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Housing Cooperatives In the Age of Climate Change

Co-ops a tool to protect communities from injustice

Residential property renters face more and worse challenges in a warming climate.Climate Central a nonprofit science-journalism organization found that unless emissions drop, rising waters will pose increasingly dire challenges for low-income renters across the country. The U. S. already faces a severe shortage of modestly priced rental housing and renters can expect the average rate to go up between 15 and 20 percent in 2023 especially in States like Texas, new York and California; climate change threatens to exacerbate this situation.Austin, Texas is the number one highest rent city with a rent increase of 40% in 2022!The average rent estimate rose in all 47 reported states from Aug. 2021 to Aug. 2022, with 37 states seeing increases of at least 8% in that time. (Data is unavailable for Montana, West Virginia and Vermont.)

The nonpartisan data center USAFacts reports that for decades between 30% and 40% of U.S. households have been renting their homes. But nationwide rent surges disproportionately affect racial minorities, who rent at significantly higher rates than white Americans. According to U.S. Census data, less than 31% of white American households were renting their homes in 2019, compared to 59% of Black American households and 53% of Hispanic households. Black American households account for 20% of renter-occupied housing units despite making up just 8% of households overall. But now young Millennials especially in the BIPOC communities are opting to form coops to take control of their housing and economic futures.

A housing cooperative or "co-op" is a type of residential housing option that is actually a corporation whereby the owners do not own their units outright. Instead, each resident is a shareholder in the corporation based in part on the relative size of the unit that they live in. Owners of a co-op own shares of the cooperative instead of owning their unit outright, which would be the case in a condominium. With some co-ops, owners are allowed to sell their co-op shares in the open market, depending on the market rate for co-ops in that location, subject to approval by the co-op board. Sometimes people confuse Coops with condos here are the differences.

Co-op owners own shares in a co-operative housing property. Instead of renting individual apartment units. Most co-ops look just like apartment buildings, but instead of renting their unit, they own shares in the whole complex. Co-op home owners buy stock in the housing complex—and the ownership of that stock comes with a proprietary lease to their home. Condo owners own individual apartment units. They do not own shares in the apartment building itself. They follow the rules of the actual owners and pay upkeep fees. As for differences in buildings If you have a strong personal preference regarding the type of building you live in, here’s what you can expect some differences living in a co-op or condo: Co-ops are usually found in older buildings in large cities they are refurbished or remodeled properties such as warehouses and Brownstones or multi-family homes or former factory buildings. Condos are found in newer buildings in large cities or remodeled older buildings.

You will likely find more apartment amenities and more modern aesthetics in condos, while co-op apartments usually boast a charmingly antiquated aesthetic which owners upgrade as needed. Price is one of the most important factors to consider when purchasing a co-op or a condo. Generally, co-ops are cheaper than condos so multiple owners have greater buying power and ability to make improvements before a move in date. Smaller co-ops are run strictly by the residents, with everyone pitching in to take care of duties, such as maintenance, landscaping, and setting rules. Large co-ops may be run by a board of directors consisting of a subset of residents. In either case, there are rules to be followed and a certain degree of social interaction that takes place. If you don't like sharing decision-making authority, co-op living may not appeal to you. The structure of housing co-ops varies, depending on the specific jurisdiction of its location. In the U.S. and Canada, the most popular are Market Rate Coops.

A Market rate cooperative sells shares at full market value in the original sale, and permits future unit sales at market value. Much like conventional real estate, a unit's sale price is determined by the market, allowing for potential accumulation (or loss) of equity by the members. This means if a member decides to move they have to sell for whatever the rate is and some agreements may include a right of first refusal essentially giving Co-op members the first crack at making an offer in a particular transaction and controlling who can come into their space. In short they have the right to buy the unit before the seller negotiates any other offers.


n a “Limited Equity” co-op, the co-op and the member each have a stake in the equity of the property. When a member joins, they purchase a share in the co-op in order to move in, just like in a Market Equity co-op. As the value of the share changes, though, there is a relationship between the co-op and the member for how this change in value is divided. One example might be that 25% of the change in the value goes to the member, and 75% goes to the co-op. The idea behind this is that by diverting some of the value to the co-op, housing prices can be kept affordable by the co-op, which has access to some of the equity in the building. A second major reason for the split of the value is to give members in the co-op less of a financial incentive to sell with the market, so that a spike in housing values does not cause a wave of sales, followed by much higher costs to live in the co-op. Limited Equity co-ops are often used to provide affordable housing, while allowing members to build some wealth with the increase in the value of the property.

When it comes to owning a co-op, monthly charges are the name of the game. Incorporate these divided equally between all owners into one monthly payment and this is essentially your living costs or rent. Some Co-ops have a commercial space which they rent to what is called an anchor tenant who is not an owner such as a convenience store or dental office. This tenant essentially pays the bulk of the Co-ops costs! In any event an anchor tenant should be positioned on the site in a fashion that maximizes their visibility from the frontage street, should be readily accessible from the ingress/egress points, and should be close to available parking.

Generally, monthly co-op fees consist of:

  • Maintenance Fees

  • Property Taxes

  • Property Mortgage

  • Utility Bills

  • Insurance Policy Premiums

Generally, monthly co-op fees are much more expensive than monthly condo fees. However, that is due, at least in part, to the fact that mortgage payments aren’t included in condo fees.

How to set up your housing cooperative? It all begins with a group of like minded people. Usually you’ll need to have something in common, binding you together. This could be the Arts, raised in the same neighborhood, school or Greek affiliation or issues that you are all concerned about, or simply strong bonds of friendship. If you have lived together in shared houses previously, or worked together, so much the better. What are you aiming for? A communal house or individual units/flats? Do you want to house everyone at once, or could you move gradually towards a fully housed membership? Share your dreams for a home and a community with each other, and develop a feeling for where your group is going. Publicize yourselves and attract more people in. Develop a wider base of support for your project. If people drop out, you will need new members to fill gaps.

Prevailing disaster aid practices often provide little comfort to low-income renters; in fact, they can make their lives more difficult over time. In a 2018 article, sociologists Junia Howell and James Elliott argued that damages from natural hazards increase wealth inequality in the United States, largely because public and private authorities prioritize middle-class homeowners in post-disaster assistance efforts. While homeowners may receive insurance payments or low-interest loans after a disaster, renters are often forced to make costly moves, frequently to higher-priced units.

These findings show climate caused damages are widespread; they are projected to increase dramatically, and FEMA aid – as currently administered – appears to exacerbate the problem. Coop owners are in a unique position to prepare and protect themselves from the potential economic impacts of climate. More and more co-ops, are looking to save money and protect their assets as expenses rise, more and more boards, shareholders and unit owners are exploring ways to incorporate “green options” into their building community. Cooperative living communities are clearly way ahead of the curve on everything from installing solar panels and battery systems for electricity and charging stations for electric vehicles and solar hot water heating, installing high-efficiency toilets and low-flow shower heads, planting vegetable gardens and fruit trees, raising bees indoor tower herbal gardens in lobby spaces, composting food scraps and yard clippings, and building gray water systems to recycle water from washing machines and showers. Some have also planted lush and gorgeous rooftop gardens where residents can enjoy picnics and breathtaking views.

Although housing Coops are rare in BIPOC communities others have been using Co-ops for nefarious and questionable reasons. Co-ops are a significant part of New York City housing, making up about 75% of Manhattan’s apartment stock. They’ve been around for more than 120 years, a reconstruction era model for an urban “planned community”. They resemble country clubs and private social clubs, assuring shareholders – those who have bought units in the building – that they’ll be surrounded by others who look and earn money like they do. The upside for anyone who’s accepted is the guarantee of community, but the incalculable downside is exclusion for countless others – the secrecy allows for discrimination with impunity. The model hasn’t adapted to modern transparency standards and is little inclined toward doing so, given the political power that comes with such economic might. But now it is being used as a tool to protect communities from gentrification especially as housing prices skyrocket! It’s a danger for buyers and renters who don’t fit the mold of any given building without legal protections, and until this option is embraced the broader effect is fewer housing options in a cities that are already short on affordability.

Contacts in Boston for Cooperative Housing.

1.Kenneth B. Gould Partner at Lawson & Weitzen, LLP

Cooperative Housing Law Attorney serving Boston, MA

2.Gallet Dreyer & Berkey, LLP

3.Greater Boston Legal Services


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