A housing cooperative is formed when individuals or families join with each other to form a corporation to gain control or ownership of the building or buildings in which they live.
One major attraction for potential co-op members is -the economic benefit of making a small equity investment to purchase a share in the ownership of the corporation, which is returned to them, with appreciation, when the cooperator moves out.
Cooperators pay an amount designed to cover the operating expenses of the not-for-profit property (the business) including such items as: mortgage, property taxes, maintenance, insurance, utilities and contributions to emergency reserves. It is customary for co-ops to offer and arrange workshops and counseling to help members become more comfortable and skilled with personal and corporate financial planning.
Members elect their corporate leadership democratically; and, share in the benefits developed from the activities of the corporation.
THERE ARE TWO BASIC CO-OP STRUCTURES:
1. Market-rate co-ops: are treated like most standard residential properties, where owners are allowed to sell their shares whenever they want, for as much money as they want. Market-rate co-ops are very common in New York City.
2. Limited equity co-ops: are usually geared toward those seeking affordable housing. There is a cap on how much equity members can earn in their homes, so they can’t sell their share for a huge profit. This restriction works to keep these co-op communities affordable. Co-op housing can be:
Single-family homes
Townhouses
Mid- and high-rise apartment complexes
Garden apartments
Senior housing
Student housing
Special-needs housing
Mobile home parks
One of the main advantages of co-op housing is affordability. A co-op is usually more affordable than a condo. Some people want to build equity in a home but have no interest in taking on the &responsibilities and expenses that come with private ownership. Most co-ops practice and promote Rochdale Principles.
ROCHDALE PRINCIPLES:
Rochdale Principles are a set of ideals established by the Rochdale Society of Equitable Pioneers in 1844. The Rochdale Principles have been adopted by the International Co-operative Alliance_(ICA). They include:
1. Voluntary and Open Membership: Cooperative Societies must have open and voluntary membership. The Rochdale Principles established important anti-discrimination policies and a system of motivations and rewards to expand membership.
2. Democratic Member Control: The Rochdale Principles mandate that cooperatives must have democratic member control. This gives members the right to participate in the decision-making processes of their cooperative. One member = one vote.
3. Member Economic Participation: Members equitably contribute the capital of their cooperative. That capital is common property of the cooperative and members usually receive limited compensation. Surplus economy (i.e. profits) are managed by the members to develop the cooperative or returned to the members.
4. Education, Training and Information: Cooperatives must provide education and training to their members. Additionally, cooperatives provide information and education to the public about the nature of co-operation.
5. Cooperation among Co-ops: Cooperatives are autonomous organizations, but they work together to facilitate communication across cooperatives and strengthen the cooperative movement. Cooperatives are responsible community partners. Co-op decisions must/should benefit the larger community.
