SquareOne Villages is a nonprofit developer of permanently affordable housing co-ops in Lane County, Oregon. We have developed two leasehold co-ops—Emerald Village (in Eugene) and Cottage Village (in Cottage Grove). And we are currently in the process of developing two new limited-equity co-ops—C Street Co-op (in Springfield) and Peace Village (in Eugene).
What is a housing co-op?
It’s a collection of individual dwellings on shared land. Residents collectively own and control the housing in which they live.
What do residents actually own?
Though residents live in individual dwellings, what they own is a membership share in cooperative corporation that owns or leases all real estate. As part of your membership in the co-op, you have exclusive right to occupy a specific dwelling for as long as you want, provided that you follow the co-ops policies and pay a monthly carrying charge. You also have a vote in how the co-op is governed and how your housing is managed.
Types of housing co-ops:
In a Market-Rate Co-op you can buy or sell a membership share at whatever price the market will bear. Purchase prices and equity accumulation are very similar to condominium or single-family ownership.
In a Limited-Equity Co-op the proceeds members can get from selling their shares is limited by the pre-determined formula stated in the bylaws. This keeps the cost of shares low and preserves affordability for future members.
In a Leasehold Co-op the co-op leases the property from an outside entity, often a non-profit organization. While members do not have financial ownership of the property, they can benefit from greater stability, control, and affordablity when compared to rental housing. A primary reason for this arrangement is if public subsidies used to fund the development do not allow for resident ownership.
What is a carrying charge?
A carrying charge is the monthly payment that each member makes to
the co-op that covers all of the co-op’s expenses, such as debt service, insurance, maintenance, replacement reserves, utilities, and other operating expenses.
The advantages for residents:
Accessible: The financial limitations and risks of owning and maintaining a home are reduced in cooperative housing, because participants share the costs and do not need to qualify for a mortgage individually.
Affordable: Buy-in equity can be modest and members experience lower monthly costs compared to low-income rental housing.
Stays Affordable: Members are collectively acting as their own landlord and therefore have no reason to substantially increase monthly charges unless taxes or operating costs increase, and therefore monthly charges remain reasonable and stable.
Stablility: Members have security of tenure, meaning they are able to stay in their homes for as long as they wish as long as they follow the co-ops rules, and are protected from arbitraty rent hikes or evictions by speculative landlords.
Control: As mutual owners, members participate at various levels in the democratic decision-making process, and have a vote in how their housing is operated and managed.
Safe: Statistics show that crime and vandalism are lower in co-ops compared to rental housing because of resident engagement.
Tax Deductions: For income tax purposes, the cooperative member is usually considered a homeowner and, as such, can deduct his or her share of the real estate taxes and mortgage interest paid by the cooperative.
Cultural Diversity: Many co-op members say that the possibility for interacting with people from different backgrounds and cultures is a positive factor in their decision to become a member.
Who is a good fit to live in a housing co-op?
The co-op ownership structure is a particularly good housing option for people with low-incomes because it pools the limited resources of each individual into a collective fund for operating quality housing at-cost.
Co-op housing is a good fit for people who are 1) interested in being involved in the shared ownership and management of their housing, and 2) able to participate in the day-to-day life and governance of the co-op in a cooperative manner. While co-op housing provides several advantages, it also comes with additional maintenance and management responsibilities in comparison to rental housing.