An explanation of why affordable housing needs subsidy, and how the Canary Co-op would purchase a site and sell shares to site members.
For people with Multiple Chemical Sensitivity (MCS) and Environmental Illness (EI), adequate housing can aid in remedying their symptoms. People with MCS and EI are disabled; they may have astronomical medical bills and/or be limited in their ability to work, so they are often low-income.
For people with MCS and EI, adequate housing can aid in remedying their symptoms.
And yet, people get trapped in housing that makes them sick, because opportunities for safe housing are limited and unaffordable.
The housing market’s Fair Market Rent does not cover development costs for affordable housing, and as a result, the Private Sector cannot provide housing for the nation’s low-income housing needs.
The federal government recognizes this fact and offers a number of housing programs. Many come directly or indirectly from the United States Department of Housing and Urban Development (HUD). HUD funds come with regulations that are set in stone and do not take Environmental Illness into consideration.
Subsidized housing provides opportunities for only 20% of these people whose income qualifies them for such programs. A shortage in affordable housing is built into the housing market.
A number of public funding sources for affordable housing have been cut back recently, and opportunities for new projects are slim to none.
Where the personal and national policy come together. Subsidized housing programs come with mandatory regulations. These regulations set site and building requirements that are a direct antithesis to good medical management for Environmental Illness. Housing for Environmental Sensitivities has requirements for interior and exterior air quality and electrical usage that appear to extend the conventional definition of “disability”. HUD has not been responsive in accommodating their regulations.
Three years ago, at the beginning of our housing search, we thought that if we looked methodically and thoroughly, then we would find a good housing site to start the cooperative from the multiple listing and current houses on the market. We were shocked to understand that the private sector can’t provide affordable housing.
The three steps to creating a Cooperative site:
- Secure the site.
- Put the Canary Cooperative and the site administration in place, and begin renting.
- Incorporate the individual site and sell shares.
This first phase, “Secure the Site”, is where we need the most help. Time is usually an issue because we are trying to find, finance, and then purchase a site in competition with other buyers. In May 2016, we considered a HUD house in a rural town. The first mortgage had to cover acquisition and renovation and would be taken in the name of individual(s), based on their credit rating. The resources we had to work with were one investor with a good credit rating and a property to use as collateral for the first mortgage – provided it is less than $150,000 and has a good business plan. Generally this $150,000 would cover either acquisition or renovation — not both. We also have been given a gift to cover closing costs on the first site, and $500 has been donated and placed in the escrow account toward that purchase.
A grant would be ideal as well as any additional investor(s) who could offer a low- or zero-interest short-term loan. However, it’s hard to ask for donations and funding without a specific site in mind to know what it needs and therefore what the budget should be.
In the second phase, we put the administration in place for the Canary Cooperative and the individual site — with a regulatory agreement between them for review and management. A second mortgage is taken in the name of the Canary Cooperative. This second mortgage pays off the first mortgage from Step 1. If the business plan warrants it, the Syracuse Cooperative Federal Credit Union would provide a mortgage in the name of the Canary Cooperative. Not all banks would be willing to work with a cooperative, and again, a low- or zero-interest loan would maximize our money.
In the third step, the Cooperative either rents or sells shares to individuals with Environmental Illness. The individual pays with personal resources, a mortgage (arranged with a local Cooperative or Community Credit Union), or a Section 8 Home Buying Voucher. The income from the share pays toward the mortgage that the Canary Cooperative holds from Step 2. Responsibility for the site is shifted to the individual shareholders who own and manage it.
The first site is committed to Fair Market Rent levels, which amounts to roughly $9,000 rent per unit per year. We believe this rent supports a mortgage of roughly $22,000 per unit. That is a level that requires subsidy in the affordable housing market. Somehow, we need to find resources to cover the expenses for acquisition and renovation.