Lessons from the History of Affordable Housing Cooperatives in the United States: A Case Study in American Affordable Housing Policy

American Journal of Economics and Sociology, The,  Oct, 2000  by Gerald W. Sazama

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This paper will concentrate on civic organizations, supply side, and tax expenditure policies, because virtually all of the existing affordable housing cooperatives were funded under such programs. To tell the history of affordable cooperatives, the author uses a combination of original source materials, interviews, oral histories, and secondary sources.

II

1910s-1920s: Early Housing Cooperatives

THE EARLY HOUSING COOPERATIVES in the United States grew out of the global cooperative movement. The first cooperative was organized in 1844 in Rochdale, England, as a self-help consumer group of urban workers. The Rochdale Cooperative Principles emphasized democratic control of capital through the principle of one member one vote. [3] By the early twentieth century, working class organizations had sponsored housing cooperatives throughout Europe, but predominantly in Germany and the Scandinavian countries (International Labor Office, 1964). In the United States, however, housing cooperatives did not become well established until after World War I. Housing cooperatives then took two forms: exclusive apartment dwellings for high-income families, mostly developed by private real estate speculators; and cooperatives organized by ethnic-immigrant groups and/or unions to provide affordable housing for their members during the post-World War I housing crunch (Dolkart, 1993).

The first affordable housing cooperative organized in the United States under the Rochdale Principles was developed in Brooklyn, New York, in 1918 by a group of Finnish artisans, the Finnish Home Building Association (Dolkart, 1993). This co-op is still alive and well today (Cooper-Levy, 1998). Other early successful affordable co-ops were developed by Lithuanian and Bohemian groups in New England and the Midwest (Leavitt, 1995).

While many unions sponsored affordable co-ops in the 1920s (Leavitt, 1995), the most well known were sponsored in New York City by the Amalgamated Clothing Workers Union (Siegler and Levy, 1986). This union had strong socialist influences, as well as experience with many self-help projects for working families, including credit unions and an early experiment in social security. Therefore, housing cooperatives were consistent with their other organizing efforts.

Given the general pressure for affordable housing, the influence of the union movement, and the sympathy of professional urban planners, Governor Al Smith pushed for the passage of the New York State Limited Dividend Housing Companies Act of 1927 (Leavitt, 1995). This act supported the development of all types of affordable housing, and was the first relatively large-scale government program available for affordable housing cooperatives. Thirteen cooperatives were built under this Act in New York City, many under the leadership of Abraham Kazan of the Amalgamated Clothing Workers Union.

In 1928, a liberal planning group sponsored an affordable co-op, and offered units to the general public. After difficulty in filling these units, they concluded that with a diverse population their co-op could not achieve the solidarity necessary for success. They proposed that the best chances for co-ops existed among a homogeneous fraternal or racial group (Leavitt, 1995).