How Washington, D.C. residents are tackling rising rents

With its prime location and rapid development over the past decade, the Columbia Heights neighborhood commands among the highest rents in the US capital – already one of the most expensive cities for housing in the country.

But resident Linda Leaks pays only about $1,000 a month, half the area's average in Washington, D.C.

She lives in a housing cooperative in which members collectively own the building, pay a low "share price" – of $2,000 to $3,000 – to move into their unit and then pay a small amount each month to cover utilities and management of the building.

Ms. Leaks created the Ella Jo Baker cooperative over a decade ago for community activists "who did not have a lot of money."

"When people move in, they are here for a long time," she told the Thomson Reuters Foundation from her flat on a quiet, rowhouse-lined street.

This model – also known as a limited-equity cooperative (LEC) – is an attractive proposition for many in fast-developing Washington, which is experiencing one of the worst shortages in affordable housing in the country, according to the US-based National Low Income Housing Coalition.

The approach is similar to the "mutual aid" housing model in Latin America, housing cooperatives in Europe, and the coops that are redeveloping informal neighborhoods in Africa and Southeast Asia, said Bea Varnai of urbaMonde, a Geneva-based housing charity.

In the United States, such cooperatives are not unique to Washington: New York City leads the country in total number, and the Urban Homesteading Assistance Board, a nonprofit group, has documented about 166,000 such units across the nation.

Amid this mix, however, Washington hosts the second-highest concentration of limited-equity cooperatives in the country – an achievement made possible by the Tenants Opportunity to Purchase Act (TOPA), a local law enacted in the 1980s, said Dominic Moulden from community development group ONE DC.

The law requires landlords seeking to sell a residential building to first offer the sale to the property's tenants.

"In D.C., coops are a way to keep very low-income people in the city and create very long-term, low-cost housing," Mr. Moulden said.

Most of the cooperatives he has helped create were "developed in crisis" to stop residents being driven away from the area by gentrification or eviction.

Other US cities such as Berkeley in California and Somerset in Massachusetts are now looking to replicate the tenants law amid a national crisis in affordable housing, said Washington city official Gwen Cofield.

Opportunity to purchase

Washington lawmakers created the law to strengthen tenants' bargaining power, said Amanda Huron, a professor at the University of the District of Columbia.

It not only requires owners to offer tenants a first shot at purchasing a building but also mandates that they be given adequate time to consider their funding options.

Responses to the law varied, Professor Huron said: Wealthier residents who qualified for conventional mortgages, for instance, often used it to buy their units under a condominium structure – with their property appreciating at market rates.

Lower-income tenants, often unable to get a conventional mortgage, realized they could band together as an association and, helped by low- or even zero-interest loans from the city as well as federal subsidies, purchase their building collectively, Huron added.

That meant a home in a central location and housing security largely delinked from market fluctuations, she explained.

"Just being able to have that sense of ownership, the control of a building and social space – that was really important" to residents, said Huron, who recently published a book on the issue.

Today Huron estimates about 6,000 such units exist in Washington, housing upwards of 12,000 residents.

One of the newer such projects is the Martin Luther King Jr. Latino Cooperative, located just outside downtown Washington and housing primarily Hispanic families.

"A lot [of residents] work in food service and cleaning jobs downtown," said Martha Davis, an affordable housing consultant who helped establish the coop.

"The reason they wanted to buy is it's a great location in terms of employment – and they understood that prices were rising around them."

Low cost as well as a sense of community are what drew Oliver Pacheco, a Mexican immigrant who works in a local restaurant, to the coop.

"I live with three roommates in a three-bedroom apartment, and we each pay $400 a month," he said.

"I like it – it's nice and clean, quiet, and nobody bothers you. And other apartments are more expensive."

Units that will last

Ms. Davis estimates about two to four such cooperatives are set up in Washington each year, translating into 100 to 200 additional housing units.

While those numbers may seem low, she said they are "significant in that these are [housing] units that will last."

"It's never going to be a large share of our market ... but it's an ongoing, viable model," she said.

In June, the city created a $2 million fund in part to help potential cooperatives get off the ground by covering some pre-development planning costs.

The cooperatives might also get a boost from landmark new regulations known as "Duty to Serve," said Emily Thaden, national policy director at Grounded Solutions Network, a nonprofit housing group.

The regulations – a response to the mortgage crisis that led to the 2008-9 recession – appear to be pushing the federal government's key mortgage backers to start providing financial support for cooperatives, Ms. Thaden added, calling them a "big step" for affordable housing.

There is also interest in Washington's coops and their legal underpinning from cities abroad, said Moulden, noting that he and his colleagues have received invitations to speak about Washington's experience with cooperatives in Caracas, Venezuela, and London, among other cities.

"We're organizing a model of a resident-led community in these expensive global cities," he said. "And people realize ... what we can learn from each other."

This story was reported by the Thomson Reuters Foundation.