Who is Northcountry Cooperative Development Fund NCDF

1
Who is Northcountry Cooperative Development Fund
(NCDF)?

• Started in 1978
• Community Development Finance Institution and a
  cooperative specializing in cooperatives
• Lending to housing, food, worker cooperatives
• Provides lending, development, technical
  assistance to cooperatives

2
What is a cooperative?

• Definition
• A cooperative is an autonomous association of
  persons united voluntarily to meet their common
  economic, social and cultural needs and
  aspirations through a jointly-owned and
  democratically-controlled enterprise.

3
Cooperative Values

• Equity
• Equality
• Democracy
• Solidarity
• Self-Help
• Self-Responsibility

4
How Does a Housing Co-op Compare with Other
Housing?
In a housing co-op, all members combined own an
undivided share of the property.
In a rental apartment, tenants own nothing.
In a condominium association, each individual
owns a divided piece of the property.
5
Financing a Single-Family Home
Equity10
Debt90
6
Financing a Condominium
Each individual owner can choose different levels
of equity and debt financing
7
Financing a Housing Cooperative
Option 1
Each member-owner chooses level of equity, and
share debt, and cooperative gets blanket debt
8
Financing a Housing Co-op
Option 2
Each member-owner chooses levels of equity and
share debt
9
Financing a Housing Co-op
Option 3
98 blanket debt 2 equity HUD Section 213
financing
10
Housing Cooperatives in Minnesota

• Minnesota cooperatives 250 77
  metropolitan 23 non-metropolitan
• Approximately 6,800 units 79
  metropolitan 21 non-metropolitan
• Nationally, there are about 1.5 million units,
  mostly in large cities like New York and Chicago

11
Types of Housing Co-ops

• Leasehold
• Market rate
• Limited equity

12
Whats so great about co-ops for affordable
housing?

• Affordability
• Inexpensive home ownership
• Operations at cost
• Joint purchasing/economies of scale
• Accessibility
• Low transaction costs
• Can borrow collectively
• Flexibility
• Lots of different building types, populations
• Intergenerational living

13
Whats so great about co-ops for affordable
housing?

• Financial Return
• Tax deductibility of interest
• Equity accumulation
• Protection from predatory lenders
• Sociability
• Leadership development
• Civic participation
• Enhanced security
• Opportunities for building social capital
• Create and support a community of interest

14
Whats so great about co-ops for affordable
housing?

• Stability
• Stable payments for residents with HUD backed
  loans
• Broader home ownership base without displacement
  for communities
• Quick resale for co-ops with limited equity
  formula
• Limited equity co-ops are a self-perpetuating and
  self-sustaining use of public and private social
  impact funds

15
Distinguishing Features of Co-ops

• Ownership
• Governance
• Flexibility
• Not distinguished by building type, management,
  demographics, or location

16
Northcountry Cooperative Development Fund

• Co-ops 101