FAQ: How Do Community Land Trusts (CLTs) Affect Local Tax Revenue?

Over the past several months, questions have been raised about how Community Land Trusts (CLTs) affect local tax revenue and whether properties placed in a CLT reduce the taxable base within a township.

Based on existing CLT models across the country and comparable attainable housing projects, the opposite is typically true: CLTs generally increase taxable value and contribute additional revenue to local communities.

Most properties considered for attainable workforce housing are initially classified as agricultural, forestry, or recreational land. These classifications commonly carry reduced taxable values reflecting their limited residential or commercial use. As a result, prior to development, these properties contribute to the local tax base at a comparatively low level.

When property is developed within a Community Land Trust:

  • The land remains owned by the CLT and remains fully taxable.
  • The home itself is privately owned and fully taxable as residential property.
  • The homeowner pays property taxes at the same rate as other residential property owners within the township.
  • The combined assessed value of land and residential improvements typically exceeds the prior agricultural or forestry valuation.

From an assessment standpoint, the addition of residential improvements increases both State Equalized Value (SEV) and taxable value, thereby expanding the local tax base.

Importantly, the CLT structure does not remove property from the tax rolls and does not rely on tax abatements or tax reductions. Instead, it maintains long-term housing attainability through ground lease provisions while allowing the property to function within the standard property tax framework used throughout the community.

For many communities, this results in:

  • Increased taxable value compared to pre-development classifications
  • Additional year-round residents contributing to local economic activity
  • Greater stability in school enrollment and utilization of local services

CLTs In Summary

  1. The local tax base typically increases when these homes are built.
  2. CLT homes are not subsidized by existing taxpayers or property owners.
  3. These projects do not create additional financial burdens for the community.
  4. The economic benefit remains local, supporting people who both work and live in the community.

Sleeping Bear Gateways Council welcomes continued discussion on this topic and encourages planning officials and community members to ask questions so that decisions can be informed by clear, accurate, and transparent information.