When community land trusts meet worker cooperatives and non-profit development, everyone wins
There are three large expenses when building: the land, the developer and the construction work (both materials and labor).
Finding ways to get the cost of all three of these down should be one way the city manages the Affordability Housing Crisis that we are experiencing in our fair city. And it looks like they are inching in that direction.
Community Land Trusts (CLT)
On Oct 24th the Interboro Community Land Trust, a citywide collaborative of nonprofit affordable housing organizations, announced the city’s first citywide CLT (Community Land Trust), not to be confused with the other CLT’s in NYC, other CLT’s are up and running (more below), but it is the first time that multiple agencies have organized to form a CLT.
Previously the Cooper Square CLT was the only existing CLT in New York City, which has been the land steward of a low-income mutual housing association on the Lower East Side for over 20 years. Because of recent funding from the city they are looking to expand their portfolio to acquire and develop distressed buildings.
There is also the East Harlem / El Barrio CLT, who are working with affordable housing developer Banana Kelly to acquire and rehabilitate a group of buildings for low-income rental housing in East Harlem that would be owned and operated as a CLT.
An excellent start to be sure, if the land is inexpensive and the community has control over what’s being built, then the building will be what the community deems most worthy and needed.
Non Profit Developers
Aside from the land, development costs are another barrier for affordable housing.
Since the company is there to create a substantial profit for the shareholders, it will try and squeeze as much equity from the building as possible, or as much as the market will bear.
While they are far from perfect, non-profit developers have been working in the city for a number of years. They are not new and actually receive a number of contracts from the city within their individual catchment areas.
For example, the Fifth Ave Committee will most likely always develop and build in and around Brooklyn, where they are based.
This does two things:
Since they are in the community and service the community, they tend to be more responsive to community needs. Again, they are not perfect, there are a number of areas where they need to improve and they should strive to, since they are key players in the building of the communities housing.
Non profit developers remove the need to squeeze maximum rents out of their tenants. There are board members, but no shareholders. Board members make no money from the work the non-profit completes, their role is guidance and direction for the organization. The staff, obviously, makes money, but that information is public, and it is the community's job to hold them accountable for budgets that are exuberant. Since the focus and basis of the non-profit is the community it serves, the community has much more power then it would with a corporation.
The last piece of the puzzle are Worker Cooperatives, a form of collaborative work that I hold dear to my heart.
The ICA Group has an wrote an excellent narrative about what a cooperative is and how it functions, so I won’t repeat their work here. I would suggest poking around their site. They do excellent work.
Aside from the social justice issues surrounding construction that can overwhelm anyone, there are two fundamental reasons worker cooperatives within large scale construction are needed to help make housing affordable:
The cost per labor hour is lower when there aren’t levels of administration and/or ownership and/or shareholders leveraging maximum worker output for minimum wages. This is true in unions as well, where the administration costs are high.
Although the labor costs are lower, more of the cost of labor for work completed goes to those doing the work. Aside from insurance, materials and equipment of course, the cost that arises from constructing the building will go directly to the men who are building it. This means the men and women who are building within the city will be able to afford to live within the city. Fair pay for work completed is one of the hallmarks of a worker cooperative.
One of the largest differences between the Worker Cooperative model and that of a traditional corporation, in my eyes, is that the workers decide fundamentals together.
For example; It took us a long time to come to a standardized pay rate for the levels of skill needed to create our construction cooperatives. We also bid projects together, review insurance, review the financial ledgers and hire together.
This kind of intimate knowledge leads to a deeper commitment to the success of the company, along with a more conservative use of resources, making the company a leaner alternative to many of the wasteful practices that are found on any jobsite.
This leanness makes the cost of the work completed much more competitive than the alternatives of traditional union vs non-union companies.
To learn more about Worker Cooperatives in general, I would strongly suggest looking through ICA’s website. If you are in NYC there are resources to start your own cooperative.
If you would like to join a Construction Worker Cooperative, or start a new one, please contact us. We would be more than happy to talk to you.