COOPERATIVELY OWNED HOUSING FOR OLDER ADULTS
"From a gerontological point of view, the essential benefit of the cooperative is that it provides an economic structure and social framework that fosters self reliance, self control and determination, interdependence, and cooperation among the resident members, even among those with severe chronic conditions. As gerontologists we know that these factors contribute directly to continued independent living, successful aging and the enhancement of longer life."
-- Gerald Glaser, gerontologist, in 1981 testimony before the President's Housing Commission
Ownership: The building and land is owned by a cooperative corporation. The stock in that corporation is owned by residents ("members") prorated in value to the size of their homes.
The stock may be sold, and equity returned to members or their family. Appreciation is often limited by the cooperative to ensure that units remain affordable. This practice is referred to as "limited equity", and experience is that as units become more and more affordable over time, the waiting list builds thereby assuring timely resale.
Members have occupancy rights to a specific home as long as they own their stock, make their monthly charges, and are healthy enough to not be a hazard to themselves or other residents. Default in monthly charges can trigger a forced sale of their membership.
Monthly charges pay for operating expenses, real estate taxes, and debt service on any master mortgage. Real estate taxes are paid comparable to single-family homes; state "Homestead" exemption, if any, often applies.
Prices and monthly charges are significantly less expensive than assisted living and continuing care retirement communities ("CCRCs"). Cooperatives do not include extensive personal or home-care services, except at the option of individual residents.
Age minimum: Under the law, 80% of the homes must be occupied by households with one member 55 and older. Most cooperatives limit all units to 55 and older.
Mortgage interest and real estate taxes are deductible from state and federal income tax.
A management company may or may not be retained. Some co-ops self-manage.
Members elect a board of directors which makes all policy decisions for the cooperative. Operating policies are set out in by-laws, including such things a pet policies, permission for members to rent their homes, etc. These by-laws can be amended by the membership.
Any style of construction can be owned cooperatively: multi-family, townhomes, single-family, garden, high-rise, mobile homes, etc. Typical unit mix is 1/3 one-bedrooms, 2/3 two-bedrooms.
Typical residents: Median age: 73-74; age range in recent projects: 56-92; independent and mobile; most from within 5 miles of the site. Most are moving out of a single-family which they have owned and use the equity therefrom to pay the co-op's share price.
Master mortgage: One permanent loan on which all members pay debt service
Share price or Downpayment: Each member's respective share of equity.
Share loans: Individual loans to members for share prices, secured by the member's share
Financing options (in order of frequency of use):
1. HUD-insured construction and permanent loans
2. "Deep equity" - No permanent loan; members pay all costs.
3. Conventional construction and/or permanent loans
4. Share loans
5. U. S. Department of Agriculture
Resale of single-family homes to younger families.
Real estate taxes.
Retain older people in their communities and neighborhoods.
Community kitchen (residential quality, not commercial)
Laundry facilities (typically central, sometimes in homes)
Van (see Transportation below)
Typical services -- Each cooperative is different, with residents deciding what types of services they want and need:
Resident service manager
Social activities - too many to mention
Housekeeping of common areas (unit housekeeping optional)
All maintenance, except day-to-day in homes. Scheduled redecoration of homes paid for by co-op every 8-10 years.
All appliance maintenance paid by co-op.
Pot-lucks, meals on wheels.
Transportation. Most co-ops have vans, driven by staff or qualified resident.
Assistance with shopping
Personal and home care is arranged as needed, at cost, with outside providers.
Terry W. McKinley
Cooperative Housing Resources
2813 South 9th Street, Minneapolis, MN 55406
612-333-8684 ~ Fax: 612-333-3685