What is Cooperative Housing?
In Cooperative Housing, people join together to own and control the building or community in which they live. Members form a co-op corporation in which they jointly own the building, land and common areas of the cooperative. Members join the cooperative by purchasing a share which allows them to occupy a unit in the cooperative. Members do not pay rent, but do pay a monthly carrying fee to cover the operating expenses of the co-op. Members elect a board of directors which governs the co-op.
Benefits of Co-op Housing
- Affordability: Co-op housing has a much lower downpayment than condominiums or traditional single family housing. Members purchase a share, their small buy-in to the community. In limited equity cooperatives, the share price is comparable to what a renter would pay to move into an apartment: first and last month's rent plus a security deposit.
- Security: Co-op members know their neighbors. People wishing to join the co-op are interviewed by the co-op board of directors, the governing body of the cooperative made up of elected members. Co-op members can find security in the knowledge that their neighbors are invested in their community.
- Community Control: Co-op residents are not tenants; they are mutual owners. There is no landlord. Residents participate in the decision making proces for their community, serving on the board of directors. The board makes the co-op bylaws, establishes rules and regulations that govern the community, and make decisions regarding the maintenance and upkeep of the building and grounds.
- Ownership: Co-op members own a share in the cooperative that earns equity and can be sold and inherited. Co-op residents do not own their units, but the share grants them the right to occupy their unit. Shares earn equity and can be sold or inherited. Contrast this with rentals in which tenants own nothing.
- Tax Benefits: For tax purposes, the co-op member is considered a homeowner and can deduct their share of the real estate taxes and mortgage interest paid by the coporation from their taxes.
About Limited Equity Cooperatives
In limited equity cooperatives, the equity that members recieve upon resale of their share is limited. This limitation on sale price helps to keep the share price affordable and insures that families of diveres income levels can afford to buy in. A mortgage is not needed to purchase a share in a limited equity cooperative because of the low share price. Many times, the share price is equivalent to what a renter would pay to move into an apartment--first and last month's rent plus a one month security deposit. However, some banks do provide financing to purchase shares and subsidies are available.
Limited Equity Housing Cooperatives:
- Build member participation in the corporation
- Operate as nonprofits
- Combine business and social goals
- Rely on democratic participation
Create voluntary membership
- In the United States, there are more than 400,000 units of limited equity housing.
Source: Policy Link: Equitable Development Toolkit
St. Boniface Cooperative Housing
The St. Boniface Cooperative will be a 15 unit limited equity mixed income cooperative for moderate to low income families.
Examples of Successful Limited Equity Cooperatives in Philadelphia
Friends Housing Cooperative
703 North 8th Street
Friends Housing was founded in 1952 by Quakers with a mission of creating affordable, urban housing for a diverse community. We are collectively owned by resident members who work togeter for the continual prosperity of the complex.
Vernon House Co-op Apartments
6446 Greene Street
Vernon House (VH) is community of people committed to diversity who share a unique living experience known as cooperative housing. The property features beautiful, spacious apartments in a courtyard setting. The VH community offers a welcoming environment for children and families. Located at 6445 Greene Street in West Mt. Airy, two blocks east of Lincoln Drive, VH offers one of the best values in apartment living in Philadelphia. VH is a limited equity housing cooperative.
Want more information?
National Association of Housing Cooperatives (NAHC) www.coophousing.org
Midwest Association of Housing Cooperatives
University of Wisconsin Center for Cooperatives Co-op Housing Guide
How Housing Cooperatives Work: HowStuffWorks
To view a presentation on Limited Equity Cooperative Housing presented by NSCA's Real Estate Director Maria Camoratto at the February 22, 2012 community meeting, see the attachments below.