Key Players

Creating a limited equity cooperative is both a technical and political process.  It requires the cooperation and assistance of many different people.

• Neighborhood Residents.  People in the neighborhood need to be accepting of the co-op.  They may be advocates for the co-op, recommending the creation of LEHCs and helping with the planning and control of gentrification.  They may be potential members of the co-op.  They may also oppose LEHCs for a variety of reasons.  NIMBY participants may oppose any type of low-income housing developments. 
• Sellers.   When real estate markets are weak, sellers may be willing to offer longer escrow periods-very useful in creating the necessary time to pull together the financing.  A seller may offer to finance part or all of the sale.  Sellers may also be willing to enter into a donated sale or partially donated sale, which lowers the cost to the buyer.  When real estate markets are stronger, sellers are less likely to agree to these terms.  Developers should explore these possibilities; the seller may be sympathetic to their goals and offer excellent terms even in a hot market.
• Public Agencies.   Agencies at all levels of government can be helpful or obstructionist in creating LEHCs.  They are influential in obtaining financing.  They can be central to the process of obtaining zoning changes or needed variances. When neighborhood opposition arises, agencies can play an important role with their recommendations to decision-making bodies. 
• Co-op Members.   Members need to be willing to cooperate, to participate in the governing and managing of the co-op, and willing to accept limitations on their equity accumulation.
• Developer.   The developer must be willing to work with a large group, accept input, and seek solutions.  This work adds time to the process and increases the costs as well.  When sweat equity is involved, the developer must be willing to work with the residents and to help train them.
• Trainer and Organizer.   These functions may be handled by the same person or by different ones.  Both functions require great skill and are crucial to the functioning of the cooperative.

Key Ingredients

Many elements are needed to successfully develop a LEHC in the context of gentrification pressures.

• Member Commitment.   Members need a clear understanding what they are getting into.  Members must be motivated to participate in the co-op's life and willing to accept the equity limits.
• Community Support.  Community acceptance is key to successful development.  In order to garner support, developers must devote sufficient time to educating neighbors, key public supporters, and local community organizations.  .
• Local Government Support.  Local politicians and staff of key public agencies play crucial roles.  They can hold the key to reasonable access to financing and zoning approvals.
• Adequate Financing.   There are many types of financing needed with a LEHC. See Financing.
• Workable Limited Equity Formula.   A balance needs to be found in creating the formula that controls the amount of equity that a member may take out of the unit and long term affordability to other low-income families.  The formula needs to provide an adequate incentive to encourage members to maintain the property and the individual units and to participate in the co-op's life.
• Technical development and management capacity.
• Comprehensive Neighborhood plan.   The co-op is best created as part of a plan to address gentrification issues.  The plan may call for development of many co-ops as well as other types of housing to accommodate older and newer residents.  The plan will help assure that the community as a whole supports the co-op and wants it to succeed.

• Ongoing Training.   Ongoing training of co-op members is also crucial in order to keep building the skills of the residents to meet changing conditions. 
• Reasonable Progress. Sometimes people lose confidence that a co-op can ever become a reality as the development process can take several years. 

next page... (Challenges)