What if investment in real estate and concern for local communities went together? That is the mantra of the New York City Real Estate Investment Cooperative (NYC REIC), a group in New York that is combining their finances to secure commercial properties to protect local neighborhood business, as well as properties with cultural and historical value to the community.
On April 14, we met with two members of the NY REIC group: Paula Segal, senior staff attorney for the Urban Justice Center and Oscar Perry Abello, editor of Next City.
Hosted by Christopher Ellis, owner of Voice of the City (2823 N. Milwaukee Ave.) and Ben Helphand of NeighborSpace, close to thirty people attended the info session about cooperative housing. The info session and discussion was co-sponsored and attended by the Friends of the Bloomingdale Trail, the Logan Square Neighborhood Association and Grow Greater Englewood.
From real estate agents to developers to concerned citizens, people were very interested in seeing if we as Chicagoans can adapt the concept of real estate cooperatives as in New York and Canada.
Both New York and Canada have flourishing housing cooperative industries, where even the pros and cons of co-op condos are being discussed.
Segal and Abello answered a bombardment of questions, breaking down these myths of real estate:
1. Real estate is just for flipping properties, a game for the rich.
2. Prime locations are scarce.
3. Community involvement is useless.
A cooperative is different than a real estate corporation; while group members do accumulate equity from the purchased property, there is a government contract stipulating that the group can flip or resale the property later. If anything, the cooperative is taking commercial and residential properties off the market and transferring them to a community land trust, overseen by trustees appointed by the group, according to the speakers.
We discussed how to achieve a “church exemption” status, wherein the group would be regulated as a charity, under the A 501(c)(3) organization tax code, as described by the IRS.
Segal and Abello took us through the processes—even sharing their membership interest and policy statement, citing Nww York state law.
The applications and procedures used in New York can very easily be applied here in Illinois for real estate purchases, protecting low-income renters and creating a bulwark against gentrification, not to mention the addition of more green spaces and community gardens—all of which Logan Square specifically needs.
Then, of course, there’s the big question: Where does the money come from?
There are many resources available in Chicago, such as the Department of Cultural Affairs and Special Events (DCASE), which gives grants to “Chicago-based, arts and culture-focused, non-profit organizations of all sizes.” Also, there are many community lenders and credit unions in Illinois. Many credit unions offer buyers a break on fees and offer potential tax benefits.
While the New York REIC is still in its infancy, there’s plenty of information available in Chicago, with a little research. There’s the Cooperative Communities of Chicago, which has a directory of Chicagoland Housing Co-ops, as well as the National Association of Housing Cooperatives (NAHC), offering a program called the Developer’s Toolbox. Essentially, it’s a step-by-step compilation support system for fledgling housing coops.
So, would this model work locally? That remains to be seen, but it shows that for people feeling powerless and isolated in their own communities in regards to housing affordability, the New York REIC is a reminder that there is strength in numbers and options are out there.
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