At some point during the effort to bring a cooperative to life, organizers venture out into the big, bad world of real estate. It's inevitable. Some groups start researching and exploring early. Others choose to first strengthen their core group culture, process, and vision. Whatever the case, the property search is a fascinating process that involves curiosity, persistence, tenacity, and perhaps a bit of political savvy.
Real estate agents, public officials, university administrators, and other professionals may not always understand who these ambitious idealists are, what they are doing, and consequently may not take them seriously. However, this is not cause for intimidation. Organizers should be ready to stand their own ground: explain what a cooperative is, how it will be achieved, and that such entities have flourished on college campuses across the continent for many years.
The second part of the Handbook addresses a slew of issues that will prepare organizers to overcome the challenges presented by the housing market. Researching the dynamics of the local community is a necessary starting point to the searching for property. Subsequent chapters on leasing and purchasing address strategic and logistical questions relating to obtaining properties to operate as housing cooperatives.
Before leaping into the real estate market and making a hasty decision, organizers should understand the dynamics of the local community, economic system, and the details their ideal building. Researching the housing market, the community context, and specific neighborhoods are important aspects of organizing a student housing cooperative.
Market research involves understanding the local real estate market in terms of supply and demand, market trends, and student needs. Community research fosters an understanding of context, existing resource networks, and local laws and regulations. And neighborhood research focuses the housing search to specific area that meet the group's goals.
Once organizers understand the factors affecting their venture, they are in a better position to make good decisions about where to look and whether or not a specific property will work. Further, the research process poses another opportunity to create allies and build a broad base of support.
With this knowledge in mind, organizers are well-positioned to create a document called a prospectus to make an argument to the public about the need for cooperative housing. A project prospectus is a document that outlines contextual factors surrounding the cooperative such as: the need for a co-op, a summary of the organization, the feasibility of a particular site, and the details of how it will be accomplished.
Researching the real estate market provides an organizing group with an analysis of the local housing market and student needs within that market. The goal is to understand the dynamics of how supply and demand affect student life. Market researchers might ask themselves the following questions:
There are several sources of information. Organizers may already have some sense of what market conditions are like through personal experience and conversations with students and others living in the area. The university may have a community housing office that can provide average rental rates for local student housing. The newspaper is another source of information, particularly the "Real Estate" section, which provides a good idea of the property values in the area.
Surveys are an excellent means of assessing student needs at a particular campus. The information may already exist, (student governments will periodically perform such work), or the organizers may have to initiate the effort.[1] Such a survey might incorporate the above questions into a format that is easy to quantify and has the space for independent comments.
One useful tool for analyzing market conditions is vacancy rate, which is the percentage of an area's total available housing that is vacant. If an area has a 2 percent vacancy rate, then renters that are looking for a place to live have only 2 percent of the area's available housing to choose from. Conversely, the occupancy rate is the opposite of vacancy and refers to the total occupied units. So, a 98 percent occupancy rate is the same as a 2 percent vacancy rate.
Statistics about an area's vacancy and occupancy rates are useful because they indicate the shape of the local housing market. If an area's vacancy rate is low --say, 2 or 3 percent-- then property values (and, thus, rent) are likely to be high because an increase in demand without an increase in supply pushes up the average price. Such statistics may be available through the technical assistance organizations discussed is the previous chapter.
Ownership patterns are also helpful to establish, particularly in smaller environments. To what extent is student housing owned by the university, local landlords, or absentee (out-of-town) landlords? Is the situation such that any one of these owners effectively monopolizes the market? Researching ownership patterns can be done in some detail at the tax assessor's office. The records on-file are public information and can be looked up either by owner or address. These records will also have the assessed value of the properties, which will likely be lower than market value.
Community research is a process whereby groups familiarize themselves with various aspects of their communities. The goal is to understand the local regulatory environment and the network of support from which student cooperatives can benefit. Generally, the more knowledge organizers have about the surrounding context, the more effective their efforts will be. Community research is strongly tied to the discussion about Technical Assistance in the previous chapter.
Programs exist at various levels of government to develop affordable housing. Public sector programs, depending on the priorities of local government, may be used to develop student housing cooperatives. Two programs, funded by the Federal government and administered at the local level are: Community Development Block Grants (CDBG) and HOME Funds. The disbursement of these funds varies widely, but includes both grants and low-interest loans.
Another resources is a city master plan. Local governments frequently produce master plans to prioritize the city's direction for 3 to 5 year periods. Such plans may call for allocating city funds for the creation of affordable housing. It may even recommend allocating provisions to address student housing needs. Reading a master plan will help organizers understand the local political climate and, a more specifically, whether they can expect to get funding.
More information about master plans and city programs can be obtained through the city departments listed in the Technical Assistance section of the previous chapter.
City and regional building codes can profoundly affect the process of looking for property. Zoning codes are essentially a means of dividing a community into numerous property zones; examples are: industrial, commercial, and residential. Each of these zones is divided by density and other permitted uses. Density codes include: high, medium, and low density. The average suburban neighborhood composed of single family homes is an example of low density zoning. Urban areas, or areas consisting of apartment buildings and similar structures are examples of higher density zoning.
In an effort to use space more efficiently, many communities adopt a mixed-use code, often in a downtown location. The code usually consists of a retail space on the bottom floor and living space on top levels. It has recently been creatively adopted by affordable housing providers to use the income provided by the retail space to subsidize the housing space. Co-op organizers could use such a code to create a mixed-use cooperative, with, say, a student-run business on the bottom floor, and cooperative housing on the top.
Organizers should look for high density areas because in order to make the housing affordable, the building's space needs to be populated as densely as possible. A map of local building codes can be obtained from the city administration (Housing Department, Community Development Department, Zoning Board, or Planning Commission). Likewise, cities often publish a zoning code handbook that lists specific properties and gives an overview of local zoning codes.
An important zoning restriction for co-op organizers is commonly called the "unrelated persons restriction." This restriction limits the number of unrelated adults that may live in a housing unit. Such restrictions are often aimed at limiting student housing in a certain locale. The existence of such a zoning code will have a great impact on where organizers look for property and the overall feasibility of the project.
Neighborhood research involves applying market and community research to specific neighborhoods. The goal is to locate neighborhoods which match the group's goals. So, for instance, a neighborhood that is zoned for high density, multi-family, residential use has the kind of characteristics that an organizing group is looking for. Another factor to consider is the property values of the area. One can get an idea of a neighborhood's property values by surveying buildings currently for sale. Also, student organizers should consider how accessible a neighborhood is to campus; either through close proximity or convenient public transportation.
Typically, communities are composed of some neighborhoods that are more affordable than others. Most of the time, "affordable" neighborhoods are that way for a reason (i.e. the housing is "less desirable" to mainstream consumers). "Less desirable" could mean that the housing stock is deteriorated. Or it could mean that it is next to an airport that is extremely noisy. Sometimes less desirable means that the neighborhood is home to poor people or people of a certain ethnic group and that other people do not want to live there because of a certain prejudice. Students can also make a neighborhood "less desirable." Neighborhoods are usually considered "less desirable" due to a combination of factors.
Some issues to consider when researching potential neighborhoods are as follows:
The Goal of all of this research is to develop arguments which you can use to convince decision-makers of the importance and feasibility of cooperative housing for students. The normal format for these arguments is a prospectus - a written proposal package which lays out the context and details of your plans for a student housing cooperative.
The prospectus is more than just a report on your research. It is a statement about your vision, your understanding about the needs and justifications for student-controlled housing, and your plans for the near and distant future.
A basic prospectus can be modified as your group begins to find properties, becoming a project proposal which you can submit to bankers, University administrators, municipal officials and other potential sources of support.