The National Housing Act of 1950 authorized the Federal Housing Administration (FHA) to insure blanket mortgages held on cooperatives and rental communities. This in turn helped attract more private capital for housing. Section 213 was added to the 1950 Act to include middle-income cooperatives. The Act provides 40-year FHA government insurance on cooperative blanket mortgages. This legislation ultimately stimulated the creation of about 45,000 cooperative units known as
Starting with the Housing Acts of 1954 and 1959, the federal government began to shift from direct construction of public housing to publicly assisted housing. The National Housing Act of 1959 stimulated the development of low and moderate income communities during the 1960s and 1970s. Sections 221(d)(3), 202, and 236 of the Housing Acts were added to help form cooperatives of affordable guaranteed insured government loans. This approach became the mechanism of choice for the explosion of housing programs in the 1960s.
Early in 1960, the United Housing Foundation and the Foundation for Cooperative Housing joined with the Cooperative League of the USA and other institutions to create the National Association of Housing Cooperatives, in which all established cooperatives are eligible for membership. Many regional associations of cooperatives across the country were formed during this time, such as the Midwest Association of Housing Cooperatives, as well as advocacy organizations that sponsored developing cooperative housing projects in California, Arizona, New Mexico, Oregon, Washington and Hawaii.
Another institution that played a significant role in the history of cooperative housing was organized in 1961. The Association of Middle Income Housing, now named the Metropolitan Mutual Housing Association, concentrated most of its development efforts in New York, and organized the 420-unit Chatham Green cooperative in 1962 in Manhattan. By 1965 the United Housing Foundation and its predecessors had created some 23 cooperative housing projects in New York City, ranging in size from the 124-unit Mutual Housing Association in the Bronx to Rochdale Village in Queens on Long Island, with 5,860 apartments and also its own food stores, nursery schools, a credit union, and a multitude of civic and social organizations.
In one of the most momentous events of the housing cooperative movement, Title VIII of the Federal Civil Rights Act of 1968, was passed. This “Fair Housing Act” prohibited discrimination in housing due to race, color, national origin, or religion, and was signed in the week following the assassination of Dr. Martin Luther King, Jr. This Act was an attempt to achieve a goal of national residential integration. The purpose of Title VIII was to “provide, within constitutional limitations, for fair housing throughout the United States.” In 1974, sex was added and in 1988, familial status and handicaps were added, giving us the Federal Fair Housing Law that we know today.
With another economic recession in 1974, many newly formed cooperatives, under 5 years of age, were defaulted at a high level. At this time HUD made available “Section 8 Subsidies” for members to save the cooperative from defaulting. Under the Section 8 program, individual members paid carrying charges based strictly on income; originally this was 25% of the member’s gross household income. In the 1980’s, this was changed to 30% of household income. Even though it helped many BMIR and 236 cooperatives through the financial difficulties it also had a profound impact on how cooperatives operated. The primary purpose of the program was to accommodate cooperative ownership by bending rules in some cases, as well as changing how cooperatives are managed in others.
The National Housing Act of 1974 introduced sweeping changes in federal affordable housing policy. The trend in this era was a shift away from below market interest rate programs (BMIR) and towards Section 8 rent supplements. The shift also focused on converting existing public housing into housing for the very poor. Through these two decades, co-ops were built with project-based Section 8 funds from the government.
In the 1990’s the federal government was focused on reducing the huge national debt that was built up during the previous decade. Federal Housing initiatives were couched in tax incentives to the private sector that did not lend well to cooperative development. The National Affordable Housing Act of 1990 produced three programs that provided for the limited creation of housing cooperatives. The HOME program, the Preservation/Prepayment program, and the Homeownership and Opportunity for People Everywhere (HOPE) program were those three programs. These programs supply funds to states and certain local jurisdictions largely to upgrade local public housing programs by expanding tenants’ rights. This was very localized by HUD offices as to use of funds, so the program remains inconsistent across the United States and could benefit by nationwide standardization.
Currently, the cooperative movement is alive and continuing to grow amidst a myriad of economic, political, and social factors. Cooperative organizations are continuing to add members and developments on a continuous basis, and range from low-income, public interest housing to high-end, luxury dwellings. The ICA (International Cooperative Alliance) is an independent, nongovernmental association which represents cooperatives worldwide. It boasts over 223 member organizations from 87 countries, and is headquartered in Switzerland.
In 2000, the National Cooperative Business Association brought co-ops to the cutting edge of technology by successfully lobbying the Internet Corporation for Assigned Names and Numbers to create a new top-level Internet domain—.coop—exclusively for cooperatives. The cooperative registry launched in January 2002 and represented a huge leap for coops to unite and work with each other. Cooperatives have grown from the days of village pueblos and communal living, but the spirit of community and unity are still alive and well.
For more details please feel free to contact an attorney familiar with cooperative housing law.
Sazama, Gerald. “A Brief History of Affordable Housing Cooperatives in the United Stats.” Working paper, University of Connecticut, 1996.
Sazama, Gerald. “Lessons from the History of Affordable Housing Cooperatives in the United States: A Case Study in American Affordable Housing Policy.” The American Journal of Economics and Sociology (2000).
Siegler, Richard and Herbert Levy. “Brief History of Cooperative Housing.” Cooperative Housing Journal (1986): 12-19.
“Significant Dates in Co-Op History.” National Association of Housing Cooperatives. Accessed March 23, 2012. http://www.coophousing.org