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.

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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.

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Financing a Single-Family Home

Debt:90%

Equity:Equity:10%10%

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Financing a Condominium

Each individual owner can choose different levels of equity and debt financing

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Financing a Housing Cooperative

Each member-owner chooses level of equity, and share debt, and cooperative gets blanket debt

Option 1:

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Financing a Housing Co-op

Each member-owner chooses levels of equity and share debt

Option 2:

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Financing a Housing Co-op

98% blanket debt

2% equity

HUD Section 213 financing

Option 3:

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Housing Cooperatives in Minnesota

• Minnesota cooperatives: 250+77% metropolitan23% non-metropolitan

• Approximately 6,800 units79% metropolitan21% non-metropolitan

• Nationally, there are about 1.5 million units, mostly in large cities like New York and Chicago

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Types of Housing Co-ops

• Leasehold

• Market rate

• Limited equity

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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

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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”

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• 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?

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Distinguishing Features of Co-ops

• Ownership

• Governance

• Flexibility

• Not distinguished by building type, management, demographics, or location

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Northcountry Cooperative Development Fund

Co-ops 101