Financing the Future of Cooperative Low-Income Housing

In a limited-equity cooperative, members buy a share in the development, which gives them the right to occupy one of the units. Members pay monthly fees to cover maintenance expenses and participate in decision-making around building management. To ensure that limited-equity cooperatives remain affordable, shares have restricted resale values and members must also fit income limitations. This arrangement can make limited-equity cooperatives more accessible to lower-income households than community land trusts or other affordable housing models. A recent study from the National Housing Institute found that 90 percent of inclusionary housing programs involving owner-occupied housing use some form of shared equity to preserve the affordability of units.

In the decades since many cooperatively-owned buildings were established, maintenance issues have piled up. For limited-equity cooperatives, it has proved especially difficult to find financing options because of their income restrictions and the relatively small sums involved, according to Harley Seligman at the National Cooperative Bank. Seligman recently negotiated a $300,000 mortgage and a $100,000 line of credit to enable the residents to carry out needed maintenance for a “small” 7-unit limited-equity cooperative in the East Village.

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