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San Antonio City Council might consider a program that helps set up community land trusts and other property ownership models aimed at combating housing displacement in gentrifying neighborhoods.
A community land trust (CLT) is an alternative land and homeownership tool used by communities across the country, including Austin and Houston. Councilman Manny Pelaez (D8) submitted a Council consideration request in June to the city clerk’s office to have City staff explore this and other mechanisms and report its findings.
The City Council’s Governance Committee will then discuss options for the creation of a pilot program that would utilize sale-leaseback, land trusts, or other mechanisms. Currently, there aren’t any land trusts for affordable housing in San Antonio. CLTs were mentioned in the policy framework developed by the Mayor’s Housing Policy Task Force as a possible strategy to increase the availability of affordable housing.
City Council adopted that policy framework last year. An accompanying report on the status of housing in San Antonio found that about half of San Antonio renters and 1 in 5 area homeowners are spending more than 30 percent of monthly income on housing.
“Ensuring that all San Antonians have access to affordable housing requires a full team effort,” Mayor Ron Nirenberg said via email. “Councilman Pelaez’s proposal will help us develop a long-term strategy for combating displacement and protecting low-income and elderly homeowners.”
Pelaez expects to see an overview from City staff of how other cities have tackled such programs, he told the Rivard Report. “We can learn from their successes and learn from their mistakes.”
These programs aren’t going to “innoculate San Antonio from gentrification,” Pelaez said, “but it could help. When you want to solve a very complex problem, you’ve got to pull every lever.”
CLTs are managed by an entity that purchases land and leases it to people who live in homes (often owner-occupied) on that land. Instead of paying property taxes on the land and dwelling, residents pay taxes only on the value of the dwelling.
Under a community land trust, the City could buy up parcels of land and then lease that land back to homeowners, Pelaez said. “In exchange for us holding on to their property, it allows them to stay in their homes,” he said, instead of being priced out by rising property values.
There are a variety of different ways to set up CLTs, said Leilah Powell, executive director of LISC (Local Initiatives Support Corporation) San Antonio. Typically a housing trust is run by a nonprofit – or several – but they can be operated by municipal governments.
“The [CLT] message is that you can never control the market, but you can control the land,” Powell said.
LISC, a national nonprofit that provides financing and support for community development, produced an informational paper on CLTs that is available online here.
Houston Community Land Trust, a nonprofit, started last year.
“CLT clients buy their homes [from HCLT] at below-market prices, receive a deed to their homes, and enjoy exclusive use of the land,” according to its website. “Homeowners lease the land underneath their homes from HCLT. All leases are 99-years, renewable, and inheritable. Homeowners agree to limit the resell price of their homes ensuring that the homes will remain affordable for future families.”
Sale-leaseback transactions allow sales of property to include a long-term continued use agreement so the seller can lease the building back from the buyer at a lower, fixed cost.
“While this transaction has been a popular tool for commercial property buyers and sellers for decades,” according to Pelaez’s Council consideration request, “it has the potential to permit municipalities and not-for-profit agencies to use the transaction to assist homeowners to stay in their homes, pay less taxes, and use the cash value of the home for upgrades and repair the properties.”
Because CLTs and sale-leaseback transactions are unusual, a key piece of the pilot program, if approved by City Council, would be to educate residents participating in it, said Veronica Soto, director of the City’s Neighborhood and Housing Services Department (NHSD).
“We know there will be challenges,” Soto said. “[A resident’s] home is their equity, their wealth, and this turns that a little bit sideways because you don’t get as much equity [out of your home]. … We’ll have to make sure those who participate have a very clear understanding of what it means.”
NHSD oversees the implementation of affordable housing policies approved by City Council, which includes strategies to combat housing displacement.
Through a grant from the Grounded Solutions Network, supported by the Ford Foundation, San Antonio is taking part in a program that provides selected cities – San Antonio is among Indianapolis and Winston-Salem – with staff and resources to develop housing policies for “lasting affordability, displacement prevention, and neighborhood preservation.”
CLTs are among those policies, Soto said, along with other incentives, fees, and other policy changes to support affordable housing.
Grounded Solutions Network worked to set up a trust in Houston and other cities, she said, “so we’re excited about working with them. They bring this national expertise.”
City staff had already been looking into CLTs and other options, specifically through this program, Soto said, but Pelaez’s Council consideration request could bring it back to the forefront of the conversation. A primary obstacle is the cost of setting up the trust, Soto said.
The City is in the first year of a three-year work plan to implement the housing policy task force’s recommendation.
City Council will return from its monthlong break from regular meetings in August to start reviewing the fiscal year 2020 budget that was made tighter by Texas Legislature decisions and a new, minimal homestead property tax exemption.
The benefits of City investment in starting a program that would eventually get picked up by another organization would be worth it, Powell said.
“This is one unit at a time, but that’s the way I think we’re going to solve this issue [of housing affordability],” she said. “I think we need some small-scale solutions that are very explicitly focused on sustainability.”