|Re: using hotel/Coh for whom||<– Date –> <– Thread –>|
|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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