HomeMy WebLinkAboutPTEV PUD D-2 Legal Equity CoopPort Townsend EcoVillage: A Limited-Equity Cooperative Legal Structure and Documents Draft 6/10/09 A. Legal Structure Housing Cooperatives have been around for many decades and are very
common on the east coast. In essence, all of the land and buildings are owned by members of the cooperative, each of who has a long-term lease that gives them and their heirs certain
rights to privately use a dwelling in the cooperative a share use of certain common amenities. In the Port Townsend EcoVillage (PTEV), individual members will own shares of stock in
the corporation, which is being formed as a limited equity cooperative. These shares represent the individual member’s equity interest in the PTEV. Members may obtain mortgages that
are linked to their equity shares in the PTEV. Share purchase prices will be kept lower than the general market in order to keep housing affordable. PTEV share ownership will entitle
members to a long-term lease on a dwelling and a voice in corporate governance. The individual is both a "t?enant" because of their lease with the corporation, and an "owner", because
of their stock ownership and participation in group governance. The PTEV members may chose to elect a Board of Trustees who will handle the day-to-day business of the cooperative. There
are essentially 2 types of cooperatives. One is the Market-Share Cooperative, in which members may sell their shares at any price they can fetch for them, though the sale must be to
a person who has already been approved for membership. The other is a Limited-Equity Cooperative in which the values of the share are determined by a formula, and not by the “open market”.
This is a much more unusual type of coop, but the practice of limiting resale equity has been well developed and is commonly used with Community Land Trusts, especially those in which
government funds and private tax-deductible donations are used to subsidize the construction of homes for low-income families. The Port Townsend EcoVillage chose this model of ownership
since it most closely fits with our values of shared ownership and cooperative living, while preserving some personal rights and equity as well as affordability. Existing members of
the coop must approve each potential new member. All of the decisions of our coop are made by consensus, which further protects to rights of all members. B. Legal Documents 1. Articles
of Incorporation This brief, proforma document filed with the Secretary of State. It merely states when and where the corporation, in this case a cooperative, is formed. We hope to file
in August, 2009.
2. Bylaws The Bylaws explain the basic organizational structure of the cooperative and specifies important aspects of governance, such as how decisions are made, officers are selected,
responsibilities are delegated, and meetings are run. 3. Occupancy Lease Often called either a Proprietary Lease or an Occupancy Agreement, this document describes the terms of the 99-year
lease afforded to each member of the cooperative. It is similar to the Conditions, Covenants and Restrictions (CC&Rs) used by homeowners associations and the Declarations used by condominium
associations. It includes all of the most important aspects related to the lease and specifies the rights and responsibilities of the member and of the cooperative. It includes topics
such as limits on the size of dwellings, how annual assessments are determined, the limited-equity formula related to valuation of housing and shares, and procedures for sale or transfer
of shares. It also includes the conditions specified by the City of Port Townsend in the Planned Unit Development Agreement regarding access to dwellings, parking, outdoor lighting to
preserve the night sky, and other factors. 4. Community Agreements In many communities or associations these are called Rules and Regulations. They are merely referenced in the Occupancy
Lease and describe in detail many of the more easily changed living arrangements. These include things like the pet policy, conditions for use of the shared Clubhouse, Shop and Laundry
facilities, use and maintenance of the common garden, and other aspects related to living together. 5. Disclosure Documents These documents are given to potential members and warn those
who are buying shares in the cooperative that this is NOT a good investment for making money and thus helps avoid issues related to Securities Law. 6. Purchase and Sale Agreement This
agreement describes the terms whereby the current owners of the property, Kees and Helen Kolff, will sell the land and infrastructure to the cooperative. When signed, it finalizes the
the sale of the property to the Port Townsend EcoVillage (PTEV). 7. Promissory Note and Deed of Trust These documents are signed at closing and describe the ongoing obligation of the
PTEV to pay the Kolffs until payment for the property has been completed.