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The four-story, mid-rise residential property at 1477 Newton Street NW is something of an anomaly in D.C., where the housing market can feel inaccessible and many residents struggle to have an ownership stake. The property is collectively owned by its residents, who were previously renting units in the building, some for more than 15 years. Homeownership in this area seemed like a long shot, given that these residents each earn a modest amount in their teaching, nonprofit, or government jobs, if they are working. But together, they were able to purchase the 24-unit apartment building in one of D.C.’s most gentrified neighborhoods, where the median household income is $97,700.
“This is the newest history on the block in Columbia Heights,” Teresa Edmondson says.
Edmondson owns a share in the entire property because she is a member of The Cooperative At 1477. The cooperative, an association of residents who organized so they could own and operate the apartment building, acquired the building from the landlord in February. Unlike condo owners who own their unit, co-op members own a share in the building and lease their unit via contract.
The residents bought the building at a price that is substantially below what it is actually worth. According to one appraisal, the building has a value of $5.5 million. Yet, tenants acquired it for $2.3 million. Edmondson, the president of the co-op’s board, revels just thinking about the co-op’s victory of collective ownership. It took more than three years, along with a dedicated team of tenants and housing experts.
Built in the early 20th century, the white concrete building accented with a dull magenta trim sits at the center of the block. At one end is a fire station and at the other is St. Stephen and the Incarnation Episcopal Church, a place of worship known to host progressive activism and community events. Residents walk in and out of the building’s bright red door as they go to work or run errands. One early afternoon, an older resident of the building greets individuals that walk by as she smokes a cigarette. Inside, the building represents a cross section of D.C., salaried and hourly employees living alongside elderly individuals who receive Supplemental Security Income. The youngest resident is 4 years old; the eldest is in their 70s.
“You see the American dream in action in your building,” says Lynette Daniels, who’s lived at 1477 Newton Street NW with her son since April 2004. Over the years, she watched residents of the building go from “little people” to high school graduates.
For The Cooperative At 1477, ownership not only means community, but power. They are no longer renters answering to a landlord, and wealthy newcomers can’t price them out. The tenants understand they are putting down roots in a neighborhood that was once home to the city’s first black bookstore and a wealth of pupuserias. All but one of the residents are black or Latinx.
In exchange for ownership, they agree to keep the building affordable for years to come by restricting the resale price of membership shares. Unlike traditional co-ops, where a member can sell their share at whatever price the market can stand, members of limited equity co-ops sell at the price they originally paid, plus a modest rate limited to inflation. Ownership, in this sense, is not about building wealth, but maintaining affordable housing. The residents of 1477 Newton Street NW are now part of a long and rich history of D.C.’s limited equity housing co-ops that dates back to the beginning of the Home Rule era, and made possible by organizers with institutional knowledge of how to create and maintain them so residents won’t be displaced.
The Cooperative At 1477’s process of purchasing a building of this value was unorthodox from the start. Most limited equity co-ops in D.C. were created under the Tenant Opportunity to Purchase Act of 1980, a local law that gives tenants the option to buy the building themselves or transfer the purchase rights to another buyer. The clock starts when tenants receive a notice from their landlord that the building is being sold and they have the right to purchase it. Tenants often form a co-op for no other reason than to exercise their TOPA rights.
A few limited equity co-ops in D.C. are intentional community co-ops, where residents decide to live together to practice a shared lifestyle, like the Ella Jo Baker Intentional Community Cooperative in Columbia Heights. Most limited equity co-ops are “forged in crisis,” University of the District of Columbia associate professor Amanda Huron argues in her book, Carving Out the Commons. She writes that limited equity co-ops rapidly started forming when D.C. was a majority-black city that began to govern itself and passed tenant protections for its low-income residents, who were threatened with displacement from an influx of whites. By 1981, about 50 buildings, with roughly 6,000 units total, had converted into limited equity co-ops.
“It’s not like they are choosing between market rate homeownership and limited equity co-op homeownership. They are choosing between continuing to rent or limited equity co-op homeownership,” Huron says. She also lives in a limited equity co-op in D.C.
Unlike the dozens of existing limited equity co-ops in the city, the residents of 1477 Newton Street NW received no notice of sale—the formation of their co-op was proactive rather than reactive. The process to convert the rental property into a co-op began because the building was behaving like one and a resident, Edmondson, took notice. When she moved into the building seven years ago, Edmondson was interviewed by a board. The residents had even independently established bylaws for residents living in the apartment to follow.
“But I don’t have a share of occupancy. I don’t own anything,” Edmondson says. “I was paying rent, so I didn’t understand.”
She did some sleuthing, and found out the building was purchased more than 20 years ago with the intent that tenants could one day own the building. In 1997, Safe Haven Outreach Ministry and Community of Hope purchased the property at 1477 Newton Street NW for individuals struggling with substance misuse. The groups hoped the tenants would own the property in recovery, as a way of teaching self-sufficiency, so the building was deeded to a co-op of their own creation, called the Haven House. Five of the original tenants still live in the building today.
To finance the property, the Haven House partnered with National Equity Fund, a nonprofit that specializes in federal-state tax credits. Due to affordability provisions in the Low-Income Housing Tax Credit loan, along with requirements in loans through the DC Housing Finance Agency and D.C. Department of Housing and Community Development, the building could only ever be occupied by tenants of modest means. Per the LIHTC requirement for the building, all units are restricted to households at or below 60 percent of the area median income, or $50,950 for a household of one in 2019. The developer and its investor entered into an agreement with the federal and local governments that regulated rents and assured affordability for the next 30 years. Even as its original tenants moved out and the neighborhood got more expensive over the next two decades, the building remained affordable. Today, a one-bedroom unit at 1477 Newton Street NW is capped at $1,417. Monthly charges vary by income bracket, and owners do not always charge the maximum rent. At the end of 2019, one-bedroom rents averaged just more than $1,100. For comparison, the fair market rent for a one-bedroom unit in D.C. is $1,500.
For years, the building was acting like a limited equity co-op, but Edmondson was the first tenant to realize they had a right to the building after complying with the LIHTC loan for 15 years, according to a contractual agreement she found. More importantly, they had the right to enlist help.
“Teresa, being an astute person, realized they had an option to purchase, so she in turn sought counsel,” says Eric Rome, the tenants’ lawyer. “She came to my firm.”
This was in 2016. There was no looming deadline or lurking landlord, as there usually is when a limited equity co-op is formed under TOPA, but the process still required plenty of patience. In interviews, Edmondson still jumbles up exactly how she did it. To understand affordable housing finance, you almost have to be a real estate developer, and Edmondson is not—she’s a case manager at Pathways to Housing and an ANC commissioner. She was determined to see the process through because, as she puts it, “I’m from New Jersey and I come from a background of money.” Meaning, her family owns her childhood home.
The team helping Edmondson included Rome and Judy Meima of Mi Casa, a nonprofit that provides development consultant services to renters and co-ops members. Rome made legal sense of the documents Edmondson gathered and Meima helped put together financing plans for both acquisition of the building and immediate repairs. In hindsight, Rome says he never worked on a project quite like it, but it was far from the first limited equity co-op his law firm has worked on.
“The big difference, frankly, [is] it’s easier to make the numbers work just because the purchase price is so relatively low,” Rome says. “It’s not easy, but it’s easier to make the numbers work without requiring new kinds of deep subsidies from D.C. Most limited equity cooperatives that are being formed these days are competing with other developers.”
“We often negotiate these options at the end of the LIHTC compliance period, but they are not viable, financially. This is the first one that’s actually come to fruition that I know about,” he says.
The co-op purchased the building for $2.3 million because the investor and majority owner of the tax credits on the property, National Equity Fund, wasn’t looking to get equity out of it when it exited. No gap financing was needed—a remarkable feat given the location and the current year. The co-op secured a loan from the National Housing Trust to make the purchase, and assumed two DHCD loans from the original purchase. The NHT loan mirrors the affordability restrictions in the LIHTC loan, and these restrictions will be written in the co-op’s bylaws to ensure continuity. Members did not collectively or individually make a down payment on the mortgage. (The mortgage underwriting for limited equity co-ops is based on the potential income of monthly carrying charges, also called co-op fees, that cover a member’s share of operating and maintaining the co-op, from mortgage payments to property management fees to insurance premiums.) But members will have to pay an additional fee once all the paperwork associated with the conversion is finished; Meima says to think of this like a security deposit for a rental apartment.
“Most tax credit deals these days are motivated, frankly, by tax credit investors or capitalists trying to stick their money somewhere,” Rome says. “I don’t know of any other deals where the tax credits are owned by somebody like NEF, whose continued goal is affordable housing, not profit acts or tax breaks.”
“NEF focuses on equitable exits, even if it’s 15-plus years down the road,” says Ramon Jacobson, the executive director of the Local Initiatives Support Corporation, a lender organization affiliated with NEF. “NEF stuck with the project through some turbulence, and worked hard to structure an exit that delivered on that long-ago envisioned result: a permanent stake in Columbia Heights.”
The seed of the idea was planted when Columbia Heights “had acres of vacant lots and piles of dirt where the Metro would be,” Jacobson says. Safe Haven Outreach Ministry and the Community of Hope saw the potential of the neighborhood before the market did, and invested the money and time. Many are grateful they did. In 2012, the Fordham Institute named Columbia Heights one of the fastest gentrifying neighborhoods in the nation. Because the building remains affordable, some longtime residents of 1477 Newton Street NW, like Retna Pullings, were able to stay and witness its transformation.
Eighteen years ago, Pullings moved into a two-bedroom apartment with her daughter. Back then, she paid just $600. Her daughter has since moved out and lives with her own family in Maryland, but Pullings stayed and has seen everything around her change. She describes seeing the area transform from a mostly black neighborhood where people sat on their front porches, chatting with one another, to something she doesn’t recognize anymore.
“I don’t know the people like I used to,” says Pullings, who is now vice president of The Cooperative At 1477. “It becomes strange when you don’t know the people who live in your neighborhood. You don’t have a relationship.”
She does have a relationship with the people in her co-op, as well as her nearby church. There are others who, like her, have refused to leave, and continue to live in the building and on the block. Community support is critical in uncertain times like these. Members of Pullings’ and Edmondson’s families each have the other’s contact information, in case something happens. Both women live alone and watch out for one another.
“The older you get, you got to have some roots,” says Pullings, when asked to describe why ownership is important to her. “You have to stake out what’s going to be yours—that’s what I decided to do. This is where I’m going to live.”
Holding on this long has been rewarding because she now gets to own a piece of her building. The building’s planned renovations excite her—she hopes to get a washer and dryer in her unit and upgraded kitchen cabinets, countertops, and appliances. For Pullings, ownership is about creating home. Planting flowers out front lets everyone know this isn’t simply a roof over her head.
“I don’t really know all the aspects of what a cooperative is, but let’s give it a try. I want to know what I can do to make it work,” she says.
A common critique of limited equity co-ops is that its owners cannot accumulate wealth.
“From an equity perspective, it’s a glorified rental situation,” says Rome. “You earn more interest on your security deposit than you would otherwise, or on your membership fee, but you don’t have the equity that you would in a true ownership situation.”
In her book, UDC’s Huron says one black co-op expert thought limited equity co-ops “sounded like something a bunch of white people thought up to keep black people poor” when he first learned of them. He changed his tune as he learned more about them, and is now in favor of the ownership structure. Edmondson, who is black, is also the first to acknowledge that this arrangement prevents her from accumulating wealth.
“The only thing we are going to own is debt. We can’t leverage this and buy another building,” Edmondson says. But while she isn’t able to enrich herself in the capitalist sense, she is able to enrich herself in another way. “I believe that everything happens for a reason and that the creator put me in that building so that I will do something that would benefit the community, my community, people of color, black people in the neighborhood.”
Supporters of limited equity co-ops see them as key to addressing the housing crisis. Between 2000 and 2013, D.C. had the highest percentage of gentrifying neighborhoods in the nation. Limited equity co-ops can prevent further displacement by keeping housing affordable over time. “Because many of these buildings have at least one subsidy … they remain affordable to residents earning no more than 80 percent of Area Median Income,” a February report from the Coalition for Nonprofit Housing and Economic Development and Virginia Commonwealth University says. The report also says that a limited equity co-op’s carrying charges can be cheaper than rent. In 2004, the median monthly cost of 30 limited equity co-ops was almost half the cost of the U.S. Department of Housing and Urban Development fair market rent in 2003. Huron had similar findings for her book, published in 2018.
Currently, this tenure type makes up just a tiny percent of the District’s total housing stock. There are 99 limited equity co-ops, or 4,400 units, in D.C., and most buildings are concentrated in Ward 1, according to a task force created by At-Large Councilmember Anita Bonds. The creation of new co-ops has slowed during the last 10 years. In an October 2019 report, task force members asked that limited equity co-ops be considered in Mayor Muriel Bowser’s proposal to create 36,000 housing units, 12,000 of them affordable, by 2025. Task force members want to see this type of co-op increase by 45 percent.
“Co-ops are a really viable way of preserving affordable housing and preserving low-income communities and communities of color in the District,” says Elin Zurbrigg, the deputy director of Mi Casa and a task force member. “We think that they should be given due attention and, to some extent, priority in funding decisions.”
The task force continues to believe that 2,000 of the 12,000 new affordable units should be limited equity co-ops, says its chairperson Paul Hazen. It’s unclear how the coronavirus pandemic will impact the executive’s housing goals, but some can see the pandemic lowering housing prices and making the acquisition price more financeable for tenants interested in limited equity co-ops. In crisis comes opportunity.
Bonds, who believes D.C. should be creating more limited equity co-ops, says the pandemic complicates the task force’s budget request of at least $25 million dollars for expansion. “I think it would be doubtful that we can have that kind of resource, but we haven’t given up,” Bonds tells City Paper. Money continues to be a problem for this housing type, from acquisition to pre-development to critical repairs to renovation, as well as for the technical support that helps co-ops own and maintain their buildings.
“The startup money—the seed money—is incredibly hard to come by, and low-income tenants do not have a couple thousand dollars just sitting around to put toward things like hiring an attorney and completing an environmental study or a building evaluation,” Zurbrigg says.
There is both private financing and public funding available for limited equity co-ops. Historically, Zurbrigg says, the main source of permanent acquisition funding has been the First Right Purchase Program, which offers low-interest loans to tenant associations so they can actually exercise their TOPA rights. Loan resources also include D.C.’s Housing Preservation Fund and Housing Production Trust Fund, sources of money available to support all types of affordable housing in a time of growing housing costs.
The task force found that limited equity co-ops are scoring less favorably when applying for public dollars because they are competing against large affordable housing projects, not just other co-ops. Virginia Commonwealth University’s Kathryn Howell found the same outcome in her own February report. Howell says both the number of developers and projects have surpassed HPTF and HPF funding, forcing competition that generally favors experienced, high-volume developers.
“The question is not ‘do we just fund all the co-ops?’ You still want the best projects to be funded because they are public dollars,” says Howell. But similar types of projects should compete against each other, she recommends.
“If you want to know what the District is prioritizing, you go to the Notice of Funding Availability. Whether that is D.C. or the federal government—funding and the way we fund, and how we fund, and what we fund, is policy and priorities,” she adds.
While working at the Latino Economic Development Center the last three years, Citlalli Velasquez has worked with two limited equity co-ops whose renovation applications for Notice of Funding Availability dollars were rejected twice. “It is really disheartening for them to look around their neighborhoods and see buildings flipping and changing rapidly and looking really nice, and their realities or their expectations of their housing have not changed drastically,” Velasquez says. “It doesn’t feel super empowering for them.”
And while this type of housing is the manifestation of her ideals, Velasquez regularly reminds tenants she’s counseling that limited equity co-ops don’t work without an ecosystem of support. She’s never worked on a building that she’s helped convert into a limited equity co-op. Groups like hers say most TOPA-eligible buildings either aren’t interested or can’t get the capital needed to purchase the building. These groups get involved at the start of the TOPA process, when tenants have a set number of days to form a tenant association and decide how they want to exercise their rights.
“Most buildings that I’ve come across are not interested in forming a limited equity co-op, and I don’t think it’s because people are not interested in being owners of their apartments,” Velasquez says. “Usually these apartments are rent-controlled apartments that were in dilapidated conditions because of neglect by the landlords, so tenants would basically be buying an apartment building that is falling apart. There are concerns of buying something that is potentially a liability for people and not really having a lot of capital to quickly turn the building around.”
“In the last five years, the biggest barrier would be affordability,” says Marian Siegel, the executive director of Housing Counseling Services, a housing group similar to LEDC. “When you have a building that consists of a significant number of low-income tenants and the price of the property is based on future expectations of development and the gentrification pressures of the pricing … then feasibility is just not there.”
In a large number of TOPA properties that Housing Counseling Services has worked with, they decided to keep them rental. This was her nonprofit’s experience even in the 1980s and 1990s, when property prices were lower and financing the deals wasn’t as big a challenge as it has become in recent years.
“I think it’s because, for so many people, the thought of ownership has always meant that white picket fence around a single family house. And to transition people’s heads around the fact that this dilapidated place that they’ve lived in, not out of love but out of necessity, could become something valuable and good for them,” Siegel says, “that takes time to transition people’s thoughts around. A lot of times tenants say ‘I want to get the hell out of this building. I don’t want to own this building’ and so we do talk a lot about what the difference in ownership opportunity means.”
Siegel and her team spend a lot of time explaining the pros and cons of limited equity co-ops to tenants when they first meet with them to go over options after they receive a notice of sale. Limited equity co-ops are only right for individuals who want to run a multi-family residential building and make decisions with their neighbors. The hard work doesn’t end at financing. For example, co-op members also need to create a new relationship with their property manager, who has long thought of them as renters.
It remains complicated for residents to be owners of multimillion-dollar properties. Renters generally become co-op members so they have control over their property. But owning isn’t easy, especially when it has to be done democratically. Co-op members sometimes have to agree to decisions that go against their own self-interest for the good of the group. This is why housing groups continue to offer their assistance for years after closing.
Housing Counseling Services is still working with limited equity co-ops that Siegel helped start in 1987, like Capital Manor in Columbia Heights. There is ongoing technical support so co-ops know, for example, to evaluate carrying charge levels and increase fees to maintain a balanced budget. Support can also look like conflict mediation or leadership training. What can happen in any democracy can happen on a co-op board: a member gets crazed with power, or apathetic co-op members lose their voice when the board gets tired of trying to engage them.
“I always see it as like a microcosm of the world, how dictatorships take over,” says Siegel.
Sandra Ceron will soon own a share in her 34-unit apartment building at 1424 Chapin Street NW. Like the property at 1477 Newton Street NW, Ceron’s was set up to become a limited equity co-op.
In 1993, tenants of the building successfully sued their landlord and the court awarded the title to the residents. These tenants formed the Archbishop Rivera y Damas Cooperative so they’d own the property, collectively. (Many of the tenants were from El Salvador, hence the name.) But all but one of the tenants vacated because they didn’t have the money to rehabilitate their dilapidated building. The one resident who stayed, Leroy Washington, found his way to Mi Casa and National Housing Trust, which provided technical and financial assistance. The name given to the partnership between the co-op and NHT, Meridian Manor, is still engraved in an old-style serif font at the entrance of the building to this day. The inscription has been there since the original construction of the building in the 1930s.
Sometime between 1996 and 1997, Ceron got a call from the executive director of Mi Casa, Fernando Lemos, asking if she wanted to move into 1424 Chapin Street NW. The building was just a block away from where she was already living, in another co-op that was converting into condos. She agreed to move to live in a larger unit for her and her two boys. In April 2003, after building renovations were complete, Ceron moved in.
In the beginning, two-thirds of Meridian Manor tenants were single mothers. Ceron remembers counting more than 50 children running around in the building. They had a computer lab for the kids set up at one point in the building, thanks to a grant set up by NHT.
“We call it a big family,” Ceron says. “Because that’s the feeling.”
She feels lucky to have stayed in the building all this time. Even though her neighborhood has become wildly expensive, her monthly rent is fixed at 30 percent of her income. It’s also Project Based Section 8 Housing. (It’s not impossible for a co-op to have Section 8 status, because the program subsidizes members’ carrying charges and doesn’t interfere with the ownership structure.) She’ll soon own a share in her building in the neighborhood of her choice. The process to acquire the building from the investor who helped tenants secure the building at the turn of the century has already started.
Like 1477 Newton Street NW, 1424 Chapin Street NW was acquired and preserved through a LIHTC loan. As part of the agreement, the investor can leave after complying with the loan for 15 years and residents have the first right of refusal at the end of the compliance period. The investor exited in 2019. NHT is now helping Sandra and her co-op secure financing to undertake the property and complete a $2 million dollar renovation. NHT, which has an ownership interest, spoke with four banks before it secured bank loans for recapitalization and renovation. Everything should be completed by the summer. NHT will continue to be involved in the property for the ease of the residents and banks, but the co-op members will be responsible for owning and operating the building.
“As we move into a new phase and no longer have an ownership interest, we will work more closely with Sandra and the co-op board. We plan to meet quarterly with the board to talk about general conditions and operations at the property,” says Kevin White, NHT’s director of real estate development. “As a result of these meetings, the co-op board will be exposed to the intricacies of multi-family ownership and understand the importance of preventative maintenance, financial reviews and planning strategies, and the importance of meeting lender and regulatory requirements.”
Ceron is looking forward to this new opportunity. She never considered homeownership in this way. Like Edmondson’s building, Ceron’s was already behaving like a co-op, and she has been on the board the entire time she’s lived there. She does it because it challenges her mentally. She says it balances her day job as a housekeeper, which is more taxing physically. Plus, she likes numbers and gets to be treasurer. She’s excited for what this opportunity means for her kids, and to teach them the ways of cooperative living. Living at the property has already enabled her to save for her kids’ college tuitions; they are nearly done paying off student loans.
“I keep telling them this is going to be their building,” Ceron says.
Zurbrigg suspects there might be more limited equity co-ops that form the way Ceron or Edmondson’s did. Others believe there are so many creative ways to proactively form limited equity co-ops.
“In 2009-10, when there was not much available acquisition funding, a number of buildings decided to utilize tax credits as their only option to purchase (rather than forming an LEC),” she says. “That means that we will likely see many of these coming up for potential conversion to co-op around 2025.”