Re: using hotel/Coh for whom
From: Robert Hartman (hartmanochun.informix.com)
Date: Fri, 17 Sep 93 20:22 CDT
> One feature of the APEX that differs from what cohousing ideas I've heard
> here is that the APEX is a limited equity co-op.  Like a co-op the building
> (or more specificially, the co-op's interest in the building) is owned by
> an "entity", and each member owns one share.  The share's value, which began
> as 1/20 of the downpayment on the building (would you believe, $1000?), is
> tied to the consumer price index.  A member's carrying charge contribution
> (rent) does not contribute to his/her equity in the building.  This keeps
> the share price low (it was $1500 in 1993), and allows many low-income people 
> to live there.  It also makes it easier to move out.  

It would be interesting to know what the Co-op is doing with the equity.

I remember studying the limited-equity co-op (LEC) in a college course
about co-ops.  There used to be community development grants and other
financing that an LEC could obtain, which weren't available to co-ops
in which the members could recover shares of equity.  Thus, members
themselves weren't able to benefit from any appreciation in the
property.

As you say, this kept rents low and allowed low-income people to move
in, but it did so at the expense of earlier members.  And it seemed
to me, it would keep members stuck.

Now, this wouldn't bother me too much if I knew that the equity would
be used in a productive way, say, to finance expansion, or even to
finance 2nd mortgages for departing members.  However, what typically
happened in the case studies I read was that the equity laid dormant,
becoming a prospective windfall to a subsequent buyer if the co-op's
management structure ever broke down.

Personally, I would be willing to split my share of the appreciation
upon departure, if it were understood that the co-op would use the half
of my share it retained for expansion.  The reason I am big on
expansion is that it would allow the co-op to take advantage of
bargains in the property market, provide more lower-cost housing, and
even allow members greater flexibility when their circumstances change,
such as if they were to have children.

-r

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