Cohousing-L Mailing List: Coops and cohousing

[Fred H Olson (fholson]

On Apri 16,  Rob Sandelin <floriferous [at] msn.com> wrote a message
"Why coops are scary to some folks (like banks)"
see: http://csf.Colorado.EDU/cohousing/2003/msg00859.html

Tho coops are not as well accepted by funders as would be desireable in
this country, Rob's message seemed more discouraging than I expected.
Given Rob's authoritative reputation, I decided to do a little checking
with my coop contacts.

I sent a copy of Rob's message to Warren Kramer of the Northcountry
Cooperative Development Fund <warren [at] ncdf.org> and later spoke to him on
the phone. Joelyn Malone's reply on this topic 
( see: http://csf.Colorado.EDU/cohousing/2003/msg00856.html )
refers to NCDF which provided some funding for Monterey Cohousing.

Among other things Warren said 8 units would be a rather small
coop and NCDF usually funds larger coops.

I also got the reply below from
Margaret Lund, Executive Director
Northcountry Cooperative Development Fund
219 Main Street SE, Suite 500
Minneapolis,MN 55414
Phone (612)331-9103  Fax (612)331-9145
margaret [at] ncdf.coop    http://www.ncdf.coop

Margaret wrote:

We do a lot of lending to housing co-ops (including one cohousing
project).  I cannot speak to the market in Oregon because we don't lend
there, but I have never heard of us or any other lender [assuming] a 20%
vacancy rate for co-ops.  In fact some HUD senior co-op programs don't
require any vacancy reserve at all only IF a project is a co-op as opposed
to a rental deal, so the co-op gets a better deal not a worse one.  I also
have never heard of any co-op requiring members to put up multiple months
of assessments in advance when they move it, and we have worked with a lot
of different co-ops.  Typically, the lease between the co-op and the
member would require that any back payments due to the co-op would be paid
before the unit could be transferred to a new owner, so the other co-op
members would never be stuck paying any one else's share. 

It seems to me that the big advantage to cohousing of using a cooperative
ownership structure is that with co-ops, the co-op gets to approve any new
buyer before a unit is sold.  They can't discriminate on any illegal
criteria of course, but they can create a screen to make sure that any new
owner is really interested in being a member of the community.  With condos,
any person can sell their unit to any other person they want to and the rest
of the community members can't stop them.  They can also rent it out to
someone who is not necessarily interested in the cohouisng community (or in
the worst case, someone who is detrimental to it) and the other folks can do
nothing.  In a co-op, the members can limit rentals and limit resales to
folks who are really there for the cohousing experience.  It seems to me
that would really help build a stronger community.

It is also, for various reasons, much easier to do a mixed-income project
with a co-op as opposed to a condo.  I know many cohousing groups struggle
with this issue, and co-ops are one tool they can use to address it. There
are other advantages as well (it is much cheaper and easier to change units
in a co-op, transaction costs for sales are much lower etc.) So I would
encourage your list members to be open-minded about this issue.  Co-ops are
not a typical structure in most parts of the country so they can be
difficult to finance, but we do them here in the Midwest and I think there
are other sympathetic lenders elsewhere who would do them as well.  One good
place to look for non-traditional lenders in the National Community Capital
Association.  Their website is http://communitycapital.org.

-- end quoted message --

I also hope cohousing organizers will be openminded about coop structure.
I think it is a natural fit for cohousing.  

Fred

--
Fred H. Olson  Minneapolis,MN 55411   (near north Mpls)
fholson [at] cohousing.org 612-588-9532 (7am-10pm Cent time)
List manager of Cohousing-L & Nbhd-tc  Ham radio:WB0YQM
http://www.cohousing.org/fholson


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