FAQ

What is a housing co-op?

A housing co-op is a nonprofit corporation with a board of directors. Each resident is a shareholder in the cooperative with a right to occupy their unit permanently. The main purpose of a housing co-op is to provide affordable housing for its residents, who are charged only for the actual cost of running the co-op. The cooperative is ruled by bylaws that aim to provide member-owners with comfortable living spaces, where everyone shares certain values and costs. Members are essentially co-property managers and make decisions collectively and democratically. 

Each member in the co-op: 

• Owns a share in the cooperative.
• Has a right to their individual housing unit.
• Has a right to enjoy common spaces.
• Has a right to participate in collective decision-making.
• Signs an occupancy agreement and follows house rules. Each building within the cooperative organization can have different rules written by the occupants of that building.

How is a housing cooperative paid for? And what are the housing costs of living in the co-op?

To buy a building, we use grants, loans, initial share money from co-op member-owners, and dollars raised through other types of fundraising efforts. To keep the co-op going, each unit of the co-op pays a monthly housing charge that includes the cost of the mortgage, property taxes, insurance, maintenance, and other operating expenses. 

The amount each unit pays depends on various factors, including the loan amount, funding sources and conditions (such as interest rates, grants, initial buy-in price), as well as the housing cooperative’s structure and rules. 

What is a “share”? And what is meant by the “initial share money”?

A share represents a person’s right to occupy a unit in the housing cooperative. When a person joins the co-op, they sign a “share certificate,” which is a legal document issued by the co-op that proves they own their individual unit. 

The “initial share money,” also referred to as “buy-in price,” is the amount of money that a person initially pays the co-op in order to become a member-owner in the housing cooperative. For an individual house purchase, the equivalent of this would be a down payment.

What is limited equity housing?

• Limited equity housing is a home ownership model that prioritizes long-term affordability in part by limiting the amount of equity a member receives for the resale of the membership share/unit.
• There are different models for limiting equity. When a member-owner sells a unit in a limited equity co-op, any return on the sale is limited by a predetermined formula. Each limited-equity co-op has its own formula, contained in the co-op’s bylaws. 
• The unit resale price is not based on the market value, which is key to keeping housing affordable in the long-term. 

What does it mean for LVHC to be a “multi-site” co-op?

“Multi-site,” also referred to as “scattered site,” means that there are multiple buildings/properties in the neighborhood owned by the cooperative. The board of directors oversees the operations of the co-op as a whole. However, each building has its own set of “house rules” or agreements, and its member-owners collectively set maintenance priorities. 

The reason for creating a multi-site co-op is to purchase as many buildings in Little Village as possible, so as to keep them out of the hands of developers and in the hands of the community. We value people over profits. 

Resources 

• Pilsen Housing Cooperative (PiHCO): A local housing cooperative in Pilsen that was started by families and artists. They have information about their model and about housing cooperatives in general on their website, under the pages titled “FAQ/¿cómo funciona la cooperativa?” and “links/más sobre las cooperativas.” https://www.pilsenhousingcoop.org/
• Cooperative Housing Toolbox: A Practical Guide for Cooperative Success: An extensive guide to starting a housing cooperative. This document includes a glossary of important terms on page 77.