In the United States we are used to thinking about the university within the context of its host city. The University of Wisconsin in Madison, the University of North Carolina in Chapel Hill and the University of Illinois in Urbana play major roles in driving the economies of those traditional college towns. Stanford University and Massachusetts Institute of Technology are examples of research universities that have served as incubators for new industries that have had significant economic and industrial impacts in Silicon Valley, California, and metropolitan Boston. The Julliard School in New York City, the Chicago Art Institute, and the film departments at the University of California (UCLA) and University of Southern California (USC) in Los Angeles also have had a significant effect on their local cultural landscapes.

After more than five years of focusing on the real estate development activities of U.S. colleges and universities, Lincoln Institute researchers are now investigating the roles that universities play in their host cities around the world. Will the National Autonomous University of Mexico (UNAM), a 733-hectare campus in the middle of one of the world’s largest cities, be able to maintain autonomy from the federal government through its land policies? Can a university that serves Northern Ireland’s Catholics and Protestants succeed in building a new campus in an area known for poverty and intractable political violence? What lessons can we learn from the redevelopment of a German military barracks by the University of Lueneburg that might be applicable to other universities’ development efforts?

Universities are major players in many activities not traditionally associated with the ivory tower. They are employers, purchasers, engines of economic growth, innovators, cultural meccas, branders of place and, increasingly, major real estate developers. This last role creates a web of opportunities and challenges that are not only important to the future of universities but also extend throughout the politics and economics of cities.

Formal examinations of the university’s role in acquiring, managing, selling and developing real estate have not been a topic of academic and professional inquiry in the U.S. until recently, but these issues are even less frequently discussed in international circles. There are few comprehensive case studies and literally no multi-continent examinations of how urban universities operate in real estate and land development, even though there is widespread agreement over its growing importance. The contributions of universities to their cities, the nature of state higher education policy and the increasing role of private market actors in university expansion are all important features of urban land development today, although they are realized differently in various places.

To facilitate further exploration and comparison of these issues, a dozen international scholars from Europe, South America, Asia and Africa gathered at the Lincoln Institute in March 2004 to present papers and engage in a critique of their work. They quickly moved the discussion beyond the case studies into a broader conversation about the role of the university in the history and the future of national policy toward cities and how such policy is affecting and is affected by the global economy.

The Role of the State

Outside the U.S., the university is almost always a public institution; therefore university land development is closely intertwined with and often an integral part of local and/or national planning and development policies. The levels of autonomy in real estate development decision making experienced by international universities are also dramatically different from those of U.S. universities, because of their relative attachment to the state as both an agency and public institution.

Anne Haila of the University of Helsinki pointed out the strong history of planning in Finland, for example, where plans are laws that carry great weight and supply clear direction to university land use planning. All university real estate in Finland is owned and managed by the national real estate company, which strives for efficiency in all of its real estate strategies. Conflicts between universities and the property manager became especially prevalent after 1999, when university departments were ordered to pay the full price of rent for their premises; if departments increased their space they had to pay more, but if they decreased it they were compensated. The reasoning behind the policy was to abolish the idea of “free space” and to make university departments aware that bringing in new research and other revenue-generating projects would help them pay for additional space.

Carlos Morales-Schechinger presented another example of the relationship between university land policies and the state in his review of UNAM in Mexico City. UNAM has been autonomous from the federal government for more than 50 years and has “abandoned any intention of becoming a developer.” Instead, UNAM considers the land’s use value as a sanctuary, an area secure from government intervention, and a place for study, natural spaces and public art. Approximately 29 percent (212 ha) of the land has been declared an ecological zone due to its unique flora and fauna.

Morales-Schechinger suggests that UNAM’s reluctance to engage in current real estate development is related to its past history, when some of its land was acquired from the territory granted to the peasants after the 1910 Revolution. The university serves nearly 260,000 students from all socioeconomic groups and thus views itself as an independent and often vocal critic of the federal government.

Shifting City Growth Patterns

Changes in the nature and structure of the nation-state brought on by economic restructuring, new political alliances, changing demographics, and the decentralization of governmental responsibilities and mandates can bring about radical changes in the real estate development policies of universities. Three participants focusing on universities in Portugal, Germany and Finland described the conditions of student demand and changes in the technology of work that were forcing both expansions and relocations of universities (or parts of them) in an increasingly decentralized urban environment.

Isabel Breda-Vazquez, speaking about the University of Porto (UP), noted the demographic shift in the city center, where UP was originally located, when it decided to expand and relocate its engineering and science facilities outside of the city, due to increasing demand for those courses of study and changing employment patterns. Problems associated with the subsequent decline of the city center included physical degradation, social vulnerability problems, functional obsolescence of buildings and spaces, reduced economic activity and consumption, and relocated student housing.

Changes in political alliances and the fall of the Iron Curtain reduced Germany’s need for military barracks, according to Katrin Anacker, and this has resulted in the large-scale conversion of one such facility to university property in Lueneberg. Increased student enrollment, a shortage of classrooms and the fact that university buildings were scattered throughout the city were important factors in the University of Lueneburg’s decision to take advantage of the military’s abandonment of a nearby barracks. Although dealing specifically with the conversion of military property into university buildings, Anacker’s paper may be read for its insights into the reuse of other types of obsolete or abandoned industrial buildings.

The growth demands on public universities and the decentralization of governance are occurring in the face of competing issues of demographic shift out of the city and revitalization efforts focusing on older parts of cities. Many workshop attendees identified the theme of abandonment during these discussions, in the contexts of either the state or local government or the university abandoning the city. Universities almost everywhere are placed in critical positions as they actively develop land themselves, and thus can be seen as agents of urban change—to both the benefit and the detriment of the city.

David Perry argued that to discuss the university as an engine of growth may be only part of the picture. The modern university may be an engine of the city’s development by dint of attrition, becoming even more important to central city renewal by filling the vacuum created by the withdrawal of once dominant agents in both the public and private sectors.

University Development Zones

Several papers addressed universities that are their own “zones of development” or “cities unto themselves.” Abner Colmenares presented the case of the Central University of Venezuela, a public institution in Caracas, and its Rental Zone (Zona Rental) Plaza Venezuela project dating from the 1940s. The notion of the Zona Rental dates back to 1827, when Venezuelan President Simon Bolivar granted real estate properties and farms to the university, to support its faculty and provide for its upkeep.

Adopting as its model Columbia University’s approach to the development of Rockefeller Center in New York City, Central University created and transferred the land to an independent foundation (Andrés Bello Fund Foundation for Scientific Development of the Central University of Venezuela–FFABUCV), which was mandated to promote scientific research by generating financial resources through the development of rental zone properties. By late 2004, more than 40 million square feet of construction had been completed, creating public spaces for the city, a subway center and numerous rental income sites, including a mall.

Wilmar Salim presented a similarly expansive project, the relocation of four universities in Indonesia to rural land formerly occupied by a rubber plantation. The government’s decision to relocate the universities from the capital city of Bandung to the Jatinangor area 23 kilometers distant resulted in the development of a new town to service the large campus. While the planning for the university was carefully conceived, such was not the case for the town that grew up alongside it. Salim notes several serious problems resulting from this relocation: environmental deterioration of the rural area due to the increased population and construction; lack of adequate planning in terms of infrastructure; and negative effects on community institutions caused by the influx of a population much larger than and culturally different from the indigenous residents.

Contested Space

The topic of the university as a contested space was addressed by Haim Yacobi of Israel and Frank Gaffikin of Northern Ireland, both of whom spoke of the challenges for urban universities located in places of conflict. In the Northern Ireland case, an attempt was made to set up a branch of the University of Ulster in an embattled area of Protestant-Catholic conflict and economic deprivation in Belfast. Although U.S. President Bill Clinton and British Prime Minister Tony Blair were present at the groundbreaking, the project faltered due to the lengthy development time and turnover of leadership, coupled with the existing problems associated with a historically contested space. The result was a distinct loss of credibility for the university in the community. Gaffikin stressed that when universities enter into these kinds of situations, they have to see the projects through with strong civic leadership.

Yacobi discussed the siting of Hebrew University on Mount Scopus in Jerusalem, a decision made by the government rather than the university, as was the case in Belfast. According to Yacobi, relocating the university after the 1967 war had a fundamental role in judaizing Jerusalem.

Fabio Todeschini of South Africa also examined the roles and responsibilities of the university in shaping urban space in a place that was already contested. He noted that the University of Cape Town has undergone enormous change since the apartheid era; currently more than one-half of the student population is black, although the majority of professors are white. The development and real estate practices of these and other universities have both created and been affected by significant symbolic, economic and cultural changes in their countries.

The workshop participants agreed about the seeming contradiction between the importance of universities to their cities and political economies and the lack of formal study of this phenomenon. The meeting confirmed that, both locally and globally, universities have enduring, indeed even increasing, levels of importance in their cities and regions. It is also clear that land development policies are equally important to the universities, to the development futures of cities and to the policy relationship with the private market.

Barbara Sherry is a doctoral candidate at the University of Illinois at Chicago in the Department of Urban Planning, a research assistant at its Great Cities Institute (GCI), and an attorney.

The City and the University Project

The Lincoln Institute of Land Policy launched The City and the University Project five years ago, to study the changing relationships between universities and their immediate neighborhoods, cities and the society at large. The Lincoln Institute shares this interest in the role that universities play in their cities with many other organizations. However, our attempt to understand this role is motivated by questions regarding urban assets and the use of those assets.

According to the currently dominant paradigm of enlightened self-interest, universities engage the city with the realization that the economic well-being of the abutting community is directly correlated to its own health. Through this project we are attempting to articulate a philosophy that universities should serve society as a whole, not just their abutters. Our goal is to extend the thinking, conversation and actions of university-community-city relations beyond this paradigm.

Under the leadership of Rosalind Greenstein of the Lincoln Institute, David Perry of the Great Cities Institute (GCI) of the University of Illinois at Chicago, and Wim Wiewel of the University of Baltimore, key actors from every conceivable side of university real estate development practices (including university administrators and faculty, developers, city planners and managers, journalists, nonprofit groups, and members of federal and state agencies) have been invited to participate in workshops sponsored by the Lincoln Institute. Perry and Wiewel have edited a book of U.S. and Canadian case studies contributed by some of these participants. Titled The University as Urban Developer: Case Studies and Analysis, this book is being published this spring by M.E. Sharpe, Inc., in association with the Lincoln Institute.

As a natural outgrowth of their work in North America, Perry, Wiewel and Greenstein expanded their research collaboration with an international seminar built on case studies from several continents. The workshop in March 2004 generated papers that will become part of a new edited volume, tentatively titled The University, the City and the State: Comparative Studies of University Real Estate Development.

In 2005 the Institute will convene a roundtable of practitioners and scholars to examine the university-city relationship in a variety of dimensions, including political, historical and philosophical. Another course is intended for neighborhood groups located near universities that face impressive challenges because of the particular role universities play in their district and their city. The course offers such groups the opportunity to learn how to best use their resources, relative to their university neighbors, to improve their urban environment.

The Institute will also offer a professional training opportunity for private-sector developers who work with and for universities that are extending their boundaries as demand increases for new laboratories, residential spaces, athletic facilities and other amenities. In addition, we are developing a special Web site for the urban university project that will facilitate communication among and between practitioners, policy makers and scholars.

This article is adapted from a keynote address delivered by President Gregory S. Prince Jr. of Hampshire College in Amherst, Massachusetts, at a Lincoln Institute–sponsored conference in May 2003 at Lincoln House. Focusing on the topic “Universities as Developers,” the conference brought together some 40 college and university presidents and administrators who deal with real estate and development issues for their institutions.

“How do you build a relationship between an institution and the community in which it lives, in all of its forms?” This is a topic that I have struggled with for more than the 14 years I’ve been at Hampshire; building these relationships is an incredibly interesting process. I’m going to describe some of the salient points that have influenced the way I work on Hampshire’s community relations. It is not coherent. It does not start with a grand design. Rather, it’s inductive, based on my experiences and my observations. In addition, this interaction, this back and forth between thoughts and actions, between the college and the community, has been an important part of my own ongoing education about this critical topic.

This process for me began when I worked at Dartmouth College for 19 years. One of the things I found extraordinary at Dartmouth, which is so different from Hampshire, is that Dartmouth is taxed like any other institution, for profit or not, in the state. Because New Hampshire does not have the income tax or the sales tax, the town of Hanover is permitted to impose a property tax on all nonacademic facilities at the college. This tax policy has been in effect for decades, so it is an accepted part of life. People struggle over all the same issues that any academic community faces, but the conversation in town meetings is quite different when the college is paying just like anybody else. Granted, in Hanover tax dollars go to the schools where the faculty send their own children, so they have a vested interest. But, I saw a relationship between the college and the community that I found very healthy.

When I came to Hampshire College in 1989, everyone was talking about PILOTS (payments in lieu of taxes). I hadn’t thought much about PILOTS until I found out that the University of Massachusetts was making these payments to the town, and the town manager wanted Hampshire and Amherst College to start paying as well. So I learned to talk about PILOTS, but I felt there was something intrinsically shortsighted about the arrangement because it was based on a very narrow conversation about money and not about needs. Both Hampshire and Amherst colleges have made contributions to the town of Amherst for certain items, but we have not called them PILOTS, and we have not made them on a regular basis. Now, I am not saying that when a college or university does make a payment in lieu of taxes to a city it is necessarily a sign of an unhealthy relationship. All too often, however, the negotiations about what universities and colleges ought to pay to their host communities focus on the cost of police protection or snow removal, for example, rather than what it means to be part of a community with the rights and obligations that accompany citizenship, what are some of the critical needs of the community, and which ones could the institution most effectively address.

As I tried to figure out how to change the conversation, I wanted all of us to understand that we were having a dialogue. That is, when I’m having a conversation at Hampshire about the town, or with the town about Hampshire, I need to acknowledge that UMass and Amherst College are also part of the conversation. Wherever possible, we try to make sure that all three of us are communicating with the town; admittedly, this four-way conversation is complicated. I found in the process that the real discussion was about how to build sustainable communities. At Amherst College or UMass, sustainability is viewed differently than at Hampshire, a 33-year-old institution with little endowment. We need to figure out how to sustain our college over the long term within these different, complicated relationships. The PILOT conversation never seemed to quite get at that issue, so we’ve tried to expand it.

Broadening the Conversation

Two very different sets of experiences influenced my thinking about how to broaden and enrich the conversation with the community.

Urban Conferences

When I first arrived at Hampshire, I received a phone call from the chief counsel for the Transit Police in New York City, whom I had taught years before. He asked if Hampshire College would host a conference in association with the International Association of Chiefs of Police, bringing together representatives from several large urban communities. My first question was, “Great, but why Hampshire?” The response was that at that time, in 1989, people like Lee Brown (former police commissioner in New York City and now mayor of Houston) and Bill Bratton (former police chief of Boston and New York City, and now police chief of Los Angeles) felt that America had lost its cities but didn’t know it, and they were trying to figure out how to talk about it. They wanted to meet at Hampshire because it was the last place in the United States one would think would work directly with the police. The partnership that emerged between Hampshire and the International Association of Chiefs of Police did send a signal, and people noticed.

The conference brought together not just law enforcement officials but also the heads of all the major departments of ten major U.S. cities. Los Angeles dropped out at the last minute because of the Rodney King incident, but Atlanta, Boston, Chicago, New Haven, New York City, Phoenix, Seattle, Springfield and Tulsa were involved in the first group; other cities attended subsequent meetings. The police chiefs did not want mayors to come, because they wanted free and open discussion across professions and across cities. Because Hampshire paid for the conference, we were able to bring students into the process.

Among the most important outcomes of these conferences over several years was the creation of a forum for people involved in community schools, community policing, community health and other areas who never had a chance to converse, and that included the Hampshire students who contributed to an intergenerational discourse. In the first conference, we divided all the participants into groups, mixing professions and cities, and we gave them a four-block area of a fictitious city. Each group had three hours to write a proposal to a foundation on how they would use those city blocks to restore or revive the most problematic part of the city. They had access to unlimited funds, but out of the process came two critical principles that actually had very little to do with money and had everything to do with how people talk to one another and collaborate: (1) the need to have conversations across professions and across community boundaries; and (2) the need for every older adult committee or commission to have a younger counterpart organization. Guess who thought that one up? The students wanted to find a way to generate networks and initiate conversations in which common plans could be developed; they understood that no plan was going to succeed without that kind of cross-generational ownership. They came away with the realization that there is no single answer to what gets done; what is most important is how it gets done. Having conversations across boundaries, be they professional, historic, generational or institutional, may be the core value and core practice of community building.

We had three of these conferences over three years, and I think they had a profound effect on the strategic ways that people like Bratton and Brown and other law enforcement officers and community leaders changed their communities. These same principles of open conversation should be built back into relationships between colleges and universities and their communities. It’s not just about PILOTS or taxes. It’s about how you generate a conversation so that everybody is part of the process, respects the outcome and is committed to the sustainability of the community.

Cultural Village

The second set of experiences also began in my first year at Hampshire, a lovely campus of 1,200 students surrounded by 800 acres of farmland in Amherst, a small New England town in the western part of the state. Amherst also hosts the University of Massachusetts, a major state land-grant university with over 20,000 students, and Amherst College, with 1,600 students. A bus system links the colleges with the town, but many students complained that they were “in a little teenage encampment.” They wanted older adults and more activity around them so they could feel more connected to the community.

As I talked with people in the town and attended meetings on economic development issues, I learned that Amherst was fairly hostile to development. Lack of development intensified the feeling among town leaders that PILOTS were the possible recourse. As I began to understand that perceptions, strategies and concerns about development underlay the conversation about PILOTS, I began to look at land. Could land possibly help the community, since Hampshire had an abundance of land relative to available cash? Our land actually held the seeds for new possibilities in the form of creating a “cultural village.”

After many years of planning and negotiating, the grounds of Hampshire College are now being transformed into a center for nonprofit cultural and educational institutions that create more activity for the students and more economic activity for the town. The National Yiddish Book Center became the first new development when, in the early 1990s, it was looking for a new home. The center’s director, Aaron Lansky, is a Hampshire alumnus and he wanted to stay in Amherst where he had started the center. It took six years to persuade the boards of the college and the center to agree, but the center now has an absolutely gorgeous building with 40,000 volumes in the library. It runs tremendous events, bringing people together from all over the world. Hampshire College didn’t pay for it; the Book Center paid for it. But its building, its facilities, its activities and its staff are on our campus, enriching our life, putting people into our dining room, creating a more interesting intellectual environment for our students, creating economic activity for the town, and not using land that could otherwise be taxed.

The second member of the cultural village, the Eric Carle Museum of Picture Book Art, opened in the fall of 2002. One may well ask, “What does it do for Hampshire College to be the site of the first picture-book art museum in the U.S.?” The 40,000-square-foot building sits on land that Hampshire donated, but Eric Carle, the author of The Very Hungry Caterpillar, endowed the museum. It employs 18 people, including some of our students. So we’re enriching the faculty and cultural resources for our students, and the town of Amherst gets a large museum to sustain its economic base while limiting environmental impact on its land resources. Only 25,000 museum-goers were expected in the first year, but more than 40,000 attended in the first four months, bringing vitality to both the town and the college.

Intergenerational Viewpoints

These two experiences—developing the cultural village and learning from the urban conferences years before—make me feel that even though Hampshire is in a rural area, the principles that have guided community outreach are replicable even for large universities in urban environments. The key is to generate a conversation that crosses boundaries and in so doing weakens those boundaries. The process is ongoing and has led to many interesting new conversations.

Recently the town of Amherst approached me about developing open space on the edge of the campus for a commercial village center. The area now houses a well-known farm stand, but the town wanted to expand the amount of commercial activity. Through open conversation with the community, college trustees, students and residents, the land was purchased and given to Hampshire with the proviso that it be used to generate income to support the college. At the first public hearing on what to do with the land, we invited the entire community. All ages were present. A group of Hampshire students came to the meeting intending to argue against development; they wanted the area kept as open space. However, the first citizens to speak were in their 70s and 80s; they tore us apart about how terrible it would be to develop this area and how they had bought their apartments nearby because of this open beautiful land. In truth, their retirement community had been built while I was the president of the college, so I knew it, too, had been built on open land. Their attitude was, “we’re here and now we don’t want any more development.” The students understood these arguments, but found themselves thinking about how they wanted to behave when they were 75 years old. They didn’t want to imagine themselves as being opposed to growth and change, so this intergenerational conversation made a difference in their attitudes. Talks have continued and the plan is still in development, with a target date of spring 2004 to present it at town meeting.

Principles of Sustainability

Developing the cultural village and new developments in academic curricula converged to make sustainability an increasingly important issue. Suddenly, the cultural village was also becoming a laboratory. When the faculty, in response to issues in the cultural village, proposed seeking funds to do a sustainable campus plan focusing on the natural environment, I suggested that the most important principle in the plan be sustaining Hampshire College. My statement generated a very constructive conversation about what sustainability should mean for Hampshire. Let me summarize the principles that we developed.

1. The core goal in planning for the college must be the school’s long-term sustainability as an educational institution committed to providing students with the most constructively transforming liberal arts education possible.

2. In pursuing the first goal, the college must strive for human sustainability—for maintaining and enriching our capacity to live well together, for providing for the economic well-being of those who work at the college, and for nurturing their creative spirit and sense of fulfillment that comes from working at the college.

3. In pursuing the educational and social goals, we must recognize the fundamental relationship between the goals and the physical environment, and strive to achieve the sustainability of that physical environment to the greatest extent possible.

4. In pursuing the core goals of sustaining the college as an educational institution, we must strive to ensure that as an institution, independent of what its graduates accomplish, what we do makes a difference locally, nationally and internationally. Success in achieving the first three goals will ensure that we take a significant step in achieving the fourth goal. In effect, our primary aim is to provide the best education we can. We must model the behavior we expect of our graduates.

5. In pursuing educational and social sustainability, we must encourage entrepreneurial activity, invention and innovation, even if it entails the risk of failure.

6. In sustaining the human spirit of the college community, economic needs must be met, but with the recognition that we must also offer a meaningful mission, a stimulating and creative intellectual environment, and a supportive and enriching physical environment.

7. In seeking to create a sustainable, healthy and enriching social environment, the practical must be balanced with the artistic, the physical and rational with the contemplative, the values of individualism with those of community, and the needs of the college with those of the larger community.

8. In seeking to create a sustainable physical environment, efficient use of energy should be the highest priority, followed by other resource uses and resource disposal. Appropriate land use must be made another high priority. In maintaining the physical plant, we should consider the ease and efficiency of maintenance in terms of those who perform the work, as well as the level of resources needed to carry it out.

9. Wherever possible, physical infrastructure changes should include visible demonstration or interactive educational displays designed to educate about sustainability.

10. The cost of innovations in programs or in the physical environment should include the endowment required to ensure that those who follow us will not be burdened with their maintenance. The projects should be designed so they can be converted to other uses, removed or terminated.

The Board of Trustees reviewed the ten principles of sustainability, then challenged us on how we will interpret and implement them. In the process of working on these tasks, additional guidelines began to emerge:

1. Process is important: conversation and explorations can uncover interests as opposed to positions.

2. Geography matters. It may not be destiny, but it has a great deal to do with it and how you have to build and grow.

3. Focus on the culture, the economy and the environment comprehensively, not as separate subjects in conversations and plans, and involve them early.

4. Involve the community.

5. Involve young people, especially high school students, in any community planning.

6. Promote interdependence.

While these guidelines answer some questions, I struggle with other questions. One of particular importance to me currently is the issue of contiguity. Do our endeavors need to be within our current campus or town or can we successfully move into other communities? The five colleges in the region (Amherst, Hampshire, Mt. Holyoke, Smith and UMass) already work together on many joint programs and all of us have done a great deal of work in Holyoke, a small city about 15 miles south of Amherst that exemplifies all the problems of urban America.

We spent a lot of time trying to encourage UMass to move its art department to an old warehouse in Holyoke. We felt it would be a major boost to the community, but it looks as though it will not happen for equally legitimate reasons. Moving an academic department geographically from the rest of the academic community will increase intellectual isolation and fragmentation. Other ideas include building a five-college dormitory in Holyoke, and that possibility raises equally complex questions related to contiguity and community citizenship.

In both projects the issue is contiguity. Must you always maintain your place as a central, unbroken whole, or can you move outside of your special place? That’s the challenge. I think Hampshire has to somehow build a presence in Holyoke. We have made a huge investment there already, and I believe the city has incredible potential. I think we have to face the issue of opening ourselves up physically, not just maintaining the boundaries of our space but carrying ourselves outside of the institution as well. But others resist. What is exciting is the conversation and the process of engaging all of the related communities in that dialogue.

Gregory S. Prince Jr. is president of Hampshire College in Amherst, Massachusetts.

Over the past 25 years, there has been a dramatic increase in the acquisition of conservation easements by nonprofit organizations. Privately held conservation easements, i.e., those held by nonprofits rather than governmental entities, have thus emerged as an important and growing tool for the preservation of natural and scenic features of the United States landscape.

Many scholars and analysts have suggested that public leasehold systems could allow governments to benefit from a share of future increased land value. Some have even argued that other policy objectives, including stabilizing land prices, controlling land uses and facilitating land redevelopment, could also be achieved through public land leasing. Although these proposals are persuasive at the theoretical level, there is only limited evidence to prove that governments could achieve these policy goals in practice. My research on Canberra and Hong Kong, which have two of the world’s most well developed leasehold systems, examines some of the benefits and problems of public land leasing.

Land Value Capture

Legal scholars have treated property in land as a bundle of rights. According to this perspective, the government can retain the right to own land and assign to a private party the right to use, develop, transfer, inherit and benefit from land. The private party can enjoy the land rights only for a specified time and as stipulated in the land contract. Theoretically, because the government is the landowner, it could retain a portion of the land value increments by asking a lessee to pay:

• a lump sum of money-called an initial land premium-at the beginning of the lease,
• an annual land rent,
• a premium when the lessee modifies lease conditions to acquire additional rights for land redevelopment, and
• a premium for renewing the land rights when the lease expires.

The Hong Kong leasehold system seems capable of helping the government recoup a large portion of development windfalls from landholders. For the period 1970-1991, I found that the government recaptured, on average, 39 percent of the increased land value from selected land sites through land leasing. This captured value financed an average of 55 percent of the annual infrastructure investment during the same period. (1)

More important, the money collected from leasing is not a substitute for property taxes in Hong Kong. Owners of residential properties must pay annual rates to the government that are 5 percent of the estimated rental value of their flats. Owners of commercial real estate pay a 15 percent property tax on income earned from their rental premises. Combining all land-related revenues, the Hong Kong government could recover, on average, 79 percent of the annual costs of public infrastructure investment.

In Canberra, by contrast, the percentage of infrastructure investment funded by lease revenues was only 5 percent. (See Figure 1.) There are at least two reasons for the difference: the abolition of land rent for residential leases and competition from other cities that weakens government’s ability to collect higher rents on public land.

In the first instance, then-Prime Minister John Gorton abolished all land rent for residential leases in 1970, an action that his opponents charged was designed to rally public support for his reelection. It was estimated that the government transferred 100 million Australian dollars in equity to lessees at that time, resulting in the loss of an important source of revenue. This incident raised the broader issue of politics in public land management, although leasehold systems do not necessarily induce “rent-seeking” behaviors for private or political gain.

Hong Kong’s government seems able to minimize this problem by establishing a tight internal control over the operations of leasing land. It also provides public officials with generous remuneration and fringe benefits to reduce the temptation of corruption. This demonstrates that, in designing a public leasehold system, a government must consider the need for a system of checks and balances to prevent opportunism or political maneuvering. No single person or department within a government should have the unchecked power to decide on the method and timing of allocating land resources.

The second reason for Canberra’s low lease revenues is its keen competition from other Australian cities in attracting capital. If the city government charged high land premiums and rents, businesses and industry would go to other cities. Thus, competition weakens the government’s bargaining position in negotiating with developers on the amount of land premiums or rent for leasing public land. Although Hong Kong also faces competition from other Asian cities, such as Shanghai, Singapore and Taipei, differences in taxation, government structure, business ethics and culture make capital flight less likely in Hong Kong.

This issue of competition is particularly important for developing economies where local governments are eager to attract investment. They may be willing to compromise by collecting a smaller amount of land premiums and rent from both domestic and foreign land investors. The use of land as a source of public funds may require some level of inter- or intra-regional cooperation to prevent developers from playing one government against another.

Land Speculation

In Hong Kong the government’s reliance on land revenues as a source of public funds presents another problem: its financial interest in land conflicts with its public role in stabilizing land prices. The government has relied heavily on initial land premiums because demanding premiums from lessees during lease renewals has proven to be politically difficult. In addition, the assembly of land rights for land redevelopment involves high negotiation costs because most land leases in Hong Kong have multiple leaseholders. These high costs deter private developers from undertaking land redevelopment by acquiring lease rights and modifying contract conditions. As a result, the government is unable to utilize this method fully to recoup land value. As for the land rent, before 1997 the amount of annual rent paid by lessees was fixed and bore no relationship with increases in land value. Hence, the amount of land rent collected has been minimal. (2) (See Figure 2.)

These difficulties have encouraged the government to retain land value at the beginning of the lease. Yet, this method can work only if officials lease land slowly to private developers. A rapid disposition of land when its value is low would impede the government’s ability to recoup land value in the future. Restrictions on land supply, however, have encouraged private land banking and property speculation, leading to high land and property prices and making Hong Kong one of the world’s most expensive cities. (3)

Officials of other countries could avoid this problem by relying more on lease renewals, contract modifications and the annual land rent than on the initial assignment of leases to capture land value. The plausibility of doing so, however, remains an empirical question. The experiences of Hong Kong suggest that such an attempt could encounter strong public resistance and high negotiation costs.

Managing Land Uses

In principle, public leasehold systems allow the government to manage urban growth by incorporating land use regulations into land leases. If lessees do not develop their land according to the lease provisions, the government has the right to take back the land, a contractual right not available to the government when land is privately owned.

To take full advantage of this special land right, the government must be capable of enforcing the contractual agreements. Despite having the ability to repossess land, there is no evidence to show that enforcement costs under public leasehold systems are lower than those found under freehold systems. This is partly because drafting a complete land contract is impossible. Neither public officials nor the contracting party has perfect information, so they cannot account for all contingencies when they negotiate. Contract language is imperfect and subject to interpretation, creating enforcement problems.

In 1995, a special committee was established in Canberra to review its leasehold system.(4) Analysts found that enforcing the lease purpose clause was a major problem in a town called Fyswick because the lease conditions were too complex and ambiguous. Local officials could not evict lessees who breached their contracts. Rather, they gave lessees an amnesty period to regularize their land uses by applying for lease modifications. In the end, lessees paid their modification premiums, but analysts who conducted the study argued that their payments were far less than the fair market value of the land rights obtained by lessees.

In Hong Kong, using lease conditions to control land uses has created a different problem. Although land contracting could give the government the flexibility to control land development in detail on a case-by-case basis, it is extremely inflexible in adjusting to changes in the overall zoning plan over time. As mentioned earlier, the government incorporates land use regulations into land contracts as conditions at the beginning of the lease. Unless lessees initiate a lease modification, these conditions will remain until the lease expires, which could be as long as 50 years in Hong Kong (and 99 years in Canberra).

When the government needs to update the master plan or revise land regulations to accommodate new urban development, the revised rules may be inconsistent with lease conditions established years ago. This problem has created confusion about which planning standards developers in Hong Kong should follow. To make matters worse, any regulatory changes that infringe on the lessees’ contracted land rights may trigger lawsuits against the government. The legal liability has impeded the government’s ability to modernize its land use plan for districts where outdated lease purpose clauses are still in effect.

Urban Redevelopment

Under public leasehold systems, the government can deny a lessee’s application for lease renewal if it needs the land to rebuild the neighborhood or for other public purposes. It can then take back the land and compensate the lessee only for the building. Thus, in theory, leasing should reduce the public costs of land acquisition for urban renewal or other public uses.

The government, however, must wait for leases to expire before it can assemble land for urban renewal. The long duration of land leases could again create a problem. Nor is there evidence that compensation negotiations for buildings are simpler than for both land and buildings. In Hong Kong, issues of holding out and disputes over compensation are as common as in countries where land is privately owned.

Conclusion

The difficulties that Canberra and Hong Kong face in leasing public land show that leasehold systems in and of themselves do not resolve land management problems. This does not mean, however, that leasing is not a viable means to manage land. In Hong Kong, the government retains a large portion of increased land value for public infrastructure investment. Canberra’s public leasehold system enables the government to obtain low-cost land for building the Australian capital.

The important lesson is that policymakers should not set unrealistic expectations on what public leasehold systems can achieve. Failure to deliver their promises could frustrate a well-intended reform and bring the effort to a halt. Because no land tenure system is perfect, the debate should not focus on the choice between leasehold and freehold systems. They are not mutually exclusive. Instead, future research should concentrate on designing specific institutions according to different political, economic and social contexts to minimize problems associated with both systems.

Yu-Hung Hong is a visiting fellow of the Lincoln Institute this year. He previously taught at Hong Kong University of Science and Technology in the Division of Social Science, after earning his Ph.D. in urban planning from Massachusetts Institute of Technology.

Notes

1. See Yu-Hung Hong. 1996. “Can Leasing Public Land be an Alternative Source of Local Public Finance?” Working Paper, Lincoln Institute of Land Policy.

2. See Yu-Hung Hong. 1998. “Transaction Costs of Allocating Increased Land Value: Hong Kong.” Urban Studies 35, 9: 1577-1595.

3. See Yu-Hung Hong and Alven H.S. Lam. 1998. “Opportunities and Risks of Capturing Land Values under Hong Kong’s Leasehold System.” Working Paper, Lincoln Institute of Land Policy.

4. Members of the committee included Justice Paul Stein, Patrick Troy and Robert Yeomans. Findings of the review can be found in the Report into the Administration of the ACT Leasehold, published by the government of the Australian Capital Territory in 1995.

Universities are involved in the development of their immediate neighborhoods for a variety of reasons. For some, it is a matter of self-preservation and marketing, as neighborhood deterioration and disinvestment can negatively affect student enrollments. Other institutions are driven primarily by the need for new or updated facilities, such as laboratories, classrooms, student housing or athletic fields, which require expansion beyond existing campus boundaries, or by a long-standing commitment to neighborhood redevelopment. However, in tight urban real estate markets, where renters and low-income households already feel the threat of displacement, university expansion plans can serve to intensify residents’ apprehensions and lead to complicated land use disputes.

Universities have responded to disinvestment and dilapidation in their neighborhoods by using a variety of strategies. These include the acquisition and rehabilitation of abandoned buildings or vacant properties; support of faculty and staff home ownership in the area; improvement of local public services, including public schools and public safety programs; redevelopment of key nonresidential and commercial properties; and, at times, the encouragement of community involvement in the redevelopment process. New development often requires a fresh approach to architecture and urban design, since historically many institutions deliberately cut themselves off from their neighbors. Steve Cottingham, of Marquette University in Milwaukee, refers to this new approach as “weaving in, rather than walling out.”

Even when universities succeed in securing new development sites, they have to balance many competing demands. For example, donors favor signature buildings; the city requires regulatory compliance; neighborhood activists call for input into the school’s expansion plans, as well as benefits from that expansion; parents want a safe environment for their children; and students desire retail and entertainment options, as well as housing and security. Meeting all of these demands is difficult and none of the possible responses speaks directly to furthering the core educational mission of a university.

Roles and Responsibilities of Urban Universities

Last February, the Lincoln Institute, the Great Cities Institute of the University of Illinois at Chicago and the Urban Land Institute convened a group of executive-level university administrators involved in real estate decision making to address these issues. The seminar participants discussed specific real estate development cases as well as general concerns, such as finance and taxation, internal organizational structures, working with developers, and community involvement. Participants were interested in the technical aspects of urban development, but also in the expectations and accompanying responsibilities placed on universities in an urban context.

Universities remain one of the few examples of long-established, place-based institutions in urban areas, and they typically have a significant physical presence in their communities. While their faculty, staff and students place many demands on local public and private services, from increased traffic and police protection to escalating housing costs, universities also provide considerable cultural, social, intellectual and economic benefits. The well-known identity of most universities contrasts with that of private-sector corporations that frequently merge and relocate to suit their changing needs and to respond to the highly competitive, globalized economy. Universities typically do not have this option, so they depend on (and contribute to) the health and vitality of their local communities to protect their vested interests. The quality of the surrounding environment directly affects the competitive advantage of a university, which is crucial to attracting and retaining the best students and faculty. In turn, communities increasingly look to universities to fill the gaps left by departed corporate leadership.

Broad Street Development in Columbus, Ohio, exemplifies this kind of university-community interdependence. Campus Partners, a nonprofit redevelopment corporation started by Ohio State University, has secured the purchase option for this 1,400-unit, scattered-site public housing project. Broad Street’s Section 8 contracts from the U.S. Department of Housing and Urban Development (HUD) have expired or are about to expire. Typically, when the federal government restructures or extends these contracts there is a significant reduction in the rent subsidy available to low-income households and little or no money available for rehabilitation of the properties. Campus Partners is working with local organizations to implement a better level of management and structural rehabilitation than is typical for Section 8 projects. Although this housing redevelopment is unrelated to Ohio State’s mission, and the university was initially reluctant to take on the responsibility, when faced with the likelihood of continued physical decline near the campus, the university decided there was no other option than to pursue the project.

As universities expend resources on local revitalization projects, they often set other forces in motion that may alter or threaten the cultural and demographic identity of the neighborhood. Real estate development can contribute to increases in the value of the land and community amenities, but it can also displace existing residents and businesses that cannot compete in tighter and more expensive land and housing markets. Seminar participants debated the responsibility of universities to address neighborhood gentrification and housing shortages due to rising land markets in the same way they previously responded to neighborhood decline. The University of Chicago, for example, has long invested in making its neighborhood an attractive residential community. Now, that strategy is being challenged because many long-term residents, both university employees and other urban dwellers, can no longer afford to live there.

Universities also face challenges from falling land markets. For example, some universities are surrounded by privately owned housing that caters to students, and those landlords often engage in short-term management practices to maximize their profits. Substandard property maintenance, coupled with high turnover of rental units, can lead to rapid deterioration in the housing stock. This behavior can either start or reinforce the process of declining property values and neighborhood deterioration-a process that fails to benefit either the university community or the neighborhood. Such a situation recently motivated the University of Pennsylvania to enter into a partnership with the Fannie Mae Corporation, First Union Bank and Trammell Crow Company to preserve and develop moderate-cost rental housing options for the broader community, and to provide high-quality management of the units.

Employer-assisted housing (EAH) strategies have also been used by the University of Pennsylvania and other universities to promote home ownership for their faculty and staff. Jim Gimpel, of the University of Illinois at Chicago, underscored the value of developing housing for staff, including the custodial, clerical and food service workers who are crucial to a university’s operation yet are among the lowest paid employees. With EAH, a university provides financial incentives, such as down-payment assistance, forgivable loans or a mortgage guarantee, to help employees purchase existing local homes. In some cases, a university may even develop the housing, but will rarely manage it. Sandra Lier, now at the University of Washington, drew on her experiences at the University of California at Irvine, which developed a faculty housing complex. After it was completed, an intermediary took over the management of the housing so that applications and complaints would be handled by the management firm rather than the university itself.

Town-Gown Tensions

Increasingly, communities are holding universities accountable for their development actions that affect the surrounding neighborhood. Historical town-gown antagonisms, coupled with the high expectations that communities hold for universities, mean that good will is more easily eroded than earned. For example, in the mid-1990s, without public input or consultation, Marquette University decided to close a major thoroughfare to traffic and create new green space for the campus. Although the plan was never carried out, the university lost much of the good will it had gained through earlier, highly successful development projects.

Openly discussing university plans with the community can help keep a project on track and avoid compromising situations when unforeseen obstacles arise, according to Terry Foegler of Campus Partners in Ohio. For example, the University of Minnesota, Twin Cities recently implemented a mandatory Neighborhood Impact Assessment that makes the university’s planning vision accessible to the public and requires the university to consider alternatives to its master plan, including the option to stop building in certain locations.. However, while community groups want universities to make their plans known, university real estate developers are generally averse to publicizing their acquisition plans, and they commonly establish a 501(c)(3) nonprofit corporation when purchasing land or properties. By buying “blind” (i.e., blind to the seller), the university is protected from the likely premium that sellers would demand were the buyer (and its presumed deep pockets) known. This is an example of how universities are often held to higher standards of development, and it is one area where the university and the community will likely continue to disagree, according to seminar participants.

The contentious issue of tax-exempt status for nonprofit educational institutions was addressed at the seminar by Joan Youngman, senior fellow and director of the Lincoln Institute’s taxation program, and Bill Stafford, finance director for the City of Evanston, Illinois, the home of Northwestern University. After churches, universities are in the strongest legal position with respect to their tax-exempt status. Still, the issue is confusing because vested interests are clear, yet are clearly in opposition. In practice, the property tax is a hybrid consisting of a user charge for services and a wealth charge based on the property’s value. Many municipalities favor user charges or fees-for-services, as opposed to property taxes, to obtain revenue from a university, and the race for revenue can lead municipalities to creative ideas. For example, one California city wanted to charge a university for its scenic view. Universities, on the other hand, feel there is some ambiguity with respect to what benefits they actually receive from municipalities, since universities provide many of their own services, such as street plowing and campus police protection.

Despite the controversial negotiations between universities and municipalities around property taxes and payments in lieu of taxes (PILOT), the actual payments may be relatively small, according to Youngman. Depending on the size of the city and the diversity of its local economy, the university payment may not be a meaningful share of local revenues, and several seminar participants confirmed this observation. Smaller cities tend to look to their universities as a more important source of revenue than do large cities, and controversy over tax-exempt status tends to escalate when universities expand their activities beyond their traditional and clearly academic roles. For example, when a university owns property that contains not only research offices and laboratories but also a bookstore, a Starbucks and a Kinko’s, should it be tax-exempt? Frank Mares, of DePaul University in Chicago, described a mixed-use project in which specific university uses are tax-exempt while the parking garage and retail spaces are taxed, essentially creating separate taxing districts.

Stafford of Evanston pointed out that there are legitimate public policy questions regarding the uses and abuses of nonprofit organizations. The nonprofit status of universities stems from the long-held belief that they contribute to the public good. However, this privileged status was based on an implicit understanding that the university did not make a profit on its activities. There are currently numerous examples of ways universities challenge this assumption. For example, when professors market themselves as consultants, working from their university-provided offices and capitalizing on the university’s “brand name,” are they acting in the public interest? Furthermore, the endowments of many universities exceed the operating budgets of the cities and towns in which they reside. Stafford concludes, “the university, at best, is a subsidized citizen.”

Yet, from the perspective of the university, increasing competition has forced universities to walk a fine line between remaining faithful to their missions and vying with other institutions to recruit and retain students and faculty, and to meet ever-growing demands for newer athletic and academic facilities, bigger and better dorm rooms, or more sophisticated telecommunications resources. The role played by universities in their communities has altered considerably over the past few decades and, at a minimum, further clarification of public policy intent and tax law regarding tax-exempt status needs to be revisited.

While the university must address the concerns of its local community, it also faces pressures to respond to broader regional goals. Local governments increasingly view universities as engines of economic development-both programmatically and physically-and as “economic anchors” in the city. Norma Grace, of the University of New Orleans, remarked on a common expectation that universities will create jobs and help local entrepreneurs, yet due to increasing budget demands universities have few resources to support this community goal. As one participant put it, the university cannot be only a real estate developer, because there are consequences to its actions; it needs to be a community developer as well. Hank Webber, of the University of Chicago, stated, “We’re not malevolent, we’re just wrong a lot of the time.”

Best Practices for the Future

Because most universities will remain in their current locations indefinitely, their futures will continue to be intertwined with their surrounding neighborhoods. However, the inevitability of future change and persistent development pressure highlights the differences between universities and the private real estate sector. Profit and speed motivate private developers-two qualities not usually associated with universities, particularly public institutions. Furthermore, given the broader mission of a university, short-term, market-oriented thinking is not always suitable. It is clear that future prospects for university expansion remain a complex challenge, especially in urban areas where land available for development is limited and expensive.

This seminar was intended to begin a dialogue among university officials responsible for campus development, and it will reconvene next year in an effort to add to our knowledge of the ways urban universities’ real estate development activities contribute to the revitalization of their cities. Many seminar participants expressed an interest in institutionalizing community and real estate development practices, and they stated a preference for examining cases in depth, with input from city officials, community leaders and university administrators, to uncover the complexities of an individual project. Seminar cochairs David Perry and Wim Wiewel, of the University of Illinois at Chicago, have begun collecting such cases to use in future seminars and to broaden the ongoing debate on this topic.

Allegra Calder is a research assistant and Rosalind Greenstein is a senior fellow and cochairman of the Planning and Development Department at the Lincoln Institute.

Despite the growing popularity of urban agriculture, many city farms continue to face the challenge of insecure land tenure and overly restrictive public policies. Some researchers and policy makers have identified the need for an updated framework for the movement that would support urban farmers as they navigate land use, zoning, and property tax regulations. Community land trusts (CLTs) are contributing to this structure, providing a locally controlled approach to land use that fosters community activism and engagement while responding to evolving market conditions and neighborhood needs.

The State of Urban Agriculture

“Urban agriculture” refers to both commercial and noncommercial activities, within or near a city center, that produce food and non-food items to serve an urban area (Mougeot 2000). While city farms and community gardens are often the public face of urban agriculture, small-scale backyard growing spaces and edible landscapes also yield a significant portion of production.

Urban agriculture has afforded communities diverse environmental, economic, and social benefits, including improved nutrition, heightened food security, ecological restoration, the creation of open spaces, and opportunities for education and job skills training (Bellows, Brown, and Smit 2004; Kaufman and Bailkey 2000; Smit, Ratta, and Nasr 1996). City farming also has the unique ability to bring together diverse populations, build social capital, and promote empowerment through community building (Staeheli et al. 2002). In legacy cities—older industrial centers that have suffered from sustained job and population losses and ensuing financial, social, and political changes—urban agriculture has been extensively used as both an interim and a permanent development tool to strengthen social cohesion and catalyze progress in disinvested neighborhoods. The process of repurposing vacant and abandoned lots into growing spaces can be a relatively quick and inexpensive strategy that yields highly visible impacts and improves public safety.

Given these wide-ranging benefits, urban agriculture has enjoyed a renaissance as a social movement. In recent years, some cities and local governments have updated public policies to make them more supportive of urban agricultural practices. The movement is not without its challenges, however, including environmental safety concerns and insecure land tenure (Brown et al. 2002). Land insecurity in particular is frequently cited as the greatest barrier to the implementation and sustainability of city farming (Lawson 2004; Yuen 2012). A 1998 national survey of more than 6,000 urban agriculture sites found that 99.9 percent of gardeners saw land tenure as both a challenge and a vital element to the future success of the movement (ACGA 1998).

In these instances, land insecurity occurs when the cost of market-rate land exceeds the income generated from agricultural activities. Ultimately, the hidden hand of the market presses for the allocation of land according to its highest and best use. Due to this dominant conceptualization, planners and policy makers have historically viewed urban agriculture as an interim measure to keep a site active until higher and better uses can be developed. Scholars note, however, that urban agriculture sites can produce many positive spillover effects related to public health and community wellness, and these benefits are difficult to monetize (Schmelzkopf 1995). Traditional exchange valuations of land rarely reflect a community garden’s contributions to healthy food education and the physical wellness of residents. This disconnect between social worth and market values has been the impetus for both public and private interventions.

Local governments typically respond by purchasing tracts of urban agricultural land, effectively insulating them from speculative market forces while also holding them off the tax rolls. While this public sector approach has been critical, it sometimes fails to provide long-term security, especially when administrative changes in local governments lead to shifts in priorities and strategies, as when New York Mayor Rudy Giuliani proposed to auction off 850 community gardens across the city in 1999. Therefore, researchers have focused on the need for alternative strategies that can complement public sector efforts to support the security of land for urban agriculture.

CLTs as a Framework for Urban Agriculture

A CLT is a nonprofit, community-based corporation with a place-based membership, a democratically elected board, and a charitable commitment to the use and stewardship of land on behalf of the local population. CLTs typically retain permanent ownership of land and lease it to individuals or organizations that own the improvements upon the land, such as residences, commercial buildings, and agricultural or recreational facilities. The CLT model offers a way to retain ownership of land stewarded by and for the community, so that the highest or best use of property can remain community-defined, community-controlled, and adaptable to changing conditions.

Although CLTs have focused on the development and stewardship of affordable housing in recent decades, the movement originated in response to agricultural land issues in rural Georgia during the 1960s. Even earlier agricultural influences included the kibbutzim in Israel, the Gramdan villages in India, and the Garden Cities of Ebenezer Howard (Davis 2010). The strength of the CLT model lies in its ability to balance local land control and long-term, stewarded development that addresses changing community needs. Thus, CLTs are well positioned to tackle a diversity of land uses through comprehensive development strategies. Legacy cities may be especially ripe for CLT engagement, as the widespread availability of vacant land has spawned a flourishing urban agriculture movement, but with less emphasis on long-term land security.

Our research found that CLTs have supported urban agriculture projects in three distinct ways: by securing access to agricultural land, providing programmatic support, and engaging directly in food production.

Box 1: 2012 Survey of U.S. CLTs

In the fall of 2012, the National Community Land Trust Network (NCLTN), in partnership with the Lincoln Institute of Land Policy, commissioned a study of urban agricultural and commercial projects conducted by U.S. CLTs (Rosenberg and Yuen 2012). The inquiry examined the role of CLTs in implementing nonresidential projects and assessed the benefits and challenges of such ventures. Researchers distributed a web-based survey to the 224 organizations in the NCLTN database; 56 CLTs (25 percent) completed the questionnaire, and 37 CLTs reported agriculture activities. Twelve CLTs were selected for in-depth data collection, which captured a diversity of projects with varying levels of success in different locations. A case study approach was used for data collection, which included gathering organizational documents and secondary sources as well as interviewing CLT staff. The final working paper is supported by an additional project directory resource that highlights the projects and organizations in the study (Yuen and Rosenberg 2012).

This article draws on that research to examine the benefits, challenges, and considerations for urban agriculture activities by CLTs. It also explores how such interventions can support comprehensive community development efforts, particularly in legacy cities.

Securing Access to Agricultural Land

The core competencies of CLTs best lend themselves to the task of securing growing space. A central mission of CLTs is to secure land for community development opportunities. To carry out this role, CLTs have utilized diverse tenure arrangements, including fee-simple ownership, ground leases, easements, and deed restrictions (table 1). These arrangements are not mutually exclusive; organizations can employ multiple techniques to secure land both within and across agricultural projects.

Fee-Simple Ownership

Fee-simple ownership allows a CLT to hold the greatest number of sticks in the bundle of ownership rights and provides a high level of land security, as long as it meets all mortgage payments and tax obligations. For example, Dudley Neighbors Incorporated (DNI), a CLT in Roxbury, Massachusetts, redeveloped the contaminated site of a former auto garage into the 10,000-square-foot Dudley Greenhouse, which functions both as a commercial farm and a community growing space. DNI secured the land through fee-simple ownership and leases the greenhouse structure at a nominal charge to a food-based nonprofit that handles all agricultural programming and maintenance. Harry Smith, Director of Sustainability and Economic Development at DNI, notes, “Growing food is a whole different thing, and we are not looking to take that role.”

Ground Leases

While fee-simple ownership is an uncomplicated, highly secure tool, it is often prohibitively expensive for CLTs to purchase urban land outright for food production. Given this challenge, some CLTs have utilized ground leases to secure growing land. The Southside CLT (SCLT), for instance, has a 10-year ground lease with the State of Rhode Island on a 20-acre farm in Cranston. In turn, the Southside CLT manages the farm as the master tenant and subleases plots to seven start-up farmers at nominal rates. The affordability and security of the ground lease creates opportunities for young farmers to incubate new businesses and participate in the local food system. A strong ground lease, with rigorous standards for performance and conditions for renewal, can provide comparable or greater security than fee-simple ownership. However, longer-term ground leases can be challenging to draft and implement, especially when the title-holding entity desires long-term flexibility.

Conservation Easements

CLTs have also secured access to land through conservation easements, or voluntary restrictions that permanently limit the uses of the land. Most commonly, the CLT holds an easement donated by a private owner. The private owner retains title and can even sell the grounds to another party without compromising land security, as the conservation easement ensures long-term access to the agricultural space. Easements can also reduce the management burden on the titleholder, as the recipient of the easement often provides land stewardship services as part of the exchange. This strategy can financially benefit titleholders, who receive local and federal tax benefits for donating conservation easements. While easements can effectively sustain access to growing space, the relatively high legal cost may be expensive, especially for smaller tracts.

Deed Restrictions

Deed restrictions can effectively place limitations on the uses of land and are often tied to specific funding sources. While a deed restriction can ensure that land is reserved for a specific use, it does not necessarily offer secure tenure for a specific grower or farmer. Further, deed restrictions are effective only when all parties and external agents choose to enforce the contract. Each tenure arrangement has relative strengths and weaknesses and is best utilized when tailored to a project-specific context. In Wisconsin, for instance, the Madison Area CLT was required to grant a deed restriction to the City of Madison as a condition for funding the Troy Gardens mixed-use development site. A deed restriction was placed over a portion of the site, limiting uses to agricultural and conservation projects. The CLT’s failure to abide by the terms of the deed restriction, however, would trigger immediate repayment of all subsidy funds provided by the city.

Programmatic Support

As the task of securing agricultural land can be very challenging, it may not be a suitable undertaking for every organization or community. Some CLTs have supported urban agricultural efforts through other means, such as program management, technical assistance, and other agricultural services. In Georgia, for example, the Athens Land Trust is a dual-mission housing and open space land trust that has engaged in urban agriculture exclusively through program assistance. Athens Land Trust chose to take on this role because of the high holding costs associated with property taxation policies in Georgia, which assesses CLT land at the unrestricted market value. The Athens Land Trust partners with public- and private-sector landowners to provide support for local agricultural projects. For instance, the Athens Land Trust staff worked with the Hill Chapel Baptist Church congregation to design a community garden on church-owned land and provided support services, such as testing and tilling of the soil, organizing workdays, and providing plant materials and instructional gardening workshops.

Agricultural Production

Finally, some CLTs have participated in agricultural production, directly and actively farming land. For example, the Southside CLT operates a three-quarter-acre commercial farm in Providence, Rhode Island, growing greens and selling produce directly to local restaurants. Many CLTs support agricultural production indirectly as well, by providing residential properties where the residents themselves grow food in backyard gardens. Hence, many CLTs have unknowingly supported urban agriculture for years, simply by offering affordable and secure access to tillable land in cities. Some groups, such as DNI, specifically design larger home ownership lots to enable opportunities for backyard urban gardening. Harry Smith of DNI explained, “As we did our community planning, people were very clear that they wanted to see open spaces and attention paid to the residents’ quality of life. We are trying to build [agriculture] into the housing itself.” In this way, the scope of CLT agricultural production can also include innovative design features, such as edible landscapes, food forests, and other permaculture concepts that are intentionally and systematically incorporated into a development plan.

Benefits of CLT-Supported Urban Agriculture

Ultimately, the study found mutual benefits between urban agriculture and CLTs. City farms enhance the value of CLTs by helping organizations expand their development vision to include a more comprehensive set of neighborhood needs and priorities. All communities have a variety of needs beyond affordable housing, and agricultural projects can create linkages to other key issues, including food security, health education, vacant land remediation, and neighborhood safety. Agricultural projects can even be seen as neighborhood amenities, potentially increasing demand for nearby CLT properties or residences in the conventional market. For example, the Church Community Housing Corporation (CCHC) developed the Sandywoods Farm project in Tiverton, Rhode Island, to include a mix of residential, agricultural, and arts-related programming. The CCHC initially marketed the development solely as an arts community, but prospective residents expressed strong interest in the community garden and in farmland preservation. Consequently, CCHC rebranded the project as an “art and agriculture” development. Brigid Ryan, senior project manager of CCHC, explained, “The agriculture has taken off much more than we ever thought it would. The garden is actually drawing some people [to the rental housing units]. They never thought their kids would be able to grow their own food.”

Beneficial connections between agriculture and housing were also present at DNI’s Dudley Greenhouse. Harry Smith of DNI notes, “The project certainly helps the marketability of our homes. People are not just getting a house, they are getting a community, and it’s based on fresh, locally grown food.”

Challenges for CLT-Supported Urban Agriculture

Despite the benefits, CLTs implementing agricultural projects still face many challenges. In particular, financial profitability continues to be a major struggle across the entire urban agriculture sector, as revenues generated from produce sales are relatively modest, even in commercial operations. The Southside CLT covers only 8 percent of its operating expenses through commercial produce sales to local restaurants. Additional revenue sources, such as membership fees and seedling sales, bring the CLT’s earned income to only 20 percent of its expenses. CLTs continue to rely heavily on grant funding to make up the difference.

A second potential challenge is that some projects require a high level of agricultural knowledge and may test the capacity and experience of CLT staff. Even Athens Land Trust, which has staff experienced in agricultural land preservation and growing techniques, acknowledged the initial difficulties in learning the nuances of local zoning codes related to commercial agriculture. As a result, some of the CLT’s pipeline projects were delayed until workable zoning solutions could be found. The risk is compounded for commercial agricultural projects that require significant understanding of processing and distribution systems and local market conditions. At Sandywoods Farm, for example, the CCHC initially planned to use preserved farmland for livestock and cattle grazing, only to discover that the sole Rhode Island butchering facility had closed. The nearest facility was across the state line in Massachusetts, making it prohibitively expensive to process meat. Brigid Ryan, senior project manager at CCHC, noted, “When you end up having to learn these specialty niches, it becomes so important to find partners who know what they are talking about.” Given the challenges and potential pitfalls, CLTs need to consider the following issues to improve the feasibility and sustainability of agricultural projects.

Community Engagement

As community-based organizations, CLTs should always be driven by neighborhood needs and concerns. However, strong community planning processes are particularly vital to the success of urban agriculture, where CLTs often rely on local residents and partners to carry out agricultural production. Harry Smith of DNI emphasizes this point: “I would say the work of a CLT is not just to manage the properties and get more land into the trust, but to really engage the community in what they want besides housing—whether that’s commercial operations, or a greenhouse, or agricultural land.” Further, CLT engagement around agricultural projects can catalyze broader community organizing efforts and help residents push for more supportive public policies.

Organizational Assessment

CLTs can support nonresidential projects in a variety of ways, and organizations should systematically assess internal capacities as well as local stakeholders who could serve as potential partners on projects. In this way, CLTs can develop complementary collaborations and build on existing assets and capacities in the community. A CLT that lacks growing experience can support urban agriculture in alternate ways to better align with local partners, by securing land, helping to develop urban agriculture zoning codes, or serving as a fiscal agent for grant funding.

Managing Risk

CLTs should minimize their financial risk in agricultural projects, especially given the modest revenues and future uncertainties associated with food-related grant funding. In response, some CLTs have front-loaded anticipated capital expenses owing to agriculture projects. Similarly, CLTs can manage risk exposure by avoiding debt financing on agricultural projects. Several CLTs have found debt service to be extremely challenging, given the modest revenues from produce sales and the nominal lease fees that CLTs typically charge for agricultural land. For instance, DNI was able to acquire land and construct the Dudley Greenhouse without incurring long-term debt, while its local property tax–exempt status allowed for minimal holding costs. The resulting low-risk financial structure became critically important when DNI was unable to secure its initial greenhouse tenant. Even though the greenhouse was subsequently vacant for nearly five years, DNI was well positioned to absorb the unexpected vacancy loss.

Conclusion

While the urban agriculture movement has gained much momentum in recent years, it still needs coherent, long-term strategies to protect growing spaces against speculative market forces. The fundamental relationship between land and community is at stake. Within the urban agriculture movement, land insecurity highlights the pressing need for a reconceptualization of land as a finite, shared resource that should be held in stewardship to meet the requirements of present and future communities. Further, the notion of the highest and best use needs to be expanded to include nonfinancial outcomes and avenues for substantive community engagement. CLTs are ideally suited to tackle these critical issues and, in doing so, can help community development processes become more inclusive, equitable, and responsive to changing local conditions.

About the Author

Jeffrey Yuen, M.S., is a CLT researcher, practitioner, and enthusiast who serves on the board of the Essex Community Land Trust. He works as the Impact Assessment Manager at New Jersey Community Capital, in New Brunswick, New Jersey.

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For most of its history the American university has been treated as an enclave—a scientific and reflective ivory tower removed from the subjective turmoil of the city. More recently the university has come to be viewed by many public officials and analysts as a driver of overall urban development.