What IS a Housing Cooperative?
A housing cooperative is... formed when people join with each other on a democratic basis to own or control the housing and/or related community facilities in which they live. Usually they do this by forming a not-for-profit cooperative corporation. Each month they simply pay an amount that covers their share of the operating expenses of their cooperative corporation. Personal income tax deductions, lower turnover rates, lower real estate tax assessments (in some local areas), controlled maintenance costs, and resident participation and control are some of the benefits of choosing cooperative homeownership.
| Comparison Cooperative Chart |
In the United States, more than 1.2 million families of all income levels live in homes owned and operated through cooperative associations. People of varying needs and desires have found several ways to apply cooperative concepts in meeting their housing needs.
Cooperative housing is not a new concept. The first housing cooperative in the nation was organized in New York City in the late 1800s. Today, large numbers of housing cooperatives are located in major urban areas such as New York City, Washington, D.C., Chicago, Miami, Minneapolis, Detroit, Atlanta, and San Francisco.
Cooperative members own a share in a corporation that owns or controls the building(s) and/or property in which they live. Each shareholder is entitled to occupy a specific unit and has a vote in the corporation. Every month, shareholders pay an amount that covers their proportionate share of the expense of operating the entire cooperative, which typically includes underlying mortgage payments, property taxes, management, maintenance, insurance, utilities, and contributions to reserve funds. There are many benefits to cooperative ownership. Some of these include personal income tax deductions, lower turnover rates, lower real estate tax assessments, reduced maintenance costs, resident participation and control, and being able to prevent absentee and investor ownership.
Housing cooperatives come in many shapes and sizes: cooperatives include townhouses, garden apartments, mid-and high-rise apartments, single-family homes, student housing, senior housing, and mobile home parks. The purchase price of cooperative membership can be left to the market or the price can be maintained at below market in order to preserve affordability. All cooperatives share a common set of principles adopted by the International Cooperative Alliance.
The key aspect in any cooperative is democratic control by the members in order to achieve an agreed upon common objective. Democratic control is typically accomplished through governance by volunteer boards of directors elected from the entire membership. In addition to the board, co-ops often have many committees, such as a membership committee, maintenance committee, activities committee, and newsletter committee. Most co-ops hire a manager or management company to perform management functions; smaller co-ops will often have no paid staff or management but will have members handle all the maintenance and operations responsibilities.
Additional information on the history of housing cooperatives can be found in an article published by NAHC titled, “Brief History of Cooperative Housing.”