Is Cooperative Ownership the Answer to Displacement?

An essay in the Houston Chronicle argues that the best way to stop displacement while revitalizing impoverished neighborhoods is through cooperative ownership of a community’s assets:

All of the programs that now lace through a distressed neighborhood like Third Ward should be controlled by the low-income people who live there, and all the assets should be held in trust — one that meets the overlapping needs of the whole neighborhood.

The author argues that outsiders—developers, investors, and non-profits—decide how money that flows into the neighborhood is spent. The solution, he claims, is to fund and empower the low-income residents of the community rather than the wealthy.

One example is the community land trust (CLT). In a CLT, an individual owns the home, but the community owns the land underneath it. The land becomes a community asset while the home is a personal asset. Participants agree to sell their home to another low-income family for a price that retains neighborhood affordability. While this will keep housing affordable for low-income families, it will do little to help them accumulate equity.

Another example is the mixed-income neighborhood trust. In this model, the trust owns both the buildings and the land. Some units are rented at below-market rates, with tenants paying market-rates providing a subsidy to low-income tenants.

There is nothing inherently wrong about this type of solution, so long as everyone who participates is doing so voluntarily. Corporations are an example of cooperative ownership. Corporations pool money from multiple sources to engage in activities that individual entities may not be able or willing to fully finance.

There are certainly some negative aspects of cooperative ownership of housing. Limits on the selling price is one. Loss of independent control of one’s home is another. But if the parties enter cooperatives fully informed, such arrangements can provide benefits that would otherwise not be available.