One path to affordable housing: You own the house, but a trust owns the land

A single mom and X-ray technician, Jennifer Sorrentino couldn't keep up with Orlando's racing housing market of recent years. She and her 16-year-old daughter lived with her mother for three years as prices climbed. They were about to give up on a dream home and settle instead on a small apartment.

Then Ms. Sorrentino learned about the Hannibal Square Community Land Trust, which aims to preserve affordable housing in the desirable Winter Park community of Orlando. Sorrentino and her daughter moved into their three-bedroom, two-bathroom, furnished home in June, and they'll proudly host family for Thanksgiving.

"It's almost like they've priced out the middle class at this point," says Sorrentino, seated in the family room of her old-Florida style home with its large front porch. "People should be able to have a home and raise their kids and have some sense of community."

Own your home, lease the land beneath you. That's the idea behind a community land trust. Across the country a growing number are encouraging affordable housing in urban areas, where surging prices have outpaced moderate incomes.

Nationwide, the number of community land trusts has doubled since 2000 to more than 200, according to the Institute for Community Economics, based in Springfield, Mass., which helps organizations establish these trusts. In 1980, there were fewer than 10.

The trusts lease land to homeowners, who purchase homes on the land. Homeowners pocket some appreciation on their homes when they sell, while the trust maintains ownership of the land. Because it's land values that soar, the homes stay affordable.

The trusts usually are nonprofits, and often the land is donated. Many get support from local governments. The trusts strengthen a community because they encourage a sense of ownership and discourage high turnover often associated with renters, says Michelle Lancto, a program officer with the Institute for Community Economics in Springfield, Mass.

Already a few have sprung up along the Mississippi Delta since hurricane Katrina struck, as developers eager to build casinos and waterfront vacation homes have overlooked housing for low- and middle-income families, says Gus Newport, former director of a community land trust in Boston. He is working as a consultant to communities recovering from the hurricane, including those in the New Orleans area.

"With housing prices on the rise, especially after natural disasters where developers ... have built beautiful vacation homes," says Ms. Lancto, "your teachers, your fire department and police were actually being forced out of neighborhoods where they worked because of increased development on upscale housing."

Among the best-known community land trusts is Dudley Neighbors Inc., established in 1989 in a part of suburban Boston that, back then, was riddled with vacant lots full of trash, weeds, and burned-out abandoned cars. With help from city leaders, residents joined together and used eminent domain to take property from absentee owners and turn the property around.

Today the trust has revitalized the neighborhood with a playground, park space, and businesses as well as affordable housing, says director Jason Webb.

"One of the things we pride ourselves on is that residents do the leading," he says. "It's not staff-run. It's not, 'We're going to help out these folks.' We're here to help facilitate what the residents want us to do."

Elsewhere, Irvine, Calif., has committed more than $250 million over 10 years to a trust of some 10,000 residences. And the Mayo Clinic helped establish a community land trust for employees in Rochester, Minn., to help them live closer to work.

The trusts don't depress home values across a neighborhood because usually they are so small – comprised of a couple dozen homes – and their effect is negligible, says Rosalind Greenstein, senior fellow at the Lincoln Institute of Land Policy in Cambridge, Mass. While homeowners are unable to pocket profits on rising land values, because the trusts own the land, the arrangement is better than renting, she says.

Orlando's Hannibal Square Community Land Trust was established in 2004 to preserve diversity in a historically black part of Winter Park. City leaders provided 10 lots of land to the trust, and the city and others also provided funding. Today all 10 homes are occupied, says executive director Bedilia Campbell.

"We're helping to dispel the myth that affordable housing has to be a box," she said. "We're proving that affordable housing can happen in Winter Park, ... and we're preserving the social equity of the land for the benefit of people who don't have the opportunity to buy more affluent homes or regular homes."

Sorrentino was leery of the trust at first. She disliked the idea of not owning the land. But even if she were to sell the home now she feels she has no place else to go – prices are so high across the city. She paid $126,000 for the home, built in 2005 and just blocks from shopping and dining.

"Now you can't even get a condo for that," she said. "You would find little dinky shacks. This exceeds my expectations by far.... It's basically an answer to my prayers."