Helping Community Land Trusts Balance Local Needs with National Scale

Grounded Solutions Network (GSN) is a national nonprofit that supports local communities in building lasting affordable homeownership opportunities, primarily through the development of community land trusts (CLTs). Beyond providing an alternative pathway to homeownership, the CLT model helps preserve community-level affordability in appreciating markets.

GSN tailors its approach to each community’s unique needs and regulatory, political, and financial context. In some communities, this may mean helping residents secure sufficient subsidies to make home prices affordable to families earning between 60 and 80 percent of area median income (AMI). In others, it may involve educating real estate agents and lenders about how to adapt their services to better accommodate CLT buyers. Despite these differences, GSN staff emphasized three elements as essential to establishing a successful CLT: (1) an engaged and motivated resident community; (2) local government buy-in and support, including through subsidies and land acquisition; and (3) sufficient public and private funding to cover startup costs.

A barrier GSN has encountered in many markets is the dearth of lenders familiar with CLT models, including unfamiliarity with long-term ground leases and resale restriction formulas. GSN staff observed that a first-mover local regional bank, state housing finance agency, or national originator must first customize their loan products and process a few CLT mortgage transactions in a local market before other lenders realize CLTs can be a viable line of business.

GSN staff also highlighted several state and federal policy changes that could facilitate CLT creation, operation, and expansion. At the state and local levels, tax policies should assess CLT properties based on their restricted resale value rather than their unrestricted market value, an important consideration for CLT sustainability. At the federal level, expanding access to CLT loans will require a robust secondary market. While HUD and state housing finance agencies can play supporting roles, the government-sponsored enterprises (GSEs)—Fannie Mae and Freddie Mac—are best positioned to help build this market and establish standardized requirements for lenders. GSN staff also emphasized the importance of explicitly permitting federal grant funds, including through HUD initiatives such as the Community Development Block Grant Program and the HOME Investment Partnerships Program, to support the establishment and operation of CLTs and other shared-equity homeownership models.

Currently, establishing and operating a CLT requires significant collaboration and often niche, bespoke interventions across a wide variety of stakeholders at the local, state, and national levels. To scale this model, financing systems must adapt to more innovative loan products, and requirements must be standardized to create greater certainty in the market.

This case study is adapted from the report Small Loans, Big Barriers: How Small-Dollar Mortgages Impact the Racial Homeownership Gap in the United States and informed by discussions with GSN staff in December 2024