Thirty Four Years Of Experience With Co-Op Land Ownership

Pursuing a vision for cooperative housing

One of the articles in Economics In An Intellegent Universe (IC#2)
Originally published in Spring 1983 on page 56
Copyright (c)1983, 1996 by Context Institute

CORPORATE OWNERSHIP is only one of a host of related factors needed for a durable community. Seattle Cooperative Housing Association provides an example. Started by the writer in ’49, SCHA’s principles were: "FAITH in the inherent order, goodness and growth potential in the universe and in every person; the GOLDEN RULE – compassionate treatment, assurance of necessities – truthfulness and frankness; COOPERATIVE PRINCIPLES …" SCHA’s aim was to develop housing co-ops. Its one creation was May Valley Co-op Community, (MVC). It was organized in ’56 by 13 SCHA members and friends. Most were well-wishers, only three families continuing into MVC resident membership.

The MVC members all had regular employment, hence no thought was given to eventually working full-time in MVC enterprises. This circumstance prevented close relations, and thus trust, from developing between members. It also resulted in debilitating turnover as members moved elsewhere with their conventional jobs. An exception, in the early years, were the three original families. They did most of the surveying, bulldozing and other development work together on MVC’s land, and worked on each other’s houses. While they remained, morale and general participation stayed high. Later members employed contractors to build their homes.

The three original families developed between themselves a fair degree of trust and cooperation also because their basic philosophies were somewhat similar. One was Theosophist, one (unprogrammed) Quaker, and one Seventh Day Adventist. All were active in their faiths. Had their religions been identical, undoubtedly their trust and cooperation would have been far higher. Later members varied in philosophy and religion far more. No limitations had been considered because it was thought impossible to find enough people for a community near Seattle from any one or all of the originals’ faiths. However, the founders did not realize that those who varied greatly in philosophy from that common to the core would be the most uncooperative. Beliefs ranged from the theism of the core to atheism, and of course from altruistic to highly selfish.

MVC took over a 37-acre farm obtained by SCHA. It was agreed that all land would remain in MVC ownership. Each member would receive a perpetual lease – Mutual Ownership Contract (MOC) – to his 1/3 acre building site. For his MOC, the member would invest in MVC his share of total land and development costs. To enable later members to enter on the same basis as the originals, the resale price of the MVC investment attached to the MOC was set at its cost, plus cost of improvements put on the lot, plus an inflation index multiplied by those costs (or appraised value if lower). This assured the seller justice but would prevent his profiting off the buyer.

The member was to finance his house on his own. When needed he could have a clear deed temporarily until his financing was completed. However some thought the MOC would be too hard to finance or sell. They advocated INDIVIDUAL OWNERSHIP (IO) with first repurchase option to MVC at the MOC price. There was intense debate followed by a vote. (Decisions by consensus had been rejected as overly delaying in favor of a two-thirds majority requirement). The majority decided now to allow a member to have either a MOC or IO.

The first four houses were built with member loans. Thereafter back financing was obtained, both under MOC and IO. MVC exercised its option fully in only one – early – instance. In all other transfers – MOC or IO, MVC waived its option, or did not enforce it fully. These failures were due to MVC’s lack of determination to repurchase (it would have had to sue to enforce its IO option against a resisting seller), lack of funds to repurchase if a buyer was not on hand, and lack of control over the selling process.

These failures, lack of members regularly working together in the community, and related factors resulted in declining morale and participation in MVC affairs. As a result, co-op minded people were no longer attracted. They had been drawn before by MVC’s option, consequent low resale price, low initial lot price (MVC was non-profit), and neighborly atmosphere. Now increasingly conservative individualists came. They took over control of MVC and persuaded the membership to "co-op", i.e. to vote out MOC and the IO option from any future use. "Charge what the market will bear" became the rule, and MVC’s practice for its remaining lots. Picnics, frequent gatherings and well- attended work parties disappeared.

When it was apparent that MVC had turned irrevocably from its original Golden Rule aims, the writer gathered in December ’70 a few Fellowship of Reconciliation friends for a new start. They pulled in others and researched and planned a more ideal community. A wide land search ended with obtaining a MOC on 1 1/2′ acres of MVC’s pasture in ’74. (MVC had not yet become conservative.) Teramanto ("Loving Earth" Esperanto) was incorporated and assumed the MOC. Tera’s goal was taken from Christ’s two greatest commandments: "Love God .. Love thy neighbors .." They were paraphrased: "To .. engender a more equitable, humane, free and nonviolent society .." and to treat neighbors and members as one does oneself.

Tera’s structure embraces consensus decisions, corporate ownership of all real estate, corporate financing only, corporate repurchase of all equities and six months or more trial period for new members. Tera has, beside the 1 1/2 acres, now – 3 houses and one lot in MVC, occupied by ten adults and three children. Five adults are members, two are prospective members. Tera members are also MVC members and use the large MVC truck garden area and the firewood from MVC’s 21-acre forest. Basic differences remain between Tera and most of the ten other MVC households. MVC even tried to repossess the 1 1/2 acres. However, relations between the two groups are improving – and Tera members are learning therefrom how to be effective in wider peace/justice struggles.

Tera maintains an open door to new prospects. Its way to benefit the region and neighborhood most is seen through continued expansion. However, it is also giving public window insulation workshops and is preparing to become an energy efficient building contractor. This and other anticipated enterprises are seen as means to internal self- support and to spiritual health.

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