Northcountry Cooperative Development Fund

1. Northcountry Cooperative Development Fund Putting It Into Practice: Overview of the Housing Cooperative Model and A Look at One Application Conference on Housing and Economic Development Indianapolis, Indiana September 12, 2005 Kevin Walker ~ Cooperative Housing Program Manager

2. Northcountry Cooperative Development Fund(NCDF) • Started in 1978 • Community Development Finance Institution specializing in cooperatives • Lending to housing, food, worker cooperatives • Provides lending, technical assistance, development services to cooperatives • Serves eleven states of Upper Midwest

3. Basics of housing cooperatives: • What they are and how they work

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

5. How do homeownership cooperatives work? A cooperative owns the building and grounds COOPERATIVE

6. Holly C.J. Warren Andrea Jon How do homeownership cooperatives work? • Members buy shares in the cooperative

7. How do cooperatives work? • Each share is linked to a unit in the building C.J. Holly Warren Andrea Jon

8. How do cooperatives work? • The cooperative is governed by its resident-owners

9. Cooperative Development Agenda • Adaptive reuse projects • Conversions of conventional rental property • Conversions of expiring Low Income Housing Tax Credit projects • Conversions of USDA Section 515 projects • Conversions of manufactured home parks

10. Financing housing cooperatives

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

12. Financing a Condominium Each individual owner can choose different levels ofequityanddebtfinancing

13. Financing a Housing Cooperative Option 1: Each member-owner chooses level ofequity,and share debt,and cooperative getsblanket debt

14. Financing a Housing Cooperative Option 2: Each member-owner chooses levels of equity and share debt

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

16. One application: • Cooperative conversions of • manufactured home parks

17. Typical Manufactured Home Park Owner • Regular rent increases • No direct voice in park policies • Little incentive to invest in park • No land ownership for residents • Home depreciation • Risk of displacement

18. Manufactured Home Park Cooperative • Monthlies increase only with operating cost increases • Direct voice in park policies and operations • Strong incentive to invest in park • Land ownership for residents • Potential for growth in home equity • No risk of displacement Cooperative

19. Why Become a Cooperative? • You own it. • You continue to own your home. • As a cooperative member-owner, you alsoown the park. • You run it. • The Board of Directors is elected from resident members; • Your Board oversees property management and operations; • You decide which improvements, if any, should be made to the park. • You benefit. • No one takes profits from the park’s operations; • If revenue exceeds expenses, excess returns to residents or the park; • Security of tenure (no one can sell the park from under you.)

20. There Are 1,000 Resident Owned Manufactured Home Parks Nationwide

21. What We Look For • Able and Willing Seller? • Able and Willing Buyer? • Feasible? • What is the condition of the park? • Will it be affordable to residents?

22. Willing Seller • Seller willing to make park available at affordable price. • Seller signs sales agreement providing investigation period for us to confirm viability of resident cooperative.

23. Willing Buyer • Interest. Residents are interested. • “Sense of the room” • Later: Written ballots and surveys • Capacity. Residents engage, ask questions. • Commitment. Core group of residents volunteer for Acquisition Committee.

24. Is It Feasible? • What is the condition of the park? • Can park be acquired, improved as needed, and still be made affordable to residents?

25. Facilitating Success • Professional management company (preferably with experience with homeowner associations) • Governance and support services consultant • Pre-funded reserves • Replacement Reserve • Operating Reserve • Training Reserve • Working Capital Reserve • Marketing Reserve • Translation and interpreter services

26. Case Study: Sunrise Villa Cooperative Cannon Falls, Minnesota Sunrise Villa Mobile Home Park 47 units

27. Sunrise Villa Mobile Home Park • Local mom-and-pop owner • Community facilities: storm shelter, mailboxes • Purchase price: $928,000 or $19,745/unit • Financing: • $696,000: Community Development Bank, Ogema, MN • $490,000: Northcountry Cooperative Development Fund • $23,500: Resident Equity • Equity requirement: $500 • Monthly carrying charge: $300

28. Sunrise Villa Cooperative • Total development timeframe: 11 months • Resident Process: One meeting about every six weeks • Park Attendance of meetings: 33% to 51% of households • Charter membership: 29 of 46 households (63% of park) • Closed on purchase: September 28, 2004 • Current membership: 43 of 47 households (91% of park)

29. Contact Information: • Kevin Walker • Program Manager, Cooperative Housing • Northcountry Cooperative Development Fund • 219 Main Street SE, Suite 500 • Minneapolis, MN 55414 • 612.767.2111 direct • 612.767.2133 fax • kevin@ncdf.coop