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Developing Cooperative HOusing

Explore the process of developing cooperative housing, from conceptualization to construction, funding sources, income limits, and construction details. Learn about the factors influencing cooperative housing projects and the teamwork required for success. Dive into a case study showcasing the development of affordable homes in Lincoln Park Neighborhood, with insights on construction costs, add-ons like solar panels, and community involvement.

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Developing Cooperative HOusing

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  1. Developing Cooperative HOusing Challenges & LonG Term RewARDS

  2. BackgrouND CONCEPTUAL FRAMEWORK: PosItive Factors • Housing for the People • Long Term Affordability & Control • Residents develop a sense of control and participation. • Builds long term community resources.

  3. BACKGROUND: CHALLENGING FACTORS • Housing development is an expensive, challenging process. • Difficult concept for bankers. • Legal machinations required. • Breaking new ground is not a good thing.

  4. DEVELOPMENT PROCESS • Conceptualization • Investigation (market, funding, building) • Finding Money and Architect Costs – Details, Details, Details • Buy-In from the city, funders, banks. contractor • Button up the details (construction contract, legal documents, architect plans, funding agreements) • Execution (construction, lease-up, budget monitoring) • Property Management

  5. CONCEPTUAL STAGE • Project Description • Market • Site • Building: Site Control • Funding Sources

  6. Teamwork • Finding Your Team • Developers that is open to cooperatives • Architect • Property Manager • Lawyer • Banker • Visionary

  7. FundiNg Sources: Market Rate units • Banks • Share Loans • Owner Down payments • National Cooperative Bank (65% loan to value) • Local Credit Unions

  8. FundiNg Sources for affordable Housing • Low Income Housing Tax Credits (oversubscribed) • Local HOME/CDBG funds • Other local sources (TIF, Tax Abatement, Civil City funds) • Donated Land • Indiana Housing & Community Development Authority Development Fund Loan • Conventional bank loans

  9. DEBT SERVICE COVERAGE • 1) Loan To Value Ratio: (Loan Amount/Appraised Value) 2) Debt Service Coverage Ratio (Money left after expenses/debt service amount) Should be 1.15 or higher 3) Net Worth & Guarantees

  10. Property Management Costs:WHAT IS ThE COOP PROVIDING? • Insurance, taxes • Maintenance • Property Manager • Accounting • Supplies • Common Space Maintenance • Common Lighting & Utilities

  11. FINDING A RESPONSIBLE DEVELOPER • Word of mouth • Ask funders, bankers, lawyers. • Partnership with a non-profit organization.

  12. South Bend Mutual Homes Example of Development

  13. Project Features • 24 Single Family Homes 2, 3 and 4 Bedrooms • Garages and basements • All in the same area. • Low and Moderate Income Families

  14. Market Mix • 6 – (2)BR ($228 to $459) • 14 – (3)BR ($228-$526) • 4 – (4)BR ($249 - $580) • Tenants pay utilities. • .

  15. Lincoln Park Neighborhood • City has demolished at least 10 homes in the area. • Possibly 4 more homes demolished in the Blight Elimination Program grant. • Lincoln Park Development. LLC owns enough lots for 24 homes plus 6 more lots in process from the tax sale. • Held meeting with the neighbors.

  16. Funding Sources • Low Income Housing Tax Credits $4,326,924 • Federal Home Loan Bank of Indianapolis $400,000 • First Mortgage $150,000 • HOME Funds - $125,000 • Misc - $10,917

  17. MAXIMUM Income Limits • 1 person - $26,640 • 2 people - $30,420 • 4 people - $37,980 • 6 people - $44,100

  18. CONSTRUCTION • Total Construction Costs - $154,000/ unit • $130/sq.ft • (2)BR – 952 sq.ft. • (3)BR – 1,242 sq.ft. • (4)BR – 1,431 sq.ft

  19. Add-Ons • Solar panels • Curbs and sidewalks • Small park in the neighborhood

  20. Groundbreaking

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