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Co-op to the Core


13th Street Terrace residents reject a proposed condo conversion to retain their affordable, limited-equity housing co-op


In 2013, residents of 13th Street Terrace Cooperative in Washington, D.C., came close to opting out of their limited-equity cooperative structure and converting to condominium units.

Driving the discussion was the manager’s proposal to orchestrate a market-rate condo conversion as a solution to a mortgage that was in technical default. Having paid just $500 to buy into the co-op years before, some tenants were excited about the possibility of owning or selling their individual housing units as condos worth $250,000 or more. The membership voted to move forward with the conversion. 

Built in 1920, 13th Street Terrace sits in the city’s up-and-coming Columbia Heights neighborhood. Its 24 units are housed in three-story buildings featuring studios and one- and two-bedroom apartments. 13th Street Terrace became a limited-equity co-op in 1989 when the tenants purchased their buildings. 

Limited-equity co-ops are designed to maintain affordability for low- and moderate-income households. Members must meet income limits, and co-op shares have restricted resale values.

After the initial condo vote, some residents began to reconsider. They realized that share values would increase from $500 to as high as $300,000. That meant 13th Street Terrace might no longer remain affordable for several residents, many of whom are seniors living alone, or to future low-income occupants. 

Maybe the condo conversion wouldn’t be such a windfall after all.

In 2014, the co-op’s board fired the property manager and hired community development consultants Martha Davis and University Legal Services (ULS) to help them better understand the condo-versus-co-op situation. Late that year, they voted to abandon the condo conversion and remain a limited-equity co-op.

Through Davis and ULS, 13th Street Terrace applied for a construction loan to make long-needed property improvements and complete an interim refinancing. After that, the board reached out to NCB for refinancing into a longer-term mortgage. In 2017, 13th Street Terrace secured a $960,000 loan from the bank. 

“NCB offered a longer-term mortgage with an attractive interest rate,” Davis says. “It also was willing to lend to a limited equity co-op. Not every lender will do that.”

13th Street Terrace is now 100 percent owner-occupied, with share values boosted to $25,000 to $40,000 to give residents a greater equity stake. Seven apartments have sold to young professionals in the last year. The co-op is financially stable. All that, says Davis, validates the co-op’s success and desirability.

“Martha very much has the interests of co-ops in mind,” says Don Plank, NCB vice president. “She’s a reminder to other co-ops that independent advice is very important when you’re thinking about your co-op’s future. There’s a whole industry out there that supports co-ops, and boards of directors should take advantage of these resources whenever possible.”