Legal Jargon Cooperative
Income limits are found in many types of affordable housing. The co-operative or sponsor establishes certain eligibility requirements for admission or continued occupancy in residential complexes designed for low-income individuals. Some housing co-ops, particularly those created under government subsidy programs to provide affordable housing, have income limits for new members. However, unlike most rental or social housing with income limits, a co-op does not need to move if an individual`s or family`s income exceeds the limit after moving in. Co-operatives differ from not-for-profit corporations in the way they raise capital. Instead of selling shares, co-ops sell memberships. In addition, cooperatives do not give shareholders the right to vote; The right to vote belongs to those who have acquired memberships. Cooperative law follows a procedure similar to collaborative law. A cooperative is autonomous and independent of other organizations. If it enters into a working relationship with another organization, the agreement must ensure “democratic control” of its members and preserve the independence of the organization. Co-operatives provide training and education to members and employees of the organization so that they can contribute effectively to the co-op.
They also inform the public about the benefits of cooperation. Co-operatives work with other co-operatives to strengthen the co-operative movement at home and abroad. Although cooperatives exist for the benefit of their members, they work for the sustainable development of their communities in accordance with membership policies. The Section 203(n) HUD Mortgage Insurance Program for Single Family Co-ops insures loans to individuals who purchase a share/membership in a housing co-op. The loan is provided by a credit institution such as a mortgage company, bank or savings and loan association and is insured by the Federal Housing Administration (FHA) of the HUD. (See “Equity Loan”) There are other types of goods and services that can be provided according to cooperative principles, such as: Similarly, a consortium of enterprises composed of enterprises or organizations forms a cooperative managed by its collective groups of employees and owned by its collective groups of employees. Organizations generate the funds needed to initially fund the program, provide space for the program, and eventually hire a management group. The Board of Directors of the Preschool Co-operative Consortium is composed of parent members as well as representatives from industry or sponsoring organizations. Section 216 is a section of U.S.
federal tax law that allows individual members of co-ops to deduct mortgage interest and property taxes on their tax returns, just like other homeowners. Section 216 allows housing co-ops to pass on mortgage interest and property tax deductions in proportion to their shareholders. The sub-state entity within the HUD that insures mortgages and provides subsidies. The FHA insures many home loans, including cooperative loans. For more information on co-operatives, contact the International Co-operative Alliance in www.coo-p.org or the National Business Co-operatives Association in www.nbca.org. In a leasing cooperative, the cooperative does not own the property in which the members live, but leases it from another entity. Food Co-op management works with members to determine these benefits. Some members may want a discount on the purchase of their products.
Other co-ops may use a patronage system where members receive dividends at the end of the year based on the amount they purchased in the co-op. This method involves the members and also helps to ensure the viability of the cooperative. A supply cooperative, such as an electricity cooperative, is another consumer-owned cooperative. These are private, independent public utilities established to provide electricity, natural gas or telephone services at cost to their members, who are mainly located in rural areas. Many utility cooperatives are also involved in community development projects. External Director – A person who is not a member of the co-operative, but who sits on the board of directors and is elected by the members of the co-operative. External directors are generally selected and approved by the board of directors and have no say on the board, but exercise an advisory role. One exception is the federal requirement that co-operatives that are part of the farm credit system have an external voting director. The board of directors of a co-operative is elected by the members/shareholders to govern the co-operative, including the establishment of policies, rules and regulations and other decisions governing the operation and welfare of its members/shareholders. The cooperative owns the buildings, but leases the land. Leasehold co-ops are found in urban renewal areas, tribal areas, Hawaii, landfill shorelines, and similar areas.