Cohousing-L Mailing List: Re: A p.s. to Mandel's piece: Affordable Coho Options

[MASwain (MASwain]

Hi,

I've been a lurker for a while and feel like now would be a good time to
espouse my theory that Coho can be affordable, or at least more affordable.

I am a member of a cohousing group in the planning stages in Olympia,
Washington and I work for a small affordable housing nonprofit that serves
Thurston County in Washington State.  Similar nonprofits have sprung up
around the United States and if there isn't one in your community you can
create one.  In addition some Housing Authorities create affordable housing
(as opposed to only disbursing rent subsidies to low income households).

Federal, State and local governments distribute many millions of dollars to
nonprofits and housing authorities to create affordable housing for
households with low incomes every year.  While these dollars are threatened
by the current congress, some funds will still remain available no matter the
outcome.  The need for affordable housing in the United States is
unbelievable-- its a nightmare out there.  (Raising the minimum wage to $10
per hour would help a lot in my opinion, but that's another story).

Existing Cohousing groups hoping for income diversity can approach their
local nonprofit housing provider or housing authority and ask them to fund
the purchase of some portion of the units in their planned Cohousing
community.  In addition, those who would like to live in cohousing who don't
have the income level or savings needed to buy into traditional cohousing can
form a group and approach there local nonprofit or housing authority with the
idea of having them sponsor the creation of an entire project.  Housing
nonprofits have access to a variety of means for making housing permanently
affordable.  Your cohousing organization may want to incorporate as  a
nonprofit yourselves in order to have access to these means.  

The most common and least coho friendly means to preserve affordability is to
have the nonprofit or housing authority own the units and rent them out.
 This can work but it removes control from the coho group and removes the
homeownership benefit from the occupant household.  

The more exciting means is to have the nonprofit act as a Community Land
Trust or create a Limited Equity Co-op structure for the development.  These
methods allow for homeownership while limiting the amount of return on a
homeowner's investment, guarranteeing that those particular units will always
be affordable to households with low incomes.   The nonprofit I work for is
currently considering these options.  

Last Spring I visited two nonprofit sponsored homeownership developments in
the San Juan Islands.  While these developments lack a common house, they are
similar to Coho in that they met as a group to design the projects in
advance, have cars at the edge with walking paths to the houses, have
community meetings, and have common facilities (one group has a community
garden, the other a community laundry facility).  One of the two groups has
land set aside for a future common house.  Many of the homeowners at these
two projects moved in with no down payment and monthly mortgages of between
$250 and $350 per month.  Houses range in size from 550 square feet to 1200
square feet.  One of the two groups used sweat equity to help contain the
cost of construction.  Homeowners had incomes below 80% or 50% of the area
median income (a HUD generated statistic) in order to qualify to move in.
 They gain equity in their homes but when they decide to resell, they must
set the sales price at a level that would be affordable to another household
in the income bracket they were in when they moved in.  This creates
permanently affordable housing, removing the house from the speculative
market while enabling folks  to build equity in a house rather than continue
to rent.

The details of the Community Land trust and Limited Equity Co-op systems are
more complicated and specific than this but that's the basic idea and there
are built developments around the U.S. proving that the concept can work.

Resources:

The Institute for Community Economics

Provides info and technical assistance on the Community Land Trust model

HUD, your State's department of housing services, your local Housing
Authority and the Farmers Home Administration are good places to ask lots of
questions about resources available including grant and loan funds and
housing nonprofits active in your area.

Disclaimer: If you're going to go forward with something like this seek out
legal and tax advice.