Cooperative Housing

No panacea exists to remedy this growing crisis, but the housing cooperative, an alternative to traditional homeownership, may provide some hope for a solution. What makes the cooperative structure conducive to the affordable housing ideology? Co-ophousing.org succinctly describes the limited-equity structure, one that aims to support an underprivileged population: "Limited equity co-ops limit the resale value of shares. The maximum resale value is predetermined by a formula established in the cooperative's bylaws. Generally targeted at low- and moderate-income people, the purpose of limited-equity cooperatives is to prevent speculation, encourage long-term residency, and preserve the "affordable" character of the co-op for a wide variety of future residents."37 In a recent Chicago Sun Times article printed in June 2009, Paul Hazen, the President of the National Cooperative Business Association said: "Cooperatives are perhaps the most democratic way of living."38 The self-governing component contributes to a sense of empowerment that cooperative residents feel from their direct involvement and strong inter-resident networks within the cooperatives. This affordable guarantee also works to curb the gentrification of Chicago neighborhoods, as proved with the strategic placement of The Hermitage Manor Cooperative, adjacent to the now-demolished Henry Horner Homes.39 In a nation haunted by speculative and discriminatory practices, the limited equity model boasts positive potential for its residents and the surrounding community.40

The cooperative housing movement began in the early 1920's when private banks financed homes along Chicago's lakeside. The biggest federal push came in 1950 with the passage of the Section 213 FHA mortgage insurance program, which offered "98% blanket financing for new construction of housing cooperatives and allowing down payments as low as 2%."41 Since Section 213, the federal government's support for this democratic and affordable living option has dramatically declined. Instead, homeowners receive Section 8 vouchers, influencing the independent ownership structure instead of the cooperative. Many credit-funded units and Section 8 properties, however, are due to expire in the coming years and risk being turned into market-rate properties.42 With lagging federal support for cooperative ownership and soon-to-be expired section 8 vouchers, it remains to be seen whether Chicago can pick up the slack.

In 2004, the Chicago Mutual Housing Network, a since dissolved network of mutual housing advocates, and The Nathalie P. Voorhees Center for Neighborhood and Community, published a paper analyzing the City of Chicago's response to the cooperative movement in the midst of an escalating housing crisis. They found that the city's support continues to be limited and sporadic. Only twice has the City partnered with the Bickerdike Redevelopment Corporation, an affordable housing provider and properties manager, to fund cooperative housing development. In 1999, Chicago's Department of Housing provided $2.3 million in tax credits and $6.3 million in loans for the creation of the 31-unit Nuestro Hogar Cooperative in Humboldt Park. The Harold Washington Unity Cooperative, also located in Humboldt Park, received $1.2 million in tax credits as well as "24 City-owned vacant lots for $1.00 for each parcel."43 Furthermore, the Chicago Mutual Housing Network outlined specific expectations to encourage the City's involvement with Cooperative development. These include: -Extending New Homes for Chicago to apply to the development of affordable housing cooperatives. - Establishing a program akin to the New York City's Tenant Lease Program (TIL) to enable tenants and/or community groups to acquire and control city owned, neglected or abandoned properties. -Facilitating the preservation of at risk properties (Section 8 and Tax Credit) through resident control and cooperative ownership.44

While the aforementioned white paper commends the city for its work and the inclusion of cooperative housing in Mayor Daley's 2004-2008 five-year plan for affordable housing, no such resolution exists within the recently published set of goals for the years 2009 through 2013.

In this way, multiple barriers prevent stable and prosperous cooperative growth in the city of Chicago. There still remains potential for partnerships between city financial and political institutions, but as Anne Reynolds, the assistant director at the University of Wisconsin-based Center for Cooperatives, explains: "Chicago suffers from a deficit of technical assistance. While New York City, a co-op-friendly environment, claims attorneys, lenders, realtors and other housing market insiders specializing in cooperative purchases, Chicago, by demand alone, possesses far less technical expertise."45 The disconnection between theory and practice impedes the unbridled success of the affordable housing model. Hundreds of recognized and unrecognized cooperatives function in the city today. As the June 2009 Sun Times article states, however, the reality is that "in this town, condos prevail."46