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.

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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.

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