Presentation to the President's Commission on Housing
Washington, D.C.
December 3, 1981
Gerry Glaser, Director of Consulting Services
Ebenezer Center for Aging, Minneapolis, Minnesota


Thank you for the opportunity to be here to discuss housing cooperatives for the elderly. My name is Gerry Glaser, Director of Consulting Services for the Ebenezer Center for Aging of Minneapolis, Minnesota. My organization is the research and consulting arm of Ebenezer Society.

The Ebenezer Society is a 64 year old nonprofit multi-level geriatric care center in Minneapolis, Minnesota affiliated with the American Lutheran Church. It is our mission to provide health, housing and supportive services to older people to enhance the quality of longer life. To that end, we operate 790 nursing beds, approximately 1,000 units of congregate housing and provide home health services to about 650 people living in their own homes. Our services are organized as a ''continuum of care".

For the last two decades, those of us in the aging business have been heavily involved in the housing business,

  1. to provide affordable housing for the elderly who are poor or who become poor as a result of retirement, and

  2. to-provide "congregate housing'' for those elderly who otherwise would be prematurely or inappropriately institutionalized at high personal, private and public cost.

While we will continue to diligently and doggedly pursue these goals, we are aware we must expand our vision and concerns to deal with emerging new realities in aging. Those realities are:

  1. Americans seem to have received a new birthright: longer life. It comes to us simultaneously as a gift, privilege, problem and opportunity. The critical question is now ''what to do with longer life?"

  2. Americans are growing older and living longer in record number What was a small minority has now become a growing, influential consumer, lobby and political force. And frankly, we are staring down a demographic cannon as we can now see the "baby boom" of this century becoming the ''senior boom" of the next century.

  3. America is aging middle class. While easily 25 percent of the elderly are at or below the poverty level, the net worth of many elderly clearly makes them middle income and middle class. This is due substantially to the fact that this generation of elderly is largely a generation of homeowners. At least 70 percent of elderly households are homeowners and 60 percent of all elderly households own their homes outright. That represents $500 billion of elderly home equity, many of whom are "cash poor" but ''equity rich".

  4. The housing needs of the elderly cannot be viewed in isolation. Even those of us who are aging advocates must now consider the legitimate needs of other groups. We must now simultaneously develop a housing policy for our children, our parents, and our future selves. Aging is a minority as distant as our parents and as personal as our own lives and children.

  5. We must view the role of government as strategic, but limited, rather than massive and sustained. For us in the aging business that have become heavily government dependent this is a hard reality to face. But I am part of a growing minority in our business that believes: "yes, there is life after David Stockman"--''but it will be different".

Faced with these new realities in aging, we believe cooperative housing for the elderly will become an important tool in the nation's overall housing policy.

Now for the basics. A cooperative is a nonprofit corporation that provides housing for its members, essentially at cost. It is consumer oriented and generally views housing as a service rather than a speculative investment. The policies, operation and cost of the cooperative are controlled by a democratically elected board of directors from among its members.

Its resident members own shares in the cooperative and have the right to occupy a dwelling unit. The members receive the same tax treatment as owners of single family homes.

In short, the cooperative combines the pride and benefits of home ownership with the convenience and efficiency of multi-family housing. Our organization was drawn to the cooperative concept in the mid 1970's when we started to realize there was an emerging group of elderly among our constituency who needed more supportive housing. However, they did not need institutional care and had economic resources that ma de them borderline or over qualified for our subsidized congregate housing.

Upon further investigation, we found the principal asset of many of these people was their single family home, many of which were either underutilized or burdensome to maintain, especially for people in their mid- 70's.

In response, we developed 7500 York, a 338 unit congregate cooperative in Edina, Minnesota, a suburb of Minneapolis. The cooperative was structured as a pre-sale management type cooperative under Section 213 of the National Housing Act.

7500 York's continuing affordability is due to the fact that it is a "limited equity" cooperative. The member or his/her estate will receive back at death or move out his original share cost (down payment), the amount of the loan amortized, the value of approved improvements, and an appreciation factor set by formula in the cooperative's by-laws.

We chose the "limited equity" approach because we believe congregate housing for the elderly should be viewed as a service rather than a speculative investment.

Furthermore, we wanted to make sure the project would continue to serve a middle income group over time, rather than become a luxury project.

The side benefit is that membership in the cooperative is likely to become a better bargain over time and thus will remain highly marketable which is of direct benefit to the cooperative.

Resident control and self determination is the other major key to the project's success. The board of directors is composed of nine members, six elected from the cooperative's membership and three officers of Ebenezer Society.

And while Ebenezer Society manages 7500 York, it is management by influence rather than control. It is vividly clear that the members are in control. Board elections are hotly contested and over 200 members of the cooperative serve on the 20 standing and subcommittees of the Board.

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.

It is possible that some of those critical social forces could emerge in a condominium approach, though we are not so sure. Likened to an ocean voyage, in a condominium each of us ties our individual boats together and sets sail. By contrast, with the cooperative, each of us sets sail on the same ship for better or worse. In short, in the cooperative "we are all in it together''.'

Consequently, cooperation, interdependence, self reliance, self determination and control are not simply by-products of community life but the ethos of mutual survival, support and success.

For these reasons, we believe cooperative housing is an important vehicle for meeting some of our elderly housing needs. In addition, by freeing up older single family homes that may be more affordable for younger families, elderly cooperative housing can contribute to the more efficient and effective use of the nation's existing housing inventory.

For the time being we see the cooperative approach as most feasible and effective for middle income elderly people who are in their mid 70's and desirous of some congregate support services.

Additionally, a strong and growing market may develop among the "empty nesters'' in their late 50's and early 60's who wish a more compact efficient and carefree living environment.

However, with more innovative design or what I call ''creative crowding" we may be able to develop projects for more low and moderate income elderly without the need for ongoing housing assistance.

We currently have on the boards a concept called SLAC, Small Living Arrangements Cooperative. In this concept, several bedroom/bathroom suites share a common club kitchen, living and dining area, and of course, the larger congregate areas of the entire project.

Other concepts we have explored or developed for the elderly include:

  1. "Deep Equity Co-ops" - Cooperatives financed by equity transfers with little or no long term debt.

  2. "Self Assistance Co-ops" - Cooperatives that generate an internal health or housing assistance program by withholding a portion of the limited equity.

  3. ""Co-Location Co-ops" - Market rate cooperatives co-located with new or existing subsidized projects to share congregate space and services.

  4. ""Partially Assisted Co-ops" - Market rate cooperatives with 20% Section 8 units.

Furthermore, we are beginning to investigate the application of the cooperative concept to long term care facilities and other institutional settings. It might be possible to ''deinstitutionalize" those institutions by converting them to housing/health cooperatives. We might be able to enhance consumer control, cut costs and regulations, and somewhat reduce the financial obligation of Medicare and Medicaid. But that's down the line with a blizzard of red tape in between.

For now, we seek from you consideration of cooperatives, and limited but strategic initiatives, to essentially assist older people in providing housing for themselves. Among our suggestions:

  1. First and foremost, amendment of the Omnibus Reconciliation Act of 1980, or favorable drafting of the multifamily housing treasury regulations, to permit limited equity elderly cooperatives to be eligible for mortgage revenue bonds. The current law excludes projects where members have had three years prior homestead. This effectively eliminates elderly cooperatives from this valuable source. Our representatives in the Congress, Mr. Frenzel in the House and Mr. Durenberger in the Senate have been strong advocates of this type of amendment.

  2. Some form of targeted assistance that will make favorable financing available to moderate income younger families to acquire the existing and often less expensive homes of older people moving to a limited equity elderly cooperative. The cities of Minneapolis and St. Paul together with the McKnight Foundation are pioneering such a program in the Twin Cities on a limited basis.

  3. Retention of limited equity cooperatives in the tandem program or its successor to make favorable financing available to limited equity elderly congregate cooperatives that will accept and partially subsidize older people eligible for Section 8 units and or housing assistance vouchers.

  4. Provision within Community Development Block Grants for municipalities to make low or no interest loans to qualified nonprofit sponsoring organizations for the pre-development costs of developing limited equity elderly cooperatives that contribute directly to housingturnover to moderate income younger families.

  5. The inclusion of limited equity elderly cooperatives which turn over existing moderate income younger family housing as priority projects for federal subsidy of taxable housing bonds as currently proposed in the Commission's Interim Report.

  6. The elimination of current laws and regulations that impede the investment of pension funds and other organizations in housing and the development of incentives for pension funds that invest in elderly housing in general, and elderly housing cooperatives in particular, or moderate younger family housing linked to elderly housing cooperative developments.

  7. Revision of FHA mortgage limits and underwriting regulations under Sections 213 and 221 (d)(3) that would more easily accomodate the inclusion of common space ("space not attributable to dwelling units'') that is critical to "congregate housing".

  8. Revision of some FHA Minimum Property Standards that would permit more creatively designed, compact and less costly units where unrelated older people could share certain semi-private living environments.

  9. Revisions in the tax laws to create incentives for families and/or older people otherwise eligible for health or housing assistance to own or directly contribute to the housing costs of older relatives in limited equity cooperative housing and health facilities.

  10. Joint investigation by HUD and HHS of the feasibility of underwriting and reimbursement of cooperatively owned long term care facilities and other institutional environments that increase consumer/family investment and control, streamline regulations and reduce costs to the public and Medicare/caid reimbursement systems.

I think I can speak for both the aging and nonprofit sectors, that with your limited, but strategic assistance, we are prepared to do our part to meet the burgeoning housing needs/demands of older people. And we urge you to consider the cooperative concept as a means to provide affordable housing that enhances the longer life of our current elderly and turns over affordable housing to generations yet to age.

Thank you for this privilege and opportunity.

Gerald D. Glaser

Director, Consulting Services
Ebenezer Center for Aging
2722 Park Ave. S.
Minneapolis, MN 55407
(6l2)87l-7ll2, #306
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