The East Bay Permanent Real Estate Cooperative’s New Way to Build Housing Equity
The co-op seeks to provide people of color with affordable housing and a stake in the American Dream. It’s a model that others are watching.
Photo of Chris Myers and Tia Taruc-Myers by Lance Yamamoto
Caroline North and her husband bought their house in Berkeley for $28,000. She and her kids were casually touring houses as a rainy-day activity in 1966 when they fell in love with one on Prince Street. “It just felt like home,” she recalls. “The kids were so comfortable there; they ran up and down the stairs.” So they bought it. The children went on to raise kids of their own, and a fig sapling that North planted eventually became a giant tree. But the kids and the tree weren’t the only things that shot up; so did housing prices. “People like my husband and I … couldn’t live here now,” North frets. “That’s not OK with me.”
When North’s husband died in 2015, the 81-year-old decided to move out of the now-$1.3-million house. But instead of leaving it to their children, North vowed to donate the home to an entity that would make it permanently affordable. She asked the Oakland Community Land Trust to help her, and later received additional assistance from the East Bay Permanent Real Estate Cooperative and Sustainable Economies Law Center. The three organizations set out to change the deed to the property so that future owners cannot charge extractive rents or sell it for speculative profit.
North’s home is just one property at which the East Bay Permanent Real Estate Cooperative is attempting to provide permanent housing for people who can’t afford the East Bay’s high rents and home prices — especially people of color. The organization uses cooperative ownership models to turn tenants into owners and give them the opportunity to build equity and intergenerational wealth. It’s part of a larger movement to make housing affordable one property at a time. In the Bay Area, the Oakland Community Land Trust, the Bay Area Community Land Trust, and the Northern California Community Land Trust are all buying properties and turning them into affordable housing. But the East Bay co-op’s funding and ownership model is unique.
Tia Taruc-Myers and her husband had been living in a North Oakland fourplex on 61st Street off of Martin Luther King Jr. Way since 2008. Although she had an absentee landlord, rent stayed at around $460 per room, so she didn’t complain. Then, last summer, the landlord painted the building a color Taruc-Myers describes as “gentrifier gray” and put it up for sale. “We were really scared when we heard the building was going to be sold,” she said. “We felt that we were definitely going to lose our home.” So Taruc-Myers reached out to the co-op’s Executive Director Noni Session, and she eventually agreed to take on the property as its first project, to be known as Co-op 789.
To raise the property’s market value of $1.3 million, the co-op partnered with the Northern California Community Land Trust to secure a $600,000 grant from a city of Oakland program established by a $600 million infrastructure and affordable housing bond issued in 2016. Then the co-op took out a bank loan for the other $700,000. It also set out to raise an additional $200,000 to repair the building.
The bank loan and the renovation funds will be paid off by building residents, mainly people of color who were tenants there until the co-op bought the property. Following the repairs, the resident-owners will pay around $1,200 for each three-bedroom unit every month, which Session said is around half of market rate. The co-op will retain the title to the property, but the residents will gain equity as they pay off the mortgage, which the co-op will keep track of. If someone wants to leave, the co-op will buy them out and they will receive the money they’ve paid into the mortgage, plus appreciation. Once they pay off their mortgage, residents will only owe for ongoing building maintenance.
Upon completion, the co-op’s cost per housing unit will be around $200,000 according to its Finance Director Ojan Mobedshahi. If the $600,000 city housing grant is included, the cost per unit climbs to around $400,000. That compares favorably to an average cost per unit of government-funded affordable housing projects in Alameda County of more than $475,000 from 2013 to 2016, according to SPUR, the San Francisco Bay Area Planning and Urban Research Association. Modedshahi said he hopes to use City of Oakland funds for many future projects. He’s meeting with city officials next month to discuss obtaining more such funding.
The system implemented at Co-op 789 is one Modedshahi’s group plans to replicate in future projects. He said the co-op expects to acquire 30 to 50 properties in the next five years. Although the cost per unit is lower than that of other affordable-housing projects, he believes the most important part of the model is allowing residents to build equity in their homes — which doesn’t happen in conventional affordable housing. The group hopes to share its model with as many people as possible. Organizations from New York, London, and various cities in California have contacted the co-op about this approach.
The co-op’s financial model was bolstered by a 2015 law that the Sustainable Economies Law Center helped pass. The California Worker Cooperative Act lowered the barriers for investing in co-ops, allowing people with a net worth of less than $1 million and earnings of less than $200,000 to invest up to $1,000 into entities such as East Bay Permanent Real Estate Cooperative. Prior to the act’s passage, such small investors could only invest $350. The co-op offers such investors an interest rate of 1.5 percent, which is more than most could make at the bank, yet much lower than the rates the co-op would pay for a conventional commercial loan, which Session said would cost around 7 percent. This gives the co-op access to inexpensive capital, which allows it to keep its housing affordable for residents such as Taruc-Myers. To date, the co-op has raised about $55,000 of Co-op 789’s $200,000 in maintenance funds in this manner.
Taruc-Myers had lived at the fourplex longer than anywhere else in her life. Her mother had run from bad credit during her entire childhood, so they never stayed in any home longer than a few years. “One of my earliest memories is our landlord banging on the door and asking for rent money,” Taruc-Myers recalled. “She was so embarrassed she couldn’t pay rent that she would just pretend she wasn’t there. Instead of paying back rent, we would just move to another city.”
When Session texted her in June telling her that the co-op had closed escrow on 789, Taruc-Myers was so happy that she started crying in a cafe. She’s excited to have a permanently affordable home from where she can continue her work for Sustainable Economies Law Center, where she is a lawyer. “Having this permanent housing is just so different from how I grew up,” she said. “It’s really nice.”
Session and Modedshahi hope that more tenants like Taruc-Myers will bring projects to it, and actively help organize and fundraise in the way that the residents of 789 have. In situations where there aren’t pre-existing tenants, the organization will prioritize people of color. Indeed, the law center and the People of Color Sustainable Housing Network created the co-op to help disenfranchised populations being displaced from the Bay Area. According to data from the Haas Institute for a Fair and Inclusive Society, some 38,000 African Americans moved out of Oakland between 2000 and 2013, a decline of 27 percent. During that same period, San Francisco lost 23 percent of its African-American population, or 13,600 people. Berkeley has lost around 4,000 African Americans since 2000, a loss of around 29 percent.
Historic and current racism has economically disadvantaged these populations, Session said. She said she has heard from many young people of color who’ve struggled to find places to live. “They’d interviewed at so many collective housing organizations, so many co-ops, so many rooming situations and they were all told the same thing: ‘You’re a good person but you’re not a good fit,’” she said. “That’s coded racist language. ‘Fit’ is code for race.”
Session grew up in the flats of West Oakland and received her undergraduate degree from San Francisco State, leaving the Bay Area to receive a M.A. in anthropology from Cornell University and to research ethnography for the United Nations Development Programme in Nairobi. “When I came back from grad school and research in 2011, I saw a city that I didn’t recognize,” she said.
At first, she liked the new Oakland, where she could watch art films in theaters and work on her doctoral dissertation in cafes. But then she concluded that the new Oakland didn’t welcome the people she’d grown up with. “My dissertation work started to mean less and less to me as I watched my people sit on the sidewalk and beg for change as wealthy newcomers would hang out at fancy establishments,” she said.
Soon after hearing about the co-op, which incorporated in January 2017, Session started volunteering there. A year and a half later, she became its executive director. Since then she’s worked on projects such as Co-op 789 and Caroline North’s house in Berkeley.
North shares some of Session’s concerns. She said she didn’t give the home to her children because she thinks they already have enough money and privilege. “We live in a society where white people tend to be way more privileged than people of color and that creates a divide that’s not good for society or for individuals,” she said.
North is sentimental about leaving her house. “This has been home for 56 years,” she said, sitting in a camping chair next to her backyard herb garden. “It’s where I lived with this wonderful man and raised my children.” But she’s excited for the future. She is building a straw house at an eco-village at El Sobrante’s Wild and Radish farm where she will live with a community that she loves.
Her Prince Street house differs from the co-op’s other projects because of North’s rare generosity, and her other desires for the home. As a longtime dance teacher and mother to a musician, she wants her house to be available to performing artists who are struggling afford housing in the Bay Area. North herself taught dance out of her converted garage for decades.
“A Berkeley where artists don’t live is unthinkable,” North said.