Resident-initiated Cooperative conversions

Conversion and renovation is not an overnight process, it takes time. A resident-initiated conversion can differ significantly from development initiated by the developer in that the residents may sometimes choose to take a far more active role in the entire development process. This can prove to be a major benefit down the road, both when it comes to marketing the cooperative interests and when the responsibility for cooperative operations is transferred completely to the membership. Involved residents tend to be very savvy. They will want the process to be theirs, and rightly so. They do, however, need the expertise of the development team.

Sponsor/developers will need to be cognizant of the emotional component of the development process for existing residents. The development process is about their homes and, as is generally the case, a home represents a significant emotional investment.

The relationship between residents and the development team must be a trusting one, if the co-op is to succeed.

Stage 1: Preliminary site selection and information gathering
As a first step, relevant data about property and available sources of funding must be gathered and explored on a preliminary basis.

For rehab projects, a preliminary architectural and engineering analysis of the building (including a preliminary environmental assessment) should also be done, to gain an understanding of major rehabilitation needs.

Stage 2: Preliminary financing decisions

Cooperative development, like other real estate development, is costly. Funds for cooperative development come from three basic sources, usually in some combination:

Equity, at first from the developer/sponsor and from the cooperative members themselves

Debt, in the form of construction and then permanent blanket debt taken out by the cooperative and secured by the cooperative’s land and buildings or in the form of share debt taken out by individual cooperative members and secured by their cooperative interests

Social investment, in the form of direct grants from governmental or charitable sources, in-kind contributions from charitable or governmental sources, interest reductions for loan, equity investment from private sources in exchange for tax credits or other tax incentives.

Stage 3: Market study and feasibility analysis

If the preliminary information gathering and analysis demonstrates the likelihood that the development will be viable and a preliminary go-ahead decision is made, it is time to invest financial and human resources in a full-fledged marketing and feasibility analysis.

A market study has three essential purposes:
demonstrating adequate demand for the property over the long term
demonstrating the price the market would be willing to pay for cooperative interests in the property
demonstrating the fallback marketability of the project as a rental, particularly where multifamily ownership is not well established in the relevant market

Stage 4: Proposals

With at least the first iteration of a detailed feasibility analysis in hand, the sponsor/developer can begin to seek outside funding for the development. This involves putting together proposals to social investors and to lenders.

Many sponsor/developers first look for outside funding by seeking grants or forgivable loans to pay for engineering and architectural work, option costs to assure property availability, and the costs of putting together the next (fully specified) iteration of the feasibility analysis.

More detailed proposals will be required to seek large amounts of social investment and construction and permanent financing (including FHA-insured loans) from conventional lenders.

Other components necessary to complete proposals will include:
documentation of the experience and competence of the sponsor and the development team;
documentation of the market value of the property before and after construction/rehabilitation;
legal documentation on both the cooperative organization and ownership of the property; and
evidence of community support for the project (this can be especially important in seeking and obtaining social investment).


MCA MAINTENANCE PROGRAM

Emergency Maintenance responds to unforeseen situations. For example, a resident reports a leak in the ceiling.  Investigation of the upstairs apartment finds a tub faucet left running. The situation is dealt with immediately.
Some examples of an emergency are:
Loss of heat in winter
Sewage backup or toilet overflow
Electrical power loss
Gas odor
Any condition that could cause a fire
Flooding
Inoperable smoke detector
No water (hot and cold)
Inoperative refrigerator

If any of these situations arise during office hours, Site Manager or Maintenance Supervisor will be contacted and they will arrange for repairs.

Routine Maintenance is the day-to-day scheduled tasks performed to maintain a clean and safe building, such as the cleaning of common areas and the outside, and removal of trash.

Responsive Maintenance includes apartment repair needs reported by the members, such as a leaking faucet, running commode and repairs to the building itself, such as a leak in the roof, a broken door or window, malfunctioning elevator, etc.

Preventive Maintenance ensures that the major systems in the building are routinely maintained to extend their useful life, for example, having the boiler checked every fall or immediately patching a crack in a wall to prevent further deterioration and more expensive repairs in the future. It also includes replacing parts.

Right of Corporation to Make Repairs at Member's Expense. In case the Member does not repairs or  fails to effect the repairs, maintenance or replacements specified for members in a manner satisfactory to the Corporation, and pay for same, the Metropolitan Cooperative Corporation may do so and add the costs to the Member's next month's Carrying Charge payment. The property management company shall have the responsibility for four major categories of maintenance; Routine, Responsive, Preventive and Emergency maintenance.