Title: Ground Leasing for Housing Affordability
Description: In times and places of escalating land costs, removing land from the speculative market may be one way to stem its rising costs in the housing cost equation. Bifurcation of property ownership – separating ownership of the land from ownership of the housing atop it - has been touted as an effective land reform measure that can engender durable affordability. A ground lease ties the land owner to the user. In terms of affordable housing, the land owner imposes affordability controls on the user, including the prospect of lease term renewals for continued affordability. Ground leasing’s roots are embedded in English common law dating back to feudalism, the Norman Occupation, and the Magna Carta. An ancient land control device, ground leasing today has been reinterpreted as a modern land reform strategy that can convert subsidy to a form of community equity. This thesis examines the effectiveness of ground leasing, or a variation thereof, as a mechanism to promote durable housing affordability especially for lower and moderate income workforce households.

Five factors for assessing ground leasing’s effectiveness are developed: affordability; efficiency (fiscal); “security, equity, and legacy”; community; and multiplicity (scale). Four ground leasing models are examined against the five evaluation factors. The four models, structured with 99-year ground leases, form a continuum of sorts: two of the models are small private nonprofit community land trusts based in the San Francisco Bay Area; one focuses on affordable homeownership (Housing Land Trust of Sonoma County); the second is a hybrid model involving master leasing of multifamily rental-type units with the goal of creating limited equity coops or nonprofit resident-ownership (San Francisco Community Land Trust); the third and fourth models involve public ground leasing – one is a public housing authority with the aim of privatizing its public housing units (San Francisco Housing Authority working with the Mayor’s Office of Housing and Community Development); and the other is an international model, the Singapore public housing system, which boasts an impressive portfolio of mostly ownership housing.

The conclusion reached is that ground leasing is effective though not perfect in creating long-term, if not perpetual affordability. Overall, continued housing affordability is generally maintained. Fiscal frugality is not necessarily achieved, though the land component, having been removed from the market, no longer requires additional subsidy for future transactions. The prospect of wealth accumulation is possible in the homeownership models, which are able to provide some degree of economic mobility. The development of social capital and community capacity requires an on-going commitment to stewardship to be successful. And scale may be seen as having been achieved in the public ground leasing models, but their replication to other venues remains open. An ancient land tenure form reinvented, ground leasing through innovative models that strive for perpetual affordability continue to evolve.