If Martha Aller, 62, ever decides to move out of her Reservoir Hill apartment, she won't go empty-handed. Along with her furniture, clothing and antique bird cage, the retired barmaid will also take a small amount of equity from the property.
That's because White Park Apartments, a 24-unit building at 2200 Park Avenue, will soon be transformed into a leasing cooperative by the Baltimore Corporation for Housing Partnerships (BCHP), a private non-profit organization that creates housing for low- and middle-income families.
In a leasing cooperative, housing property is owned for about 15 years by an investment group, then sold to a cooperative corporation made up of tenants.
Because the property is initially owned by the investment group, residents don't have to obtain financing to live there. At the same time, they gain some of the privileges of homeownership.
Most of Baltimore's 14 or so cooperatives were created to encourage home ownership among low- and middle-income individuals. But the White Park project is probably the first leasing cooperative in Baltimore, according to Fern Dannis, a low-income housing finance consultant in Baltimore.
"The concept is really to buy time for the residents, to give them time to establish themselves," said Ms. Dannis. "Because the investor stays in it for 15 or 20 years, the cooperative [corporation] has time to pull together an organizational structure, to establish a presence in the community, and to learn how to run the properties. So when ownership passes to [the residents], they can take control and make their own decisions."
Leasing cooperatives have existed in the United States since about 1978. But they have become more prevalent since 1986, when a new federal program permitted a single investor or investment entity to qualify for low-income housing tax credits by owning low-income property.
Today, there are about 100 leasing cooperatives in the United States, according to Herbert Levy, executive director of the National Association of Housing Cooperatives in Alexandria, Va.
This form of housing may be catching on in Baltimore. Apart from the White Park project, BCHP is already working on a second leasing cooperative project in Mondawmin, according to Pat Massey, executive director of the organization. It will involve five buildings off Reisterstown Road and a total of 38 units, said Ms. Massey, who hopes to settle on the buildings in July.
Meanwhile, the Reservoir Hill project is in its final stages of construction. The $888,760 rehab of the three-story building, which BCHP purchased last January, should be complete by April, allowing residents to move in. Rents for the one-, two-, and three-bedroom units will range from $300 to $485 per month.
Currently, six families occupy units that have been renovated, said Ms. Massey.
BCHP is now negotiating with Federal National Mortgage Association (Fannie Mae) to form a limited partnership that will own the building, said Wendell Johns, director of Housing Impact Investments at Fannie Mae. Ms. Massey expects the deal to be completed by the end of this month.
Although residents won't accumulate a great deal of equity living in the property, they'll build up a small nest egg.
Each tenant will pay $500 to obtain a share in the White Park Cooperative Housing Corp. That sum will be invested in a Maryland savings account earning 4 percent interest, and will be returned to the resident when he or she leaves the building.
During the 15 years that the property is owned by the limited partnership, BCHP will train the tenant-shareholders in property management and development, preparing them to take over these duties when the ownership passes to the White Park Cooperative Housing Corp.
Moreover, that training will prepare the residents for future homeownership outside the cooperative, said Ms. Massey. "This lets them learn how to manage a property, to know what kinds of improvements are necessary to make it keep its value, and to establish house rules to insure that people respect it," said Ms. Massey.
Additionally, a leasing cooperative "puts people in a stable living environment where they can be sure of the condition of the houses and they have control over their monthly payments," said Ms. Massey.
After 15 years, the building will be sold to the cooperative corporation for a price that has not yet been determined. But Ms. Massey said that it would be within the range of low-income families.
Not everyone likes the idea of a 15-year waiting period. Ideally, residents should own the property sooner, said Mr. Levy of the National Association of Housing Cooperatives.
He called leasing cooperatives a "cumbersome tool" to encourage home ownership among those with lower incomes.
"Any time that you have to have an investment group involved, and any time that ownership takes 15 years to come into fruition, there are disadvantages," particularly the small amount of equity gained by the residents during the first decade and a half, he said.