Saturday, July 28, 2012

Court Co-op

A developer friend argued that too many single family homes for rent in a neighborhood was dangerous to the neighborhood, because renters failed to keep up the property. The planner in me bristled, considering this nothing more than blatant NIMBYism. But after longer discussion, I was forced to agree.

Non-occupying owners, don't receive any of the use-benefit from even minor improvements (new paint, new windows). As a landlord, it's very hard to know if an improvement is worth the money. Will repainting increase the rents? (Market information on residential rents is scarce).

As a renter (with a lease only a year long), I'm very reluctant to fix anything, let alone make improvements--I know the only value I can obtain for doing so will be utility over the next year, so it's not in my interest to make improvements that will endure beyond my lease.

How to make rentals (and thus affordable housing) available in single family neighborhoods? I would suggest 'Court Co-ops'. A 'Court Co-Op' would consist of adjacent single family homes clustered around a shared street, with a Co-Op Ownership structure.

 Co-ops are most often seen in Manhattan apartment buildings. A co-op is like condo association, but instead of the condo property being owned by an outside company, the owners of the condos are also the owners of the condo corporation, with a board of directors chosen by residents. 'Private communities' or 'planned communities' already represent a trend toward 'private government' in the form of HOA (Home Owners Associations), which have the power to exact a mandatory fee from residents, and then use those funds to make repairs and improvements to common resources.

HOA's make sense because a not insignificant portion of the value of a home is 'neighborhood value', as a result of the quality of your neighbors home. Providing a mechanism to guarantee the maintenance of all houses in the neighborhood (to the cost of to households) represents and equitable sharing of risk and benefit. (Although I'm less fond of their deed restrictions on renting....).

Salt Lake City would be an excellent place for this. Due to the large size (660' on a side) of blocks in Salt Lake City, many have 'courts', or mid-block alleyways, with small houses built on each side of the alley. Some courts are city streets, while others have only decrepit asphalt paving, installed by the original owner before it was subdivided into house parcels. Changing the courts into 'Court Co-ops' would provide a mechanism to both revitalize the areas and ensure that the properties are maintained, thus generating benefit for all occupants, whether owner or renter.

*The developer friend stated that the same effect was not true for multi-family units, because they enjoyed the services of professional management companies (with much better information on rents, the ability to adjust rents in response to changing conditions, legal liability with the city...).