Cooperative housing bill receives favorable report

By Brandon Moseley
Alabama Political Reporter

Wednesday, February 15, 2017, the Alabama House State Government Committee gave a favorable report to House Bill 72 sponsored by State Representative Chris Pringle (R-Mobile).

House Bill 72, Alabama Cooperate Housing Corporation Act of 2017 would establish guidelines for cooperatives, a form of ownership of real property in which legal title is vested in a corporation or other entity, and the cooperative unit’s occupants receive an exclusive right to occupy the unit.

Representative Pringle said that other states already have housing cooperatives and that this bill would establish a legal framework for them to be built in Alabama. Pringle said that be brought with him the expert in from Florida, Joseph Jessup Warren to present the details of the bill.

Warren said that he was researching this for both his Masters and doctorate degrees. “My background is in preservation and policy.” Cooperatives are very useful for urban areas. Most urban blocks historically are not single use. When these properties become blighted there is a challenge in how to redevelop. Cooperatives were established over fifty years old in New York City when flight from the city left many properties abandoned by their owners. The buildings ownership was reorganized as cooperatives owned by the residents. That has proven successful and property values have since risen. This legislation is similar to cooperative statutes done in Pennsylvania and more recently in New Jersey in 1989

Warren said that with private ownership of each unit of a block there are challenges of rehabilitation as each property owner has rights. There are limits to what the neighboring property owners can do. With a cooperative, a highly blighted property occupant can simply be removed by the other members of the cooperative. This is typically mixed used spaces where there are residences and businesses. Each member of the coop has one vote owns a share of the whole cooperative, which then leases out the commercial properties in the coop to the businesses.

Warren showed several examples of where this was done successfully, including the Hessler Coop in Cleveland case that was a blighted area consisting of multiple buildings. The residents purchased their buildings and set it up as a cooperative and now that is a very expensive property. This concept could be done in Selma or Mobile. “We need the legislative framework to make it happen.”

Warren said that there is one share per owner. You can’t purchase multiple shares and try to flip it. There are two levels of financing. The developer would have a blanket mortgage. The residents would have share loans not mortgages.

Rep. Pringle said that the bill last year was 340 pages long. This is trimmed down

State Representative Tim Wadsworth (R-Arley) said, “I like the concept.”

Rep. Barbara Boyd (D-Anniston) praised Joseph Jessup Warren for his presentation and said that a lot of work went into this

Committee Chairman Mark Tuggle (R-Alexander City) wanted to add some portions of last year’s bill to this version regarding the rules of ownership but told Pringle that he will vote to move this out of committee if you will commit to amend it on the floor.

Rep. Pringle agreed and said that there are developments like this in style but are developer driven projects, with a cooperative the residents themselves own it, not some big guy from Birmingham owning it

State Representative John Rogers (D-Birmingham) said, “This is a good bill. I like the bill.” “We have several of these underway in Birmingham. This is a great idea. Fantastic. I am ready to roll with it.”

Rogers motioned to give the bill a favorable report. Rep. Harry Shivers (R-Mobile) seconded the motion.

According to the synopsis, “This bill would require any cooperative housing corporation formed after January 1, 2018, to organize under the Alabama Nonprofit Corporation Act, and be subject to all the duties, requirements, obligations, rights, and privileges under the act, and would require the filing of certain cooperative documents with the Secretary of State.”

“This bill would require the Secretary of State to implement and maintain an electronic database, organized by cooperative name and accessible by the public through the Secretary of State’s website, with the capability to search and retrieve cooperative filings. The bill also provides requirements for the adoption of certain governing documents of the cooperative, including the master declaration, bylaws, and master list; provides for the transfer or sale of shares of the cooperative under certain conditions and allows for the exercise of a right of first refusal; and authorizes cooperative housing corporations to claim a homestead exemption on cooperative property, with the tax reduction to be apportioned among the owners on a per unit basis.”

The bill received a unanimous favorable report from the members of the committee. It will now advance to the full House.