Permanent Real Estate Cooperative
Janelle Orsi of SELC:
" “Permanent Real Estate Cooperative” is the name SELC has given to a model we have been working on for land and housing acquisition, management, and ownership. The PREC model employs similar tools to those used by limited equity housing cooperatives (LEHCs) and community land trusts (CLTs): Residents buy homes and feel much like homeowners, but the equity that they can build in a property is limited to what they put in (purchase price and improvements) plus a strictly limited rate of return, usually tied to inflation rates or a consumer price index. Capping the resale value and putting land into community control helps ensure that it won’t be sold back into the speculative marketplace." (http://www.theselc.org/homeownership_is_dead?)
"In addition, the PREC model brings multiple innovations:
1) It’s for everyone: Unlike most affordable housing developments and 501(c)(3) community land trusts (CLTs), which are often limited (by tax exemption or their funding sources) to providing housing to low-income households, the PREC is a cooperative corporation spreading the notion that everyone – high-income and low-income – should stop profiting from property and live in limited equity housing.
2) It’s self-help: PRECs are platforms for mutual aid and self-help, not charitable assistance. Charities can create a disempowering divide between the helpers and the helped. The cooperative structure transforms the relationship to create groups of people working together to provide for their own long-term housing needs. That can make it motivating and empowering, and it sets the stage for communities to engage in mutual support in many forms beyond housing.
3) It’s self-organizing and scalable: Our vision is to design the governance of PRECs to enable bottom-up organizing by hundreds or thousands of members, rather than top-down management by a board and staff. A household or group of people can self-organize, find financing, and identify a property to shepherd into the cooperative. The cooperative will serve as a container to hold title to land and enforce limited equity. The cooperative Board and staff support members in this process, but generally do not drive decisions about what properties to buy and who will live in them. Because all members will be responsible for organizing to acquire properties, we believe that a PREC can grow quickly to involve many people and homes.
There is much more to say about the PREC model, how properties are financed, how governance works, how to ensure permanence of affordability, how we can grow a movement of PRECs, how PREC members build economic security outside of the conventional housing market, and so on. SELC has put a lot of thought and research into it, and we feel satisfied that this is a viable and powerful path forward." (http://www.theselc.org/homeownership_is_dead?)
"A SELC project to pilot PRECs in the Bay Area will hopefully illuminate a way out of the gentrification and displacement trap. Stay tuned as we develop this model, and let us know if you recommend any resources or potential support for our work. Note: We have not received funding to do this particular work, and we are just beginning the process of fundraising while we use unrestricted funds to lay the groundwork. Stay tuned, and let us know if you have suggestions." (http://www.theselc.org/homeownership_is_dead?) (http://www.theselc.org/homeownership_is_dead?)