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Co-ops that Manage Themselves

By Avin Lipsky

This article originally appeared in the ARCH Groundbreaker.

While not common in Massachusetts, many housing co-ops in other parts of the country manage themselves. By doing so, they dramatically reduce their costs, and at the same time bring the members closer to the cooperative ideal of working together for the betterment of all.

The building manager provides essential services such as rent collection, building maintenance, the payment of bills, and ensuring the building’s compliance with government and investor’s regulations. But are outside managers always necessary? Groundbreaker writer Avin Lipsky spoke recently with Andy Reicher of UHAB, an organization based in New York City that enables co-ops to effectively manage themselves.

UHAB’s mission is to enable poor people to have affordable housing that they control. For the past twenty-five years they have done this by helping to create independent, self-sustaining, co-ops. In New York City co-operatives that are self-managed are required to have training for the tenants, the Tenant Board, and the building managers. UHAB provides these services as part of the many functions it performs to assist self-managed co-ops. The Tenant Board’s Officers are responsible for selecting a manager or managers from among the tenants. The manager is never one of the officers of the Tenant Board. Frequently they are elderly women or single mothers who have been a leader among the tenants. Working as the building manager they earn between 6 to 8% of the rental income, which is the standard managing fee.

Once a manager is hired, UHAB trains them to perform all the aspects of their job. They learn not only how to be administrators, collecting the rent and keeping the books, but how to be more effective leaders. Many of these developments face drug and crime problems and it is the building manager’s responsibility to tackle these problems -- trying to mobilize tenants and working with the local police. It is also the manager’s responsibility to initiate and follow through the eviction process in the event that a tenant is delinquent with the rent. After their initial training, UHAB serves as a continual resource for the managers as they confront problems on the job.

The developments that UHAB serves are frequently the most affordable housing in New York City. Rooms generally rent for $85, with a four room apartment renting for about $350. Many of these buildings do not have any government subsidy, which means that tenant revenue must cover all the operating costs. Outside management agents find the 6-8% of rental revenue too small a fee to cover their operations. Thus, without self-management this housing stock would not be able to survive.

In addition to training the building manager, UHAB also provides training for the Tenant Association Board, its Officers, and the Treasurer’s Committee. Of particular importance, UHAB helps the Tenant Board deal with financing problems. If a building is unable to make its tax

payments or undertake essential building maintenance, UHAB assists the tenants in acquiring loans or restructuring the loans they have. Obtaining this financing is not difficult, according to Mr. Reicher, because lenders have confidence that UHAB’s training program is effective and they have seen that the majority of self-managed co-ops work.

Developing Self-Managed Co-ops

Self-managed co-ops have proven to be one of the most successful ways of dealing with abandoned properties in New York City. Frequently when building owners can not afford to pay the taxes on a building, and can find no buyers, they abandon it, leaving it to become the property of the city. Rather than condemning the building and forcing residents to vacate, the city government has contracted with UHAB to help these tenants acquire, rehabilitate, and manage their building. In many of these buildings an active tenant associations already exists, in others UHAB assists in the effort to organize the tenants. In either case the tenant association is and must be the driving force to co-operate and manage the building.

Another way in which UHAB helps create self-managed co-ops is through the development of unoccupied city owned buildings. UHAB purchases the building through loan financing and rehabilitates the property. Frequently, these buildings are home to squatters who work

to rehabilitate the building, using their "sweat equity" to buy their apartment in the co-op. Thus, for many buildings UHAB is there from the inception, during the rehabilitation, and provides a continual support system thereafter. According to Mr. Reicher, this network of support is the formula for having successful self-managed co-ops.

Self-Managed Success

This support network prevent the co-ops from getting to the point where they are beyond help. Not that all self-managed co-ops survive -- some are forced to default on their financial obligations or cannot overcome crime or drug problems. But these are the exception. As Mr. Reicher attests, self-managed co-ops not only maintain New York City’s affordable housing -- they are the most successful developments. Tenants make better choices than an outside agency would, particularly when resources are scarce. Tenants make the best choices, because they have the biggest stake.



Unless otherwise indicated, copyright 1999 ARCH. All rights reserved.
Revised: October 02, 2003.

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