University of Wisconsin Center for Cooperatives
Cooperatives: A Tool for Community Economic Development


How can co-ops and other alternative housing options help Wisconsin residents achieve the goal of home ownership?

This chapter:

  •  examines a variety of housing options, including co-ops; 
  •  discusses what these options are and how they work; 
  •  presents some of the advantages of each; 
  •  offers advice for starting a housing co-op; and 
  •  provides examples of several successful co-ops and other housing options.
We have...a set of unmet needs caused by a housing pattern that reflects the dreams of the mid-19th century better than the realities of the late 20th century.
Dolores Hayden
Redesigning the American Dream

Current Economic & Demographic Trends

...are making it increasingly difficult for many individuals, especially in rural areas, to find safe, affordable housing. These trends include:

  • The typical single-family home, which comprises two-thirds of the housing in the U.S., is designed for a demographic profile which hardly exists any longer: a bread winning father, a stay-at-home mother, and 2-4 children.
  • Single-parent families are the fastest growing type of household.
  • By 2040, nearly 25% of the U.S. population will be over 65.
  • Nearly 25% of the U.S. population lives alone; this will increase as the baby boomer generation ages.
  • The rising costs of housing in recent years have made home ownership an unattainable dream for a growing number of Americans.
  • Suburban sprawl wastes land, energy, and human resources and offers, in most cases, none of the nurturing and satisfying aspects of community.

For many people, this combination of factors has resulted in a high level of dissatisfaction in their living situation, and has motivated them to look beyond the traditional nuclear family home.

A variety of alternatives are described here, ranging from cooperative housing to examples of housing alternatives that offer some of the same advantages of community that co-ops do.
The difference between going into a regular apartment building and a cooperative apartment building is an overwhelming sense of community and camaraderie.
Terry Mc Kinley
Homestead Housing Center

1. Housing Cooperatives

Housing cooperatives are a form of multi- family homeowner-ship. Tenants can join together to form a cooperative corporation which owns the building(s) in which they live.

Residents buy a share (membership) in the co-op, but the cooperative owns the building(s), land, and any common areas. Residents are entitled to live in a housing unit as part of their membership benefits. Members pay a fixed amount each month that covers basic expenses, including mortgage, property taxes, maintenance, insurance, utilities, and reserves. As owners, members exercise control over their housing situation by electing a board of directors made up of other residents.

Note that this is very different from a condominium, where residents each own their individual housing units.

Some people have the misconception that hous-ing co-ops are like communes, where residents all share meals together and have no privacy. In fact, each member/resident of a co-op has his or her own private housing unit. Cooperatives by their nature tend to promote a balance of privacy on the one hand and community on the other.

Upon joining, members sign an occupancy agreement, which specifies in contract form the member’s rights and responsibilities. These generally include the member’s right to occupy a dwelling unit and participate in the governance of the co-op. These are granted in return for his or her financial support in the co-op and taking part in its operation.
In the interests of protecting our individualism, Americans have become starved for community.
Mc Camant & Durrett

Personal Advantages

Members cite a variety of personal advantages to living in a housing cooperative. We list only some of these.

Democratic  Control and Participatory Decision-making
Housing co-ops are run by the people who live in them, providing members the opportunity to participate in decisions that affect their home lives. Because cooperatives operate on a one-member, one-vote basis, all members have the same amount of control.

Predictable Monthly Costs
Since members collectively set the monthly housing costs, those costs cannot be changed without warning; nor is there any reason to alter them unless taxes or other costs change.

Tax Advantages
In most cases, members of housing co-ops are considered homeowners for income tax  purposes, and therefore receive the same tax benefits that homeowners receive.

Equity Accumulation
Individual members of housing co-ops can accumulate equity on their shares over time (with the exception of limited equity co-ops).

Social and Cultural Advantages
Cooperatives often provide opportunities for social contact with a variety of people from different backgrounds. In addition, because residents know one another and screen prospective members, housing co-ops statistically have lower crime rates than many other types of housing.
The cooperative philosophy has much to offer as our society ages...there’s a real opportunity to make our social and political responses to aging much more positive if we work with cooperative strategies.
Susan C. Lanspery
Brandeis University 
The cooperative idea of empowering consumers can help us all age successfully.
Susan C. Lanspery
Brandeis University

2. Cooperative Housing for Seniors

Several of the trends in housing discussed above have hit rural areas particularly hard. These include the overall aging of the population, the increasing number of senior citizens, and the dominance of rural single- family housing stock by older people.

As the population has aged, developers have rushed to build assisted living housing complexes for seniors throughout the country. These units, however, are geared toward seniors with moderate to high incomes. Yet according to the National Cooperative Bank Development Corporation, about two-thirds of the nation’s seniors cannot afford such assisted living housing. Cooperatives and other cooperative-like housing options are seen by many as affordable and replicable models of senior housing that focus on rural communities.

Although the nation is aging, people tend to be healthier and live longer. Thus, many seniors do not want or need to live in a nursing home. They may not need assisted living, but do want something easier than a large family-size home. They are healthy and active and want a housing situation that meets their needs.

Cooperative housing for seniors offers one  answer, providing homes designed for seniors who wish to remain independent in their local community. This strategy also serves to free up single-family homes for younger families in the community.

Homestead Housing Center (HHC), based in St. Paul, Minnesota, has been a leader in developing housing cooperatives for seniors. HHC is a non-profit organization started by the Cooperative Development Foundation and several Midwestern regional agricultural cooperatives. Homestead, with its rural emphasis, has started 12 new senior housing co-ops in the upper midwest, often in towns with less than 10,000 people.

Cooperative housing is quickly becoming popular among seniors. Co-ops allow seniors to retain the advantages of home ownership (income tax deductions and equity accumulation); as well as enable seniors to retain complete control over their housing - including the operating budget and monthly living costs.

Homestead provides development, design, and organizational services, but puts special emphasis on partnering with local sponsors to spearhead the housing development and provide matching funds. HHC’s philosophy includes stepping aside after the housing units have been planned and built. Then the senior owners take over, planning the annual operating budget, charting policies and overseeing building improvements.

Thus, Homestead has helped hundreds of seniors to continue to live their lives independently yet in a community, and have control over their living situation. Housing cooperatives allow seniors to retain their freedom while having access to a built-in community.

More than one million families in the U.S. now live in some type of housing co-op: 

  • single family homes, 
  • apartment buildings, 
  • mobile homes
  • townhouses.
And several varieties of housing cooperatives exist: 
  • A market-rate cooperative allows the market to set the purchase price  of housing for new members.
  • A limited equity co-op places a limit on how much equity can be accumulated in order to keep purchase prices affordable.
  • A subsidized co-op is one which has received a subsidy of some kind from  government or other sources in order to lower the cost of membership and  housing.
  • A leasing co-op does not own the property as most co-ops do; it leases  the property (sometimes with an option to buy it), and operates it as a cooperative.
  • A senior housing co-op is one which has been designed to make the building more accessible and appropriate for seniors.
  • A mutual housing association is a non-profit organization which develops and operates housing. In most cases, the association is owned and controlled by the residents of the housing it produces.
Marathon Housing Co-op 
Los Angeles, California 

Rossana Perez and her two children live in a two-bedroom house in the 66-unit Marathon Housing Cooperative in the Echo Park/Silverwood section of Los Angeles. Marathon Co-op includes single family homes, duplexes and triplexes stretched over an eleven block area. Perez purchased her membership share in the co-op for $500 (in an area where most homes start around $250,000). In addition, Perez and her fellow members pay a monthly charge to cover rent and other operating costs of the cooperative. Perez has become closely involved with the operation and management of the co-op, and has served as the president of the board.

As Perez sees it, not only does the co-op model furnish affordable housing for her family, it also encourages better understanding of people from diferent cultural and ethnic backgrounds, providing opportunities to learn to live in harmony and build organizing and leadership skills.

Organizing takes a lot of time, and you need to be open to other people's ideas. Empowerment is a long process that requires patience.
Rossana Perez
Marathon Housing Co-op

Co-housing is a new approach to housing, not a new way of life.
MC Camant & Durrett

3. Co-Housing

Co-housing has some similarities to housing cooperatives, but also has some important distinctions that make it an interesting option. It is a type of housing development that attempts to address residents’ needs for both private and community life.

As noted above, a number of demographic changes have taken place in this country during the last 30 years. The available housing, however, has not changed to accommodate those trends. Thus we have an increasingly diverse population living in housing which no longer fits the needs of most people.

Most people in America don’t live near people of different ages and races; they have to drive somewhere in order to be in a social situation; they often don’t know their neighbors; they are isolated within their homes. Co-housing grew directly out of peoples’ dissatisfaction with these issues and their existing housing choices.

Co-housing is not a new idea. Throughout history most people lived in small villages where everyone knew each other and all were linked socially and economically. Co-housing is an attempt to recreate this sense of community, yet be responsive to contemporary needs for greater freedom, independence, and diversity.

In other words, co-housing offers the advantages of traditional close-knit communities for late 20th century people. Co-housing residents are simply looking for a stronger sense of community than they found in urban and suburban neighborhoods. Co-housing attempts to overcome the current patterns of segregation by race, income, and education that are so prevalent in American housing and neighborhoods.

The first co-housing development was started in 1972 outside of Copenhagen, Denmark by 27 families who were looking for a greater sense of community than other housing options provided. They sought to create a more practical and social neighborhood, where mutual assistance in day to day chores like laundry, meal preparation, and child care might be available if they wanted to participate. They also wanted a safer, friendlier environment for their children to grow up in.

Co-housing communities are diverse, varying greatly in size, ownership structure, and design in order to fit the needs of the individuals and families that start them.

According to McCamant & Durrett, regardless of the ownership structure, all co-housing communities share these three common characteristics:

  • Resident Planned and Controlled: Residents use participatory decision making and control the design and operation of the community.
  • Neighborhood Design: The physical layout of the housing complex encourages social interaction and a sense of community.
  • Common Facilities: Common areas are an important part of co-housing, and are integral to the sense of community.
Note that co-housing is a bit of an umbrella term; the ownership structure of any given co-housing community can include privately owned condominiums; limited-equity cooperatives; and rental units owned by non-profit organizations.
Characteristics of Co-housing Communities
  • Although their roots may be in the cooperative movement, co-housing communities are not, strictly speaking, cooperatives. Characteristics of co-housing -- some of which are also common to housing cooperatives -- include: 
  • Generally, co-housing communities have some common facilities, and residents eat some meals together.
  • Each family has its own separate dwelling and the sanctity of each family’s privacy is respected.
  • Co-housing is usually a mix of ages, sexes, and races. Unlike many housing developments, it is not targeted toward a specific age group or household size.
  • Unlike a commune, co-housing groups are not organized around a particular  ideology. Co-housing offers a new approach to housing rather than a new way of life.
  • Co-housing communities are organized, planned, and managed by the residents  themselves.

According to Rob Sadowsky, Executive Director of the Chicago Mutual Housing Network, putting together a cooperative or other alternative housing project includes these steps: 

1. Bring the group together to establish clear goals and objectives. Make sure all parties are on the same page about what they want from a new housing  situation. This step may require some outside facilitation.

2. Seek formal partners for the project. These partners should include financial  institutions or other lenders, a developer, an architect, any technical assistance providers, and of course the future residents/owners. Oftentimes a  non-profit organization acts as a guide to the development process for the  group.

3. Determine which of several alternative housing models best fit the group’s goals  and objectives. This could mean adopting a pre-existing model or adapting  parts of models to fit the group’s unique situation.

4. Develop a business plan, generally with the help of technical assistance  providers, which will assist the group to obtain funding for the project.


4. Self-Help Housing

In the Self Help Housing Program, participants’ labor replaces their financial investment. The average participant is about 30 years of age, married with two children. As a result, they have not had much chance to save the money needed for a down payment. The Self Help Housing Program gives them an opportunity to trade labor on their own and their neighbors’ homes in exchange for a downpayment.

Qualified participants are organized into a formal building association. Participants are expected to exchange labor on one another’s houses, and no one is permitted to move in until all homes are completed and have passed the final inspection. The group effort among five to sixteen households results in building not only homes, but whole neighborhoods.

The labor requirement for participation in a self-help group is 40 hours per week for up to eight months. Because most participants also work full time, in effect they put in 80 hours per week during the construction period. Most of the work gets done on weekends, with spouses and other family and friends splitting the work commitment.

The Self-Help program staff provide instruction and supervision on construction techniques, and must guarantee that the construction will be completed within the established time frames and within budget limits. Staff first carefully screen potential participants, both for their financial situation as well as their ability to work within a group. The Group Coordinator of each self-help group also facilitates group dynamics, helping to ensure a smooth operation despite a
typically wide array of personalities.

By assisting low and moderate-income families to build decent, affordable housing, the Self-Help program promotes stable communities. As homeowners, participants are more likely to be interested in their neighborhoods, protective of their environment, concerned about schools and recreation facilities, and more apt to become involved in local government and civic organizations.

These suggestions for developing housing alternatives were adapted from the California Mutual Housing Association.

1. Create local legitimacy through partnerships.
Any housing organization, no matter how well intentioned, must work through local groups in order to build legitimacy with the local community. This also helps develop organizational capacity in the local groups.

2. Build residents’ management skills.
The residents of any potential cooperative (or other alternative housing) building are its chief resource. Approaching development from a resident-based perspective helps to avoid a situation where the developers become the overriding authority. Thus, when the developers finish their job and go home, the local owners have greater capacity to conduct their affairs and operate the co-op.

3. Train for the long-term.
The co-op development process is analogous to a wedding ceremony. There’s lots of attention and outside assistance provided to the couple during this phase by consultants and outside developers. Yet afterwards, the couple must learn to live long-term with each other, generally without the help to which they may have become accustomed. Thus, co-op development should be seen as training in democratic management and communication so that the resident controlled housing can thrive long-term.

For More  Information...

On the Self-Help Housing Program in Wisconsin, contact: 

 Angela Ramirez 
 Housing Grants Administrator 
 Wisconsin Department of Administration 
 PO Box 8944 
 Madison WI 53708-8944 
 phone 608-267-6905 


Dev. Corp.
Own individual unit
Own total project
Control monthly costs
Must pay down payment on move
Personally liable for mortgage
Receive homeowner tax benefits
Benefit from profit (loss) at resale
Control community standards & policies
Determine upgrades of facilities/equipment
Control open and common space
Control management of complex
Able to move at will, according to lease terms.

(1) The Condo Assn. owns the entire project, although individual units are owned by individual investors.
(2) The owner has some control built into the management agreement so as to ensure fiscal responsibility.
(3) Must pay a membership fee in order to become a member of the cooperative.
(4) A cap is established on the transfer value of the member share in order to maintain affordability.
(5) Requires approval of owners.
(6) Owners control management but may be absentee.
(7) Need to find a buyer (or sell to the co-op).
(8) Must find a buyer.

SOURCE:  Chicago Mutual Housing Network.


Center for Housing Training: 1120 Rhode Island Ave, NW, Washington, DC 20005; (202) 667-3002. The Center for Housing Training provides training and technical assistance to housing corporations and non-profit developers of housing corporations. The center provides property management computer software for cooperatives and rental properties.

Chicago Mutual Housing Network:  2125 W. North Ave, Chicago, IL  60647; (312) 278-4800. The Chicago Mutual Housing Network is a federation of organizations (co-ops, condominiums, and resident management companies) and their many supporters. It is dedicated to the development of more and better housing for low to moderate-income families in Chicago through the expansion of mutual housing models. The Network offers established mutual housing organizations the advantages of scale, pooled resources and expert information such as start-up advice and legal directions.

Cooperative Housing Foundation: P.O. Box 91280, Washington, DC 20090-1280; (301) 587-4700. The Cooperative Housing Foundation is a non-profit organization dedicated to the development of better housing and related community services for low and moderate income families.

Cooperative Services, Inc (CSI): 25900 Greenfield, No. 326; Oak Park, MI 48237-1267; (248) 967-4000. CSI is a private, non-profit housing cooperative that promotes a model of affordable resident-assisted housing for seniors. CSI has 32 individual co-op apartment builings that house 5,000 independent living senior members.

Homestead Housing Center (HHC): 5500 CENEX Dr., Staion 210; Inver Grove Heights, MN  55077-1733; (612) 451-4930. HHC was created by the Cooperative Development Foundation and twelve midwestern regional cooperatives to develop cooperatively-owned housing alternatives for seniors in rural communities. HHC provides seed money, development expertise, and financing to assist development projects.

National Association of Housing Cooperatives:  1401 New York Avenue NW Suite 1100, Washington DC, 20005-2160; (202) 737-0797. The National Association of Housing Cooperatives is a national federation of housing co-ops, professionals, organizations and individuals, organized to promote the interests of housing cooperative communities.

Urban Homesteading Assistance Board (UHAB): 40 Prince St., 2nd Floor, New York, NY  10012-3499; (212) 479-3300. The UHAB works to make cooperative ownership opportunities available to the lowest income residents of some of America’s most distressed neighborhoods.

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