with the lands protected by federal agencies. His answer was instructive: “Actually, the relationship between local, state and federal conservation organizations is not always smooth. There are some threads that are starting to tie one piece of the quilt to another, but they are only threads today.” He explained that what may look like some sort of coordinated picture on a map really was built “from the grassroots up,” starting with a variety of “piecemeal efforts”; any “regional vision” emerged later.

Bay area conservationists at the conference took in stride the idea that a regional vision regarding the achievement of management objectives was still being worked out. Greg Moore noted that he and his colleagues are in some ways just now refocusing on stewardship challenges, but he offered a hopeful perspective: “Each era of success generates a new generation of ambition.” Audrey Rust pointed out that it can be a struggle just to get public and private funders to focus on stewardship issues, particularly when they are inundated with land protection funding requests. But both Moore and Rust agreed that, over the next several decades, focusing substantial resources on the achievement of stewardship objectives is a job that needs greater attention. Bob McIntosh concurred, noting that similar challenges face conservationists active on the eastern seaboard.

Yellowstone to Yukon (Y2Y)

Progress toward the realization of a continuous, well-stewarded corridor of protected lands in the Y2Y region is at an even more formative stage. Ted Smith described Y2Y as a “bottom-up” effort that has biodiversity conservation at its center. Among other objectives, Y2Y seeks to establish core areas and connecting corridors that will sustain healthy populations of grizzly and black bears along a long spine of mountains that crosses the U.S.-Canadian border.

The Y2Y Initiative website (www.y2y.net) offers a brief overview of the effort. The community of interest that has gathered around the Y2Y idea has grown over the past decade to include more than “340 organizations, institutions, foundations and conservation-minded individuals” that have “recognized the value of working together to restore and maintain the unique natural heritage of the Yellowstone to Yukon region and the quality of life it offers.”

The community has played a key role in achieving numerous visible and important conservation projects. For example, Y2Y member organizations, including the Canadian Parks and Wilderness Society (CPAWS), helped lead the successful effort to establish in northern British Columbia the Muskwa-Kechika Management Area (M-KMA), a nearly 16 million acre (6.4 million hectare) district; about 25 percent of the M-KMA is designated as parkland, with the remainder included in special management zones where certain resource development activities will be allowed. While the establishment of the M-KMA is a significant success for the conservation community, its ongoing management has proven to be a real challenge. George Smith explained: “In the M-KMA, progress has been made and problems solved; some industry is occurring while the wilderness remains essentially intact. Yet, much of the integrated management system has not been created, causing line-agency power struggles and inefficiencies.”

South of the U.S.-Canadian border, the conservation community is working hard to expand on the gains made over the past two decades to conserve both public and private lands for the public benefit along the Y2Y corridor. The Trust for Public Land, for example, was successful in 2002 and 2003 in helping to protect the Taylor Fork drainage in Montana, filling in some of the checkerboard pattern of land ownership in the Gallatin National Forest. However, with various property rights groups spearheading organized opposition to both public and private land conservation efforts, the realization of landscape-scale initiatives is far from assured in the Rocky Mountain region. Many years of concerted effort lie ahead if the gaps are to be spanned between the disparate protected landscapes appearing on regional maps. Dan Sayre commented that to achieve ambitious goals, the conservation community will have to be extraordinarily persistent in making its case that careful land stewardship is in the interest of local communities, is in our national interest, and is part of a tradition with deep roots in American history.

Innovations to Advance New Initiatives

Recognizing that the concept of landscape-scale conservation is still in some respects nascent, the assembled conservationists offered a number of ideas regarding innovations that may advance its development. Story Clark pointed out that in the area of stewardship U.S.-based conservationists have a great deal to learn from their international colleagues, especially regarding “community-based conservation methodologies.” Jessica Brown agreed, based on her experience in building support for conservation initiatives in Central Europe by focusing on the role of the local community.

Glenn Prickett offered the group a short presentation on how Conservation International (CI) is helping a community-based effort in the Cerrado, a massive savannah that covers more than one-quarter of Brazil’s land area. Since World War II, the Cerrado has been intensively developed for agricultural purposes, including soybean cultivation. The region is important for its own biodiversity attributes, and because it feeds water into Brazil’s Pantanal, home to one of the globe’s most significant freshwater ecosystems. In working to build a 370-mile biodiversity corridor that connects the Cerrado and the Pantanal, CI has forged a relationship with some of the region’s most important soybean processors to develop purchasing guidelines that encourage local soybean growers to use “best practices” in their operations. Such practices include the protection of natural habitat on agricultural lands as well as careful management of riparian zones to make a measurable difference in local stream and habitat quality. By working with the community, and leveraging the reach of key industrial processors in the area, CI hopes to considerably improve the odds that a regional biodiversity corridor will be sustainable. The approach, Prickett pointed out, is transferable to North American initiatives that will depend on wildlife corridors adjacent to, or even woven into, the fabric of local agricultural and industrial properties.

In addition to working closely with communities and local industry to achieve conservation objectives, participants stressed numerous other opportunities for innovation. Gretchen Daily addressed the need for new financing mechanisms to underwrite large-scale conservation initiatives. She discussed with candor the challenges of accessing potential streams of income associated with the provision of ecosystem services (for example, funding to support forest protection and other “carbon sequestration” efforts that would help to control the levels of gases that are released into the earth’s atmosphere and contribute to global warming).

Participants also discussed the need for increasingly powerful ways to monitor large-scale easements, especially on initiatives that incorporate working forests and farmlands. Peter Stein noted that methodologies for improving both the accuracy and cost-effectiveness of monitoring protocols are under development. At the New England Forestry Foundation, for example, novel applications of remote sensing technology, combined with more traditional aerial photography techniques and on-the-ground inspections, are being leveraged to monitor new landscape-scale easements. Seasoned conservationists including Mike Soukup, Bob Bendick and Philippe Cohen underscored how advanced information technologies, such as those used in detailed, multi-scalar Geographic Information System (GIS) mapping applications, can be particularly useful in thinking through regional conservation strategies.

In conclusion, however, the focus turned from exciting new technologies to the human element. Armando Carbonell summed up the sentiment of the group, noting that a “green matrix is not just land represented by green on a map, but also a set of lasting social relationships.” Like the effort sustained by the diverse group of men and women who brought the Appalachian Trail into existence and have cared for it as a national treasure, it will take the long-term attention of present and future generations to bring today’s expansive conservation concepts into reality.

James N. Levitt is director of the Program on Conservation Innovation at the Harvard Forest, Harvard University, and is a faculty associate at the Lincoln Institute. He organizes the Institute’s annual Conservation Leadership Dialogue, and reported on the March 2002 program in the July 2002 issue of Land Lines.

References

Bristow, Robert S. 1998. Volunteer-Based Recreation Land Management: Appalachian National Scenic Trail Management Model. Parks and Recreation. National Recreation and Park Association, August 1.

Levitt, James N. 2002. Land and Biodiversity Conservation: A Leadership Dialogue. Land Lines 14(3): 1–4.

MacKaye, Benton. 1921. An Appalachian Trail: A Project in Regional Planning. Journal of the American Institute of Architects 9 (October): 325–330.

——. 1990. The New Exploration: A Philosophy of Regional Planning. The Appalachian Trail Conference, Harpers Ferry, WV, and the University of Illinois Press, Urbana-Champaign.

Conservation Leadership Dialogue Participants and Correspondents, 2003

Elizabeth Bell, Land Conservation Advisory Services, Seattle, WA
Robert Bendick, The Nature Conservancy, Altamonte Springs, Florida
Robert Berner, Marin Agricultural Land Trust, Point Reyes Station, CA
Jessica Brown, Quebec-Labrador Foundation, Ipswich, MA
Armando Carbonell,* Lincoln Institute of Land Policy, Cambridge, MA
Story Clark, conservation advisor, Wilson, WY
Patrick Coady, Coady & Company, Washington, DC
Philippe Cohen, Stanford University/Jasper Ridge, Stanford, CA
Charles E. (“Chip”) Collins, Forestland Group, Inc., Cambridge, MA
Gretchen Daily, Stanford University, Stanford, CA
Julie Early, Island Foundation, Marion, MA
Ralph Grossi, American Farmland Trust, Washington, DC
Jean Hocker,* Land Trust Alliance, emeritus, Arlington, VA
Reed Holderman, Trust for Public Land, San Francisco, CA
James N. Levitt,* Harvard Forest, Harvard University, Cambridge, MA
Nick MacPhee, Land Conservation Advisory Services, Seattle, WA
Robert McIntosh, National Park Service, Boston, MA
Nora Mitchell,* National Park Service Conservation Study Institute, Woodstock, VT
Greg Moore, Golden Gate National Parks Conservancy, San Francisco, CA
Brian O’Neill, National Park Service Golden Gate National Recreation Area, San Francisco, CA
Glenn Prickett, Conservation International, Washington, DC
Will Rogers, Trust for Public Land, San Francisco, CA
Audrey Rust, Peninsula Open Space Trust, Menlo Park, CA
Dan Sayre, Island Press, Washington, DC
George Smith, Canadian Parks and Wilderness Association, Gibsons, BC
Ted Smith, Kendall Foundation, Boston, MA
Michael Soukup, National Park Service, Washington, DC
Peter Stein, Lyme Timber Company, Lyme, NH
Douglas Wheeler, Hogan & Hartson, LLP, Washington, DC

* Conference Steering Committee

Over the past 25 years, there has been a dramatic increase in the acquisition of conservation easements by nonprofit organizations. Privately held conservation easements, i.e., those held by nonprofits rather than governmental entities, have thus emerged as an important and growing tool for the preservation of natural and scenic features of the United States landscape.

Public policy changes often have unintended consequences—side effects, feedback effects, benefits to individuals not in the target group, unexpected costs, perverse incentives, new opportunities to game the system, and the like. Early experiences with assessment limitation measures reveal an unanticipated result: some property owners seemingly targeted to benefit from lower assessments may be harmed instead.

Many scholars and analysts have suggested that public leasehold systems could allow governments to benefit from a share of future increased land value. Some have even argued that other policy objectives, including stabilizing land prices, controlling land uses and facilitating land redevelopment, could also be achieved through public land leasing. Although these proposals are persuasive at the theoretical level, there is only limited evidence to prove that governments could achieve these policy goals in practice. My research on Canberra and Hong Kong, which have two of the world’s most well developed leasehold systems, examines some of the benefits and problems of public land leasing.

Land Value Capture

Legal scholars have treated property in land as a bundle of rights. According to this perspective, the government can retain the right to own land and assign to a private party the right to use, develop, transfer, inherit and benefit from land. The private party can enjoy the land rights only for a specified time and as stipulated in the land contract. Theoretically, because the government is the landowner, it could retain a portion of the land value increments by asking a lessee to pay:

• a lump sum of money-called an initial land premium-at the beginning of the lease,
• an annual land rent,
• a premium when the lessee modifies lease conditions to acquire additional rights for land redevelopment, and
• a premium for renewing the land rights when the lease expires.

The Hong Kong leasehold system seems capable of helping the government recoup a large portion of development windfalls from landholders. For the period 1970-1991, I found that the government recaptured, on average, 39 percent of the increased land value from selected land sites through land leasing. This captured value financed an average of 55 percent of the annual infrastructure investment during the same period. (1)

More important, the money collected from leasing is not a substitute for property taxes in Hong Kong. Owners of residential properties must pay annual rates to the government that are 5 percent of the estimated rental value of their flats. Owners of commercial real estate pay a 15 percent property tax on income earned from their rental premises. Combining all land-related revenues, the Hong Kong government could recover, on average, 79 percent of the annual costs of public infrastructure investment.

In Canberra, by contrast, the percentage of infrastructure investment funded by lease revenues was only 5 percent. (See Figure 1.) There are at least two reasons for the difference: the abolition of land rent for residential leases and competition from other cities that weakens government’s ability to collect higher rents on public land.

In the first instance, then-Prime Minister John Gorton abolished all land rent for residential leases in 1970, an action that his opponents charged was designed to rally public support for his reelection. It was estimated that the government transferred 100 million Australian dollars in equity to lessees at that time, resulting in the loss of an important source of revenue. This incident raised the broader issue of politics in public land management, although leasehold systems do not necessarily induce “rent-seeking” behaviors for private or political gain.

Hong Kong’s government seems able to minimize this problem by establishing a tight internal control over the operations of leasing land. It also provides public officials with generous remuneration and fringe benefits to reduce the temptation of corruption. This demonstrates that, in designing a public leasehold system, a government must consider the need for a system of checks and balances to prevent opportunism or political maneuvering. No single person or department within a government should have the unchecked power to decide on the method and timing of allocating land resources.

The second reason for Canberra’s low lease revenues is its keen competition from other Australian cities in attracting capital. If the city government charged high land premiums and rents, businesses and industry would go to other cities. Thus, competition weakens the government’s bargaining position in negotiating with developers on the amount of land premiums or rent for leasing public land. Although Hong Kong also faces competition from other Asian cities, such as Shanghai, Singapore and Taipei, differences in taxation, government structure, business ethics and culture make capital flight less likely in Hong Kong.

This issue of competition is particularly important for developing economies where local governments are eager to attract investment. They may be willing to compromise by collecting a smaller amount of land premiums and rent from both domestic and foreign land investors. The use of land as a source of public funds may require some level of inter- or intra-regional cooperation to prevent developers from playing one government against another.

Land Speculation

In Hong Kong the government’s reliance on land revenues as a source of public funds presents another problem: its financial interest in land conflicts with its public role in stabilizing land prices. The government has relied heavily on initial land premiums because demanding premiums from lessees during lease renewals has proven to be politically difficult. In addition, the assembly of land rights for land redevelopment involves high negotiation costs because most land leases in Hong Kong have multiple leaseholders. These high costs deter private developers from undertaking land redevelopment by acquiring lease rights and modifying contract conditions. As a result, the government is unable to utilize this method fully to recoup land value. As for the land rent, before 1997 the amount of annual rent paid by lessees was fixed and bore no relationship with increases in land value. Hence, the amount of land rent collected has been minimal. (2) (See Figure 2.)

These difficulties have encouraged the government to retain land value at the beginning of the lease. Yet, this method can work only if officials lease land slowly to private developers. A rapid disposition of land when its value is low would impede the government’s ability to recoup land value in the future. Restrictions on land supply, however, have encouraged private land banking and property speculation, leading to high land and property prices and making Hong Kong one of the world’s most expensive cities. (3)

Officials of other countries could avoid this problem by relying more on lease renewals, contract modifications and the annual land rent than on the initial assignment of leases to capture land value. The plausibility of doing so, however, remains an empirical question. The experiences of Hong Kong suggest that such an attempt could encounter strong public resistance and high negotiation costs.

Managing Land Uses

In principle, public leasehold systems allow the government to manage urban growth by incorporating land use regulations into land leases. If lessees do not develop their land according to the lease provisions, the government has the right to take back the land, a contractual right not available to the government when land is privately owned.

To take full advantage of this special land right, the government must be capable of enforcing the contractual agreements. Despite having the ability to repossess land, there is no evidence to show that enforcement costs under public leasehold systems are lower than those found under freehold systems. This is partly because drafting a complete land contract is impossible. Neither public officials nor the contracting party has perfect information, so they cannot account for all contingencies when they negotiate. Contract language is imperfect and subject to interpretation, creating enforcement problems.

In 1995, a special committee was established in Canberra to review its leasehold system.(4) Analysts found that enforcing the lease purpose clause was a major problem in a town called Fyswick because the lease conditions were too complex and ambiguous. Local officials could not evict lessees who breached their contracts. Rather, they gave lessees an amnesty period to regularize their land uses by applying for lease modifications. In the end, lessees paid their modification premiums, but analysts who conducted the study argued that their payments were far less than the fair market value of the land rights obtained by lessees.

In Hong Kong, using lease conditions to control land uses has created a different problem. Although land contracting could give the government the flexibility to control land development in detail on a case-by-case basis, it is extremely inflexible in adjusting to changes in the overall zoning plan over time. As mentioned earlier, the government incorporates land use regulations into land contracts as conditions at the beginning of the lease. Unless lessees initiate a lease modification, these conditions will remain until the lease expires, which could be as long as 50 years in Hong Kong (and 99 years in Canberra).

When the government needs to update the master plan or revise land regulations to accommodate new urban development, the revised rules may be inconsistent with lease conditions established years ago. This problem has created confusion about which planning standards developers in Hong Kong should follow. To make matters worse, any regulatory changes that infringe on the lessees’ contracted land rights may trigger lawsuits against the government. The legal liability has impeded the government’s ability to modernize its land use plan for districts where outdated lease purpose clauses are still in effect.

Urban Redevelopment

Under public leasehold systems, the government can deny a lessee’s application for lease renewal if it needs the land to rebuild the neighborhood or for other public purposes. It can then take back the land and compensate the lessee only for the building. Thus, in theory, leasing should reduce the public costs of land acquisition for urban renewal or other public uses.

The government, however, must wait for leases to expire before it can assemble land for urban renewal. The long duration of land leases could again create a problem. Nor is there evidence that compensation negotiations for buildings are simpler than for both land and buildings. In Hong Kong, issues of holding out and disputes over compensation are as common as in countries where land is privately owned.

Conclusion

The difficulties that Canberra and Hong Kong face in leasing public land show that leasehold systems in and of themselves do not resolve land management problems. This does not mean, however, that leasing is not a viable means to manage land. In Hong Kong, the government retains a large portion of increased land value for public infrastructure investment. Canberra’s public leasehold system enables the government to obtain low-cost land for building the Australian capital.

The important lesson is that policymakers should not set unrealistic expectations on what public leasehold systems can achieve. Failure to deliver their promises could frustrate a well-intended reform and bring the effort to a halt. Because no land tenure system is perfect, the debate should not focus on the choice between leasehold and freehold systems. They are not mutually exclusive. Instead, future research should concentrate on designing specific institutions according to different political, economic and social contexts to minimize problems associated with both systems.

Yu-Hung Hong is a visiting fellow of the Lincoln Institute this year. He previously taught at Hong Kong University of Science and Technology in the Division of Social Science, after earning his Ph.D. in urban planning from Massachusetts Institute of Technology.

Notes

1. See Yu-Hung Hong. 1996. “Can Leasing Public Land be an Alternative Source of Local Public Finance?” Working Paper, Lincoln Institute of Land Policy.

2. See Yu-Hung Hong. 1998. “Transaction Costs of Allocating Increased Land Value: Hong Kong.” Urban Studies 35, 9: 1577-1595.

3. See Yu-Hung Hong and Alven H.S. Lam. 1998. “Opportunities and Risks of Capturing Land Values under Hong Kong’s Leasehold System.” Working Paper, Lincoln Institute of Land Policy.

4. Members of the committee included Justice Paul Stein, Patrick Troy and Robert Yeomans. Findings of the review can be found in the Report into the Administration of the ACT Leasehold, published by the government of the Australian Capital Territory in 1995.

No es casualidad que la Universidad de Kenyon, en Gambier, Ohio, aparezca en gran cantidad de listas de los más hermosos campus universitarios de los Estados Unidos. Cuando el obispo Philander Chase fundó esta universidad en la cumbre de una colina arbolada en el año 1824, su visión era lograr un entorno rural sereno que promoviera el pensamiento serio y la buena conducta. Durante 189 años, la universidad y todos aquellos que han pasado por ella han valorado este entorno. Los ritmos atemporales que presenta el paisaje permiten obtener vistas agradables que alimentan el espíritu en cada estación, y tanto los estudiantes como el cuerpo docente utilizan las hectáreas rurales adyacentes al campus para realizar trabajos de campo relacionados con diferentes disciplinas, desde la sociología hasta la química, pasando por la biología. Aun mucho después de graduarse, los exalumnos de la universidad recuerdan el campus, los campos y bosques circundantes y el curso serpenteante del río Kokosing, un pintoresco río del estado de Ohio. Como parte integrante de la experiencia en Kenyon, es precisamente este entorno el que atrae el interés de los posibles estudiantes y sus padres, ya que implica mucho más que un conjunto de hermosos bienes naturales: representa el pasado, el presente y el futuro para Kenyon.

En la década de 1820, Chase adquirió originalmente unas 1.600 hectáreas para la universidad y el pueblo de Gambier, además de otras 1.600 hectáreas adicionales, lo que representó una inversión total de US$18.000. No obstante, en los cinco años siguientes a su fundación, Kenyon comenzó a vender las hectáreas en las que había invertido debido a las dificultades económicas que estaba atravesando. Para principios de la década de 1970, los terrenos de la universidad se habían reducido a menos de 300 hectáreas.

Hacia la última década del siglo XX, era evidente que la universidad no podía dar por hecho su encantador entorno natural. En primer lugar, el propietario de un inmueble ubicado sobre el río Kokosing directamente enfrente de la entrada a Kenyon anunció sus planes para establecer un parque para vehículos recreativos. La universidad compró la propiedad por una prima significativa y, posteriormente, compró unas 90 hectáreas adicionales con el fin de detener las propuestas de desarrollar un distrito de negocios a lo largo de la autopista estatal que conduce a Gambier. Al mismo tiempo, el crecimiento y el desarrollo estaban modificando el paisaje en amplios sectores de la zona rural del condado de Knox. A medida que aumentaba la cantidad de subastas de granjas, ventas de terrenos, subdivisiones realizadas de manera atropellada y desarrollos comerciales, quedó claro que debían tomarse medidas al respecto.

La Philander Chase Corporation al rescate

En 1995, la universidad se encontraba en la primera etapa de una campaña de 5 años para recaudar fondos que comprendía una meta de 1 millón de dólares para la “adquisición de terrenos con el fin de preservar el entorno que [la universidad] tanto aprecia”. La primera donación para la preservación provino de un exalumno que, en 1997, visitó el predio un soleado fin de semana de primavera. Después de caminar hasta la cumbre de una colina que daba al valle del río Kokosing para ver el entorno que Kenyon deseaba proteger, este exalumno transfirió 1 millón de dólares a la universidad. Hacia fines de la campaña, en el año 2000, la universidad había recaudado más de 3 millones de dólares, es decir, había triplicado la meta establecida para preservar el espacio abierto.

Esta campaña demostró que los exalumnos y otros donantes consideraban el tema de la conservación del suelo muy importante en sus listas de donaciones benéficas y que la protección de los terrenos alrededor de la universidad continuaría atrayendo la lealtad y las donaciones de los exalumnos de Kenyon. Al mismo tiempo, los programas estatales y federales estaban comenzando a brindar un financiamiento significativo para la conservación del suelo. Debido a que la universidad no reunía los requisitos para recibir dicha asistencia, resultó crucial establecer una entidad especial.

Recuadro 1: Catalizadores de la conservación

La historia de la Universidad de Kenyon en cuanto a la protección de las granjas y campos circundantes al campus universitario representa un caso ejemplar de una institución académica que cataliza medidas de conservación de paisajes a gran escala. Como tal, esta historia es sólo una entre más de una docena de casos compilados por el Instituto Lincoln en un libro que se publicará próximamente, “Catalizadores de la Conservación”, editado por James Levitt, fellow del Instituto Lincoln. Levitt comenta que “este libro nos dará una idea de las prácticas llevadas a cabo por universidades, facultades y organizaciones de investigación independientes en todo el mundo, que van más allá de su misión de enseñanza e investigación para aplicar su reconocida experiencia en la conservación del suelo, que, en muchos casos, se realiza literalmente ‘in situ’”.

Lo que resulta extraordinario en estos casos no es sólo su impacto sino también la amplitud el alcance de la diversidad organizacional y geográfica que representan. Las organizaciones académicas y de investigación están catalizando estas iniciativas mucho más allá de la base de operaciones de Kenyon en Gambier, Ohio, hacia lugares tan remotos como Australia, las islas caribeñas de Trinidad y Tobago y el bosque boreal canadiense. Las iniciativas, por lo general, abarcan una amplia gama de intereses que representan a los sectores público, privado, sin fines de lucro, y académico y de investigación, e involucran una gran variedad de disciplinas de las ciencias naturales, las ciencias sociales, los estudios profesionales y las humanidades. El estudio y la divulgación de las buenas prácticas en cuanto a la conservación del suelo a gran escala son el tema central de dos proyectos actuales del Instituto Lincoln y sus contrapartes en la iniciativa conjunta formada a tal fin con la Red Profesional para la Conservación de Paisajes a Gran Escala (www.largelandscapenetwork.org) y la Red de Catalizadores de Conservación (www.conservationcatalysts.net).

En el año 2000, la universidad creó la Philander Chase Corporation (PCC), una entidad sin fines de lucro independiente, con una misión simple: “Preservar y mantener los terrenos agrícolas, los espacios abiertos, los lugares pintorescos y los paisajes característicos que rodean a Universidad de Kenyon y a Gambier, en Ohio”. La estructura de organización de la PCC, consistente en un directorio formado por 15 miembros, es única entre los fideicomisos de suelo. La PCC es una organización de categoría 501(c)3 y Kenyon College es el único miembro, según las disposiciones establecidas en la ley de entidades sin fines de lucro de Ohio. Aunque la organización es una entidad que funciona por separado a instancias de su directorio, Kenyon College es la organización de control y ratifica la elección de los directores de la PCC. Tanto el presidente de Kenyon como el presidente del directorio de la PCC son, ex officio, miembros respectivos del directorio de la otra organización.

Uno de los objetivos de la PCC consiste además en evitar que los futuros directorios vendan hectáreas y en mejorar las relaciones entre la universidad y la ciudad. Aunque las interacciones entre Kenyon y la comunidad en la que está emplazada no presentaban mayores problemas, existía cierto grado de fricción, ya que, aun cuando la PCC funcionaba bajo los auspicios de la universidad, los residentes de la ciudad en general percibían a la PCC como una entidad por separado que comenzaba desde cero.

Asistencia de los socios locales

Tal como se sugirió anteriormente, la PCC tuvo la suerte de recibir el financiamiento en un momento especialmente oportuno, ya que sus intereses coincidían y se superponían con iniciativas similares que se estaban gestando en el estado de Ohio y en el condado de Knox, lo que brindó el marco y las estrategias que, posteriormente, ayudarían a la PCC a llevar a cabo sus tareas.

En 1996, el gobernador de ese entonces, George Voinovich, estableció una comisión bipartidaria denominada Unidad Especial para la Preservación de Terrenos Agrícolas de Ohio, formada por representantes del gobierno, del sector empresarial, del sector académico y del sector agrícola. En junio de 1997, esta unidad especial informó que, en los 45 años anteriores, se habían perdido más de 2,8 millones de hectáreas (el 33 por ciento de los terrenos agrícolas de Ohio) para su utilización en actividades no relacionadas con la agricultura. Dos recomendaciones específicas prepararon el camino hacia medidas de conservación más amplias: la creación de la Oficina para la Preservación de Terrenos Agrícolas, perteneciente al Departamento de Agricultura de Ohio, y una declaración de principios en la que se establecía el compromiso del estado de proteger sus terrenos agrícolas productivos de una recalificación para usos no agrícolas que sería irreversible.

El estado anunció, además, la creación de un programa de Subsidio en Bloque para el Desarrollo Comunitario de 10.000 dólares con el fin de apoyar los planes municipales de “preservación de terrenos agrícolas”, lo que desembocó en la creación de la Unidad Especial para la Preservación de Terrenos Agrícolas del Condado de Knox en el año 1988. Me desempeñé en la unidad especial de este condado, donde me encomendaron “evaluar el estado de la producción agrícola en el condado, analizar alternativas para el desarrollo sin planificación y presentar recomendaciones para la preservación de los terrenos agrícolas del condado de Knox”.

En el año 2000, el electorado estatal aprobó la creación del Fondo Limpio de Ohio, un programa de bonos de 400 millones de dólares destinado a preservar las áreas naturales y los terrenos agrícolas, proteger los arroyos, generar oportunidades de recreación al aire libre y revitalizar áreas urbanas mediante la recuperación de terrenos contaminados abandonados para un uso productivo. Este fondo (que el electorado renovó en el año 2008) dedicó 25 millones de dólares al Programa de Compra de Derechos de Servidumbre Agrícola de Ohio, administrado por el Departamento de Agricultura de Ohio, para ser utilizados durante un período de cuatro años.

Otro desarrollo clave a nivel del condado que se dio en esos momentos fue la creación del Fideicomiso Conservacionista de Owl Creek, un fideicomiso de suelo privado sin fines de lucro que trabaja junto con los propietarios para conservar los terrenos agrícolas, los corredores fluviales, las áreas protegidas de acuíferos y cuencas, los hábitats de vida silvestre, los bosques y otras áreas particularmente sensibles desde el punto de vista ecológico de la región central de Ohio, entre la que se cuenta el condado de Knox.

Desde sus inicios, la PCC determinó que, para lograr el éxito, sería fundamental crear buenas asociaciones de trabajo, por lo que entabló relaciones con los encargados de elaborar políticas a nivel del pueblo, la ciudad, el condado y el estado. Desde los Comisionados del Condado de Knox hasta el Distrito de Conservación del Suelo y el Agua, pasando por la Comisión de Planificación Regional, la PCC estableció y ha mantenido relaciones productivas. También resultó de vital importancia que, en mi carácter de director gerente de la PCC, fuera también un participante activo en varias de estas organizaciones.

Estrategias de preservación de la PCC

En medio de este entorno dinámico, la PCC comenzó a funcionar. Antes de la creación de la PCC existían varios informes y numerosas recomendaciones a nivel municipal, pero la PCC actuó como uno de los primeros catalizadores para tomar medidas en todo el condado. Al estar en consonancia con la filosofía de la PPC de ayudar a los demás, el Programa de Compra de Derechos de Servidumbre Agrícola de Ohio recientemente establecido brindó la oportunidad perfecta para que la PCC se relacionara con la comunidad agrícola local con el fin de ayudarlos a proteger sus tierras de los proyectos de desarrollo perjudiciales.

Según el Programa de Compra de Derechos de Servidumbre Agrícola de Ohio, los propietarios de terrenos no podían solicitar derechos de servidumbre directamente, sino que un condado, pueblo, municipio o fideicomiso de suelo debía solicitar dichos derechos en nombre de los propietarios. Poco tiempo después de publicarse las pautas en el año 2001, dos agricultores locales solicitaron a la PCC que actuara en calidad de auspiciante local. El estado recompensaba a los solicitantes que con-stituían terrenos más grandes al unir propiedades adyacentes, por lo que los agricultores reclutaron a sus vecinos y se organizaron para asistir a talleres auspiciados por la PCC con la ayuda de la Oficina para la Preservación de Terrenos Agrícolas. Durante el primer año del programa, la PCC ocupó el tercer lugar entre las fuentes más grandes de solicitudes en todo el estado. Sólo se financiaron 24 solicitudes, y la PCC recibió uno de los derechos de servidumbre tan codiciados.

Al año siguiente, la PCC se las ingenió para ayudar a aumentar los puntajes de los agricultores en la parte expositiva de las solicitudes. Los solicitantes auspiciados por la PCC obtenían puntajes altos en las preguntas objetivas, pero la mayoría obtenía puntajes más bajos que otros solicitantes del estado en las cinco exposiciones. Por lo tanto, le pedí al presidente del departamento de Lengua inglesa de Kenyon (reconocido como uno de los mejores del país) que reclutara a unos 20 estudiantes para que ayudaran a los agricultores a escribir sus exposiciones. Los estudiantes se reunieron con los agricultores en sus hogares, los entrevistaron y los ayudaron a elaborar exposiciones persuasivas. Este trabajo conjunto tuvo un éxito rotundo. Los agricultores disfrutaron de poder conocer a los estudiantes de Kenyon, a los estudiantes les encantó visitar las granjas y conversar con los agricultores y, en los años siguientes, las solicitudes de los agricultores obtuvieron los puntajes más altos en las exposiciones.

Las propiedades bajo protección permanente cercanas a la granja de un solicitante obtenían puntos adicionales, por lo que la PCC obtuvo de la universidad un derecho de servidumbre de conservación en el Centro Medioambiental de la Familia Brown, de 153 hectáreas. En forma similar, la PCC pidió al Fideicomiso Conservacionista de Owl Creek que solicitara un financiamiento a los Fondos Limpios de Ohio con el fin de adquirir un derecho de servidumbre sobre terrenos de propiedad de la PCC. El resultado fue positivo para las tres partes involucradas: la PCC obtuvo dinero en efectivo por la venta de los derechos de servidumbre y conservó la propiedad de los terrenos; el Fideicomiso Conservacionista de Owl Creek recibió el derecho de servidumbre; y los solicitantes de derechos de servidumbre agrícola obtuvieron puntos adicionales.

La PCC impulsó los puntajes de los solicitantes locales aumentando también los aportes que igualaran a la cantidad de subsidios estatales. Ohio financia solamente el 75 por ciento del valor total de los derechos de servidumbre y el 25 por ciento restante debe provenir del propietario o de alguna otra fuente. Si los solicitantes deciden voluntariamente pagar más del 25 por ciento (lo que reduciría la obligación del estado) el estado otorga entonces puntos adicionales a dichos solicitantes. Así, mediante el uso de su propio dinero y persuadiendo a los Comisionados del Condado de Knox de que aportaran unos 300.000 dólares para apoyar el programa, la PCC logró que muchas más solicitudes se tramitaran con éxito.

Con el correr de los años, la PCC también aumentó los puntajes de los solicitantes cuyas propiedades reunían los requisitos para lograr la designación de “Granjas Centenarias” por parte del Departamento de Agricultura de Ohio, mediante la cual se honra a las familias que demuestran haber sido propietarias de sus tierras en forma continua por al menos 100 años. Las Granjas Centenarias recibieron puntos adicionales y, gracias al impulso y la guía de la PCC, 5 de las 18 Granjas Centenarias del condado de Knox solicitaron con éxito derechos de servidumbre y lograron conservar sus tierras.

A la vez que ayudaba a los agricultores locales a proteger sus propiedades, la PCC también se dedicó a crear un parque del condado. Con dinero generado por la campaña de recaudación de fondos de la universidad y otras donaciones posteriores se adquirieron tres propiedades por un total de 82 hectáreas, que luego se revendieron, sujetas a las restricciones contenidas en las escrituras respectivas. Una de estas propiedades, la granja Prescott de 68 hectáreas, ubicada entre Gambier y Mount Vernon, resultó ser muy importante para Kenyon, ya que allí se origina el arroyo Wolf Run, que desemboca en el río Kokosing y pasa por el Centro Medio-ambiental de la Familia Brown. Una empresa de Pensilvania dedicada a los desarrollos ya había comprado terrenos justo enfrente de la granja Prescott, en donde tenía la intención de construir 225 viviendas. Antes de que esta empresa desarrolladora pudiera adquirir también la granja, la PCC la compró a 626.000 dólares.

Un año más tarde, la PCC aceptó revender la granja al Distrito del Parque del Condado de Knox con la condición de que dicho distrito obtuviera subsidios estatales para adquirir la propiedad y establecer el primer parque del condado de Knox. Dado que los fondos otorgados por el estado requerían que el distrito también aportara sus propios fondos (una suma de dinero que el distrito no poseía), la PCC ayudó a convencer a la Fundación Comunitaria de Mount Vernon y a los Comisionados del Condado de Knox para que donaran los terrenos de su propiedad que eran adyacentes a la granja, a fin de satisfacer el requisito de fondos aportados por el distrito. El plan funcionó. El distrito del parque obtuvo el financiamiento y adquirió la propiedad de la PCC, el condado de Knox logró crear el nuevo Parque Regional Wolf Run de 116 hectáreas, y la zona de nacimiento del arroyo Wolf Run quedó protegida de los proyectos de desarrollo.

Aunque ciertos casos de éxito ocurrieron sin financiamiento alguno, muchos de los logros fueron el resultado directo de la disponibilidad de dinero. Además de las donaciones de exalumnos y amigos durante dos campañas impulsadas por la universidad, la PCC se aseguró de recibir fondos adicionales provenientes de fuentes estatales, federales y del condado, que superaron los 2,1 millones de dólares. La noción original de que los exalumnos y otros donantes podrían estar interesados en “preservar la naturaleza en la experiencia de Kenyon” demostró una vez más ser correcto.

Universidades y facultades como catalizadores de la conservación

La PCC, tal como se ha desarrollado, es un modelo que presenta la estructura legal y las herramientas necesarias para actuar como un catalizador efectivo de medidas de conservación. Para el año 2013, la PCC había comprado un total de 93 hectáreas que administra y alquila a los agricultores; había facilitado la creación de 35 derechos de servidumbre que abarcan 1.700 hectáreas; y, junto con el Fideicomiso Conservacionista de Owl Creek, había protegido un total de 2.730 hectáreas en el condado de Knox. Del total de 137.190 hectáreas del condado, la cantidad restante de 66.640 hectáreas sin proteger supone una enorme oportunidad para la comunidad conservacionista del suelo local.

Aunque se están llevando a cabo medidas conservacionistas de grandes proporciones tanto a nivel nacional como internacional, las actividades de conservación locales cumplen una función invaluable y tienen mucho que aportar a las actividades a mayor escala. Según el Censo de la Alianza de Fideicomisos de Suelo de 2010, los 1.723 fideicomisos de suelo activos que funcionan en los Estados Unidos han logrado conservar, en conjunto, un total de 19 millones de hectáreas. Existen 7.500 instituciones educativas terciarias en los Estados Unidos. Si solamente el 10 por ciento de dichas instituciones se involucrara en la conservación del suelo utilizando un modelo similar al de la PCC, esto representaría un gran paso adelante del movimiento conservacionista.

Cada institución que adoptara el modelo de la PCC tendría su propio entorno de características únicas. No obstante, el modelo puede aplicarse en forma amplia, ya que cada elemento que formó parte de la creación de la PCC es absolutamente replicable en cualquier institución educativa del país.

La Philander Chase Corporation comenzó a funcionar en un tiempo en que existía una creciente preocupación en torno a la erosión del paisaje rural que se fue dando con cada operación realizada. El objetivo era local, ya que estaba relacionado con Kenyon College y sus alrededores. Sin embargo, la experiencia y los objetivos de la PCC pronto fueron compartidos por agencias aliadas y con intereses coincidentes del condado de Knox y otros lugares, lo que posibilitó la existencia de oportunidades de mayor envergadura. Esta experiencia demuestra que lo que ocurrió aquí puede darse en cualquier otro lugar.

Sobre el autor

Doug Givens fue el director gerente fundador de la Philander Chase Corporation. Givens también se desempeñó como presidente del Comité de Preservación de Terrenos Agrícolas, perteneciente a la Comisión de Planificación Regional del Condado de Knox, y fue miembro de la Junta Asesora para la Preservación de Terrenos Agrícolas de Ohio. Además, Givens fue fideicomisario fundador del Fideicomiso Conservacionista de Owl Creek y presidente del Fondo Brown. Actualmente, Givens se desempeña como vicepresidente, director y miembro del comité ejecutivo de Scranton-Averell Company (un holding de bienes raíces), como director de Bradford & Carter Company (una empresa dedicada al desarrollo inmobiliario) y como director de la Fundación George B. Storer. Trabajó en la oficina de desarrollo de Kenyon College durante 28 años y se jubiló en calidad de vicepresidente en el año 2000. Givens obtuvo su título de grado y su maestría por la Universidad de Indiana, y se doctoró en Derecho por el Kenyon College. 

Recursos

A Place with a View for the Future. www.kenyon.edu/x44947.xml.

Knox County, Ohio. 1998. Knox County Comprehensive Plan: Focus 2100 Advanced.

———. 1999. Knox County Farmland Preservation Taskforce Report.

———. 2003. Cost of Community Services Study.

Land Lords. https://orgsync.com/35905/chapter.

Ohio Farmland Preservation Task Force. 1997. Ohio Farmland Preservation Task Force Findings and Recommendation: Report to Governor George V. Voinovich. Ohio Issue 1. Environmental Bond Act. 2000.

Owl Creek Conservancy. www.owlcreekconservancy.org.

Philander Chase Corporation. www.kenyon.edu/philanderchase.xml.

Philander Chase Corporation Articles of Incorporation. www2.sos.state.oh.us/reports/rwservlet?imgc&Din=200013300715.

Rural Life Center, Kenyon College. http://rurallife.kenyon.edu.

It is no accident that Kenyon College, in Gambier, Ohio, appears on so many lists of America’s most beautiful campuses. Since Bishop Philander Chase founded the college on a wooded hilltop in 1824, he envisioned a serene rural environment that would promote serious thought and good conduct. For 189 years, the college and those who have found their way to it have valued this setting. Timeless rhythms in the landscape afford views that please the eye and nourish the spirit in every season, and students and faculty members use the rural acres adjacent to the campus for fieldwork in a variety of disciplines ranging from sociology to biology and chemistry. Long after graduation, alumni remember the campus, the surrounding fields and forests, and the twists and turns of the Kokosing State Scenic River. Integral to the Kenyon experience, it is this environment that captures the interest of prospective students and their parents. More than beautiful natural assets, they represent the past, present, and future for Kenyon.

In the 1820s, Chase originally purchased 4,000 acres for the college and the village of Gambier plus an additional 4,000 acres as an investment for a total of $18,000. Within five years of its founding, however, Kenyon began selling the investment acreage in response to financial difficulties. By the early 1970s, the college’s land holdings had dwindled to fewer than 750 acres.

By the final decade of the 20th century, it was clear that the college could not take its charmed setting for granted. First, the owner of a property on the Kokosing River and directly across from the entrance to Kenyon announced plans to establish a recreational-vehicle park. The college purchased the property for a substantial premium and soon thereafter bought an additional 225 acres in order to quash proposals for a business district along the state highway that leads to Gambier. Concurrently, growth and development were changing the landscape in broad swaths of Knox County’s rural countryside. As farm auctions, land sales, pell-mell subdivisions, and commercial developments accelerated, it became clear that action was required.

Philander Chase Corporation to the Rescue

In 1995, the college was in the early stage of a five-year capital campaign that included a $1 million goal for “land acquisition to preserve the surroundings [the college] so cherishes.” The first preservation gift came from an alumnus visiting one sunny spring weekend in 1997. After walking to a hilltop overlooking the Kokosing River valley, to see what Kenyon needed to protect, he wired $1 million to the college. By the end of the campaign, in 2000, the college had raised more than $3 million—three times the goal for open space preservation.

The campaign showed that alumni and other donors ranked land conservation high on their charitable giving list, and the protection of land around the college would continue to enlist the loyalty and charity of Kenyon alumni. At the same time, state and federal programs were beginning to provide meaningful funding for land conservation. Because the college was ineligible to receive such assistance, the establishment of a special entity was crucial.

In 2000, the school formed the Philander Chase Corporation (PCC) as a separately incorporated nonprofit entity with a simple mission: “To preserve and maintain the farmland, open spaces, scenic views, and characteristic landscapes surrounding Kenyon College and Gambier, Ohio.” With its own 15-member board of directors, PCC’s organizational structure is unique among land trusts. It is a membership 501(c)3 organization, and Kenyon College is the sole member under provisions of Ohio nonprofit law. Even though the corporation is a separate entity operating under the direction of its board, Kenyon College is the controlling organization and ratifies the election of the corporation’s directors. The president of Kenyon and chair of PCC are ex officio members of one another’s boards.

PCC also serves to prevent future boards from selling off acreage and to improve town-gown relations. While interactions between Kenyon and the surrounding community were not a major problem, there was some friction; although PCC functioned under the college’s auspices, local residents generally perceived it as a separate entity with a clean slate.

Aid from Local Partners

As suggested above, PCC was lucky to have been founded at an especially opportune time, when its concerns coincided and overlapped with similar initiatives taking shape in the state of Ohio and in Knox County, providing the framework and strategies that would later help PCC carry out its work.

In 1996, then-Governor George Voinovich commissioned a bi-partisan Ohio Farmland Preservation Task Force consisting of representatives from government, business, academia, and agricultural interests. In June 1997, the task force reported that in the previous 45 years, more than seven million acres (33 percent of Ohio farmland) had been lost to nonagricultural uses. Two specific recommendations set the stage for broader conservation efforts: the creation of an Office of Farmland Preservation within the Ohio Department of Agriculture and a policy statement declaring the state’s commitment to protect its productive agricultural land from irretrievable conversion to nonagricultural uses.

The state also announced a $10,000 Community Development Block Grant program to support local “farmland preservation” plans, which led to the formation of the Knox County Farmland Preservation Task Force in 1998. I served on the local task force, charged with “evaluating the state of agricultural production in the county, exploring alternatives to unplanned development, and making recommendations for the preservation of the farmlands in Knox County.”

In 2000, state voters approved The Clean Ohio Fund, a $400 million bond program to preserve natural areas and farmland, protect streams, create outdoor recreational opportunities, and revitalize urban areas by returning contaminated brownfields to productive use. The fund (renewed by voters in 2008) dedicated $25 million, to be spent over a four-year period, to the Ohio Agricultural Easement Purchase Program administered through the Ohio Department of Agriculture.

Another key county-level development at that time was the establishment of the Owl Creek Conservancy. A nonprofit private land trust, the conservancy works with landowners to conserve farmlands, stream corridors, aquifer- and watershed-protection areas, wildlife habitats, woodlands, and other ecologically sensitive areas of central Ohio including Knox County.

From the beginning, PCC determined that good working partnerships would be essential for success, and so it forged ties with policy makers at the village, township, county, and state levels. From the Knox County Commissioners to the Regional Planning Commission to the Soil and Water Conservation District, PCC established and continued to nurture productive relationships. It was also critical that, as the managing director of PCC, I was an active participant in many of these organizations.

Box 1: Conservation Catalysts

The story of Kenyon College’s protection of the farms and fields near its campus is an exemplary case of an academic institution catalyzing large landscape conservation. As such, it is one of more than a dozen narratives being compiled by the Lincoln Institute in a forthcoming book, Conservation Catalysts, edited by Lincoln Institute fellow James Levitt. He reports that “the volume will give us a picture of the practice of universities, colleges, and independent research organizations around the globe that are going beyond their research and teaching missions and applying land conservation expertise, in many cases quite literally, ‘on the ground.’”

What is remarkable about these cases is not only their impact, but also the span of organizational and geographic diversity they represent. Academic and research organizations are catalyzing these initiatives well beyond Kenyon’s base in Gambier, Ohio, to places as widespread as Australia, the Caribbean islands of Trinidad and Tobago, and the Canadian boreal forest. The initiatives often encompass a broad range of interests representing the public, private, nonprofit, and academic/research sectors and involve a wide variety of disciplines in the natural sciences, social sciences, professional studies, and the humanities. The study and sharing of best practices in large landscape conservation is the focus of two ongoing efforts of the Lincoln Institute and its joint venture partners, the Practitioner’s Network for Large Landscape Conservation (www.largelandscapenetwork.org) and the Conservation Catalysts Network (www.conservationcatalysts.net).

PCC’s Preservation Strategies

Amid this dynamic environment, PCC began its operations. Before its establishment, there were reports and numerous recommendations at the local level, but PCC was an early catalyst for countywide action. In keeping with PCC’s philosophy of helping others, the newly established Ohio Agricultural Easement Purchase Program provided the local farming community to help them protect their land from adverse development.

Under the Ohio Agriculture Easement Purchase Program, landowners could not directly apply for easements; a county, township, municipality, or land trust had to apply on their behalf. Shortly after the guidelines were published in 2001, two local farmers asked PCC to act as their local sponsor. The state rewarded applicants who formed larger blocks with nearby properties, so the farmers recruited their neighbors and rallied many of them to attend workshops hosted by PCC with help from the Office of Farmland Preservation. In the program’s first year, PCC was the third largest source of applications statewide. Only 24 applications were funded; PCC received one of the coveted easements.

The following year, PCC ingeniously helped raise local farmers’ scores on the essay portion of the application. PCC’s applicants scored highly on the objective questions, but most scored lower than other applicants statewide on the five essays. So I asked the chair of Kenyon’s English department, renowned as one of the nation’s best, to enlist about 20 students to assist farmers in writing their essays. Students met with the farmers in their homes, interviewed them, and helped them craft compelling essays. The effort was a rousing success. The farmers enjoyed getting to know Kenyon students, the students loved visiting the farms and talking with the farmers, and in following years their applications earned top essay scores.

Permanently protected property in close proximity to an applicant’s farm garnered additional points, so PCC secured a conservation easement from the college on the 380-acre Brown Family Environmental Center. In a similar manner, PCC asked the Owl Creek Conservancy to apply for Clean Ohio Funds to purchase an easement on PCC-owned land. The result was a threefold win: PCC received cash for selling the easement and continued to own the land, the Owl Creek Conservancy held the easement, and agricultural easement applicants received additional points.

PCC boosted local applicants’ scores by increasing its local match of state subsidies as well. Ohio funds only 75 percent of an easement’s total value; the remaining 25 percent must come from the landowner or another source. If applicants volunteer to pay more than 25 percent, lowering the state’s obligation, the state awards “bonus” points to the applicant. By using its own money and persuading the Knox County Commissioners to contribute nearly $300,000 to support the program, PCC ensured more successful applications.

Over the years, PCC also raised the scores of applicants whose property qualified for the Ohio Department of Agriculture’s Century Farm designation, honoring families who demonstrated continuous family ownership for at least 100 years. Century Farms received extra points, and, with encouragement and guidance from PCC, five of Knox County’s 18 Century Farms successfully applied for easements and conserved their land.

While helping local farmers protect their properties, PCC helped create a county park at the same time. Using money generated by the college’s fundraising campaign and subsequent gifts, three properties totaling 202 acres were purchased and then resold subject to deed restrictions. One of these properties, the 168-acre Prescott farm between Gambier and Mount Vernon, was especially important to Kenyon as the source of Wolf Run Creek, which flows into the Kokosing River and through the Brown Family Environmental Center. A development company from Pennsylvania had already purchased land across the road from the Prescott farm and planned to build 225 homes there. Before the developer could purchase the farm as well, PCC bought it for $626,000.

A year later, PCC agreed to resell the farm to the Knox County Park District only if the district obtained state subsidies to acquire the property and establish Knox County’s first park. Because state funding required matching grants—money the district did not have—PCC helped persuade the Mount Vernon Community Foundation and the County Commissioners to donate land they owned adjacent to the farm to satisfy the matching fund requirement. The plan worked. The park district got the funding and purchased the property from PCC, Knox County had a new 288-acre Wolf Run Regional Park, and the source of Wolf Run was protected from development.

While some successes happened without funding, many of the accomplishments directly resulted from the availability of money. In addition to donations from alumni and friends during two college campaigns, PCC secured additional funding from state, federal, and county sources in excess of $2.1 million. The original notion that alumni and other donors might be interested in “preserving the nature of the Kenyon experience” proved to be correct again.

Colleges and Universities as Conservation Catalysts

PCC, as it has developed, is a model with the legal structure and tools needed to be an effective conservation catalyst. By 2013, PCC had outright purchased 230 acres that it manages and leases to farmers, facilitated the creation of 35 easements encompassing 4,216 acres, and, with the Owl Creek Conservancy, protected a total of 6,746 acres in Knox County. Of the county’s 339,000 total acres, those remaining 164,666 unprotected acres provide a tremendous opportunity for the local land conservation community.

While large landscape conservation is taking place nationally and internationally, local conservation activities have a valuable role to play and a great deal to contribute to grander-scale activity. According to the Land Trust Alliance 2010 Census, the 1,723 active land trusts operating in the United States had collectively conserved 47 million acres. There are 7,500 post-secondary educational institutions in the United States. If only 10 percent of these institutions engaged in land conservation using a model similar to PCC’s, it could be a major step forward in the conservation movement.

Each institution where the PCC model might be adopted would have its own unique environment. Nevertheless, the model is widely applicable; every element that led to the formation of PCC is eminently replicable at any educational institution in the country.

The Philander Chase Corporation began at a time when there was growing concern about the deal-by-deal erosion of the rural landscape. The goal was local: it related to Kenyon College and its environs. But PCC’s experience and aims were soon shared by overlapping and allied agencies in Knox County and beyond, leading to and suggesting larger possibilities. This experience demonstrates that what happened here can happen elsewhere.

About the Author

Doug Givens was the founding managing director of the Philander Chase Corporation. Givens also served as chair of the Farmland Preservation Committee of the Knox County Regional Planning Commission and member of the State of Ohio Farmland Preservation Advisory Board. He was a founding trustee of the Owl Creek Conservancy and president of the Brown Fund. Mr. Givens is currently the vice president, director, and member of the executive committee of the Scranton-Averell Company (a land holding company); a director of the Bradford & Carter Company (a real estate development company); and a director of the George B. Storer Foundation. For 28 years, he worked in the development office at Kenyon College, retiring from the vice presidency in 2000. He earned his bachelor’s and master’s degrees at Indiana University and received a doctor of laws degree from Kenyon College. 

Resources

A Place with a View for the Future. www.kenyon.edu/x44947.xml

Knox County, Ohio. 1998. Knox County Comprehensive Plan: Focus 2100 Advanced.

———. 1999. Knox County Farmland Preservation Taskforce Report.

———. 2003. Cost of Community Services Study.

Land Lords. https://orgsync.com/35905/chapter

Ohio Farmland Preservation Task Force. 1997. Ohio Farmland Preservation Task Force Findings and Recommendation: Report to Governor George V. Voinovich. Ohio Issue 1. Environmental Bond Act. 2000.

Owl Creek Conservancy. www.owlcreekconservancy.org

Philander Chase Corporation. www.kenyon.edu/philanderchase.xml

Philander Chase Corporation Articles of Incorporation. www2.sos.state.oh.us/reports/rwservlet?imgc&Din=200013300715

Rural Life Center, Kenyon College. http://rurallife.kenyon.edu

The foreclosure crisis and its impact on the U.S. economy seem far from abating as mortgage delinquencies and foreclosure filings continue to climb. According to RealtyTrac, a total of 2.8 million properties had foreclosure filings during 2009, or one out of every 45 residences. That foreclosure rate was 21 percent higher than in 2008 and 120 percent higher than in 2007. Maintaining home ownership has proven to be a tenuous, if not impossible, proposition for many homeowners.

Some researchers, policy makers, and advocates are questioning whether conventional, market-oriented home ownership is the best form of housing for low-income households and communities. While others continue to extol the many benefits of home ownership, they question the way it is structured and suggest that alternative models of resale-restricted, owner-occupied housing may help low-income homeowners keep their homes more successfully.

Research on one of these alternative models, the community land trust (CLT), found delinquencies and foreclosures to be far lower among the owners of CLT homes than the owners of unrestricted, market-rate homes during the market downturn of 2007–2009. This article presents these findings and examines aspects of CLTs that may help to explain the sustainability and success of CLT home ownership.

Community Land Trusts

CLTs are nonprofit organizations that utilize public and private funds to provide affordable home ownership opportunities for low-income households (usually those with gross incomes less than 80 percent of the area median income). Traditionally, CLTs purchase and retain title to the land under detached houses, attached townhouses, or multi-unit condominiums. The land is leased to residents who hold a deed to their individual homes. Some CLTs use other legal mechanisms, including deed covenants, second mortgages, or cooperative housing models, to convey ownership and subsidize properties.

CLTs provide homeowners with pre-purchase and post-purchase stewardship services to protect them from high-cost or predatory mortgage lending. CLTs also intervene to cure delinquencies and prevent foreclosures. In exchange, homeowners accept limitations on the resale price and the equity they may remove from their homes. Through this arrangement, households unable to afford market-rate homes are able to realize most of the financial and social benefits of home ownership, while CLTs are able to maintain affordability of their homes for future buyers.

Reevaluating Low-Income and Minority Home Ownership

Cross-sectional investigations have found that home ownership is the most robust explanatory factor of wealth in low-income and minority households. Home equity made up 56 percent of the wealth in households within the bottom quintile on income in 2000 relative to 32 percent for all households (Herbert and Belsky 2008). Before the housing market crisis, home equity accounted for approximately 62 percent of wealth for African-Americans and 51 percent for Hispanics, but only 44 percent for whites (McCarthy, Van Zandt, and Rohe 2001).

The financial benefits of home ownership may only be realized if low-income households are able to enter and sustain it. Longer durations of tenure greatly increase the likelihood of financial returns. When studies have examined home ownership over time, they find that low-income households take longer to enter owner-occupied housing and are more likely to return to renting; indeed, roughly half of low-income households exit home ownership within five years of purchase (e.g., Reid 2005).

Risk factors associated with losing one’s home are more common among low-income and minority homeowners. They are more likely to obtain high-risk loans for purchase and refinance, and they are more vulnerable to trigger events, such as unemployment or health issues, which are associated with higher incidents of delinquencies and foreclosures (Immergluck 2009). Almost half of low-income households are severely cost-burdened by their housing expenses (Joint Center for Housing Studies 2008). Length of tenure, loan terms, affordability, and trigger events may impact sustaining home ownership and affect the likelihood that low-income and minority homeowners will accumulate wealth or debt.

Costs of Foreclosure to Communities

The costs of foreclosure extend well beyond the households that lose their homes, impacting the immediate neighborhood and surrounding municipality. Studies in Columbus (Ohio), Chicago, and New York City have shown that foreclosed properties significantly diminished nearby housing values, and that rates of depreciation were greater for lower-income than higher-income neighborhoods. Depreciation leaves remaining homeowners vulnerable to negative equity, default, and foreclosure. Foreclosures, which are associated with rises in vacant properties and crime, tend to cluster in low-income and minority neighborhoods (Immergluck 2009).

Foreclosures also impose costs on municipalities due to vacant property demolition, administrative fees, and outstanding or declining property taxes. Apgar and Duda (2005) modeled the costs of a foreclosure in Chicago and found that more than a dozen agencies could be involved in over two dozen activities, which were estimated to cost the city up to $34,199 per foreclosure. Moreno (1995) estimated the cost to Minneapolis and St. Paul for the foreclosure of houses with FHA mortgages and found that municipal losses were approximately $27,000 per foreclosure. Higher rates of delinquencies and foreclosure filings during 2009 portend continued losses for households, neighborhoods, and municipalities.

Overview of the CLT Study

In March 2010, the National Community Land Trust Network (the Network) designed and conducted the 2009 CLT Delinquency & Foreclosure Survey (Thaden 2010). All 229 CLTs in the Network’s database were invited to participate in the online survey, and 53 CLTs (23 percent) completed it. Eleven respondents did not have CLT homes with outstanding mortgages at the end of 2009, so they were not included in the final analysis. The remaining 42 CLTs in 22 states had 2,279 resale-restricted, owner-occupied homes in their portfolios, 2,173 of which had outstanding residential mortgages as of December 31, 2009. The median number of mortgaged homes for these CLTs was 30.

The primary purpose of the survey was to examine how many residential mortgages held by CLT homeowners (referred to as CLT loans) had been seriously delinquent, entered the foreclosure process, or completed the foreclosure process in 2009. Survey items were designed for comparison with results from the Network’s 2008 survey, as well as results from the 2008 and 2009 National Delinquency Surveys conducted by the Mortgage Bankers Association (MBA).

The Network’s survey replicated the definitions used by the MBA for loans that were (1) “In the Foreclosure Process,” which includes loans in the process of foreclosure regardless of the date the foreclosure procedure was initiated; and (2) “Seriously Delinquent,” which includes loans that were at least 90 days delinquent or in the process of foreclosure. The secondary purpose of the Network’s survey was to explore the practices and policies of CLTs that may help to explain the primary results.

Delinquencies, Foreclosures, and Cures

When comparing the performance of CLT loans to that of conventional mortgages for market-rate homes, it is important to emphasize that CLT loans are held by low-income households. MBA and Residential Mortgage-Backed Security (RMBS) loan samples are not limited to low-income borrowers. Considering that low-income homeowners in the market are more prone to delinquencies and foreclosures, the differential outcomes reported below may have been even greater if loans held by low-income borrowers could have been isolated for comparison in MBA and RMBS samples.

Serious Delinquencies and Foreclosure Filings in 2009

Figure 1 presents the percentages of CLT loans and MBA prime and subprime loans that were seriously delinquent or in the foreclosure process at the end of the fourth quarter of 2009. Only 0.56 percent of CLT mortgages were being foreclosed (12 out of 2,151 loans; CLT median = 0, range = 0–2), whereas the percentage of MBA loans in the foreclosure process was 3.31 percent for prime loans, 15.58 percent for subprime loans, 3.57 percent for FHA loans, and 2.46 percent for VA loans (MBA 2010). When all types of MBA loans were combined, the overall MBA percentage was 4.58 percent. Overall, MBA loans were 8.2 times more likely to be in the process of foreclosure than CLT mortgages.

On December 31, 2009, 1.62 percent of CLT mortgages were seriously delinquent (34 out of 2,099 loans; CLT median = 0, range = 0–6), while the MBA loan percentage was 7.01 percent for prime loans, 30.56 percent for subprime loans, 9.42 percent for FHA loans, and 5.42 percent for VA loans. A prime loan within the MBA sample was 4.3 times more likely to be seriously delinquent at the end of 2009 than a CLT mortgage.

2008 and 2009 Comparisons

The percentage of CLT mortgages in the foreclosure process at the end of 2008 was 0.52 percent (10 out of 1,930 loans), demonstrating a percentage point change of .04 over one year. For all MBA loans, the percentage in the foreclosure process at the end of 2008 was 3.30 percent, showing a percentage point increase of 1.28 by the end of 2009. The respective percentage point increases were 1.43 for prime loans, 1.87 for subprime loans, 1.14 for FHA loans, and 0.80 for VA loans.

The percentage of CLT mortgages that were seriously delinquent at the end of 2008 was 1.98 percent (36 out of 1,815 loans), demonstrating a percentage point decrease of -0.36 (figure 2). The percentage of MBA prime loans that were seriously delinquent at the end of 2008 was 3.74 percent, a percentage point increase of 3.27. The percentage point increases were 7.45 for subprime loans, 2.44 for FHA loans, and 1.30 for VA loans (MBA 2009).

In sum, the percentage of MBA loans that were in the foreclosure process or seriously delinquent increased from the end of 2008 to the end of 2009, while the percentages for CLT loans remained consistently lower.

The CLT Network’s surveys gathered additional information not collected by the MBA. During 2009, 0.42 percent of CLT loans completed foreclosure (9/2,160) compared to 0.26 percent during 2008 (5/1,928), which illustrates a percentage point change of 0.16. When homeowners are foreclosed upon, CLTs have a vested interest in recovering the property from the lender in order to minimize the loss of the public subsidy and preserve the affordability of the unit. No foreclosed CLT homes were lost from CLT portfolios during 2009.

2009 Cure Rates

The 2009 Network survey also gathered information on the number of serious delinquencies during the year and the total that were resolved. The percentage of CLT loans that had ever been seriously delinquent during 2009 was 2.80 percent (58/2,075). Respondents reported that 29 out of 57 were cured (51 percent).

CLTs have unique contractual rights to implement stewardship activities and intervene with homeowners and lenders in order to make mortgage payments current or preclude foreclosure completion. Respondents were asked to explain how they provided these cures, which included facilitating short-sales, offering financial counseling or referrals to foreclosure prevention programs, providing direct grants or loans to homeowners, arranging sales and purchases of a less expensive unit, and working with homeowners and lenders on permanent loan modifications.

Fitch Ratings, a global rating agency, reports cure rates for RMBS loans. They define cure as the percentage of delinquent loans returning to a current payment each month. The percentage of RMBS delinquent loans in August 2009 that had been cured was 6.6 percent for prime loans and 5.3 percent for subprime loans. Since CLTs define cures as resolving impractical financial situations for their homeowners, rather than solely as making mortgage payments current, RMBS and CLT rates are not comparable. However, these findings indicate that CLTs more often terminate serious delinquencies through a broader range of activities.

Stewardship Activities of CLTs

Intrinsic to the CLT model is a commitment to stewardship, which aims to promote positive outcomes and sustainable home ownership for residents long after they have purchased a CLT home. While stewardship is a core component of every CLT’s programming, its implementation can vary greatly. Therefore, the survey collected data on the prevalence and variety of stewardship activities in an effort to explain the low rates of delinquency and foreclosure among CLT homeowners.

The greater affordability and lower loan-to-value ratio found in CLT homes may explain part of the difference between CLT and MBA loans. However, stewardship is almost certainly a contributing factor. Without the protective shield of the CLT, low-income CLT homeowners would be prey to the same economic pressures and circumstantial factors that threaten home ownership sustainability among their market-rate counterparts. Survey results indicate that CLTs are implementing stewardship policies and practices in the following five areas, which may help to explain why CLT loans have outperformed the market.

Pre-Purchase Education

Homebuyer education enables sound mortgage decisions and prepares individuals for the responsibilities of home ownership. Because owning a CLT home entails unique contractual rights, responsibilities, and resale restrictions, supplemental education is offered frequently. The study found that 85 percent of CLTs required general homebuyer education and 95 percent required CLT-specific education prior to purchase.

Pre- and Post-Purchase Stewardship

Pre-purchase stewardship also included referrals to CLT-trained lawyers and lenders, an activity reported by 83 percent of the respondents. A one-on-one meeting of prospective homebuyers with a financial counselor was required by 71 percent of CLTs. Approximately 50 percent of all CLTs offered such post-purchase stewardship services as ongoing financial literacy training; staff outreach to homeowners; formal communications to remind them of policies; referrals for contractors or repairs; and mandatory meetings with defaulting homeowners.

Prevention of High-Risk Loans

Research finds that subprime and predatory lending have occurred more often during acquisition of refinance and home equity loans than during purchase (Immergluck 2009). Eighty-three percent of CLTs required their homeowners to seek the CLT’s permission to refinance or take out home equity loans, thus ensuring that the loan terms will not compromise affordability or home ownership sustainability and that homeowners comprehend the loan’s impact on their equity.

Detection of Delinquencies

CLTs also adopted policies and practices to monitor and detect homeowners who may be headed toward serious delinquency. Most CLTs charge a monthly ground lease fee (typically $10–50) to offset their costs. According to 90 percent of respondents, late payment of these fees was used as an indicator that a homeowner may be late paying their mortgage. Further, 69 percent of CLTs reported that they detected delinquencies through informal interactions with homeowners, and 55 percent of CLTs reported that 80–100 percent of seriously delinquent homeowners contacted the CLT on their own volition. Close to 50 percent of CLTs reported that lenders were legally obligated to notify the CLT of delinquencies or foreclosure proceedings.

Intervention with Delinquent Homeowners

CLTs reported an array of interventions with homeowners at risk of foreclosure. Two activities that are instrumental components of federally sanctioned foreclosure prevention programs were also implemented by CLTs: 71 percent contacted lenders as soon as they became aware of delinquencies; and 57 percent provided homeowners with direct financial counseling. Over half of CLTs reported other activities that enable residents to keep their homes, such as providing rescue funds for outstanding mortgage payments. For homeowners unable to keep their homes, 49 percent of CLTs reported activities to prevent completed foreclosures, such as facilitating sales to low-income buyers or directly purchasing the homes.

Discussion and Conclusions

The prevalence of stewardship activities among the nation’s CLTs may help to explain why CLT loans are outperforming most market-rate loans in terms of delinquencies and foreclosures. It may also explain the high cure rates among CLT mortgages that become seriously delinquent, as CLTs intervene to arrest the slide toward foreclosure. In this respect, CLT home ownership appears more sustainable than private market options for low-income homeowners, suggesting that CLTs may provide a less speculative and more reliable avenue to wealth accumulation for low-income and minority homeowners.

Low-income households can only enjoy the economic benefits of home ownership if they are able to remain homeowners for a number of years. If they lose their homes to foreclosure—or simply return to renting after discovering that the costs and burdens of home ownership are too difficult—low-income households cannot build wealth. The findings of the Network’s survey make clear, however, that few CLT homeowners are losing their homes to foreclosure. Moreover, other research on CLT homeowners has found that they far exceed the 50 percent home ownership retention rate reported among conventional market, low-income homeowners. Preliminary results from a study by The Urban Institute, which includes three CLTs, found that over 91 percent of low-income households remained homeowners five years after buying a CLT home. They either continued to occupy their CLT home or resold it to purchase a market-rate home (Temkin, Theodos, and Price, forthcoming).

CLT home ownership not only lessens foreclosures and increases the chances of success among the population most at-risk of losing their homes, but it also indirectly prevents costs of foreclosure for neighbors, municipalities, and lenders. Such exemplary performance implies that greater investment in this model, including its stewardship activities, is both warranted and overdue.

Only one-third of CLTs reported receiving any funding for foreclosure prevention activities during 2009, while many reported increasing stewardship activities to buffer homeowners from the economic downturn and foreclosure crisis. The study also found that only one-third of CLTs received funding to create new CLT units from foreclosed and vacant housing stocks during 2009. Hence, CLTs are not adequately resourced to create home ownership opportunities from the crisis, which could help to preclude negative outcomes associated with unsustainable home ownership in the future.

Jacobus and Abromowitz (2010) call for a reevaluation of the ways that the federal government encourages home ownership. They recommend targeting existing resources to purchase-subsidy programs like CLTs in order to more efficiently use public dollars and expand and maintain home ownership opportunities. This study provides further support for that policy recommendation.

About the Authors

Emily Thaden, M.S., is a doctoral candidate in the Community Research and Action Program at Vanderbilt University and is employed as the Shared Equity Development Specialist at The Housing Fund in Nashville, Tennessee.

Greg Rosenberg, J.D., is director of the CLT Academy of the National Community Land Trust Network and the former executive director of the Madison Area Community Land Trust. He was a contributing author to The Community Land Trust Reader (Lincoln Institute, 2010), and is a graduate of the University of Wisconsin Law School.

References

Apgar, W. C., and M. Duda. 2005. Collateral damage: The municipal impact of today’s mortgage foreclosure boom. Minneapolis, MN: Homeownership Preservation Foundation.

Herbert, C.E., and E.S. Belsky. 2008. The homeownership experience of low-income and minority households: A review and synthesis of the literature. Cityscape: A Journal of Policy Development and Research, 10(2): 5–60.

Immergluck, D. 2009. Foreclosed: High-risk lending, deregulation, and the undermining of America’s mortgage market. Ithaca, NY: Cornell University Press.

Jacobus, R., and D.M. Abromowitz. 2010. A path to homeownership: Building a more sustainable strategy for expanding homeownership. Washington, DC: Center for American Progress (February).

Joint Center for Housing Studies. 2008. State of the nation’s housing 2008. Cambridge, MA: Harvard University, Joint Center for Housing Studies.

McCarthy, G.W., S. Van Zandt, and W.M. Rohe. 2001. The economic benefits and costs of homeownership: A critical assessment of the literature (Working Paper No. 01-02). Washington, DC: Research Institute for Housing America.

Moreno, A. 1995. The cost-effectiveness of mortgage foreclosure prevention. Minneapolis, MN: Family Housing Fund.

Mortgage Bankers Association. 2009. Delinquencies continue to climb in latest MBA National Delinquency Survey. Washington, DC (March 5).

–––—. 2010. Delinquencies, foreclosure starts fall in latest MBA National Delinquency Survey. Washington, DC (February 19).

Reid, C.K. 2005. Achieving the American dream? A longitudinal analysis of the homeownership experiences of low-income households (CSD Working Paper 05-20). St. Louis, MO: Washington University, Center for Social Development.

Temkin, K., B. Theodos, and D. Price. Forthcoming. Balancing affordability and opportunity: An evaluation of affordable homeownership programs with long-term affordability controls. Washington, DC: The Urban Institute.

Thaden, E. 2010. Outperforming the market: Making sense of the low rates of delinquencies and foreclosures in community land trusts. Portland, OR: National Community Land Trust Network. (This report is also available as a working paper on the Lincoln Institute Web site.)