Paul's Internet Landfill/ 2021/ UnionSD Co-op Membership Drive

UnionSD Co-Op Membership Drive

For about a year now, I have belonged to a co-op called UnionSD. The "SD" stands for "Sustainable Development". Their motto is "Permanent Affordability through Community Ownership". Their goal is to secure affordable housing in Waterloo Region. They hope to do this by buying existing multi-tenant housing stock on the free market, and keeping rents affordable. When units become vacant they want to make them available to nonprofits (currently Reception House) or to people waiting on assorted affordable housing waitlists.

Housing is expensive (duh) so the co-op needs to raise money so that it can make down payments on properties. This is where individual investors come in. The co-op wants members to purchase so-called "preference shares", which will be pooled together for the down payment. Then tenant rents will pay the rest of the mortgage and maintenance costs, as well as (in principle) paying a dividend to shareholders.

In addition to individual investors the co-op wants charitable foundations to purchase five-year "debentures" the co-op can use towards its down payment.

In principle the co-op is a for-profit organization, and the preference shares members purchase are supposed to be investments. In practice, return rates are set deliberately low -- the plan is to have dividends set to at most 3% above the prime rate, and there is no guarantee that dividends will be announced for any given year (and I am guessing there won't be any dividends for the first few years while the union gets used to being a landlord). There will probably be some return, but I am not counting on it being very much.

The co-op is not a cheap hobby. A membership costs $500, and preference shares are sold in $1000 chunks up to a maximum of $10 000. I am in a strange position where I (a) care about affordable housing, (b) have some (but not a lot of) savings, (c) depending on my employment and my own housing situation, could be facing destitution myself in a few years. Nonetheless I am planning to purchase some preference shares. I have no expectation of making much of a return, and given the dividend rates I probably will not even make back the cost of inflation, but my hope is that I will not lose my investment entirely, and that this investment will make a small dent in housing affordability.

Many aspects of the co-op appeal to me:

Of course, I do have reservations:

I suppose I am writing this blog entry as part of the membership drive? The co-op has about 50 members now and wants to expand to 500. If you are interested in affordable housing and don't mind expensive hobbies, then this might be of interest to you.

If my publicity here and elsewhere convinced a handful of people to sign up as members, I would consider it a success. (But given how committed I am to disclaimers and downsides, I do not expect success.)