Table of Contents
Introduction
The Community Land Trust Model
Early Roots in the Co-op Housing Sector
Setting up the Organization
The Land Trust Model Evolves - BC Style
Communicating the Land Trust Model
Putting the Land Trust Model to Work
Case Studies
Project 1: Co-ops on Provincial Land Leases
Project 2: Manufactured Home Park Pilot Project
Project 3: Municipal Affordable Housing Project
Summary
References
Introduction
The Community Housing Land Trust Foundation (CHLTF) was created in 1993 by the Co-operative Housing Federation of B.C. to preserve the stock of affordable housing in B.C. and to acquire land on which new affordable housing could be developed. Since its formation, CHLTF has explored a number of ways to use the community land trust model to secure affordable housing.
Each experience of forming a land trust and bringing land into trust is unique, depending on government policies and regulations, financing opportunities, social and neighborhood characteristics and the specific individuals involved. As the land trust concept spreads and as CHLTF's specific project experience grows, experience gained from one project can be applied to the next to improve the outcome and reduce transaction costs and time.
This case study documents the experience of CHLTF. It describes
The Community Land Trust Model*
*The following has been excerpted and summarized from The Community Land Trust Handbook, by the Institute for Community Economics, 1982.
A community land trust (CLT) is an organization created to hold land for the benefit of a community and of individuals within the community. The CLT acquires land through purchase or donation with the intent of retaining title in perpetuity, thus removing the land from the speculative market. As a non-profit organization, a CLT can use a number of techniques to acquire donated or discounted land from people and institutions motivated by support for the CLT's goals and by an interest in the tax savings resulting from the donation.
Normally, a CLT offers long-term land leases on a non-profit basis to individuals, families, co-operatives, community organizations or businesses. The lease specifies the use permitted on the site, but beyond that the CLT does not interfere with the personal belie~, associations or activities of CLT residents. For those with limited resources, where home ownership is not a realistic option, becoming a CLT leaseholder provides the affordability and security of tenure that could not be realized in a for-profit, rental situation. For those with ample financial resources, becoming a CLT leaseholder may represent an economic sacrifice compared with private home ownership. hi such cases, the leaseholder may have made the philosophical choice to forgo personal benefit in favour of community benefit.
CLT leaseholders pay a regular lease fee negotiated with the CLT. Once any cost of acquiring the land is paid, the lease fees can be used to acquire more land. As the value of its accumulated resources increases, the CLT's ability to borrow in order to finance further acquisitions increases.
CHLTF's Early Roots in the Co-op Housing Sector
As early as the 1960's, people in the co-operative housing sector in Canada were aware of efforts to apply the land trust concept in other countries. At this time in Canada, considerable energy was being directed at securing federal funding for the first co-op housing programme,which was finally introduced in 1973. The steady growth of federally and eventually provincially funded co-ops through a variety of programmes continued throughout the 1970s and 1980s.
But even during these decades of development, many in the co-op sector began looking into the not-too-distant future. How would they continue the development of new co-ops, when funding for affordable housing programmes through Canada Mortgage and Housing (CMHC - the federal government agency responsible for providing development and operational funding for assisted housing programmes) was already in jeopardy? How would they ensure that the use of the stock developed as affordable co-op housing remained for this use past the expiration of the co-ops' operating agreements - especially as this was not required by the agreements?
There was concern from co-ops on land leased from the BC Government that the lease cost would continue to rise or that government might sell the development once the end of the lease was reached. Co-ops also began to question a co-op's ability to renovate or rebuild aging buildings once government subsidy had ended.
In short, the sector wanted to develop ways to ensure that the existing housing stayed as a source of affordable housing for future generations and that new (or redeveloped) housing could be built using funds generated through the existing sector.
In response, the Co-operative Housing Federation of Canada (CHF Canada) formed a land trust committee to conduct research into forms of land trusts. This culminated in a study on land trusts that reviewed the experience of groups developing such systems in other jurisdictions. (see Land Trust~ for Non-Profit Continuing Housing Co-operatives, CHF Canada, 1985) The study outlined a "land trust model" which included a land component, a capital component and a support services component, and identified the legal, economic and tax constraints to implementing the model in Canada. The study concluded that a land trust was a viable vehicle for ensuring that co-ops could continue to provide affordable, non-profit housing well beyond the expiration of their operating agreements with CMHC.
Over the next five years, land trusts began operating in Toronto and Ottawa, sponsored by local co-op housing federations. The federations also acted as resource groups, overseeing all aspects of project development from securing project funding to working with architects and contractors to establishing the co-op and selecting first members. A Toronto tenants' organization started a land trust that included at least one housing co-operatbenefitseration in the Hull and Sherbrooke areas of Quebec were also performing the land development function of a land trust.
In British Columbia, there was much support for the concept but co~ps raised questions about the mechanics of such trusts. How could co-op autonomy and security of tenure be maintained if title to their land was transferred to another body?
What were the financial requirements of participating in the trust, and could the co-ops meet those requirements? In theory, co-ops thought a land trust was a good idea. In practice, they weren't so sure if it would provide them with the benifits they needed.
The 1992 withdrawal of the federal government from funding social housing sparked new interest to the concept of land trusts. Here in B.C. where an estimated 10,000 low-income families, seniors and people with special needs were on waiting lists for affordable housing, people in the housing sector were looking for innovative solutions to a growing problem. While the provincial government continued funding a non-profit housing programme, the number of new housing units, particularly co-op housing units, was greatly reduced by the elimination of the federal programme.
Adding to the interest in the land trust concept were a number of co-ops on provincial leased land whose lease prices were up for renewal. Their lease prices were adjusted every five years to reflect changes in the market value of the land. This had proved to create a staggering increase in the late 1980's, as land values in the area skyrocketed. Faced with the threat of still higher lease costs, the co-ops began investigating other options.
In 1992, members of the Co-op Housing Federation of BC (CHF/BC) passed a motion to incorporate the Community Housing Land Trust Foundation and began the research, consultation and legal work to proceed with developing a functioning land trust.
Setting up the Organization
One of the key goals of CHLTF's founders was to create a structure that allowed the Land Trust to maintain and expand the pool of affordable housing in BC, while promoting self-management by the residents. Clearly, CHLTF's intent was not to become an "active landlord", but rather a steward of the land. However, some interaction between CHLTF and residents would ensure that CHLTF's affordable housing mandate was being carried out by those living on CHLTF lands. The terms of this interaction would be confirmed through land leases between CHLTF and each resident organization on its lands.
CHLTF Mission and Purposes
CHLTF's mission and purpose statement is shown below. CHLTF established itself to include affordable housing projects of all kinds, although the founders envisioned that at least initially, coop would be the primary participants. This broader mission allowed CHLTF easier access to potential land donors, such as churches and non-profit foundations, and was critical in gaining charitable status through Revenue Canada.
MISSION AND PURPOSES
The mission of the Community Housing Land Trust Foundation is to acquire, create and preserve affordable housing for future generations, and to foster self-managed housing communities. The Foundation operates as a non-profit, community based, democratic organization.
The purposes for which the Foundation was incorporated in June 1993 are:
1. To provide and preserve opportunities for persons of low income to acquire and occupy housing and accommodation and facilities which would otherwise be unattainable or unaffordable.
Keep existing housing affordable
2. To develop and make available for development property held by it for housing and related accommodation and facilities that will assist persons of low income, seniors and the specially challenged occupying it to sustain and improve the quality of life.
Increase the amount of affordable and special needs housing
3. To seek and receive donations, contributions, endowments and gifts of all kinds for and to apply its finds and other resources to, the promotion of co-operative and social housing initiatives for persons of low income, seniors and the specially challenged and the ecologically sound use of land resources used for such housing accommodation.
Raise funds to carry out our goals
4. To promote and encourage research and education into the concept of land trust use for co-operative and social housing initiatives.
Spread the concept of land trust for long-term affordability
CHLTF's Legal Status
Earlier discussions about CHLTF focused on its potential as a true 'mist", which is established through a contract called anindenturede of trust. Such trusts are governed by the civil code in Quebec and by common law in the rest of Canada. After more explorations on the potential structure and role of the organization, it was decided that incorporation as a non-profit society would best meet CHLTF's goals.
Securing Charitable Tax Status
One of the key events in CHLTF's formative years was the receipt of charitable status. In 1995, CHLTF was registered under Section 149 of the Income Tax Act (Canada). This paved the way for land donations and transfers because CHLTF could issue tax receipts for donations. CHLTF's charitable status also exempts it from paying Property Purchase Tax on land transferred to CHLTF, and from paying income tax on land transfers made by the federal or provincial crown or a crown corporation.
Board Structure
The founding members considered a number of interests in creating the CHLTF Board structure. CHLTF wanted to maintain strong ties with CHFC. This was accomplished by reserving a proportionate number of seats on the Board for CHF/BC directors. This would allow the Land Trust to continue a valuable association with a credible, established organization as well as provide ready access to the large pool of co-operative" landowners who were likely to support the Land Trust's purpose. Additionally, while the idea of having non-housing co-op members on the Board was controversial, the group also recognized the need for outside expertise and contacts. The members also recognized that potential land donors would want representation on the Land Trust board and set up seats for "community action panels". These seats were allocated geographically across the province and permitted representation by election where there would be more than one land donor in the area.
Finally, government representation was desired in the hopes of generating support for the programme and also to provide a "reality check" on proposed initiatives. The resulting structure (see page 17) combined these interests to include representatives from CHF~BC, residents on CHLTF lands, community interests and a provincial representative.
At the same time as developing such fundamentals as the Foundation's structure, the Trustees were under pressure to respond quickly to the issue of six co-ops on provincial leased land who were exploring how they might have their properties transferred from the province to CHLTF. Some board members felt they needed to move ahead quickly to take advantage of this opportunity to acquire CHLTF's first properties. Others wanted to ensure that all the technical requirements had been thoroughlyexamined' to ensure that there would be no problems when the trust was set up. In reality, delving into the land lease project made CHLTF confront issues related to implementing the land trust programme.
The Land Trust Model Evolves - BC Style
Land trusts already established in the US using the Community Land Trust model discussed previously were a primary source of inspiration and ideas for CHLTF's founders. However, different laws govern real property in Canada and we have different government housing programmes and policies. CHLTF 's version of the land trust model took on new dimensions that reflected Canada and BC's political, legal and economic structure.
CHLTF's first Board worked vigorously to develop programme features that responded to the issues of preserving the affordable housing already built and securing a regular source of funds for new projects and for ongoing operating costs. CHLTF planned to secure long-term affordability by having title to properties transferred to the trust, then entering into long-term land leases with residents. The leases would commit residents to:
In return, CHLTF would commit to the principles of resident self-management and autonomy and ensure that the properties were always used for affordable housing.
With programme features in place, CHLTF's next task was to secure land through donation or at a discount. Different land owners would have different incentives for transferring their land to CHLTF.
The provincial government's incentive for offering discounted Crown properties to CHLTF was motivated more by its desire to show support for affordable housing initiatives than by any huge financial gain. The "Lands Now" policy allowed for discounts of up to 75% on Crown Lands sold for affordable housing purposes.
CHLTFC was incorporated with a Board of up to 15 trustees, one third of whom come from the Board of CHF/BC. (This was later changed to 18 trustees as both the heavy volunteer workload and need for additional outside expertise became apparent.) Up to five trustees are elected by Regional Community Action Panels consisting of co-ops and others who have transferred land into the trust. The structure includes other trustees elected by the membership of the Land Trust from the interested community, and offers the possibility of a trustee nominated by the provincial government. The Land Trust can also appoint committees with non-members to help carry out its work.
For private land owners, CHLTF 's charitable status would enhance their willingness to donate land or sell it at a discount. As the case studies in the final chapter will show, in two of the three projects CHLTF is pursuing, private land owners are motivated by the prospect of receiving tax relief through a charitable tax receipt.
As CHLTF began approaching coops who own their land ("free-hold co-ops") to explain its programme, it became clear that the programme in its current form does not offer enough incentive for co-ops to transfer their land to CHLTF. Since housing co-ops are non-profit organizations they could not benefit from CHLTF's charitable status. The taxation and legal system is not set up to reward their attempt to give long-term benefit to the housing community. Instead, it appeared a co-op would have to pay substantial transaction costs (legal fees, transfer taxes, etc.) to transfer its land to CHLTF and receive a long-term land lease in return. While freehold co-ops acknowledge the potential long-term threat to the co-op sector's ability to maintain affordability and to regenerate itself, the co-ops did not feel the threat was immediate.
In the coming years, CHLTF must work with government and the freehold co-ops to develop incentives and firm commitments that protect the co-ops' interests and the government's previous financial investment and ensure the regeneration of affordable housing.
Communicating the Land Trust Model
CHLTF's outreach and communication programme has always had a two-pronged approach:
In the Land Trust's early years, with the exception of some housing co-operatives who had been active in establishing CHLTF, there was little public understanding about the purpose or function of a housing land trust. One of CHLTF's earliest tasks was to educate the broad housing sector about how the land trust model works and how it could be applied in a variety of situations. Staff and trustees took every opportunity to explain and promote the land trust concept to organizations who might contribute their land, from participation on housing-related boards and advisory committees to presentations to co-ops, church groups, and service organizations. Questions asked and issues raised at these sessions were brought back to the CHLTF Board for discussion, and the model evolved to respond to the concerns of supporters and participants.
Many of the earliest outreach efforts focused on elected officials and staff at the Province, CMHC and on the six co-ops on provincial land leases who were involved in negotiations about the cost of their land leases. The evolution of the negotiations and CHLTF's participation are discussed later in Putting the Model to Work - Project 1.
CHLTF began approaching lenders such as VanCity and Delta Credit Union to encourage support for attractive lending packages for land trust projects and to get assistance in developing a model for how co-ops' unencumbered equity could be used as leverage to finance new affordable housing projects. The key issues here were:
1) ensuring that co-ops whose unencumbered equity was used as collateral were not put at risk by the new project
2) developing a repayment scheme that would benefit the old co-op whose equity is leveraged and the new co-op whose equity is leveraged and the new co-op who seeks to operate "affordability".
Outreach efforts were intended to secure philosophical and financial support for CHLTF. Aware of the need for operating funds while CHLTF was in its "infancy", trustees and staff spent significant effort seeking public and private sponsorship. The first major success came in the form of a generous grant from the Real Estate Foundation of BC. The REF was most interested in the legal policy framework through which the land trust model would be implemented, particularly with respect to the co-ops on provincial land leases who were seeking to place their land in trust. Additionally, BC Housing Management Commission (BC Housing) provided substantial seed funding for CHLTFoperationss during the first four years through the Community Housing Initiatives programme. It was clear that these organizations viewed CHLTF as a promising participant in securing affordable housing opportunities and in creating some self-sufficiency in the co-op housing sector. Other private sources such as the Vancouver Foundation, VanCity Community Foundation, Van Dusen Foundation, the Canadian Co-operative Association and the Co-operators have provided project-specific grants. As an organization, CHF/BC consistently supported CHLTF operations, but attempts to generate financial support among individual co-ops and their members have been unsuccessful.
Key outreach events in CHLTF's early years were the Land Trust conference sponsored in February 1995 and the Symposium in 1998. These events provided an opportunity for elected officials, senior government staff; business leaders, church representatives and co-op members to learn more about the Land Trust. They gave a tremendous boost to CHLTF's programme and solidified a number of important personal contacts in the housing community.
1995 also saw the publication of the CMHC-sponsored Land for Our Future: A Guide to Land Trusts and Affordable Housing in Canada. Written for the Canadian Housing and Renewal Association, the guide outlines the various types of land trusts, the different models that have been used, and reviews the issues that a group needs to address in developing their own land trust. The organizational structure and evolution of CHLF figures prominently in the guide, further confirming that CHLTF's efforts were gaining national recognition
By late 1995, only three years after it was formed, CHLTF had built an impressive network of support throughout the housing sector. The Board of Trustees and staff were active in promoting the land trust concept, operational finding had been secured, at least for the short term, and government interest in the programme had been piqued. What was still lacking, however, was land in the trust.
Putting the Land Trust Model to Work
In its first five years, CHLTF has had an opportunity to test the land trust programme through three key projects. Each project has required CHLTF to work with a range of partners and use a variety of tools to secure affordability.
The first project involves the transfer to CHLTF of three Crown properties leased to three housing co-ops. Work on this has played a major role in the formation of CHLTF's policies and programme elements and in gaining awareness of the programme by key players in government and the broader housing sector.
The second project involves the acquisition of a manufactured home park which houses over 500 seniors living on 345 separate pads that are leased from the landlord. Like many of the other 1,000 manufactured home parks in BC, the affordability of this park is threatened by the "for-profit" nature of the existing land lease. CHLTF is working to develop a model for CHLTF ownership and resident self-management that could be repeated in other BC manufactured home parks.
The third project involves a private developer who, as part
of municipal affordable housing requirements, must designate a
site in his residential/resort project as affordable rental housing
and is eyeingCHLTFF as the steward of the affordable housing site.
In the following pages, these three projects will be discussed
in greater detail, with particular attention being paid to the
methods explored by CHLTF to secure affordability; challenges
it has experienced along the way; and ways it has successfully
applied its growing experience from project to project.
Project 1: Co-ops On Provincial Land Leases
Much of the impetus for the speedy development of CHLTF was driven by the problems facing six co-ops who lease their land from the provincial government. The terms of the 50 year leases include provisions to adjust the lease price every five years to reflect changes in the market value of the land. The rapid rise in land values in the late 1 980s meant a drastic rise in the co-ops' land lease costs, by as much as several hundred percent in some cases. The co-ops were faced with lower income members who genuinely could not afford the increase. With a new NDP provincial government supportive of social housing initiatives, the time seemed ripe to approach the province with the idea of placing the land into the Land Trust.
Gaining Provincial Support for the Land Trust Model
In 1993, shortly after the incorporation of CHLTF, a letter was sent to then provincial housing minister Joan Smallwood asking that the province consider transferring the land to CHLTF. The NDP provincial government had continued to find social housing programmes after the withdrawal of the federal government and was looking for ways to build new housing. But the government was initially wary of turning public1y-owned land over to another body. While some government staff were familiar with the co-op housing sector, work needed to be done to get the provincial government on side.
The financial problem faced by these co-ops was certainly a
catalyst to changing the government's views they became aware
a solution was needed. CHLTF needed to convince the housing ministry
and the six co-ops that the land trust model was the most effective
way to deal with the situation. The 1995 conference, CMHC's 1995
publication on land trusts, and the many personal meetings with
government officials and staff did a lot to increase public awareness
and the credibility of the organization.
Following over 2 years of meetings with elected officials and
staff as well as co-op boards and members, CHLTF received the
good news in 1996 that the co-ops would be given the option to
purchase the property if they transferred it to the Land Trust.
Their other options were to remain on a provincial lease that
continued to link lease payments to the market value of the land,
or to revise the provincial lease to link payments to the rate
of inflation. In the coming months, the province offered sales
prices that reflected substantial discounts from the market value
of the land.
Securing Commitments from Co-ops on Leased Land
At this point, CHLTF's outreach efforts toward the six co-ops accelerated. Its task was to prove to the co-ops that the Land Trust was the best option from both a philosophical and financial perspective.
Philosophically, placing their land in trust offered the co-ops several advantages. First, the co-ops would be offered "leases in perpetuity", which by law meant 80 year leases with automatic rights of renewal. This proved an attractive feature to the co-ops who had no security beyond the approximately 30 years remaining on their provincial leases. Second, CHLTF emphasized the long-term affordability for co-op residents, as an on-going subsidy programme would remain in place even after the co-ops' operating agreements with CMHC expired. Finally, co-opmemberss were encouraged to place the land in the trust so they could contribute toward the long-term sustainability of the co-op sector. This aspect of CHLTF's programme would require residents to contribute a significant amount per month toward a "development fluid" but only once the land portion of their mortgage was paid. The development find would be used by CHLTF to develop more affordable housing or redevelop existing housing. Additionally, CHLTF would seek a commitment that the equity in the properties could be used as leverage to build more affordable housing, subject to lender approvals.
The philosophical advantages of forming the Land Trust could not be separated from the financial picture. CHLTF had to structure the financial obligations of the programme to ensure that the Co-ops would pay lesson a CHLTF land lease than on a provincial land lease. There were certain costs to joining CHLTF that would not be a factor if the co-ops remained with the province. These included:
Since none of the co-ops was ma financial position to pay all of these costs outright, these costs would be borrowed as part of the mortgage.
The Land Trust itself examined the options given to the co-ops from the co-ops' perspective. Remaining on a provincial lease was clearly the easier option - it would not require the co-ops to secure a mortgage, negotiate a lease, or generate support and approval from the majority of members, and the province was a "known entity". There was concern that CHLTF had no track record and had been "in business" less than five years This was a particularly important factor for co-ops whose residents were primarily seniors. In fact, three of the six co-ops declined to move with CHLTF to the financial analysis stage, determining early on to remain on a provincial lease.
In late 1996, three co-ops, James Bay, Washington and New Westminster, notified the province of their intent to pursue placing the land in CHLTF, assuming the financial viability could be confirmed and a satisfactory lease could be negotiated. CHLTF began working with the co-ops to secure commitments from lenders who would be willing to provide 'mortgages of the leasehold" at competitive rates.
Having secured the philosophical commitment from the three co-ops at an early stage, negotiation of the lease between CHLTF and each co-op proved a relatively uncontentious process. There was much discussion on what formula would be used to establish future payments by the co-ops for the trust fee for ongoing CHLTF administration expenses; the development find (to be used for the establishment of new affordable housing); and an internal subsidy programme for low income members. The concepts behind these programme elements received substantial support from the co-op representatives sent to negotiate the leases. Throughout the lease drafting process, the co-ops' desire for self-management and minimal interference by CHLTF was constantly balanced by CHLTF's need to ensure that its charitable obligations and overall programme goals were being met.
Satisfying CMHC Concerns about the Land Transfer
Throughout negotiations with the co-ops and the province,CHLTFF kept in contact with CMHC, which maintains the operating agreements and holds the first mortgages for these and most other co-ops. CMHC approval was needed on three levels for the co-op transfers to be completed.
First, CMHC must approve of the new lease between CHLTF and each co-op. This was required due to clauses in the co-ops' first mortgage and operating agreements with CMHC. CMHC's review was aimed at ensuring that the new leases would not increase CMHC's financial obligations to the co-ops or contradict in any way the operating agreement. It was also concerned that the co-ops remain for use as affordable housing, and that nothing in the new lease provide for conversion to "for profit" housing.
Second, CMHC approval was required for each co-op to take out a second mortgage to pay for the land, again due to the fact that all three co-ops had first mortgages with CMHC. It was during this review that a complication arose. As the co-ops and CHLTF shopped for the best mortgage rates, it quickly became clear that some of the coops would be financially much better off by paying out their existing CMHC mortgages (with interest fixed at 8%) and securing a new first (fixed at 6.95%) that combined the land purchase and capital construction amounts. CMHC's response was that the co-ops would be assessed a penalty if they paid out their CMHC mortgage, negating much of the savings the co-ops would experience.
CHLTF and the co-ops presented CMHC with financial and philosophical reasons why the penalties should be reduced or eliminated. They stated that by reducing financial obligations now, the co-ops would be in a better position to add much needed resources to their replacement reserve accounts - something CMHC leaders were beginning to acknowledge was a necessity. Additionally, the co-ops were going far beyond other co-ops by committing to the land trust programme. The co-ops argued that this commitment justified a "break" from CMHC penalties. CMHC remained firm, however, going back to its original criteria that CMHC would only approve of the transfer if it was "revenue neutral" to CMHC.
By this time, nearly two years had passed since the province first agreed that the Crown properties could be purchased and placed in CHLTF! Everyone involved in the process was quite frustrated at how long the transfer was taking. The delay stemmed from several causes including the regular turnover of government staff assigned to the project, resulting in the need for frequent re-education about the issues. Just as all parties felt confident the transfer was within reach, a new issue arose that continues to impede the final transfer.
This issue involves the third level of CMHC approval required for completion of the transfers - providing mortgage insurance. This insurance is required by the lender in order to secure a viable interest rate. As a condition of providing insurance, CMHC stipulates that if a co-op defaults on the mortgage and the lender requires CMHC to pay the insurance, CMHC is entitled to sell the leasehold interest in the project with no restrictions. With this provision, all terms of the CHLTF lease to secure the affordability of the project would be void. (This, despite a different branch within CMHC earlier insisting that the CHLTF leases guarantee the projects always be used as affordable housing!) In contrast, the Crown Grant through which the property is being transferred to CHLTF requires that the property always be used for non-profit or co-operative housing. The province will not transfer the property to CHLTF with the "unrestricted use" clause in the mortgage documents.
These competing government requirements have resulted in another lengthy delay in project completion as all parties attempt to find an acceptable solution. This may be in the form of a provincial indemnity to cover any CMHC losses. CHLTF is hopeful that recent intervention on this issue at the political level will result in a positive solution and eventual completion of the transfers.
Project 2. Manufactured Home Park Pilot Project
In 1996, CHLTF representatives participated on a provincial-level Manufactured Homes Task Group that was seeking ways to prevent the loss of existing manufactured home parks (through conversion to other use) and to promote manufactured housing as an affordable housing option. The Task Group was formed in response to growing tensions between park residents who own their homes and park owners who own the land in the more than 1,000 parks BC wide.
The primary cause of the tensions is the contrasting goals of the park residents and park owners. Park residents, many of whom are on fixed incomes, want long-term, affordable tenure in the parks. As homeowners, many also want some say in how their park is managed. In contrast, the park landowners are for the most part business people who seek to maximize the return on their investment. For some, this means converting an aging park to a more profitable use, which results in displacing tenants and reducing the supply of affordable housing. For others, it means upgrading existing parks, which results in increased pad fees to pay for the improvements and displacement of residents with "older, non-conforming" homes. Provincial restrictions around rent increases have further increased the tensions, as landlords and tenants regularly engage in arbitration over issues involving their leases.
The Task Group recommended that alternative forms of park ownership and management be explored. In 1998, CHLTF began a pilot project to determine how it could purchase parks at less-than-market value, using its charitable status as "enticement" for owners, then transfer park management over to residents, possibly through establishment of a co-op.
CHLTF's pilot project involves a manufactured home park in Surrey, BC. CHLTF entered into negotiations with the park owner, who, because of personal financial considerations and tensions in the park, seems willing to consider CHLTF's offer that combines cash and a charitable tax receipt as payment for the park.
CHLTF determined a maximum cash offer based on its decision that it will not increase pad rents currently paid by park residents. The amount of charitable tax receipt that can be offered is dictated by the property's appraised value. An appraisal is underway. The down payment required by the lender will be covered by CHLTF's equity in the property gained as a result of the discount. Mortgage payments will be paid through the pad rents charged to residents. CHLTF does not anticipate the same problem with mortgage insurance requirements that has slowed the progress of Project 1 above, since Crown Land requirements are not applicable in this situation.
CHLTF has approached both BC Housing and the local municipality to participate financially in this project if a shortfall occurs. Each has expressed some interest, although negotiation over how this project would fit into existing provincial and municipal programmes is still pending.
CHLTF has met with the park's residents to discuss establishment of a housing co-op for day-to-day operation of the park and to enhance the sense of ownership and community. The community seems interested to explore this if CHLTF's acquisition efforts are successful.
Finally, CHLTF's involvement in this pilot project has led to inquiries from other park owners who are interested in selling using the cash/charitable receipt formula CHLTF is now able to quickly assess whether a project is financial viable and, if so, can proceed to meet with residents to begin forming a positive relationship. As this project evolves, CHLTF notes the considerable overlap from Project 1. For example, it envisions using a similar land lease with park residents as was developed for the three co-ops and is talking with the same lender who is involved in Project 1.
Project 3. Municipal Affordable Housing Project
CHLTF's involvement in this third project came as a result of a private developer reading aboutCHLTFL~ in a provincial publication. His efforts to develop a 700-unit "residential resort" came at a time when the municipality in his area was beginning to formulate an affordable housing policy - a new requirement under the Municipal Act. The result of the policy was to require the developer to offer 10% of the new units as affordable housing - half of which would be resident owned, the other half rental. The municipality specified rent ceilings for the rental units that would benefit the lower-income residents of the community.
The developer had little desire to remain an active landlord in the project after construction was complete and sought an alternative that would still meet the municipality's requirements. After a few initial discussions with CHLTF about the land trust programme, he was attracted to the idea of transferring ownership of the two sites designated for affordable rental housing to CHLTF in exchange for a charitable tax receipt. CHLTF would then be responsible for securing construction financing and determining how long term management of the units would be structured.
CHLTF's challenge over the coming months will be to confirm that it can get the affordable units built within the municipality's rent ceiling requirements and the developer's design requirements. Securing the land for free will certainly be a factor in CHLTF's ability to keep the new housing affordable. This type of project also would be a good candidate for financing through the provincial Homes BC programme.
Once the financing issues have been resolved, CHLTF will begin exploring different forms of resident structures (i.e. co-op and non-profit) and what would be most suited to the community. It has already been approached by a non-profit group in the area who is interested in being a partner in the project.
Again, CHLTF will draw on its experience with the provincial land transfers and the manufactured home park pilot project in the areas of securing financing, organizing residents into a co-op or non-profit, and preparing a land lease. Further, it is hoped that the success of this project will lead other municipalities to utilize the Land Trust as a way to implement their affordable housing policies.
Summary
Although this case study began with the premise that each experience of bringing land into trust is unique, it is clear that CHLTF is beginning to establish patterns in the incentives it uses to secure land and the commitments it envisions for its land leases.
Where will CHLTF focus its energies in the next few years? Clearly, the potential still exists for involving freehold co-ops in the land trust programme, but some immediate incentives must be identified through consultation with co-ops, government, and perhaps the private sector.
Additionally, CHLTF will continue its efforts to protect manufactured home parks as an important source of affordable housing through widespread consultation with park owners, residents, government and private lenders. CHLTF sees great promise in securing new lands being developed for affordable housing under government programmes, both at the municipal and provincial 1ev-els.
What is certain is that preserving and creating affordable housing requires a partnership effort - partners in government, the private and non-profit sectors.
References
The Community Land Trust Handbook
Institute for Community Economics, 1982
Land Trusts for Non-Profit Continuing Housing Co-operatives
Co-operative Federation of Canada, 1985
Land for Our Future: A Guide to Land Trusts and Affordable
Housing in Canada
Canada Mortgage and Housing Corporation, 1995