Friday, January 25, 2008
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Robert Owen William King The Rochdale Pioneers G. D. H. Cole Charles Gide Beatrice Webb Friedrich Raiffeisen David Griffiths List of cooperatives List of cooperative federations International Co-operative Alliance Co-operative Party
A housing cooperative is a legal entity - usually a corporation - that owns real estate; one or more residential buildings. Each shareholder in the legal entity is granted the right to occupy one housing unit, sometimes subject to an occupancy agreement, which is similar to a lease. The occupancy agreement specifies the co-op's rules.
In larger co-ops, members of a co-op typically elect a board of directors from amongst the shareholders at a general meeting, usually the annual general meeting. In smaller co-ops, all members sit on the board.
The board typically elects its own officers, such as a president, vice-president and so on. Usually, the directors are volunteers, or are paid an honorarium. The board may then establish standing committees from among the shareholders, who usually also volunteer their time, to either handle the business affairs of the co-op or make recommendations to the full board on such issues as its finance, membership and maintenance of its housing units.
A housing cooperative is normally de facto non-profit, since usually most of its income comes from the rents paid by its residents, who are invariably its members. There is no point in creating a deliberate surplus—except for operational requirements such as setting aside funds for replacement of assets—since that simply means that the rents paid by members are set higher than the expenses. (Note, however, that it's quite possible for a housing co-op to own other revenue-generating assets, such as a subsidiary business which could produce surplus income to offset the cost of the housing, but in those cases the housing rents are usually reduced to compensate for the additional revenue.)
It is relatively difficult to start a housing co-op because if the idea is, for instance, to build a building or group of buildings to house the members, this usually takes a significant mortgage loan for which a financial institution will want assurances of responsibility. It may also take a year or more for the members to organize the design and construction, as well as time and foresight to establish even basic organizational policies. It is rare that these kinds of skills of organization are available in a random group of people who often have pressures on their existing housing. It may be somewhat easier to organize a group of closely related housing units. This opportunity may arise, for example, if an existing apartment building's owner is thinking about selling it.
There are housing co-ops of the rich and famous: John Lennon, for instance, lived in a housing co-operative, and most apartments in New York City that are owned rather than rented are held through a co-operative rather than via a condominium arrangement.
There are two main types of housing co-operative financing methods, market rate and limited equity. With market rate, the share price is allowed to rise on the open market and shareholders may sell at whatever price the market will bear when they want to move out. In many ways market rate is thus similar financially to owning a condominium, with the difference being that often the co-op carries a mortgage, resulting in a much higher monthly fee paid to the co-op than would be so in a condominium. The purchase price of a comparable unit in the co-op is typically much lower, however.
With limited equity, the co-op has rules regarding pricing of shares when sold. The idea behind limited equity is to maintain affordable housing. A sub-set of the limited equity model is the no-equity model, which looks very much like renting, with a very low purchase price (comparable to a rental security deposit) and a monthly fee in lieu of rent. When selling, all that is re-couped is that very low purchase price.
In the United States, housing co-ops are usually categorized as corporations or LLCs and are found in abundance in the Greater New York metropolitan area, and more precisely within New York City itself, Westchester County, New York (which borders the city to the north) and towns in New Jersey that are immediately across the Hudson River from Manhattan, such as Fort Lee, Edgewater, or Weehawken. Unlike in other parts of the world, most of these housing co-ops did not develop as a result of social engineering. Apartment buildings and multiple-family housing simply make up a more significant share of the housing stock in the New York City area than in most other US cities, and the cooperative form of ownership has dominated over the condominium form. Reasons suggested to explain why cooperatives are relatively more common than condominiums in the New York City area are In the USA
However, multiple person cooperative models exist all over the country. Artist, student and community co-operatives are common in the San Francisco Bay Area. Many of these housing co-operatives are members of organizations such as NASCO.
Student-owned and -operated housing co-operatives were formed primarily for economic reasons to provide low-cost housing to university students. Secondarily, they generally provide experience in self-governance and social cooperation. The earliest examples began in the Depression years. Two of the first on record were founded in 1932, Michigan Socialist House at the University of Michigan in Ann Arbor, Michigan and Collegiate Living Organization (University of Florida) in Gainesville, Florida.
Examples of such cooperatives are Berkeley, California; Irvine, California; Santa Cruz; Chicago, Illinois; Minneapolis, Minnesota; Oberlin, Ohio; East Lansing, Michigan; Stanford; Ann Arbor, Michigan; Austin, Texas; Providence, Rhode Island; Olympia, Washington; Eugene, Oregon; Ithaca, New York; West Lafayette, IN; Worcester, MA; Princeton, New Jersey; and Buffalo,NY.
Student housing cooperatives
Housing co-ops in Canada take on many different forms. In Ontario, there are co-ownership, equity and occupant-run co-ops.
Co-ownership co-ops are generally older apartment buildings, incorporated before the Ontario Condominium Act, 1973 came into existence, where shareholders each own one voting share in the corporation that owns the building and have a registered right to occupy individual units as described on their share certificate. Most of these types of co-ops date from the thirties, forties and fifties and are in the city of Toronto. They are similar to condominiums, in that units may be bought and sold by private sale or on the open market. Until relatively recently, these units tended to be bought by older people with home equity who could buy the unit outright, as it was difficult to get a mortgage against these units. However, a number of Ontario credit unions are now offering limited financing, provided that that individual co-op corporations meet their fiscal standards, making these units affordable housing options for younger buyers. Incoming owners must be approved by the building's Board of Directors, and agree to abide by building bylaws and Occupancy Agreements.
Equity co-ops are buildings in which individuals purchase a percentage share tied to the square footage of their unit. More credit unions will offer financing against them than against co-ownerships. They are a relatively new form of construction, designed to encourage owner occupancy by having the building's corporation hold back a percentage of the unit's share equity to ensure owner occupancy.
Then there are co-ops that provide all the privileges of ownership except for the right to make (or lose) money on a primary residence and are run by the people who live there.
The federal and provincial governments in Canada developed legislation in the 1970s that aided potential co-ops by providing start-up funding and financing through mortgages via an agency called the Canada Mortgage and Housing Corporation (CMHC). The government simultaneously began to encourage the development of resource groups to contract with fledgling boards of directors of housing co-ops to develop co-operatives either in turnkey buildings or buildings designed and constructed by architects and builders with which the board contracted to deliver the service. Supervised by the board, the resource groups marketed the units to suitable members, educated them about their rights and obligations as co-operators, and established a management structure which usually included paid staff. These organizations helped in forming initial policies and holding the organization together while all the necessary work is done.
The federal government tied its loan assistance to requirements that these housing co-ops provide a percentage of their units, usually at least 15 to 20 per cent, for what are termed income-tested residents. These people voluntarily provide information to the co-op on a confidential basis about their gross income, and their rent is calculated according to a formula. If the calculated rent is less than the market rent of the units, then the federal government, through another formula, would provide funding to those units to bring their unit revenue up to the market rate. This produced mixed-income co-op housing, in which relatively well-off people lived side-by-side with relatively low-income people and worked with them on committees. This often had the ripple effect of improving the financial health of those less well-off. (It's interesting to note that, depending on your political point of view, such government payments for offsetting the rent could be considered subsidy of the low-income people, or a contractual business arrangement between the government and the co-op which helps to stabilize revenue to the co-op in exchange for accomplishing a social goal for the government for a specific period. This dichotomy is typical of the fact that a housing co-op is somewhere between a corporation and a social agency, and where one places it depends on one's viewpoint -- and the collective viewpoint of each housing co-op.)
Political will dissipated in Canada in the 1990s, however, as other issues occupied politicians and financial belt-tightening by the governments reduced the funds available for the mortgages. In 2004 and 2005, however, the political winds shifted back towards the idea of developing more low-income housing. However, not-for-profit housing co-operatives are committed to the mixed-income concept and have not been able to make much use of the few opportunities that have come available in recent years.Also, the term of many of the government agreements concerning funding for housing subsidies are coming to an end, provoking a debate in individual co-ops and the co-op movement on the extent to which co-ops should continue to be mixed-income forms of housing.
In Canada, there are associations of housing co-operatives. The major one is the Co-operative Housing Federation of Canada (CHF Canada). Most provinces have similar organizations for their area, but many are stand-alone members of the CHF Canada, as opposed to being branches of it. Each such organization charges its member co-operatives a fee based on the number of housing units in the co-op to pay for staff to do its work. This includes lobbying governments, setting up self-help funding and the like. These organizations do not act for individual members, and do not give members advice when the member encounters problems with the Board of their co-op. In most jurisdictions there are no organizations for members of housing co-operatives, in contrast with tenants in a traditional landlord-and-tenant relationship, who can be assisted by various tenant advocacy groups.
In Ontario, the eviction of members of a housing co-operative is governed by special rules set out in the Co-operative Corporations Act. The Board of Directors of the co-operative initiates the process by sending the member a notice to appear, requiring her to attend at a Board meeting at which her eviction will be considered. If the Board votes to evict, the member has a right of appeal to the membership as a whole. In order to enforce the eviction, the Board must bring an application to a judge of the Superior Court, on which occasion the member has the opportunity to present her case to the judge; the judge considers whether the eviction process was conducted fairly and in accordance with due process, and has a residual discretion to refuse the eviction should the judge consider it fair to do so, notwithstanding the decision of the Board. Sometimes this hearing is conducted like a trial, with oral evidence from both sides, while at other times it is conducted based only on written documents submitted to the court; the practice varies from judge-to-judge and courthouse to courthouse, and there is no consensus on the proper procedure or what right a member has to be heard. This process is different from evictions of rental tenants, which proceed in Ontario before a specialized tribunal and in which the tenant is always entitled to an oral hearing. The standard of deference that judges should show to the decisions of Boards is a controversial and unresolved issue in the law, with various cases taking seemingly inconsistent positions on the issue.
A co-operative housing project can resemble a traditional apartment building, or it can be the basis of an intentional community.
"Building co-operatives" ("self-build housing co-operatives" in British parlance, which distinguishes them from worker co-operatives in the building trade) are formed by members who cooperate to build their homes but own their houses on completion. Building co-ops were extremely popular across Canada from the 1930s to the 1960s.
There are several hundred housing co-operatives in Britain, and most are "par value" rental co-operatives, meaning that the tenants have no equity share in their house or flat. They may or may not be "fully mutual" meaning that all tenants are members and vice versa. They are normally incorporated as industrial and provident societies. While many housing co-operatives occupy permanent accommodation, there has also been a significant sector of "short life" housing co-operatives, especially in London where rents are high. These are formed to alleviate homelessness by making use of empty housing while it is waiting for redevelopment - akin to a form of legalised squatting.
A registering body and support network for housing co-ops, workers co-ops, social centres and land co-ops is Radical Routes. Radical Routes also produce a booklet called 'How to set up a housing co-op' which is free to download from their website or can by purchased by mail order.
A representative body for Britain's housing co-operatives is the Confederation of Co-operative Housing (CCH).
The government grant aids some housing co-operatives via its social housing agency the Housing Corporation.
Secondary housing co-operatives - co-operatives of co-operatives - may be formed to help with the legal procedures of buying and renovating property.
In the UK
In Finland co-op membership is the prime form of real estate and home ownership.
Except for a very limited number of co-ops that follow the strict Rochdale Principles of one vote, all Finnish co-ops are incorporated as (non-profit) limited-liability companies (asunto-osakeyhtiö).
Membership of a co-op is obtained by buying the shares on the open market, most often through a real estate agent. No board approval is needed to buy shares. In some older co-operatives old members have the right of pre-emption, i.e. the right to buy the shares at the set market price.
Neither is there any requirement for members to live in the co-operative. Owning of apartments for rent is a common form of saving and private investment.
The first housing cooperatives were built around 1900, many of them in the Helsinki neighborhood of Katajanokka, in the national romantic Jugend style. Initially many co-ops were set up by the future members themselves, often workers or artisans in the same trade. By the 1920s co-op founding was the business of professional real estate developers. After WW II nationwide non-profit developer organizations were formed and a system of government provided loans (ARAVA) was introduced. Sale of shares in co-ops with state loans were restricted by limited equity rules for 50 years, the price of the shares was limited by an index.
The Finnish model of the housing co-op was also the basis of the modern U.S. co-ops, as the first cooperative the Finnish Home Building Association in Brooklyn was started in 1918 by Finnish immigrants.  
Posted by bushganizer258 at 10:25 AM