- What is a Senior Housing Cooperative?
- Are Cooperatives a New Form of Home Ownership?
- How is a Senior Housing Cooperative structured financially?
- How do I finance the purchase of my cooperative share?
- Will the value of my home appreciate?
- Is there a minimum age or income requirement?
- When will construction of Vintage Hills Cooperative begin?
- What do Co-op members say about Co-op living?
What is a Senior Housing Cooperative?
A housing cooperative is joint ownership in a housing development in which members own a share. Members or share owners are a part of the cooperative corporation, which owns the building, land and common areas. The share's value is based on the size and type of home. Members pay a monthly fee, which is used to cover the cooperative's monthly operating costs, including principal, interest, taxes, reserves maintenance and utilities. Share owners retain the same tax advantages under the Federal and State law and enjoy similar property tax (homestead) treatment under State law.
Cooperatives are member-owned/member controlled. They are operated through a member-elected Board of Directors. The Board of Directors governs policy, forms committees and is responsible for decision making on behalf of the cooperative community. Professional management provides on-site staff, human resource management, accounting services and oversight of day-to-day operations.
Cooperatives bring back the spirit of community and sociability. The participatory nature of a cooperative enhances the lives of its members and contributes to healthier living. While members can enjoy the privacy of their individual home, there are many opportunities for social involvement with other members who have similar interests. This may take the form of running for the Board of Directors, participating on a committee, attending social programs or joining with friends in daily leisure activities, such as: playing cards, group exercise or golf.
Are Cooperatives a New Form of Home Ownership?
Cooperative housing is not a new concept, but has been around for a number of years. The country's first housing cooperative was established in New York City in the late 1800's. Today, a large number of cooperatives have been established in major urban cities such as New York City, Washington, Miami, Minneapolis, Detroit, Atlanta and San Francisco. In 1976 the very first member-governed cooperative for senior adults was established by Ebenezer Society in Edina, Minnesota. 7500 York Cooperative, a 338-unit community, set in motion a growing trend of senior housing cooperative development throughout the Midwest. Since then, over 90 Senior Housing Cooperatives have been established in the Upper Midwest, and over 24 new projects are currently underway in expanding regions throughout the country, such as Iowa, Wisconsin, Arkansas, Montana, Montana, Washington and Illinois…
To find our more about senior housing cooperatives, visit the Cooperative Network Website, Senior Cooperative Foundation website, Ethos Principles for Senior Housing Cooperatives, and the NAHC website.
How is a Senior Housing Cooperative structured financially?
Master Mortgage Loan – To reduce costs, Vintage Hills Cooperative will use a federally insured master mortgage loan to finance the project, which assures a fixed low interest rate for a 40-year term. The cooperative holds title to the property assuming mortgage and tax obligations, relieving members of direct liability; they simply agree to pay their monthly fee, which includes an allocated portion of the mortgage principal, interest and taxes. Members retain tax deductions for mortgage interest, as well as real-estate taxes. Because of their not-for-profit nature, membership involvement, and shared services,
cooperatives typically cost less to operate and experience the lowest default rate of any housing alternative.
Share Price – This represents the difference between the Total Share Value and the prorated portion of the cooperatives first mortgage loan. The Share Price is approximately 40-50 % of the share value, which keeps cooperative homes affordable in comparison with single family homes, town homes or condominiums listed at full market price.
Monthly Fee – The monthly fee includes a proportionate share of the cooperatives master mortgage, real estate taxes, insurance reserves, maintenance and utilities. A detailed cost/lifestyle comparison is enclosed listing all that is included in the monthly fee. A cost breakdown will be provided to each member before finalizing their purchase.
Since the initial share costs are low, a portion of the proceeds from the sale of your home is used to purchase a share in the cooperative, leaving the remainder of your equity to invest, save, or spend on personal enjoyments. The interest from investing equity can be used to pay a portion of the monthly fee, therefore reducing monthly living costs.
During the development phase, buyers of a cooperative either use available funds or take out a short-term home equity loan to pay for their membership share until they have sold their current home. The interest on the home equity loan is tax deductible.
Vintage Hills Cooperative will use a Limited Equity Formula, limiting appreciation to 1% of the share value, compounded annually, plus the loan pay down. This practice is widely used by cooperatives to keep the units' affordable overtime, therefore building lengthy waiting lists of prospective buyers and to promote ease of re-sale. The cooperative has the option to change the limited equity formula if they so choose. The following is an example showing the increase in value and appreciation over five years, using a sample unit, with a Share Value of $219,909:
|Annual Growth||Cumulative Growth|
What are the re-sale procedures of a cooperative share?
To implement the Limited Equity Formula, the cooperative holds the first right-to-sell. The re-sale price of the membership share will equal the member's original investment plus the amount appreciated under the Limited Equity formula. The cooperative has 60-90 days to market the cooperative share and transfer the sale. If the cooperative does not elect to transfer the share, the member may choose to continue to contract with the cooperative or may sell it on the open market to anyone who qualifies for membership. Re-sale of a cooperative share avoids the fees, title and recording costs associated with a typical real-estate transaction.
The cooperative will provide a way for its members, through the cooperative's attorney, to title their membership share to meet their estate planning needs. Single owner, joint tenants, trusts, transfer on death or a life estate are typical forms of holding title. Proceeds of sale would go to the member's estate or heir(s), as indicated in their estate planning documents.
Eligibility: Vintage Hills Cooperative is an age-restricted community. All owners must qualify for membership by meeting the minimum age and income requirements.
Personal design choices: Vintage Hills Cooperative offers a variety of standard and upgrade design options. Representatives of Vintage Hills Cooperative will work closely with members through the selection process and any special requests. Personal design selections for standard and upgrade options are available to buyers who purchase during the development phase and prior to construction deadlines.
When will construction of Vintage Hills Cooperative begin?
Once 60% of the units are subscribed and approved by FHA, construction will begin. Approximately 10-12 months is projected to construct and complete the building.
Have more questions?
Give us a call at 515.964.2900 or visit our contact page!
*The above are brief answers, which will be explained in more detail in the formal Organizational Documents developed by the Vintage Hills