1. Northcountry Cooperative Development Fund Putting It Into Practice: Overview of the Housing Cooperative Model and A Look at One Application Conference on Housing and Economic Development Indianapolis, Indiana September 12, 2005 Kevin Walker ~ Cooperative Housing Program Manager

2. 2 Northcountry Cooperative Development Fund (NCDF) Started in 1978 Community Development Finance Institution specializing in cooperatives Lending to housing, food, worker cooperatives Provides lending, technical assistance, development services to cooperatives Serves eleven states of Upper Midwest

3. 3 Basics of housing cooperatives: What they are and how they work

4. 4 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.

5. 5 How do homeownership cooperatives work? A cooperative owns the building and grounds COOPERATIVE

6. 6 How do homeownership cooperatives work? Members buy shares in the cooperative Holly Andrea Warren Jon C.J.

7. 7 How do cooperatives work? Warren C.J. Each share is linked to a unit in the building Andrea Jon Holly

8. 8 How do cooperatives work? The cooperative is governed by its resident- owners

9. 9 Cooperative Development Agenda Adaptive reuse projects Conversions of conventional rental property Conversions of expiring Low Income Housing Tax Credit projects Conversions of USDA Section 515 projects Conversions of manufactured home parks

10. 10 Financing housing cooperatives

11. 11 Financing a Single-Family Home Debt: 90% Equity: 10%

12. 12 Financing a Condominium Each individual owner can choose different levels of equity and debt financing

13. 13 Financing a Housing Cooperative Each member- owner chooses level of equity, and share debt, and cooperative gets blanket debt Option 1:

14. 14 Financing a Housing Cooperative Each member- owner chooses levels of equity and share debt Option 2:

15. 15 Financing a Housing Co-op 98% blanket debt 2% equity HUD Section 213 financing Option 3:

16. 16 One application: Cooperative conversions of manufactured home parks

17. 17 Typical Manufactured Home Park Owner Regular rent increases No direct voice in park policies Little incentive to invest in park No land ownership for residents Home depreciation Risk of displacement

18. 18 Manufactured Home Park Cooperative Cooperative Monthlies increase only with operating cost increases Direct voice in park policies and operations Strong incentive to invest in park Land ownership for residents Potential for growth in home equity No risk of displacement

19. 19 Why Become a Cooperative? You own it. –You continue to own your home. –As a cooperative member-owner, you also own the park. You run it. –The Board of Directors is elected from resident members; –Your Board oversees property management and operations; –You decide which improvements, if any, should be made to the park. You benefit. –No one takes profits from the park’s operations; –If revenue exceeds expenses, excess returns to residents or the park; –Security of tenure (no one can sell the park from under you.)

20. 20 There Are 1,000 Resident Owned Manufactured Home Parks Nationwide

21. 21 What We Look For 1.Able and Willing Seller? 2.Able and Willing Buyer? 3.Feasible? 1.What is the condition of the park? 2.Will it be affordable to residents?

22. 22 Willing Seller Seller willing to make park available at affordable price. Seller signs sales agreement providing investigation period for us to confirm viability of resident cooperative.

23. 23 Willing Buyer  Interest. Residents are interested.  “Sense of the room”  Later: Written ballots and surveys  Capacity. Residents engage, ask questions.  Commitment. Core group of residents volunteer for Acquisition Committee.

24. 24 Is It Feasible? 1.What is the condition of the park? 2.Can park be acquired, improved as needed, and still be made affordable to residents?

25. 25 Facilitating Success Professional management company (preferably with experience with homeowner associations) Governance and support services consultant Pre-funded reserves –Replacement Reserve –Operating Reserve –Training Reserve –Working Capital Reserve –Marketing Reserve Translation and interpreter services

26. 26 Case Study: Sunrise Villa Cooperative Cannon Falls, Minnesota Sunrise Villa Mobile Home Park 47 units

27. 27 Sunrise Villa Mobile Home Park Local mom-and-pop owner Community facilities: storm shelter, mailboxes Purchase price: $928,000 or $19,745/unit Financing: –$696,000: Community Development Bank, Ogema, MN –$490,000: Northcountry Cooperative Development Fund –$23,500: Resident Equity Equity requirement: $500 Monthly carrying charge: $300

28. 28 Sunrise Villa Cooperative Total development timeframe: 11 months Resident Process: One meeting about every six weeks Park Attendance of meetings: 33% to 51% of households Charter membership: 29 of 46 households (63% of park) Closed on purchase: September 28, 2004 Current membership: 43 of 47 households (91% of park)

29. 29 Contact Information: Kevin Walker Program Manager, Cooperative Housing Northcountry Cooperative Development Fund 219 Main Street SE, Suite 500 Minneapolis, MN 55414 612.767.2111 direct 612.767.2133 fax kevin@ncdf.coop