Land trusts offer a housing solution, but ...
Innovative idea has a staunch foe — the Bay Area real estate market
After more than three years of fighting for his East Oakland home, Rafael Luna is exhausted.
Campaigning against rent hikes that could have priced them out of their apartment building, Luna and his neighbors passed out flyers at the building owner’s office, protested outside the owner’s mother’s house and even had two run-ins with the police. This month, the tenants finally are celebrating a major milestone — a local community land trust bought the building and will convert it into affordable housing.
But he says it’s a bittersweet victory and one that opens another chapter of waiting and uncertainty.
“I don’t know if it’s worth staying here,” said Luna, a 49-year-old electrician. “It’s so much stress.”
Community land trusts — nonprofits that buy market-rate properties and then rent or sell them back to residents as permanently affordable housing — are sweeping the Bay Area, promising a new solution to the region’s low-income housing shortage. New land trusts recently formed in San Jose and on the Peninsula, and Oakland, Berkeley and San Jose are considering ordinances that could make it easier for the groups to snap up homes.
The idea is for tenants living on land trust properties to ultimately buy their homes — giving them a chance to build equity that they’d never be able to afford on the open market.
But Luna’s disillusionment highlights the stark reality these organizations are up against as they compete with wealthy buyers and investors in the Bay Area’s overheated real estate market. Without adequate funding, land trusts can spend years struggling to close just one deal. And because of their unique rent-to-own emphasis, land trusts often can’t access traditional sources of affordable housing funds, which are geared toward rental properties.
“It’s still too slow. It’s still too under-resourced,” said Justin Tombolesi, who worked for the Oakland Community Land Trust before joining Councilwoman Carroll Fife’s office.
For example, the San Francisco Community Land Trust has 12 properties but hasn’t made a new purchase since 2017, said Keith Cooley, director of asset management. Part of the problem, he said, is the city stopped helping fund acquisitions.
The nonprofit is fundraising to buy an apartment building in the Tenderloin neighborhood, and has $600,000 in donations so far, Cooley said. But the land trust needs another $700,000.
In San Jose, the newly formed South Bay Community Land Trust is looking to make its first purchase downtown or in East San Jose. The Bay Area land trust movement is about to take off — if it can get funded, board member Sandy Perry said.
“We feel that we’re catching a wave, so to speak,” he said.
Oakland in 2019 set aside $12 million for land trusts. Last month, the city awarded $4 million of that to the Oakland Community Land Trust, which owns about 45 properties.
That includes Luna’s four-unit complex, which the nonprofit bought last month for $1.6 million — marking the culmination of a yearslong ordeal, said Executive Director Steve King.
The tenants started organizing in 2018 after real estate investor David Lawver bought the property and attempted to raise rents by more than $1,000. Luna and his neighbors fought back with tenants rights group Alliance of Californians for Community Empowerment, and Lawver postponed the rent increases. Then the tenants began working with the land trust to acquire the building, so they’d never again have to worry about a massive rent hike.
The land trust offered Lawver $1.5 million when he decided to sell in 2019, but got outbid, King said. The new owner agreed to sell to the land trust, but it took the nonprofit more than a year to raise the money.
Now that the deal has finally closed, nothing has changed for the residents, Luna said. His $2,000 rent payments haven’t decreased, and he has no idea when he’ll get to call himself a homeowner — if ever.
But it likely will take several more years. The land trust has to work with the city to convert the building into condos, then secure mortgages for the tenants with 3% down payments.
“This is what these deals look like until we have a more amenable system in place to do this work,” King said. “So I totally share their disillusionment and frustration.”
After a land trust buys a property, it helps residents purchase the building at a reduced rate — if it’s a multi-unit building, residents form a co-op that shares ownership, or convert it into condos. The land trust retains ownership of the ground underneath, ensuring the property never reenters the open market. When the property is sold, it’s priced at an affordable rate for the next low-income buyer.
Oakland, Berkeley and San Jose are considering ordinances that would require certain landlords to give tenants, land trusts or other affordable housing nonprofits first dibs when a building goes up for sale. San Francisco already has such a policy, but the city’s land trust hasn’t had the capital to buy any of the buildings it’s been offered under the ordinance.
On the Peninsula, Pam Dorr is working on a slightly different strategy. Dorr, director of the nascent Valley Community Land Trust, wants to buy single-family homes in Santa Clara and San Mateo counties, add two in-law units to each lot, and then rent or sell the units at affordable rates. Increasing the density of the lots will help keep prices down, Dorr said.
Still, she’s struggling to find financing that fits with her innovative idea.
“We do need a funding source,” Dorr said. “There just isn’t one. There’s absolutely zero.”