Cooperative Solutions to Housing Challenges

By Lynn Pitman, Outreach Specialist, UW Center for Cooperatives

Rural and urban communities are grappling with a shortage of housing that is affordable and meets basic quality standards. In Wisconsin, housing costs in 2017 had increased to above the pre-Great Recession peak of 2007, while median income remained lower than 2007 levels. Nearly 37% of renter households and 18% of owner-occupied households in Wisconsin are facing housing stress, meaning that their housing costs that are greater than 35% of their household income.

The cooperative option

In response to these challenges, there has been a renewed interest in the cooperative housing model. The model’s flexibility allows it to be used for many types of single or multi-unit residences that meet the unique needs of groups ranging from owners of manufactured homes to seniors.
Co-op housing options can be made more affordable by accessing targeted financing with longer-term, low interest rates. These lower financing costs are passed on to the resident member through the price paid for the equity share required for cooperative homeownership. By limiting the amount the equity share can appreciate when it is resold, the co-op can maintain affordability into the future.

A housing co-op also offers self-determination and community through democratic governance. The equity share not only gives the member the right to occupy a particular space, it also gives each household the right to vote for the board of directors. The board oversees the cooperative’s finances and property management operations, so that member needs as well as the co-op’s future financial stability is maintained.

Cooperatives and manufactured home parks

While manufactured homes are an affordable housing option for many, the homeowners must rent the lot and utility service from the manufactured home park owner, which substantially affects the quality of their housing situation.

Pammel Creek Estates, a manufactured home park in La Crosse, WI, provided affordable housing, community, and natural beauty to its residents. But like many parks built in the 1950s-1960s and owned by investor landlords, Pammel Creek’s private road, water, and sewer infrastructure needed substantial repair and replacement work.

Northcountry Cooperative Foundation (NCF) and the ROC USA network helped the residents of Pammel Creek Estates purchase the park in 2016. By converting it to a cooperative resident-owned community (ROC), residents now control monthly housing fees, manage park infrastructure improvements, and can improve the value of their homes.

Cooperatives for senior living

While there are a few senior housing cooperatives in Wisconsin, the majority of the 109 midwestern senior housing cooperatives are located in Minnesota. A network of knowledgeable organizations and property developers has successfully driven the development of new senior cooperative start-ups, and provided ongoing support to established ones.

Senior housing co-ops are structured to take care of residents’ primary home maintenance needs while providing the tax and asset preservation benefits of home ownership. The co-ops typically include community building features where residents can gather, spaces where residents can pursue individual interests, and amenities that can support independent living as residents age.

Members make monthly payments that cover their share of co-op expenses, taxes, utilities, mortgage, and reserve payments. By using a federal HUD-insured 40-year, fixed rate mortgage program, senior housing co-ops can keep financing costs low. Typically the equity appreciation of a member share is limited to preserve affordability. when it is sold.

Ongoing support for effective boards and informed member engagement are important factors for the success of any housing cooperatives. Member leadership assures that cooperative operations remain focused on meeting member priorities, sustaining community and maintaining financial stability, instead of maximizing a return on equity investment.

More information on housing cooperatives.