The Kaua’i County Council was told yesterday by a mainland housing expert that creating housing co-operatives is the best way to help provide more affordable housing on Kaua’i. Addressing the council at the historic County Building, David Thompson said establishing
The Kaua’i County Council was told yesterday by a mainland housing expert that creating housing co-operatives is the best way to help provide more affordable housing on Kaua’i.
Addressing the council at the historic County Building, David Thompson said establishing “non-subsidized limited equity co-op housing” is one way that would enable moderate-income folks to get into housing as island market prices continue to skyrocket.
Councilwoman JoAnn Yukimura indicated the establishment of housing co-operatives may be a partial solution that could prevent more people from leaving Kauai because they can no longer afford to live on the island.
It has been concern voiced by council chairman Kaipo Asing and the rest of the council.
Yukimura asked the council to set aside time to allow Thompson to speak on the benefits of the co-op housing concept and his experiences with it in the mainland. Thompson said the concept has been applied successfully in San Francisco, Berkeley, Ca., Palo Alto. Ca. and Davis, Ca.
Thompson has advised housing co-op groups in more than 30 nations and has master’s degree in urban planing from UCLA.
Thompson said limited equity co-op housing is a way to provide permanent affordable housing in a community.
Through such a plan, a developer builds a multi-family-unit project that eventually comes under the control of a housing co-operative that will be led by a board of directors, Thompson said.
A person wanting to move into the development will pay a share for a residential unit, possibly $18,000, and , while living there with his family, the co-op member would pay mortgage interests and property taxes.
When the family left the co-op project, the departing co-op members would get back their initial investment and a determined percentage increase on that investment, Thompson said. It could be as high as 10 percent for some co-ops, he said.
If the housing co-operative dissolves, a member gets back his investment of $18,000, for example, interests on their shares, Thompson said. The banks that financed the project would be paid off and “any equity remaining must be contributed to a non-profit tax entity for the public’s good,” Thompson said.
One benefit of being part of the housing co-operative is that members don’t have to pay real estate transaction costs when they move into their units or when they leave them, Thompson said.
While they live in the co-op development, members can save their money for the day when they are ready to put a down payment for their first home purchase, Thompson said.
The co-op project acts as a “transition one” for people waiting to get into a home, Thompson said.
“We are talking about a transition from the rental mode to a limited co-operative moment and then providing them with the ability (through savings by families), so they can go into the regular market,” Thompson said.
The co-op project would not prevent anyone from qualifying for “first-time homebuyers programs” offered through Kaua’i County or by any other municipality in the United States, Thompson.
The cost savings for living in a co-op housing project is substantial, and Thompson pointed to the 60-unit Dos Pinos housing co-operative project in Davis, Ca. as an example. It was developed 1986.
In 2003, a co-op member paid $940 a month for a three-bedroom unit measuring 1,238 square feet, he said.
Of the $940, $754 was used for mortgage interest and property taxes, deductions that could be applied to taxes paid by the co-op member, Thompson said.
By comparison, a person living in a neighboring condominium project paid $1,450 a month for a three-bedroom unit of 1,250 square feet, Thompson said.
The co-op owner of the three bedroom unit saved $696 after tax deductions, Thompson said.
Most of the councilmembers showed interest in Thompson’s presentation; Councilmember Jay Furfaro had concerns about reserve funds for the maintenance of a co-op development, councilman Joe Munechika had concerns about maintenance fees for the project and councilman Daryl Kaneshiro had concerns about the mortgaging for the project.
County housing officials said after the council meeting that while they liked the concept, they had questions about where the land for such a project would come from, and the financing for the co-op housing project.
Staff writer Lester Chang can be reached at 245-3681 (ext. 225) and mailto:lchang@pulitzer.net
