New models are emerging to facilitate community land ownership, allowing residents to invest directly in funds and properties. The CIT solicits small investments from local residents to support local businesses and real estate development.
A prominent example of the CIT model is the Plaza 122 retail mall in southeast Portland, which is owned by the Community Investment Trust. The trust was established in 2017 and has since raised over $825,000 from 345 neighborhood resident families, earning 7 percent annual dividends.
Community Investment Trusts
The CIT model is designed to provide a pathway for renters to gain a stake in equity in real estate. The trust is structured as a standard Oregon shareholder corporation, and community investors can invest as little as $10 a month. The trust also provides a “direct pay letter of credit,” which ensures that small community investors can cash out when they wish to do so.
Before investing, community investors must take a “Moving from Owing to Owning” course, which is taught by peers in three, two-hour sessions. This course is an important “community engagement and educational piece” that helps investors understand the risks and benefits of investing in the trust.
The CIT model has been replicated in other cities, including Minneapolis, South Dallas, and Albany, New York. In each of these cities, the model has been adapted to fit the local context and needs. For example, in South Dallas, the local partner is St. Philip’s School and Community Center, which has acquired several small buildings and is working to create a “necklace” of community-owned properties.
In Albany, the CIT model is being used to renovate a four-story building, which will be leased to local businesses and community members. The project is being led by Ruth Kassel, who sees the CIT as a way to bring collective ownership to a neighborhood without requiring direct resident involvement.
Community Co-Ownership
Another model that is being used to facilitate community land ownership is community co-ownership. This model combines conventional investment by philanthropic or accredited investors with a non-accredited community investment “lane” that uses Regulation Crowdfunding to enable retail investors to invest.
A prominent example of the community co-ownership model is TREND, a for-profit social enterprise that owns commercial properties in several cities, including Columbus, Ohio, and Baltimore, Maryland. TREND was founded by Lyneir Richardson, who references a Brookings Institution report that found that 81 percent of the value of commercial real estate is owned by 1 percent of the population.
TREND’s model is designed to counter this concentration of ownership by providing a lane for residents to safely invest in commercial real estate through crowdfunding. The minimum investment is $1,000, and outreach is highly targeted to low- and moderate-income neighborhoods. To date, there are 462 community investors in TREND properties, with an average investment amount of $2,554.
Richardson says that 57 percent of investors reside in low- and moderate-income neighborhoods, 70 percent are Black, and 44 percent are women. The average dividend has been 5 percent, and Richardson is aiming for a dividend rate of 6 or 7 percent after stabilization. He hopes to sell the properties after 10 years for at least twice the initial purchase cost.
Brent Fosberg, a Lansing, Michigan-based developer, is also experimenting with community co-ownership models. He is working on a project called the Lansing Growth Fund, which is designed to provide long-term financing for community development projects. Fosberg says that the fund will be structured as an “evergreen” fund that grows over time, rather than aiming for a specific target amount.
Fosberg’s goal is to create a fund that will allow community members to invest directly in local development projects, with a focus on affordable housing and community facilities. He believes that this model will help to build household wealth and provide a new way for community members to shape development in their neighborhoods. The first building in the Lansing Growth Fund is currently under construction, with a target completion date of March 2027.
The city of Lansing has committed $9 million to the project, which will include 28 units of affordable housing, a community center, credit union, and cafe. Fosberg says that the fund is designed to provide a 5 percent return over 10 years, and that he hopes to have thousands of small investors participating in the fund. The project is still in its early stages, but it has the potential to be a model for community-led development in other cities.
As the project moves forward, Fosberg will be working to raise the necessary equity to complete the development. He has 36 months to raise the funds, and he is confident that the community will come together to support the project. The success of the Lansing Growth Fund will depend on Fosberg and his team’s ability to engage with the community and build support for the project.
