1. Co-ops Are a Good Housing Choice
2019 Prosperity Indiana conference
Jan. 30, 2019
Deb Trocha
Executive Director
Indiana Cooperative Development Center

2. Who we are…
501(c)3 nonprofit which provides development services for new and existing co-ops
Our mission is to foster community economic development through the cooperative business model
We provide
Technical assistance
Education
Advocacy, referrals and access to resources

3. A Cooperative Is…..
An enterprise formed by a group of people who join forces and work together to solve a common problem or to reach a shared goal

4. Member Ownership Member Control Member Benefit
Three Ways Cooperatives Are Differentiated from Other Business Entities…
Member Ownership
Member Control
Member Benefit
OWNERSHIP: When you make a financial investment in the cooperative, you’re not only a customer or user, you’re an owner
CONTROL: As members you run the cooperative; elect its board of directors which oversees the property and selects the management company; determine when improvements need to be made
BENEFIT: The co-op exists to meet the needs of its member owners. As members you benefit not some absentee landlord; profits are returned to the members

5. Guided by Cooperative Principles Voluntary and open membership
Democratic member control
Member economic participation
Autonomy and independence
Education, training and information
Cooperation among cooperatives
Concern for community

6. Basics of housing cooperatives

7. History 1857 – first recorded housing co-op created in New York
City (artists)
1916 – first full residential housing co-op begun by Finnish
immigrants
1930s – expansion of co-op enterprises including housing
co-ops including the first student housing co-ops
1950s – another growth spurt in response to post-war
housing boom
1970s-80s – Many new housing co-ops created with
assistance from various government programs

8. Statistics Population: 312,913,872
Total housing stock: 130,599,000 dwellings
Total social (rental) housing stock: 1,200,000 dwellings
Total co-op housing stock: 6,400 housing co-ops
Housing co-ops account for 1% of all housing units
2010 statistics from NAHC (National Assoc of Housing Cooperatives)

9. How Does a Housing Co-op Compare with Other Housing?
In a condominium association, each individual owns a divided piece of the property.
In a housing co-op, all members combined own an undivided share of the property.
In a rental apartment, tenants own nothing.

10. Types of Housing Co-ops
Market rate
Limited equity
Mobile home parks or manufactured housing communities
Student housing
Senior housing
Market rate:
Usually sponsored by for profit real estate developers
Directed to households with middle to high income
Limited equity
Sponsored at first by labor unions and ethnic immigrant societies, now sponsored by non-profit organizations
purpose to prevent speculation, encourage long term residency and preserve affordability
targeted to low and moderate income families
government financial assistance can be used to maintain affordability
Mobile Home
Coop owns the land and any common utilities and amenities
members own their mobile homes or manufactured homes and have complete control over management of the home
members joints own the park
Special Interest
Senior Housing
Incorporate design and service features appropriate to senior residents
Most limit all units to 55 or older
most developments are in Minnesota with some in Iowa and Michigan; gaining in popularity with many having very long
waiting lists, i.e years
Artist housing
combine housing and workspace needs
goal is permanent affordability
Student housing
housing for student on or near university campuses
could be dorm, house or apartment building
minimal membership fee is charged

11. Wide Variety of Housing Co-ops
Traditionally located in urban areas
Increasingly seen as a way to meet rural housing needs
Can be structured as:
multi-family or apartment type dwellings
single family homes located close together
manufactured housing parks
townhouses, garden apartments
scattered site
Vary in size from very large to very small
Can be new construction, renovated or existing housing

15. Benefits of Housing Cooperatives

16. Individual benefits Affordability Accessible home ownership
Flexible housing model
Financial advantages
Home ownership
Supportive community
Affordability:
Operates cost: because coop is owned by residents, it operates at cost; no third party profit motive. Members have no reason to increase monthly charges unless taxes
or actual operating costs increase; members control budget
Joint purchasing: achieve economics of scale when purchasing goods and services such as appliances, carpet, etc.
Accessible home ownership
Low transaction costs: buying a share in a coop is usually less expenses than purchasing a single family home or condo; because no actual real estate is changing hands
title work and other closing costs are lower;
Can borrow collectively for unbudgeted expansions or additions
Flexible housing model
Lots of different building types and populations
Intergenerational living
Financial Advantages
Tax deductibility of interest: members enjoy benefits of conventional home ownership including mortgage interest deduction, favorable property tax treatment and
homestead tax classification
Equity accumulation: depending on by-laws, coop members accumulate equity in the same way as traditional homeowners
Protection from predatory lending: coops provide a natural barrier to predatory lending; loans to housing co-op residents are a specialized product and offered by
only a few lenders thus making the loans unattractive candidates for predatory practices such as flipping
Home ownership: Makes it possible for owners from all income levels to achieve home ownership
Supportive Community
Leadership Development: running for and serving on the board; skills transferrable to work in other organizations
Skills development: allows for participation on committees, learning the democratic process; transferrable to participation in the larger community
Civic participation: not only of the coop itself, but also individual members; leadership skills translate into civic participation
Enhanced security: one of the most important benefits of cooperative living; residents know their neighbors; often have hired security; ; Encourages strong
intra-coop relationships; residents often look after each others

17. Social benefits Self management Community control
Leadership development
Democratic participation
Enhanced security
Lower rates of mortgage delinquency and default

18. Community Benefits Engine of economic growth
Stabilization of changing neighborhoods
Stabilizing out-migration in rural areas: retaining an important asset base
Engagement
Growing popularity ensures financial health
Economic growth: help ensure property can be affordably developed; breaths new life into neighborhoods; can lead to neighborhood economic growth and development
Stabilization: in gentrifying neighborhoods creates supply of affordable housing; stabilizing housing costs allows people to remain in their home neighborhoods
Stabilizing out migration rural: Rural areas face out migration of seniors who are looking for affordable, accessible housing; allows seniors to age in place and keeps their financial wealth to remain in the community; frees up former housing for younger families
Engagement: seniors especially become engaged in committee structures; running the co-op; remain active; allows families to engage with neighbors of all ages
Ensures financial health: as co-ops become more well known, waiting lists have grown; ensures financial health of co-op by providing ready supply of potential owners

19. Challenges of Housing Co-ops….
Tenant mindset
Desire for single-family housing
Desire for sole ownership
Restrictions on resale
Submitting to group decisions
Close living
Complexity of organizational process
Tenant mindset: those who have lived in rental housing a long time may find it difficult to adjust to being their own landlords
Desire for single family housing: for many the American Dream is owning a single family detached home. This ideal is not always within the reach of everyone. Coops provide an alternative
Desire for sole ownership: co-ops are jointly owned. Title or ownership of buildings rests with the coop corporation. Requires an education process to informs residents about this structure
Restrictions on resale: growth in resale or transfer value may be limited, especially in limited equity coops; may been seen as a negative for some
Submitting to group decisions: some may not be comfortable with the democratic decision making process. Members must view their own needs in relation to those of the whole group; again an education process often needed
Close living: residents of multi family housing must have consideration for their neighbors; some may consider the rules governing behavior, pets, etc. as infringing on their freedom
Complexity of organization process: planning, financing, construction as well as becoming familiar eith cooperative way of operating has unique challenges and often requires outside help. COOPERATIVE LIVING IS NOT FOR EVERYONE.

20. In Summary….. Co-op model is proven
Offer many advantages to individuals and their communities
Wide variety of housing co-op models
Can provide the answer to both urban and housing shortages

21. THANK YOU! Deb Trocha Indiana Cooperative Development Center
225 S. East St., Suite 737
Indianapolis, IN 46202
Fax: