Kauai weighs
cooperative housing
LIHUE >> The idea of cooperative housing as one solution to Kauai's housing shortage has received a warm reception from the Kauai County Council.
But residents around the island questioned whether the concept would work with Kauai's high land costs.
Councilwoman JoAnn Yukimura, who chairs the Council's Planning Committee and is a point person on housing, said she endorses cooperative housing and it will be a major part of a housing package she is developing.
David J. Thompson, a consultant on cooperative housing, talked to the Council Thursday and gave five presentations to communities around the island last week. He was invited by Yukimura.
Thompson's proposal is similar to cooperatives that were popular in the 1960s. Several exist on Oahu. Those cooperatives have a market value when they are sold.
But Thompson is promoting nonprofit cooperatives. The market value of the housing would be fixed in what he terms "limited equity." By freezing the value, Thompson said, the housing units would always remain within the reach of middle-income residents.
Thompson's cooperative works like this:
First, a developer builds the project. It can be multifamily, single-family or a mix. Then, a nonprofit corporation buys the complex using a single large mortgage.
People who want to live in the complex buy a share in the cooperative, not the house or apartment itself. If there are 10 units, their share is 10 percent of the cooperative.
The price of a share is relatively small, far less than the 20 percent downpayment required in conventional mortgages.
Once they move in, residents pay a monthly fee, set by an elected board of residents and based on each unit's portion of the total monthly cost for mortgage payments, utilities, insurance and maintenance.
At the end of each year, the interest paid on the mortgage is allocated to each resident and can be deducted from each one's income tax.
Thompson used as an example a 60-unit cooperative he helped develop in Davis, Calif., called Dos Pinos, and compared it with a neighboring apartment house. Residents paid $18,000 up front for their shares.
After tax refunds (which renters do not receive), the monthly payment on a three-bedroom unit at Dos Pinos was $109 a month cheaper than at the apartment house when both opened in 1986. Since then, monthly payments at Dos Pinos have increased 18 percent compared with 103 percent at the apartment house.
But several residents who heard the proposal questioned whether the savings in monthly payments would be attractive to middle-income Kauai residents when the initial cost of a share was considered. They said that while it appears to be a good deal over a long term, it would be hard to promote initially.
Others questioned whether construction and land costs on Kauai could be low enough to make the units affordable to middle-income buyers.