Cooperative Advocate Leads Washington, D.C.’s Efforts to Increase LECs

I was sitting in the living room of a friend’s home in Northwest Washington in the spring of 2018, waiting to hear D.C. Council Member Anita Bonds make a campaign speech for a second term. Council Member Bonds is also the chair of the council’s Committee on Housing and Community Development. I did not know much about Council Member Bonds even though we attend the same church, and I know several of her staff members. However, the first thing she said surprised me. Council Member Bonds said – the solution to Washington D.C.’s affordable housing crisis is limited-equity housing cooperatives. I thought to myself it is rare to have a policymaker promote cooperatives as a cornerstone of their campaign. I should know. I have over 30 years’ experience advocating for cooperatives in Congress.

In follow-up conversations with Council Member Bonds, I learned that she had taken it upon herself to visit several Mitchell Lama cooperatives in New York City. She was impressed with the size of the co-operatives and the strong community she witnessed inside the buildings. This was her inspiration for a new limited-equity housing cooperative initiative in our nation’s capital. Several months later I received a call from Council Member Bond’s staff asking me to become the chair of a task force on cooperative housing that she was proposing to the D.C. Council and mayor. The purpose of the Task Force would be:

“To establish a Limited-Equity Cooperative Task Force (LEC) to provide comprehensive policy recommendations, assist district residents and the district government with improving existing limit-ed-equity cooperatives, establish new limited-equity cooperatives and help all limited-equity cooperatives succeed and prosper.”

The task force was to have representatives from housing cooperatives, housing advocates, and those who provide services to housing cooperatives such as financial institutions, lawyers, property managers, and representatives of the D.C. government.

The other members of the task force are Jade Hall, Housing Counseling Ser-vices; Louise Howells, University of the District of Columbia Law School; Amanda Huron, University of the District of Columbia; Vernon Oakes, Oakes Manage-ment, Inc.; Lolita Ratchford, Ella Jo Baker Intentional Community Cooperative; Risha Williams, D.C. Housing Finance Agency; Ana Van Belen, D.C. Department of Housing and Community Development; and Elin Zurbrigg, Mi Casa, Inc.

The task force began working in the fall of 2018 and throughout the winter and spring gathering in-formation. We did not have a budget or any staff, and I soon learned there was little hard data on housing cooperatives in D.C. No one knew how many limited-equity housing cooperatives were in D.C. This was going to be a true grassroots volunteer effort. However, there was a study from 2004 by Katheryn Howell at Virginia Commonwealth University that assessed housing cooperatives and the support systems, but the data was out of date. I was afraid that without current data the task force’s policy recommendations would not be taken seriously. However, the task force was grateful that the National Cooperative Bank, Capital Impact Partners, and the Local Initiatives Support Corporation stepped forward and provided funds so that the study could be updated.

Washington, D.C., like most other major cities in the United States, has an affordable housing crisis. However, low- and-moderate income families in D.C. have one advantage, the Tenants Opportunity Purchase Act (TOPA). The D.C Council passed this legislation in the 1970s that provides that if a building owner plans to sell or convert a rental property, they must provide the current residents’ first right to purchase. This often leads to the formation of the tenants’ association and ultimately a housing cooperative. The catch is that the tenants only have one year to complete the transaction. The TOPA has ensured that thousands of affordable housing units have remained affordable.

In the early years of TOPA, the D.C. Council provided funds that supported the conversions by tenants’ associations and housing advocates. Funding was available for education, training, feasibility studies, predevelopment funding, and most importantly financing for building improvements and long-term financing. However, in the 1980s, D.C.’s city government experienced severe financial problems, and many of the programs that housing cooperatives accessed were underfunded or eliminated. Council Member Bonds and the task force set forth to change the current situation for preserving existing affordable housing units and creating new limited-equity housing cooperatives.

Today, D.C. has approximately 4,400 units of limited-equity housing cooperatives in 99 cooperative buildings. These units are spread across the city with more than half in low-income neighborhoods. Many cooperatives are in gentrifying neighbor-hoods representing a stable form of homeownership. A 2019 report from the National Community Reinvestment Coalition found that D.C. had the highest percentage of gentrifying neighborhoods of any major U.S. city. The task force knew that as housing prices continue to soar and lower-income residents find themselves squeezed into unaffordable housing or out of the city, there is a renewed sense of urgency.

To address the housing crisis in D.C., Mayor Muriel Bowser has set a goal of creating 36,000 units of new housing by 2025 including 12,000 units of affordable housing. The task force saw this commitment as an opportunity and proposed that the city should establish a goal of increasing the number of limited-equity housing cooperative units in D.C. by 45 percent by 2025 from 4,400 units to 6,400 units. Our strategy was to build upon the mayor’s commitment and complement her larger goal, but we knew that a lot of work needed to be done to build an eco-system that could support existing cooperatives and create a new generation of limited-equity housing cooperatives.

The task force began working on our understanding that limited-equity housing cooperatives are effective at creating and preserving affordable housing. Housing cooperatives pro-vide stability in housing costs. Studies confirm that the average limited-equity housing cooperative carrying charge was less than half than the U.S. Department of Housing and Urban Development determined fair market rents for D.C. neighbor-hoods. For low-income people who could never qualify for a conventional mortgage, cooperatives offer a chance at home-ownership and the opportunity to build wealth. Data shows that limited-equity housing cooperatives stay affordable longer than low-income tax credit projects. As owners, cooperative members build community; the property is better maintained, is safer, and is often the anchor of the neighborhood.

The task force’s conclusion was that to meet the goal of creating more cooperatives the city would need to invest in the cooperative ecosystem so that D.C. residents could create their own long-term, affordable and stable housing. The task force presented its recommendations (see the sidebar) to Council Mem-ber Bonds and the D.C. Council in February just before the COVID-19 pandemic hit the United States. The D.C. Council soon found themselves with budget shortfalls reaching $750 billion, and it was clear that the city had other priorities. Just before COVID-19 started to affect D.C., Council Member Bonds offered two bills related to the task force report. The first was to make the task force a permanent entity re-quired to submit two reports to the D.C. council each year. The second bill would provide a property tax abatement for all D.C. limited-equity housing cooperatives. Both bills have the support of the majority of the council and are still pending. It is our hope that they will be considered by the council in the fall. In the 2021 D.C. budget, Council Member Bonds was able to include funding for a staff person at the D.C. Department of Housing and Community Development to focus on cooperatives, another recommendation.

Once we have COVID-19 under control, the task force plans to continue working. We now have a website www.dchousing.coop where the recommendations can be found and other information about the work of the task force.

This article was featured in CHQ winter 2020 issue. Click here to read the PDF newsletter.

 

Paul Hazen is the Executive Director of the U.S. Overseas Cooperative Development Council in Washington, D.C.

Cooperative Business Head is the Keynote Speaker at the NAHC Virtual Summit

The National Association of Housing Cooperatives (NAHC) will convene its first-ever virtual summit on November 11–13, 2020. The online program will feature a keynote speaker and deliver seven online learning sessions and special events, such as social activities, engaging breaks, and games.

Doug O’Brien, president and chief executive officer (CEO) of the National Cooperative of Business Association (NCBA), will be the keynote speaker on November 11. During his address, O’Brien will educate participants about the various types of cooperatives that exist and the significance of NAHC’s federal issues such as the Paycheck Protection Program, disaster relief (H.R. 5337) and reverse mortgages for housing cooperatives.

Later that day, a panel will discuss the various measures communities have taken in response to COVID-19 and share the best practices for your cooperative. The last session will highlight conflict resolution in light of the pandemic. The day will end with a game of NAHC bingo.

Thursday’s summit will present sessions on finance, management and disaster preparedness. The finance session will focus on refinancing during these low-interest rate times. The management session will deal with how to lead your property manager and help them navigate the COVID-19 safety procedures, and the final session will be a discussion on your cooperative’s readiness for disaster. After the sessions, the NAHC talent show will begin.

On the last day of the summit, participants will get an update on legal and governance issues. The legal session will expound upon the rights you have as a cooperative, and the governance session will be a new board member panel discussion. The NAHC trivia session will conclude the day. ladyx.ch

The summit will take place via Zoom, a video communications application. Prior to the start of this event, registrants will receive a unique Zoom link to join the program. Register today for the NAHC Virtual Summit.

Workforce Housing Cooperatives: You Can Live Near Your Job

CREDIT: TOM ARBAN, TEEPLE ARCHITECTS, INC, TORONTO. | Local 75 Housing Co-op is located in Toronto, Canada.

Daily newspaper headlines beg for solutions for America’s affordable housing crisis. There are lots of valuable ideas, but few implementations that are scalable. For example, there’s much talk about the concept of “workforce housing” but very few concrete examples. Numerous definitions of “workforce housing” exist with the most prevalent being that it serves working people earning 80-120 percent of median income who pay no more than 30 percent of their income in rent.

There is a housing crisis in many major U.S. cities, a continued rise in homelessness and a vast shortage of affordable housing for extremely low, very low and low-income households (30-80 percent of median income). While just a drop in the bucket, federal and state programs and subsidies are at least addressing some of the problems of supply.

A similar and growing crisis exists in the supply of affordable housing for households earning between 80-120 percent. This segment of the population, however, is not eligible for subsidies or affordable housing and most often is paying far more than the 30 percent of income that the U.S. Housing and Urban Development regards as normal. This 80-120 percent segment is mostly destined to be renters-for-life, and with overpaying for rents and miniscule ability to save, they will never have the down payment to own a home or pay a mortgage.

Nor, most likely, will they be able to afford to live near their job. Commuting is a major contributor to global warming. Affordable housing for this segment of our major cities is fast disappearing. “Workforce housing” targets this segment with words and policies, but, regretfully, with few real projects.

One group did do something about it, however. Here’s the story of a workforce housing cooperative operating in the heart of one of the biggest cities in North America.

This housing cooperative gives first preference to low-income workers with jobs in downtown hotels and restaurants. Those resident members are easily able to walk, bike or take public transportation to their jobs. The 85 cooperative apartments (33 one-bedrooms, 24 two bedrooms, 24 three bedrooms, and four four-bedroom units) are a mix of subsidized and slightly below-market-rate units. Four units were developed as accessible. Because of the central city location, only 10 on-site parking spaces were provided. One space is reserved for Enterprise CarShare and one space reserved for handicapped parking.

How did such a sensible, affordable home for the lowest-paid employees of Toronto’s Downtown hotels and restaurants get built a third-of-a-mile away from Toronto City Hall in the city’s business center? The cooperative is six minutes by bike from Union Station, Toronto’s transportation and downtown hub. One Local 75 Housing Co-op resident was quoted in the National Post as saying, “I love it. I can walk to work. I don’t have to get up at 5:30 a.m. and get the bus.”

The city of Toronto had a vacant site at 60 E. Richmond Street. Toronto Community Housing (TCH) was fast losing social housing units downtown. The Cooperative Housing Federation of Toronto (CHFT) had not seen any new cooperative in 20 years, and Local 75 UNITE (Hospitality Workers) had members traveling quite a distance to their downtown jobs. The ingredients were there, but there was not yet a cook.

Along came Toronto City Councillor Pam McConnell. McConnell had lived in Spruce Court Co-op for 40 years. At times she was a cooperative housing manager and rose to become president of the Cooperative Housing Federation of Toronto. In 2017, the year she died prematurely, she was a deputy mayor of Toronto. McConnell saw a unique alliance that met her cooperative vision to house low-income workers in downtown Toronto.

The alliance spent a few years looking for an outcome that was acceptable to all four groups. At the conclusion of their efforts: The city of Toronto leased the vacant site to TCH for 50 years; TCH, CHFT, and UNITE signed a memorandum of understanding on who would be eligible to live there and what income groups would qualify. TCH then subleased the property to Local 75 Housing Cooperative, Inc. The final agreement reserved 47 units for displaced low-income households who once lived in the gentrifying Regent Park neighborhood and 38 units for UNITE members or non-union workers in the hospitality industry.

To support the project and to bolster the cooperative’s operating budget, UNITE filled another gap. UNITE rented most of the ground floor commercial space for two purposes. One was for its Toronto offices, and the other, more importantly, was for a training restaurant.

Called Hawthorne Food and Drink, the training center is open to all UNITE members and to any member of the public who wants to work in the hospitality industry. For example, United Way of Toronto and other government work programs provide scholarships to homeless and low-income people who want a job in the field. The Hospitality Workers Training Center (HWTC), a nonprofit sponsored by Local 75 UNITE, downtown hotels and government and nonprofit employment organizations operate the restaurant. In less than seven years of operation, Hawthorne has trained hundreds of hospitality workers.

The Canadian Architect magazine wrote this about the cooperative: “Designed by Teeple Architects, 60 Richmond East is a boldly contemporary high-rise with sculpted lines and splashes of colour, as well as a compelling blend of social, environmental, and urban aspirations.”

The 11-story building has won numerous awards for its architecture and sustainable construction, such as Governor General’s Medal in Architecture; Greater Toronto Chapter Innovation in LEED Award – First Place; Toronto Urban Design Award – Award of Excellence; ArchDaily Building of the Year Award; Sustainable Architecture & Building Award; and Canadian Architect Award of Excellence.

The need for workforce housing cooperatives like Local 75 Housing Cooperative in major American cities is enormous. Cities desperately need targeted affordable housing to attract teachers, public employees, service workers, nonprofit employees and gig workers who are the moderate-income backbone of the urban economy. Due to the very high costs of housing in many cities, the need stretches from households earning between 80-140 percent of median income.

Religious organizations, teachers’ associations, unions, employer and employee groups, nonprofit housing and community organizations are some examples of people who could step forward to sponsor such initiatives for their members.

CREDIT: ED YAKER | Amalgamated Workers Housing Cooperative, Bronx, N.Y. is one of the first examples in the United States of union sponsored workforce housing.

The oldest continuing housing cooperative sponsored by a union is Amalgamated Housing Cooperative in the Bronx. It was first occupied in 1927. A second housing cooperative called Amalgamated Dwellings in Manhattan was occupied in 1929. Amalgamated Clothing Workers Union under the leadership of their president, Sidney Hillman built the two housing cooperatives. The manager was Abraham E. Kazen, who went on to become known as the ‘father of cooperative housing in the United States of America.’

In the 1950s, a group of trade unions under the leadership of Kazen drew upon the Amalgamated experience and went on to form United Housing Foundation in New York City. Through their joint sponsorship, UHF spurred the creation of over 20 housing cooperatives. Those unions created about 33,000 units of cooperative housing in New York City targeted to their members. Some were developed by unions to house their particular members. UHF functioned to provide affordable housing to the city’s core workforce. Through UHF, union workers got to live affordably and have cooperative homeownership in the city where they worked. Without a doubt, and without knowing what it would be called later, the UHF cooperatives in NYC were the first mass provision of “workforce housing” in the USA.

Only a coalition of that type of scale sponsoring limited-equity housing cooperatives (LEHC) and using state and federal funding can meet the affordable ‘workforce housing’ shortage facing today’s moderate-income working families.

Silicon Valley and San Francisco in California are at the epicenter of the jobs-housing crisis. Apple, Cisco, Google, Facebook, and other tech giants are investing billions of dollars in foundations to address the regional affordable housing crisis. Some of these new funds should foster LEHCs for targeted employee groups such as teachers, municipal workers, tech workers, etc.

LEHCs have the best record of maintaining affordability over time, requiring modest down payments, creating lower entry home ownership, ensuring owner occupancy and creating democratic governance and community. In particular, the U.S. is fortunate that the National Cooperative Bank and Capital Impact are available to share their extensive experience in funding affordable cooperative housing.

The moderate-income housing and homeownership deficit are growing at crisis proportions. The overpayment of rent by moderate-income families is destroying the asset building opportunities of this core segment of the population. Without employing a cooperative housing solution that has access to targeted government, foundation and institutional financing, the U.S. will be left with cities of lifetime renters not able to save. Without an affordable ownership solution for the middle class, America’s societal structure and values and the American Dream are at risk


David J. Thompson has visited Soldier On twice to learn about the progress of the limited equity cooperative model. He has worked on the California legislation and successful bond measure in 2014 which made $1 billion more available to house veterans in new ways. David is president of Twin Pines Cooperative Foundation and a co-principal of Neighborhood Partners, LLC. www.npllc.org

Legal Workshops are Popular with Conference Goers

For many years, my legal team, April Gallup and Creighton Gallup, and I have presented various classes to board members and management alike, on the legal issues facing cooperatives.

For the Registered Cooperative Manager (RCM) track, there were “Legal Issues for Management.” This class presented a number of hot issues including the fiduciary responsibilities of management agents to their cooperative clients, how to select and recommend cooperative attorney candidates to cooperative boards, mold and mold litigation, fair housing, dwelling unit alterations, e-security, and other topics routinely faced by cooperative management agents. Additionally, the class reviewed management contractual agreements and what to include in order to protect not only management but their clients. The class also covered requests for proposals and requests for quotation, how to write them and how to make sure the lowest responsive, responsible bidder is contracted to perform so cooperative clients are adequately protected. The discussion moved on to document retention policies and what needs to be saved and what can be tossed (after a certain period of time) and what documents must be made available in the event a member makes a corporate records request. There was even discussion on adopting and enforcing house rules for cooperatives and the perils of security cameras for cooperatives and members alike.

In addition to instructing in the NAHC RCM Track, my attorneys and I presented the “Legal Update for Housing Cooperatives,” “Legal Landmines for Board Members” and the “Attorney Roundtable” courses. The “Legal Update for Housing Cooperatives” covered a number of topics that cooperatives are facing more frequently. For this year’s “Legal Update,” however, things were changed up a bit from prior years, and the class was made far more interactive. Class attendees were advised to pay close attention because there was going to be a quiz at the end and that was no joke. Attendees were given a short test asking them to identify “Who Does What?” in the cooperative business setting.

The “Legal Update” topics included board ethics, personal liability of board members, marijuana, member-initiated meetings, meeting minutes and written resolutions and business judgment rule. These are important topics for board members. Some classes exist devoted to meeting minutes and even board ethics, but none of these classes are presented by a cooperative attorney who can give a clear what to do and what not to do answer to these topics. The business judgment rule discussion helps the board learn what makes a board decision a good decision and what makes a bad one that could expose a board member to personal liability outside the protections of the cooperative insurances.

For the new “Legal Landmines” class, the presentation included not only new and emerging hot topics impacting cooperative boards but for each topic, there was a fact scenario presented to the class attendees, like a mini-law school exam question. Each fact scenario gave a detailed synopsis of a topic impacting today’s cooperative boards and momentarily placed the class attendees in the shoes of the attorney to engage critical thinking. Class attendees actively participated in question and answer sessions involving each fact scenario before delving into the course material. Some of the topics included member admission interview questions, secondhand smoke and smoking bans in cooperatives, alteration agreements and enforcement issues, subletting, assistive animals and accommodations, corporate records review requests and directors who behave badly. You would be surprised how many times asking personal questions during member interviews will land the board and the cooperative in hot Federal Housing Administration water. “Legal Landmines” was an opportunity for board members to not only learn from fact scenarios but be able to apply what was learned going forward and, most importantly, know when to talk to the cooperative attorney first.

The “Attorney Roundtable,” a class traditionally designed for participants to sit down with experienced cooperative attorneys and ask questions about any topic, also received a bit of a face-lift for the fall conference. For this class, we opened with an extended fact scenario involving cooperative legal issues that literally read like a good thriller and to get the questions started from the class attendees. Presented in an informal setting, the “Attorney Roundtable” is the chance to ask a question from an experienced legal professional without judgment but with a chance to get an answer and maybe a recommendation to take back to the cooperative attorney.

 


Randall Pentiuk is a partner of Pentiuk, Couvreur and Kobilijak, PC in Wyandotte, Mich.

Calling All Housing Cooperatives: Act Today

Superstorm Sandy was the deadliest and most destructive, as well as the strongest, hurricane of the 2012 Atlantic hurricane season. Inflicting nearly $70 billion in damage, it was the second-costliest hurricane on record. After this storm hit and the area affected was federally declared a national disaster, impacted housing cooperatives learned the hard way that although the inside of their individual units would be eligible for Federal Emergency Management Agency (FEMA) grants, the common areas of their housing cooperatives would not qualify for them. This scenario meant that they would have to apply for Small Business Administration (SBA) loans to replace boilers, furnaces, damage to hallways and roofs and more.

Here’s the catch: FEMA grants do not have to be repaid, but SBA loans, which are very difficult for housing cooperatives to obtain, do. And, it’s simply unfair because if a single-family homeowner is impacted by a federally declared national disaster, then FEMA would cover damage to the entire home.

Representative Jerry Nadler, D-NY, has been working since 2012 to remedy this wrong for cooperatives. The introduction of his bill, H.R. 5337, is approaching. However, now it’s your turn. H.R. 5337, already has 11 bipartisan co-sponsors but need more. You can make a difference.

Go to the Democracy.io to find your representative. Ask him or her to co-sponsor and support HR 5337. It’s fast and easy. Ask everyone in your housing cooperative to do it. Protect your housing cooperative and do it TODAY!


Judy Sullivan is NAHC’s government relations representative. She is also the recipient of NAHC’s Jerry Voorhis and the Roger J. Willcox President’s awards.