1 Who is Northcountry Cooperative Development Fund (NCDF)? Started in 1978 Community Development Finance Institution and a cooperative specializing in cooperatives Lending to housing, food, worker cooperatives Provides lending, development, technical assistance to cooperatives

2 What is a cooperative? Definition A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly- owned and democratically-controlled enterprise.

3 Cooperative Values Equity Equality Democracy Solidarity Self-Help Self-Responsibility

4 How Does a Housing Co-op Compare with Other Housing? In a condominium association, each individual owns a divided piece of the property. In a housing co-op, all members combined own an undivided share of the property. In a rental apartment, tenants own nothing.

5 Financing a Single-Family Home Debt: 90% Equity: 10%

6 Financing a Condominium Each individual owner can choose different levels of equity and debt financing

7 Financing a Housing Cooperative Each member- owner chooses level of equity, and share debt, and cooperative gets blanket debt Option 1:

8 Financing a Housing Co-op Each member- owner chooses levels of equity and share debt Option 2:

9 Financing a Housing Co-op 98% blanket debt 2% equity HUD Section 213 financing Option 3:

10 Housing Cooperatives in Minnesota Minnesota cooperatives: % metropolitan 23% non-metropolitan Approximately 6,800 units 79% metropolitan 21% non-metropolitan Nationally, there are about 1.5 million units, mostly in large cities like New York and Chicago

11 Types of Housing Co-ops Leasehold Market rate Limited equity

12 What’s so great about co-ops for affordable housing? Affordability Inexpensive home ownership Operations at cost Joint purchasing/economies of scale Accessibility Low transaction costs Can borrow collectively Flexibility Lots of different building types, populations Intergenerational living

13 What’s so great about co-ops for affordable housing? Financial Return Tax deductibility of interest Equity accumulation Protection from predatory lenders Sociability Leadership development Civic participation Enhanced security Opportunities for building “social capital” Create and support a “community of interest”

14 Stability Stable payments for residents with HUD backed loans Broader home ownership base without displacement for communities Quick resale for co-ops with limited equity formula Limited equity co-ops are a self-perpetuating and self- sustaining use of public and private social impact funds What’s so great about co-ops for affordable housing?

15 Distinguishing Features of Co-ops Ownership Governance Flexibility Not distinguished by building type, management, demographics, or location

16 Northcountry Cooperative Development Fund Co-ops 101