Understanding Renter Equity
Why Renter Equity?
One of the roots of the growing economic divide between the poor and the rest of society is that most low-income families are lifetime renters. People for whom ownership isn't practical or affordable do not have the same opportunities for economic growth as the rest of society.
Renter Equity addresses this problem by creating an alternative to ownership for households earning less than 60% of median income. The Cornerstone Corporation for Shared Equity enables residents to build financial assets by partnering with them to manage and maintain their housing.
HOW Renter Equity WORKS
A resident association is organized for each participating affordable housing development. Residents help plan and market the project, maintain a waiting list, orient new residents and develop rules and procedures. They work with Cornerstone to meet performance goals for occupancy and budget that enable the project to invest in a financial fund for Renter Equity.
Each household earns credits toward a future cash payment from the fund by paying their rent on time, fulfilling responsibilities for cleaning and upkeep of common areas and attending resident association meetings. Credits are vested after five years at which time their value can be $4,137. Credits can continue to accrue for up to 10 years or $10,000.
Results and Current Activities
Cornerstone's first community, St. Anthony Village, was established in 2002. The housing development is frequently described by visitors, and by its residents, as an "oasis" and a "source of hope" because it is so clean and peaceful.
Occupancy rates remain over 97% and rental income is 100% of budget. This is more amazing because the 22 units in 6 rehabilitated buildings are located in the midst of a very distressed neighborhood, Over-the-Rhine in downtown Cincinnati. Other affordable housing projects in the neighborhood are troubled by high vacancy and crime rates.
Residents at St. Anthony Village are already planning for how they will invest their Renter Equity funds in their future. Some are planning to start business and some to buy a home while others are saving for retirement or education. Cornerstone provides financial education to Renter Equity participants, and others, to help them budget, control spending, and plan for the future.
A second community, Community Views, was established in 2005 and includes 12 additional households living in 5 properties scattered in Over-the-Rhine.
Cornerstone and Over-the-Rhine Community Housing, the owner of Community Views, are working together to expand Renter Equity to other properties. In addition, Cornerstone is planning to renovate 25 units in buildings surrounding St. Anthony Village for prospective Renter Equity participants.
Summary
Cornerstone Renter Equity is an innovative alternative to renting and owning that enables low-income families to improve their housing and earn financial assets by participating in management and maintenance of their housing. Very low-income families are able to develop financial resilience and plan for the future. Resident participation in housing management and maintenance improves the attractiveness, safety and financial performance of affordable housing and attracts additional investment to the neighborhood.
For more information about Renter Equity please contact Cornerstone Community Loan Fund at (513) 369-0114 or visit www.cornerstoneloanfund.org.