NYC Community Land Initiative

What startups can teach community land trusts about narrative

You just need to sell it to people (neweconomyproject)

You just need to sell it to people (neweconomyproject)

Recently, Grounded Solutions Network, which is the national umbrella organization for community land trusts, received $1 million from Citibank’s development arm to form an accelerator to launch more CLTs. As a housing advocate, a startup founder, and a tech educator who runs an accelerator, I’m excited. I’ll talk about the accelerator in a moment, but I’m particularly excited because it finally gives me a chance to talk about all three through the power of narrative. Forming a strong narrative is drilled into startups from the get-go, but the housing community, so far, has failed to appreciate its importance, or at least how to do it right. That might be changing.

A bit of background first. I got involved with the community land trust movement 6 years ago to help solve the foreclosure crisis in Brooklyn. As part of a grad school studio at Columbia, we were contracted by the New Economy Project (they were NEDAP at the time) to come up with a way to protect minority homeowners from losing their homes or to regain their lost homes from the particularly heinous predatory lending practices that laid waist to many majority-minority communities. (The foreclosure crisis has never endedin these communities, by the way.)

While working with visiting professor Jeffrey Lowe and the legendary Peter Marcuse, we were able to study the CLT model in great depth. I visited and researched the Lake Champlain CLT in Burlington, VT (the biggest CLT in the country) and Dudley Street Neighbors Initiative in Boston, MA (the first community group to be granted powers of eminent domain).

I was and remain enamored by the story of these organizations and the people that made them possible. The CLT model changed the destiny of these communities. It created permanent, community-controlled affordable housing in places largely abandoned by the public and private sectors. These people showed how working together against unbelievable odds could make something big happen.

Their stories made me believe that CLTs could happen in NYC. By the end of the studio, we began crafting a vision for how the model could work and how it could help these homeowners and communities who had been sacked by the financial industry. It was a very exciting time.

However, most people in city government had no idea what a CLT was or flat out laughed at a bunch of lefty grad school students and community groups for suggesting that it could work in the real estate capital of the world (that is slowly changing). This is despite the presence and decades-long success of Cooper Square, the first CLT formed in NYC. Even in the wake of the foreclosure crisis, when the city was taking over hundreds of properties, the model never found an audience. In retrospect, we put a lot of work into research and policy, but failed to appreciate how crafting a good narrative could get people’s attention.

At the same time, on an entirely unrelated note, I was launching my first startup company, Brightbox. (Going to grad school for urban planning and building a tech company confused a lot of people -including my parents- at the time) Brigthbox is a secure cellphone charger for bars, nightclubs, and restaurants that allows people to charge their phones when they need to. My good friend Adam Johnson came up with the idea while we were bartenders in NYC’s Meatpacking District dealing with this problem every night. Our experience as scene-y bartenders gave our product two key insights —highlight security and sexiness. Through some grit, dumb luck, and smart luck, we got funding and began the Quest to Scale into other markets and sectors with some notable ups and downs.

Along the way, there was one key lesson that we could always come back to for guidance — no matter who we worked with, whether it was a dive bar or Disney, as much as they liked seeing the product, they loved hearing the story about how we were bartenders. We saw an everyday problem first hand and did something to solve it. It is a great story.

To this day, it is clear to me that the power of that narrative — simple, plucky, aspirational — is what took Brightbox from a literal cocktail napkin idea to a business with hundreds of kiosks across the country and world. (One of my former coworkers just shared a Facebook memory from Internet Week 2012, where Brightbox shared a small booth in the back corner of an event with Uber. We obviously didn’t learn how to scale compared to them.)

Telling a good story is the foundation for growing a startup company (or a campaign or a religion). It’s what attracts users, talent, and investors that ultimately help build the product and the business. I have kept that lesson with me as I have started my second company, homeBody, and we drill it in to my students at CUNY Startups: Everything is built on the power of your unique narrative. There’s a big problem a lot of people have. But there’s an elegant solution. You’re the one who can make it. You’re the one who can get it to people. A lot of people. And it’s going to change everything.

This urgently needs to happen with the affordable housing crisis. The crisis is massive and painful, but housing advocates have not been able to craft a narrative to solve it that captures the nation’s attention. Coincidentally, as I worked on this blog this week, Citylab had an article about the nonprofit agency Public Interest who is trying to make an “Inconvenient Truth” type doc about the crisis to do just that. I hope they do it.

That’s why I’m so excited about Grounded Solutions CLT accelerator. It shows that a powerful narrative is forming about how to solve the housing crisis: communities taking control. First, the fact that Citibank is investing in it shows that at least some major financial institutions are coming around to the model. I have no love for the financial industry or its role in creating the housing crisis, but there is no way to solve it without them playing some role either. Second, creating a formal structure to grow more local CLTs spreads the model to more organizations and more communities. The more people hear about CLTs, the more they like them. The more they get started and succeed in one place, the more they will get started and succeed in other places.

The Ground Solutions accelerator isn’t like a traditional startup accelerator, but calling it that shows a willingness to adopt a startup vernacular, which is an important signal to the public (and press) that there is something cutting edge going on in the housing crisis. I hope that insight is embraced within the accelerator as well — Leveraging technology to form and manage CLTs; Adopting branding and growth hacking techniques to gain support; telling a compelling story to secure stakeholders in the community.

I’m excited to see the beginning of a convergence with my startup experience and my housing experience. Of course there are unique complexities in trying to scale a community-based model of housing that don’t compare to scaling a hardware startup, but there is at least one major similarity. It’s a heck of a story.

There is a massive, wide spread problem (phone batteries die, housing is too expensive) with a really simple, elegant solution (secure phone charger, community-owned housing.) As the accelerator gets off the ground, I hope that Grounded Solutions, their local partners, and other housing advocates continue to embrace the tools startups use to craft their narrative. The CLT model can be a game changer in the housing crisis if more people hear its story.

4 Reasons To Be Excited for Community Land Trusts in NYC

Cooper Square CLT shows they already work in NYC (urbanomnibus)

Cooper Square CLT shows they already work in NYC (urbanomnibus)

This past week marked an exciting development in affordable housing policy in NYC.  HPD has announced that it will give $1.65m through a grant program from Enterprise Community Partners to four groups to develop or expand community land trusts around the city.  Though it is a small amount of money, it is a giant step for the city and could serve as a larger evolutionary step in housing policy.  What happens next with these groups will be important, but undeniably a new policy tool has entered into the housing debate.  There are many reasons to celebrate this and I’ll outline four today.

A Community Land Trust is an alternative form of ownership that separates the value of land from the value of the shelter on it. It does this by placing the land in a community-controlled trust that removes it from the private market permanently.  This separation removes the speculative nature of real estate from the cost of shelter, maintaining a consistent level of affordability. 

CLTs have been around, notably in Burlington, Vermont, for decades, but have had limited support and awareness in NYC.  One of the groups receiving funding is Cooper Square, the only current CLT in the city.  Its success over several decades has played a considerable role in getting the city to believe in the model.

Along with Cooper Square, the other three groups are Interboro CLT, a new partnership of organizations, East Harlem/El Barrio, a brand new tenant CLT, and the NYC Community Land Initiative, the long-running regional group dedicated to helping groups form CLTs.  These groups, along with the New Economy Project, have been working on getting to this point for years.

I’ve always believed CLTs could work in NYC (and worked with NEP back in 2012 on a CLT project) because there are so many opportunities with the right combination for success: organized community groups and lots and lots of small, existing properties.  Given how the Mayor has put such a priority on affordable housing and has tried to frame it as a vehicle for community control and inclusive growth, community land trusts are a no brainer. Let’s turn to why.

1. They are Really Cheap

As an affordable housing tool, CLTs are really inexpensive because they rely on existing housing stock (but can still create new development), which is always going to be cheaper than new construction.   The basic model would include a single, upfront subsidy provided through an agency like HPD, or potentially a non-profit like ECP, to purchase a parcel or parcels of land to turn over to a CLT.  After that contribution, CLTs are effectively self-sustaining. (There are legitimate questions about how much subsidy is needed in addition to land costs to make individual units even more affordable, but these are best left to individual cases.)

Compare this model with our current reliance on market-based solutions that cost hundreds of thousands of dollars per unit.  As I mentioned in last week’s blog, the mayor’s plan relies on tax incentives that make each new “affordable housing unit” come in at between $400,000-$600,000.  Spending billions of dollars on building new units at that cost just doesn’t make sense and will never produce the number of units the city needs.

So much focus has been put on new development and the need to create more density that we forget that preserving existing units in many neighborhoods accomplishes the same affordability goals for a lot less money and in a shorter time frame.  It’s estimated that over the next few years, 100,000 affordable housing units will be lost to deregulation and vacancy decontrol.  Think of what a difference putting those units into CLTs would make for overall affordability and think about how quickly and cheaply that could be accomplished. It is stunning.

2. They Prevent Displacement

Another complimentary feature of CLTs in NYC is that they are likely going to be most effective in neighborhoods that are on the brink of gentrification but haven’t seen new development or upzoning yet.  The land will still be affordable in most cases, keeping the subsidy cost low.

More importantly, establishing a CLT will allow existing residents to remain in their communities.  The logistics of converting a market-rate, or even rent-stabilized building, into a CLT is seamless and doesn’t involve tenants moving. 

New construction generally means displacement when an old building is torn down, with very little likelihood of those tenants returning. New construction also begets more new construction, which drives the speculative nature of real estate into new neighborhoods. Very few existing residents benefit under this dynamic (although its complicated.) Even building on empty lots under the current model makes it difficult for existing tenants to have access to new “affordable” units. 

By allowing existing residents to remain in their homes, especially renters who don’t have the benefit of equity gains as neighborhoods gentrify, even low-income residents have the opportunity to benefit from the positive aspects of growth and new development.  Rather than continue with a generally zero-sum development pattern, CLTs allow neighborhoods to have more inclusive growth.

3. They Provide Community Control

Along those lines, CLTs are the ultimate tool for community control.  They allow residents to have a larger say in their neighborhoods through the voice of the CLT.  Renters in particular are generally underrepresented as stakeholders in an area, but as members of a CLT, they become more powerful advocates.

To be clear, I don’t see this as a NIMBY/YIMBY issue.  Community control doesn’t mean community resistance to change.  The dynamic now, and why so many neighborhood groups do resist any change (although with limited success in reality), is that development doesn’t help existing residents.  Who would want to allow massive disruption in their neighborhood that will probably result in having to move at the end of it?

When long-term residents have the ability to be part of the long-term change in their neighborhood, when they can rightfully envision their futures’ there, then it becomes less about resisting and more about shaping.  The end result is a more economically, socially, and politically dynamic neighborhood which is what the whole city should look like.

4. They Compliment Private Development

A big point of supporting CLTs that I want to make clear is that they are a complimentary piece in a larger policy toolkit.  I don’t think they are a panacea or even appropriate in every instance.  But having them as a pillar or at least an option creates more space in housing policy for community control and non-market solutions.  This can eventually allow more resources to go into new construction of private or public housing with government assistance.  It’s all connected.

If we can create a policy frame work for CLTs that allows a significant number of units to be preserved at a very low cost, that leaves more room and potentially more money to drive new development in more targeted ways.

I’d rather see some of those billions of dollars the Mayor has allotted to subsidize private development used to improve the subways and buses.  A better transportation network extends the housing options for all New Yorkers.  I’d rather see it go towards supporting NYCHA, which houses over 400,000 New Yorkers. Pubic housing has been a vastly successful government program that should continue to be a priority. Finally, I’d rather see our public funds going towards building working class and middle-class housing where it is needed rather than subsidizing luxury construction in glitzy parts of Manhattan.

The total amount is modest and the details of how the model could work in NYC still need time to develop, but trying community land trusts in NYC should excite everyone concerned about affordable housing and the future of NYC.  Provided with the right support and deployed in the right areas, CLTs could be a major evolutionary step for the city as it struggles to solve the affordability and homelessness crises.

421a Stinks, Here's a Better Use of Taxpayer Money for Affordable Housing

Community Land Trusts to the rescue? (bedford+bowery)

Community Land Trusts to the rescue? (bedford+bowery)

This week, the Independent Budget Office of New York released a damning report on the impact of the 421a tax program. It argues that over the last 11 years, $2.5-$2.8 billion of taxpayer money has been effectively wasted.  Far from encouraging more affordable development, which has been its main justification, the policy has rewarded condo owners and developers (particularly in Manhattan) with significant tax relief. 

In case you haven’t heard, NYC is in the midst of a massive affordable housing and homeless crisis. Rather than simply rebrand 421a, which is what the governor is proposing, and continue to throw taxpayer money away, we need to examine new ideas that can actually address this crisis full on.  Luckily, NYC Housing Preservation and Development (HPD) is potentially doing that by exploring Community Land Trusts.

421a has long been criticized for being an incredibly expensive and inefficient affordable housing policy, but the simple truth is that it was never an affordable housing policy. 421a was designed in 1971 during the Bad Old Days to promote development, not affordable housing.  Those goals are not mutually exclusive, but they are not one and the same. The checkered history of 421a shows that.

Originally, the policy gave a 10-year property tax rebate on any new housing development on vacant or ‘underutilized’ land.  After Trump Tower received millions from the program to construct exclusively high-end housing, Mayor Koch revamped the policy in 1985.  It then required any housing development using the program in central Manhattan (but not outside) to provide a certain percentage of affordable housing.  The policy has gone through various iterations and lapsed enforcement since, raising the cost of the subsidy while providing vanishingly small amounts of affordable units.  Given this complacency, the Governor’s revamped 421a plan "Affordable New York Housing Program" would cost taxpayers $400k-$600k per unit and apparently that’s OK.  It’s not and this thinking is not sustainable.

The point here isn’t to keep harping on 421a (or on using tax money to promote development in general). It’s to demonstrate two things. First, that focusing on development first, affordable housing second, has failed spectacularly in addressing the affordable housing crisis.  That much is pretty clear at this point.

Second, it is to show that there are existing models that focus on affordable housing first that are much more cost-effective, community-based, and sustainable.  One of those models, Community Land Trusts, is finally getting looked at seriously in New York City thanks to HPD

Community Land Trusts (CLT) have been around for decades, most successfully in Burlington, Vermont (started when Bernie Sanders was mayor).  The basic concept is very simple – remove the value of land from the value of the dwelling. When a CLT buys a house or building, it puts the land in a trust that removes it permanently from the private market. This of course removes the speculative possibility of the land, which is the main variable in real estate deals.  (It’s why Stuyvesant Town, where I live, got bought for $5.3 billion even though the buildings are 70+ years old and showing it. The 86 acres in the heart of Manhattan is what Blackstone paid for. The tax breaks are a cherry on top.)

HPD, after meeting with community groups like the New Economy Project, the NYC Community Land Initiativehas issued a request for economic interest (FREI) to groups that are interested in forming CLTs in the city.  As reported by NextCity, a group of residents formed the East Harlem-El Barrio CLT to take part in the first wave.  The FREI is a modest proposal to see if a CLT can “improve upon, or fill in the gaps of” existing city programs, but it is a signal that the city is at least looking at CLTs.  It remains to be seen how much HPD understands the model or how committed it would be to pursuing it, but residents and developers alike should welcome this move. 

Community Land Trusts could be a much better use of taxpayer money to address the affordable housing crisis because after the initial investment of acquiring the land, the model is self-sustaining.  A trust controlled by a diverse board of interests still collects rents, it can still do major capital improvements and pass along some of the cost to tenants, and it can even offer transferable equity to residents in co-ops or condos in certain cases. Again, this model already exists and has worked in many cities (including Cooper Square, the first and so far only CLT in NYC, which has been around for decades.)

421a cost taxpayers an estimated $1.2 billion this fiscal year alone. For a fraction of that, the city could purchase foreclosed properties or neglected properties and transfer them into either a publicly administered trust or to private non-profit trusts like East Harlem-El Barrio.  Almost instantly, the city would create thousands of sustainable affordable housing units that wouldn’t require anywhere near the level of operating support currently wasted on 421a and other property tax programs.

This policy might seem like anathema to the real estate dominated political interests of the city, but it shouldn’t.  NYC is an incredibly large city with a lot of property.  Even a large presence of CLTs wouldn’t impact this landscape.

If anything, supporting CLTs would presumably remove the cumbersome requirements of affordable housing that drives up costs for developers.  By creating a separate, robust affordable housing policy, lawmakers could reform current development policies to encourage other priorities, such as mixed-use or transit-oriented development that would allow developers to maximize a development’s potential. Perhaps a developer could receive FAR bonuses or tax breaks by supporting a CLT by providing capital or professional services.

To address the affordable housing and homeless crisis, New York City needs to explore every possible idea out there.  Building new, large public housing developments will never happen again politically. Relying on the private market has made the problem worse economically.  Ungodly amounts of taxpayer money are being wasted every year on poorly designed tax, rent, land-use, and occupancy policies.  Community Land Trusts aren’t the silver bullet to address these seemingly intractable problems, but by supporting them, perhaps we can create space to finally explore truly innovative ideas from the public and private sectors alike.