Co-operative Place Making through Community Land Trusts

A fascinating new report just published by Co-operatives UK describes the huge potential of community land trusts and other forms of mutual housing and enterprise. Commons Sense:  Co-operative place making and the capturing of land value for 21st century Garden Cities brings together a wealth of insight into the practical solutions that community land trusts (CLTs) can provide. 

By converting land into commonwealth – capturing escalating land values for everyone’s benefit – it is possible to make housing more affordable and to finance all sorts of infrastructure and services that make communities more stable, attractive and thriving.  What’s not to like?  (Well, if you’re a bank, private landowner or speculator, you may not like the competition of a superior financial model.)

The Commons Sense report, edited by Pat Conaty of Cooperatives UK and Martin Large of Stroud Common Wealth, succinctly describes the basic problem:

The high cost of housing is draining money out of the productive economy, mainly through land and house price inflation, with damaging effects for national and individual household budgets.  Many new homes are unaffordable to ordinary working people, some offer poor value for money in terms of quality or construction, design and energy performance, and cost pressures frequently drive out good design in the spaces between buildings and in the concept of supporting new neighbourhoods.  Many new developments are socially, environmentally and economically obsolete from the moment they are conceived, let alone designed or built.

Conaty and Large note that in Britain, only 0.6% of the population – 36,000 people – own about half of the land.  This is a significant structural reason for soaring housing prices and continuing wealth inequality.

All of these problems take place within a larger, more troubling context:  “Population levels are rising, unemployment and poverty are becoming more widespread, the economy is crawling out of a ‘Great recession,’ fuel and food costs are soaring, young people cannot afford to buy housing, overcrowding is on the rise and the building industry is dormant.”

Most government policies and programs to deal with market failures in housing are mostly tired and ineffectual.  No wonder:  They tend to privilege the interests of private landowners, banks and speculators over everyone else.  This leaves few options on the table that could really benefit ordinary citizens and taxpayers.

The gist of the Co-operative UK report is that cooperative, community-based financial systems could provide multiple benefits in terms of thoughtful land use, affordable housing, commercial prosperity and responsible environmental practices.  But building community land trusts on whatever scale requires focused, collaborative action by diverse parts of a community -- and in some instances, political action and policy changes. 

To help galvanize such action, the Commons Sense report lays out often-overlooked facts about community land trusts and other modes of co-operative place making.  It pays special attention to the history of the Garden Cities movement in the UK. 

The most notable example is the new town of Letchworth, 34 miles north of London, which was created in 1903 when developer Ebenezer Howard acquired 4,000 acres of farmland.  He worked with ethical investors, Quakers, philanthropists and others to build a town whose land values would be community owned. This in turn allowed the town to control the rising costs of land while capturing both the “unearned increment” of land value increases as well as “economic rent” of land (the excess returns commanded by a finite resource), so that everyone, not just investors, could benefit.

Letchworth now has 33,600 citizens.  For decades the economic value generated by its infrastructures – water, sewerage, gas, electricity, roads, schools, hospitals – were mutualised to benefit all of its inhabitants.  This enabled the city to become relatively self-sufficient. There were other garden cities that followed, such as the Welwyn Garden City in the 1920s.

While is would be difficult to replicate the Letchworth example in today’s world, the principles that the first garden cities demonstrated can be used by smaller community land trusts for similar purposes today. That is the chief purpose of the Commons Sense report – to showcase the many strategies that community land trusts could use to convert land into commonwealth.  The report recounts a number of fascinating success stories of mutualized land ownership, and it points to a variety of organizational forms that can be deployed, such as trusts, mutual associations, co-operatives and community benefit societies. 

In the US, for example, the Champlain Housing Trust in Burlington, Vermont, has built over 2,000 affordable housing units as well as a day care center for the elderly and office space for social enterprises and nonprofits. In Scotland, crofters on the remote Isle of Eigg succeeded in buying the entire island in 1997 and then converting it into a community land trust, the Isle of Eigg Heritage Trust.  This has inspired other rural and island communities in Scotland to attempt the same feat, something that has been assisted by sweeping land reform (including support for community land trusts) that the Scottish Parliament enacted in 2003.

As the vise of economic decline, government austerity, privatization and wealth inequality continues to squeeze ordinary citizens, it’s time to give a closer look at the role that community land trusts could play.  The Commons Sense report is a great place to start.

Comments

Mutual or sterilized Ownership?

I would like to expand on some of the points raised by David Bollier that could lead to confusion.

David should not have referred to Letchworth as creating mutual ownership. As he points out it was owned by ethical investors not the residents.

Letchworth reduced the cost of housing like a CLT by eliminating the cost of land sites. In addidtion it was sufficiently large to include commercial enterprises. These allowed the commercial sector to cross subsidize the residential sector as occurs also in a Cooperative Land Bank (CLB).

Letchworth, like CLT's require a gift or grant of land to become established. As the Cooperative Place Making reports points out this typically halves the cost of housing. The cost of land is removed for homebuyers because the value of the land site is eliminated by a process that Lou Kelso describes as "sterlization".

This term is used because the uplift in site values are not just eliminated for the home buyers but also eliminated from being used to finance the acquistion of the site. This sterlization process is not involved in a CLB that uses the increases in site values to allow all sites in its precinct to become self-financing. In this way CLBs are NOT limited by the need for grants or gifts of land to provide half cost housing. In other words the formation of CLBs are not limited by finance except for seed funds for a "mid-wife" to allow them to be born.

In my comment posted on The Economist web page on November 30 at http://www.economist.com/comment/2227466#comment-2227466 I suggested that all 32 London Bouroughs be converted to CLBs without using cash. Instead each Bourogh would create the CLB by it issuing its own title deeds in exchange for the existing title deeds.

The CLB creates at least two title deeds to land: One for the site and another for the privately owned building on the sites. In this way land ownership becomes mutualised not sterilized. Only voting citizens can own a title deed to a site and so can vote on electing the CLB board. Non citizens obtain non-voting negotiable stapled preference shares for their sites to eliminate corporate or alien control of communities to enrich demoncracy both economically and politically.