HUD Focusing New Attention On Co-op Housing
Q & A
Editor’s note: Allen H. Jones was sworn in as senior adviser and special assistant for cooperative housing in the department of housing and urban development in may 2003. Reporting to the federal housing commissioner, Jones serves as HUD’s point person for cooperative housing issues and policies, he’s the first to fill the position in many years. Jones answered questions on housing issued for cooperative business journal.
CBJ: You arrived in your position fairly recently. How has your background prepared you for this assignment? Can you list your priorities or goals for cooperative housing development the coming year? Also, can you explain where cooperative housing fits into HUD’s overall agenda?
The Congress created the special assistant for cooperative housing role so that an appointee reporting directly the Federal Housing Commissioner could focus on the critical issues facing cooperative housing. The Administration of President George W. Bush is first in decades to utilize his legislative authority to fill the cooperative housing position.
To effectively serve the Administration and the interests of cooperative housing, a background in housing finance is a key component. I believe my background in this area can make impact
I can call on the experience of primary mortgage loan origination, secondary mortgage policymaking and Big 5 mortgage consulting to guide me through the cooperative housing landscape. My experience at HUD under the first President Bush and my experience serving on the Board of Commissioners of the Virginia Housing Development Authority provide a foundation for making headway on cooperative housing issues.
Given the lack of attention paid to cooperative housing issues from an Administration perspective over the years, someone needs to produce a far reaching report that will provide a background and current assessment of the strengths and weaknesses of cooperative housing programs. This assessment could address the history of cooperative housing, assess current conventional and governmental programs, explore demand for new cooperative product, identify and document the delivery of HUD program guidance, and review how cooperative housing now fits into the overall Blueprint for the American Dream Partnership.
The Blueprint for American Dream is a call from the Administration on its partners to create 5.5 million new minority homeowners by tile year 2010. HUD’s efforts to increase minority home ownership are a large part of that call and cooperative homeowner ship is a tool that can help us achieve this goal by the end of the decade.
In add to the cooperative housing assessment, the cooperative housing industry has consistently called for an update to HUD’s Handbook 4350.1 Multi—Family Asset Management and Project Servicing on cooperative housing issues. We are focused on revising this program guidance and will involve he coop industry in the review process.
With our plans for a new cooperative chapter in the 4350.1 and a benchmark document assessing cooperative housing we will have a strong foundation for moving the cooperative housing debate forward.
CSJ: Co-ops offer a way to overcome traditional barriers to home ownership for low- and moderate-income families. Unfortunately, as residential property values have skyrocketed, some housing co-ops have become targets for conversion to an investor-owned structure. This is especially true for limited-equity co-ops that keep costs to residents at or below market levels. Is HUD following this trend? Does it have any plans to address it?
While we certainly follow the coop market trends, we are not contemplating making changes to present policies regarding housing cooperatives. We envision utilizing the cooperative housing assessment report to guide us in the policy debate.
As to the cooperative corporation. i.e., the owner, it drives conversions from cooperative to investor-based ownership. Limited equity co-ops With FHA mortgage insurance may have mortgage prepayment restrictions requiring HUD approval -However, at mortgage maturity such prohibitions disappear. HUD has and will continue to follow applicable statutes and regulations as they relate to these activities.
CBJ: Polls show that less than half of Americas are familiar with cooperatives’ organization and values. The National Cooperative Business Association stresses the importance of education, both in building co-op membership and for well-functioning co-op boards. Would you agree that, in the co-op housing world, it is important to stress education for both the public and board members?
Public education, by organizations such as the National Association of Housing Cooperatives, is indeed valuable to both board members and individual cooperators. Where HUD controls the carrying charges, it allows the cooperative corporation to budget for reasonable training costs.
At NAHC’s Atlanta conference, I had the opportunity to see the training and education process play out. It seems to me that NAHC can take what it has in place and broaden its execution to more of a mass appeal. And it’s a good story to tell. I have learned a lot about the cooperative structure and the values board members exemplify.
I agree with the poll numbers you cite. Many people would not know, for example, that housing cooperatives come in so many different shapes and sizes: single-family homes, duplexes. townhouses, garden apartments, mid- and high-rise apartments, fraternity houses, dormitories, walk-ups, land subdivisions with sites arid utilities, mobile home parks-even marinas. I understand there are over 1.5 million families living in these various homes owned and operated through cooperative associations.
CBJ: The Federal Housing Administration has separate offices for single family and multifamily housing, while co-ops have characteristics of both. You are in the ideal position to bridge the gap between the two offices and make sure that co-ops do not get lost among the more dominant HUD programs. Is this function part of your mandate? How have you helped promote co-ops and articulated their needs at HUD?
My appointment to the special assistant for cooperative housing position in and of itself raises the visibility and prominence of cooperative housing in HUD’s Office of Housing. I report directly to Federal Housing Commissioner John C. Weicher and we meet regularly to discuss issues of importance to the Office of Housing. In addition, I am fortunate to be working with both Acting Deputy Assistant Secretary for Single Family Housing John Coonts and the Deputy Assistant Secretary For Multi-Family Housing, Stillman Knight.
CBJ: Access to capital is an issue for all cooperative businesses, housing co-ops included. But HUD’s Section 213 co-op loan program still lacks the accelerated processing procedures that the Federal Housing Administration rental programs have. When can we expect to see the playing field leveled, so that co-op loan applications are processed in the same speedy manner as rental loan applications?
Accelerated processing for Section 213 is one of a number of issues that we have on our plate at HUD. FHA Commissioner Weicher has previously commented on the importance of MAP throughout the Department’s programs including 213 co-ops. This is one of the issues that would he addressed in the cooperative housing assessment that we expect to produce. We hope to utilize that study to help us prioritize how we move cooperative issues forward.
CBJ: Housing co-ops are experiencing significant “aging in place” among their residents. Seniors in other types of housing are eligible for Federal Housing Administration-insured reverse mortgages under HUD’s Home Equity Conversion Mortgage program. HUD has authority to extend HECMs to co-ops. When will this program be available for seniors in co-op housing?
HUD is developing a regulation to implement the recently enacted law that permits the agency to offer HECMs to seniors living in cooperative housing. We anticipate publishing a proposed regulation in the spring of 2004. As with all new federal programs, there is a process to follow the proposal goes to the Office of Management and Budget for review, then over to the Congress for review, and then we will review comments we receive and update the regulation as necessary. We are well along in this process and we will keep focusing on this initiative.
CBJ: Some co-ops with large numbers of older residents have been leaders in creating programs that provide services allowing seniors to stay in their homes and live independently. What is your view of the role HUD should be playing in helping co-ops and other housing facilities provide supportive services programs to seniors?
While the Department’s housing programs and policies are focused on providing housing resources, we are seeing the leadership and innovation in the cooperative housing market around seniors. In most programs it is the responsibility of the owner or other organization to garner additional resources for supportive services. HUD encourages co-op entities to continue this dialogue directly with providers of housing for elderly and disabled persons to share lessons learned, best practices, and more about the state of the art in this area.
In addition, HUD has a program that provides for Service Coordinators - see HUD Handbook 4381.5 Chapter 8 to link elderly and disabled residents with the supportive services necessary for them to remain independent and in their homes. We encourage
co-ops to utilize all of the Department’s offerings.
Volume 1, Issue 4