Our house: Could co-ops help solve Madison's housing crisis?

When Abby Davidson first visited Lothlorien Co-op with a friend, she said it was “love at first sight.” 

She sensed an open, welcoming and community-minded space at one of the oldest of Madison Community Cooperative’s 11 houses, a lakefront mansion on West Lakelawn Avenue, just off of Langdon Street.

“I'd been feeling a little bit isolated,” Davidson said. “I'd been living in Madison for a little under two years at that point and hadn't really felt like I'd found my place anywhere ...  it just seemed like this is a good way to meet people and to find a group that I can really gel with and be a part of.”

Davidson went on to live at Lothlorien from 2006 to 2008 and contributed to efforts to save it following a 2013 fire. Now, she and two other co-op advocates — Paul Schechter and Dave Drapac — are working to create Madison’s newest co-op: ReJenerate Housing Cooperative.

According to the Madison Area Cooperative Housing Alliance (MACHA), a housing cooperative is a residence whose members, typically the people who live there, collectively own and control it. Each one is different, varying in size, demographics and culture. Members put in physical and emotional labor to keep the house running, pay the bills and foster relationships with each other.

A cooperative can be any kind of business owned and democratically controlled by members who share the risks and benefits. Housing is one type of cooperative, but they can also include grocery stores, organizations of dairy farmers, rural utility companies and financial services.

Wisconsin has a robust tradition of cooperatives of all types because of strong laws on the books thanks to Scandinavian settlers who brought the business model with them in the 1800s.

Attorney David Sparer said creating a cooperative is easier in Wisconsin than other states, but cooperative housing is more of a “way of living more than a legal structure.”

Now, it’s even easier to create a housing co-op in the city due to changes in the zoning code that groups like MACHA have been working on for two years. And housing cooperatives are now eligible for funding through the city’s Affordable Housing Fund. 

“Housing co-ops are definitely experiencing a renaissance in Madison at the moment,” Schechter said. 

And because living in a cooperative is more affordable than renting a market-rate apartment, which runs an average of about $1,300 per month, advocates hope they can be part of the city’s affordable housing solution. But some changes may be needed to ensure cooperative living is welcoming for all who seek it.  

“There's no one solution to housing, and the real key is to create a whole diversity of options both in terms of type of housing and the living arrangement and also in terms of the level of affordability. Absent that, we're really not going to get to where we need to be,” Mayor Satya Rhodes-Conway said. “We really just need people to be able to have options in every neighborhood.” 

‘Cooperative solutions to communal problems’

Consumer cooperatives are rooted in the upheaval that led to Europe’s Industrial Revolution, and they became part of a broader vision of meeting social needs through cooperative action.

“It’s this whole idea of people who don’t have access to money saying we’re just going to have this method of pooling our resources and having the use of those resources be fair and democratic,” Sparer said.

Courtney Berner, UW Center for Cooperatives’ executive director, said Wisconsin has a strong framework outlined in state statutes for creating cooperatives. Madison, in particular, has an “underpinning of really established cooperatives.” 

“Culturally, it’s a place where people look to cooperative solutions to solve communal problems,” Berner said.

Housing cooperatives have existed in Madison since the early 1900s. According to a history of Madison housing co-ops compiled this spring by Rachel Peller, who lives at a Madison Community Cooperative (MCC) house, low-income white women in 1915 created Mortar Board Cottage as an alternative to expensive sororities at the University of Wisconsin.

The anti-Communist campaign led by Sen. Joseph McCarthy in the 1950s led to the dissolution of many housing co-ops, though agriculture co-ops largely survived, Sparer said. The movement saw a revival from the late 1960s through the early 1980s.

“The early kind of hippie co-ops started without really recognizing that they were a continuation of what had existed for nearly 100 years,” Sparer said.  

A report from MACHA last August identified 23 group equity, or rental, housing cooperatives in Madison, totaling 388 units. Of the 23 co-ops, 11 are a part of MCC and 12 are independent.

Most housing co-ops in Madison are nonprofits organized to provide affordable housing alternatives. They don’t provide the opportunity for equity accumulation, but members have control over the co-op’s function and priorities.

‘Non-exploitative housing model’

Because of their proximity to the University of Wisconsin-Madison, many co-ops are thought of as student housing, but they house people in all walks of life. Some newer cooperatives emphasize long-term membership and include spaces that accommodate families.

Many co-ops feature individual rooms with shared common spaces, and members participate in maintenance, cleaning and cooking communal meals.

Rhodes-Conway said cooperatives create a “shared sense of purpose and ownership over where we live.” 

“I really don't want people to feel like this is a push to just accommodate the students and the hippies,” Rhodes-Conway said. “Cooperative living is not going to be for everyone, but it is a tool that can be useful for a much broader range of people that most people assume.” 

Steve Vig, coordinating officer and president of MCC, lives at Hypatia on North Pinckney Street. He has always enjoyed group living situations, describing himself as a social person, and sought out a cooperative when he got a job downtown.

“I just like living with other people and having people around, but just as important or more important, I like the non-exploitative housing model,” Vig said.

Vig said he wanted to avoid renting from an unresponsive landlord and he appreciates living where “housing is for the benefit of the house, not the owners, and it is controlled by the house, not an owner or property management company.”

Others, like Peller and Zach Seaborne, had previous experience living in communities whose residents built strong relationships with each other. They sought out a similar environment in Madison. Peller, who lives at Syntropy on Jenifer Street, enjoys the communal meals, the sustainable way of life and the built-in support systems.

“When you live with somebody, you care about them,” Peller said. “When you love somebody, you share things with them, and one of the worst things we do in society is we isolate and insulate.”

Seaborne’s parents lived in co-ops when they were younger and then went on to form a rural intentional community. Growing up with a strong sense of communal living and responsibility, in part, motivated Seaborne’s decision to join the independent Nottingham Cooperative on Langdon Street.

Incentives via zoning

During a 2013 rewrite of the zoning code, Madison began looking at housing cooperatives as a land-use instead of an ownership structure.

The only project to be completed under the 2013 rewrite process was Perennial, a co-op at the corner of Lake Point Drive and Hoboken Road on the south side. Gabrielle Hinahara helped form Perennial while living at MCC’s Ambrosia co-op on East Lakelawn Place and described the process as a “guinea pig situation.”

Under those rules, the city required Perennial to get conditional use approval to allow 12 people to live in the eight-bedroom building, while the four-unit apartment building next door had an occupancy limit of 20 people.

With changes adopted in January and pushed for by MACHA, cooperatives can now house more people before conditional use approval is required and have higher capacities with additional approval. This is similar to how multi-family use is allowed in Madison.

The recent change also allows housing cooperatives to exist everywhere in the city that allows  residential housing. This means multiple unrelated people can purchase a home together — something not previously allowed.  

Madison zoning administrator Matt Tucker said this is “the little secret” of the zoning code change.

“It enables anyone who has a single-family home to potentially own it as a housing co-op with a group of people who are not related and could gain the same equity that anyone who owns a single family home could,” Tucker said.

This could be a critical change for people like Gabrielle’s sister, Natalie Hinahara, who view co-homeownership as the primary path to owning land or a house of her own. An artist, she and her partner, a baker, are self-employed.

“I can’t really imagine when I’ll have the resources to buy a house in a traditional way or land in a traditional way, but I do feel pretty confident that … if we pooled our resources, we could make that happen,” said Hinahara, who lived at Ambrosia for three years.

In addition to the zoning change, cooperatives now have access to the city’s Affordable Housing Fund without seeking federal low-income housing tax credits. Typically, this funding has been used to help for-profit developers secure federal tax credits that cover a significant portion of construction costs and allow them to charge lower rents.

RefineJenifer, the group behind ReJenerate, was one of two co-ops to receive this funding in February. Madison’s newest co-op is converting two houses on the 900 block of Jenifer Street on the city’s near east side and hopes to open in the fall.

ReJenerate seeks to combine affordability and sustainability within cooperative living and is using $688,149 in city funding to “to go above and beyond,” Drapac said.

That means conducting an “extreme energy makeover,” implementing geothermal heating and cooling, and installing solar panels. Finally, a key component of the co-op is that it will provide three electric vehicles in a car sharing program.

Affordable housing, but at a price

Madison’s housing stock has not kept pace with its population growth. This puts pressure on the housing market, and especially burdens low-income renters whose incomes have not kept pace with rent increases.

Rhodes-Conway said this trend is the reason the city continues to increase funding for affordable housing and consider more zoning changes that make it easier to build small- and medium-scale buildings to meet the “missing middle” of housing demand.

“Multiple tools are needed, but all pushing to the same place of creating more housing choice for everyone regardless of what their income level is,” Rhodes-Conway said. 

According to MACHA, the average rent in a Madison co-op is $426 per month, which includes utility payments. Madison renters earning $40,200 annually can afford rent of $1,005 per month, according to the city’s 2020 Housing Snapshot report, and cannot afford the typical new unit built in the city.

Debbie Rasmussen, who describes themself as working class, low income and without access to generational wealth, said they were seeking stability and security in housing. Cooperatives offered them that opportunity. Rasmussen now lives in Ridge Side Co-op on Williamson Street, but previously lived in Syntropy.

“I think increasingly more and more people are not surviving economically and finding it hard to find sustainable shelter,” Rasmussen said. “When I learned about co-ops, I felt both a really keen interest in horizontal, non-hierarchical decision-making structures … but then also the way to survive economically myself.”

But the demands of some co-op living situations can be difficult for people who are struggling with multiple jobs or other aspects of poverty and may not have extra energy to contribute to the functioning of the co-op. 

“(Cooperatives) are a really great place to get more affordable housing. On the flip side, in order to get that affordable housing, to live in a housing co-op is work,” Rasmussen said. “It felt like more than a part-time job. ... I think that is an important thing for people to know that it isn't just the reduction in housing costs, it requires your participation and that requires time and energy.”

Experts say individuals and cities can benefit from encouraging housing models like cooperatives that aim to create permanent affordability, social equality and democratic resident control. They can keep costs in check and weather economic challenges better than the private real estate market, according to sociologist H. Jacob Carlson.

“People are able to look out for each other in tough times,” Carlson said. “The community assumes the risk of the property collectively. If one person falls on hard times, that risk is able to be absorbed by a larger number of people.”

Brel Hutton-Okpalaeke, director of development services for North American Students of Cooperation (NASCO), said the quality of accessible affordable housing improves when residents are in control.

“You're not beholden to an outside entity to set your standard of living,” Hutton-Okpalaeke said. “You, as the people who live there, can set your standard of living.”   

Cooperatives don’t have an incentive to raise rates beyond keeping up with inflation and covering base expenses because there isn’t a profit motive. Hutton-Okpalaeke also said cooperatives can prevent gentrification and displacement because they take housing units off the speculative real estate market for “effectively, perpetuity.”

That’s in contrast to affordable housing projects supported by federal tax credits, in which reduced rents are guaranteed for 15 or 30 years.

“A lot of affordable housing tax credit projects are simply big apartment complexes that don't have much community, they don't have much sustainability,” said Schechter, who formed a nonprofit that uses affordable housing to address social issues like sustainability and community empowerment. “They're just cheap rent.” 

The ‘grad school’ of co-ops

Homeownership, the traditional path to achieving stable and secure housing, is also challenged as household incomes haven’t kept pace with the increasing cost of housing, according to a forthcoming report from the UW Center for Cooperatives. Other factors, like the cost of construction materials and shortage of skilled labor, have constrained the housing supply.

In the community land trust model, in which homeowners purchase their houses but not the land, people can buy at lower prices. The land is leased from the land trust. When they sell, 75% of the appreciated value stays with the house, so it’s more affordable for the next buyer.

Taking land off the market keeps it permanently affordable.

“The idea is we should hold that land permanently affordable, make sure people will be able to live here and work here and that can stabilize a whole neighborhood,” said Olivia Williams, executive director of the Madison Area Community Land Trust (MACLT). 

A nonprofit founded in 1990, MACLT currently has 59 permanently affordable single family homes and also the land occupied by Troy Gardens on the city’s north side. Williams said the demand is higher than supply, and she would like to see greater city support.

Individuals may build wealth through homeownership in the conventional market, but Williams is concerned about renters who are hurt when landlords take advantage of increasing property values and raise rents.

If enough land is held in community land trusts, she said, property values could stabilize. 

Lisa and Peter Fiala own a home on the south side through MACLT.  Peter described owning property through the land trust as the “grad school of co-ops.”

After meeting at Ambrosia and having their first child while living there, they wanted their own space as their family continued to grow. With the MACLT’s program and some additional support, they were able to pay for the house.

“All that came together to take us from that awkward period where we would maybe have to wait five to 10 years to get a down payment to getting into our own first home,” Peter said.

Are co-ops inclusive?

While Madison’s low-income households are disproportionately people of color, the city’s housing cooperatives have traditionally been populated by young, white people who may live in the city for only a few years.

Hutton-Okpalaeke, who lives at the Yahara Linden Cooperative, said housing cooperatives have struggled with inclusivity and support to marginalized groups for decades. 

“As much as we don’t like to admit it, white supremacy and transphobia and sexism don’t disappear at the co-op door,” Hutton-Okpalaeke said. “There are real systems that affect real people that we have to actively deal with.” 

The current housing market has led to “economic segregation that have reinforced patterns of racial and ethnic segregation,” according to the city housing report.

“This creates a need to build more housing units for low-income households to promote the economic stability that is associated with stable permanent housing,” the report said. 

If housing cooperatives are a part of the solution to housing affordability challenges, they need to address who has access and who feels welcome. Some, like Perennial, place an emphasis on members who plan to live at the co-op for a longer period of time, and ReJenerate plans to include space that could accommodate a family. 

NASCO works with co-ops to recognize unconscious bias during the membership process and develop systems to prevent application and removal discrimation. The lack of representation can become a reinforcing factor when deciding on new house members.

“Madison co-ops could definitely stand to actively take an interest in increasing their representation because that’s going to just change how decisions are made and change how comfortable people are coming into the space,” Hutton-Okpalaeke said.