THE END OF SPECULATION AND THE STRENGTHENING OF COMMUNITY

The End Of Speculation, the Strengthening Of Community -- a new report by the Coalition on Homelessness Housing Workgroup -- advocates the creation of community institutions for San Franciscans which can advocate for and establish mutual, cooperative, land-trust and limited equity housing as a strategy for the creation and preservation of affordable housing.

Mutual and Cooperative Housing -- An Idea Whose Time Has Come Again.

Only those models of housing which prevent property speculation can provide permanent, sustainable housing. The public housing model attempted to do this in a limited fashion; the government bankrolled the construction and subsidized housing in order to stimulate job growth and achieve rent stabilization in the larger market by increasing the supply of rental housing.

The Coalition on Homelessness maintains that all levels of government should be committed to producing housing -- especially for those most in need.

The ideas of cooperative housing are of course, nothing new. Forms of cooperative housing have existed in \"North America\" for centuries in Native American cultures. Even settlers took advantage of homesteading laws, allowing them to live in unused homes; often living cooperatively. Through the 1930\'s and 1960\'s many housing cooperatives were established. Cooperative housing is not a perfect model and may not be for everyone... However, this model seems to be the most viable option for affordable housing for several reasons.

* Cooperative Housing prevents property speculation and preserves
affordability,
* Creates opportunities for community and economic development,
* Requires lower ongoing subsidy commitments,
* Does not require many restrictions upon tenants, or tenant selection criteria, thus preserving accessibility.

Nationwide, cooperatives succeed when they have adequate support from both government entities and the surrounding communities.

An ambitious cooperative housing program has the potential to build political consensus. It incorporates aspects of first-time homebuyer programs, popular among conservatives. The collective aspects appeal to those on the left. Outside the realm of political debate, cooperatives make good economic and social sense and several exist in San Francisco already.

Following are brief summaries of the most common forms of cooperative housing; or, as it is now commonly referred as, mutual housing.

Definition of Cooperative Housing

In almost any form of cooperative housing the cooperative owns the building, and tenants buy shares. Each shareholder occupies one apartment; a shareholder can be an individual or a family. An Occupancy Agreement lays out terms of residency and an elected Board Of Directors, upholds by-laws and over-sees operations of the cooperative housing.

Limited Equity Cooperatives.

Limited Equity is a form of ownership where tenants own a limited share in the development; but the cooperative association retains the majority
interest.

In order to prevent property speculation, there must be strict restrictions on the resale value of the share; outlined in the occupancy agreement.

Generally, the \"buy in\" is comparable to that of a security deposit in a
private apartment. The exact formulas may vary from site-to-site. Each
cooperative sets its own affordability return investment goals, which
enables this model to be adapted to a variety of income levels. Upon leaving resident is entitled return of share. The lower the return of investment, the more affordable it is in the future. St. Francis Square, in San Francisco\'s Western Addition/Fillmore neighborhood, is an example of a successful Limited Equity Cooperative. St. Francis Square contains 299
family-sized apartments in fifty, 3 story walk-up buildings.

David Freelander, President of St. Francis Square is still an enthusiastic
supporter of coops, nearly thirty years after the founding of his. \"The
original cooperative idea had two purposes: to provide community so people could know neighbors and raised their children in safe place while building wealth for people with little means. It is a simple way for low and mid-income people to gain equity in their building. St. Francis Square is tremendously successful, some three generations have raised their children here.\"

Freelander advocates that organized labor rededicate itself to solving the housing crisis for working families. \"The working people have the need, and can be provided the opportunity for affordable housing. In the
case of St. Francis Square, the International Longshoremen and Warehousemen Union provided the seed money and HUD guaranteed the loan. The federal government hasn\'t given us money, simply guaranteed the loan.\"

Can cooperatives be used as a strategy against gentrification? \"We need to proliferate cooperatives, San Francisco might be in much different shape if we had created more of them,\" Freelander said. \"Our original residents paid into the coop for $400.00, and a share is worth much more than that now. Still cooperative housing is a dream that needs to grow to survive.\"

Northridge Cooperatives in San Francisco\'s Bayview District is a limited
equity coop built in the late 70\'s. It contains three hundred
families, accepts Section 8 vouchers, and charges 30% of a tenants\' income for rent. As Northridge cooperative member Malik Rahim explains, \"Cooperative housing is the only real assurance that a person can remain in San Francisco. If there is to be a presence of comments of color left in
this city, Blacks and Latinos especially, then coops will have to become the norm.\"


Community Land-Trust

Similar to a Limited-Equity cooperative a Land-trust separates ownership of land from ownership of building and improvements. The CLT holds the title to the land, and leases it to the cooperative cooperation. Some leases reach up to 99 years, with regular review points. The nature of the rental agreement prevents anyone from removing affordability controls. In the event that anyone decides to move, the CLT has first right of refusal to buy back the unit and re-sell it at an affordable rate.

\"Without Land-Trusts we would have homelessness and abandoned properties. Low-income people would have an extremely difficult time finding affordable housing.\" remarked Sonjia Gipson, Project Manager for the North Camden Community Land-Trust in Camden, New Jersey.

Scattered Site Cooperatives

Scattered-site cooperatives are popular where large tracts of land are hard to find. Scattered-site coops are placed in various locations but share ownership and support services. They can be the basis for community development such as job training, management services, outreach, waiting lists, and group buying plans. As noted elsewhere in this report, there is surplus land, even in San Francisco, that could be used to build new low-income and affordable housing. Since these plots are placed in a variety of neighborhoods scattered-site cooperatives make sense as a possible strategy here.

The Future

The report does not suggest that existing not-for profit housing
developers are obsolete. Especially in light of the fact that such
providers preserve thousands of units of housing at rents affordable to
working people. However, in order to truly preserve affordable housing,
tactics such as mutual housing must be combined with others.

San Francisco\'s housing crisis and resulting homelessness is tied to the overall global economy and the abandonment of the idea of housing as a basic human right in public policy; reflected at all levels of government. We have identified areas that have contributed the most to the creation of homelessness, not only in San Francisco, but also in the rest of the United States as well. Recent scholarship has proven that the epidemic of homelessness is directly linked to the shortage of affordable housing available to very low-income people. Rampant property speculation has destroyed such housing in the private market, while two decades of federal housing budget cuts and privatization measures have eliminated many of the \"steps up\" which were used to exit homelessness in the past.

We have also discovered that even in San Francisco there is surplus government-owned land where new affordable housing could be established. To date, the political will of elected officials has been not to do this. While the traditional non-profit housing models are valuable, we think that mutual housing adds a valuable weapon in the fight against homelessness. Even if there were absolutely no tracts of land available, mutual housing strategies could still be used to stabilize homes rented by people at risk of displacement. We have included a list of action steps that would help facilitate the creation of affordable housing in San Francisco.

Finally, we recommend that any new low-income housing create living wage jobs for tenants. Healthier neighborhood economies are created when money circulates in the community rather than leaving it.