Co-opting: After market alternatives to affordable housing development in Miami’s communities of color

Co-opting:

Aftermarket alternatives to affordable housing developments in Miami’s communities of color

Our current global health crisis has rendered more clearly how care, housing affordability, and the climate crisis disproportionally affect our most vulnerable communities. Within this context, Miami presents itself as a vulnerable coastal city exemplar. A growing and rapidly changing city, Miami is struggling with a widespread housing affordability crisis and an existing housing stock that is at risk to rising seas. Despite palpable climate change, construction continues along the Miami waterfront, and the cost of living continues to rise along with sea levels. Miami is often portrayed as a tropical oasis, but it has slowly progressed to being regarded as one of the country’s most inequitable cities.

Today, the Miami waterfront is being developed to cater to wealthy foreign investors who park capital in high-end real estate. Some vacation seasonally or rent out their luxury waterfront apartments, but a large percentage lies vacant for most of the year. Almost half of the residential properties in Miami Dade county? do not have a homestead exemption, further supporting that a large percentage of residential properties serve as second homes. Meanwhile, many locals are struggling for housing stability. The U.S. Department of Housing and Urban Development categorizes households that spend more than 30 percent of their monthly income on housing as rent-burdened. In Miami Dade, 60 percent of renters fall within this cost-burdened category. A predominantly tourism driven economy keeps wages low, intensifying the city’s affordability crisis.

While building continues along the city’s most lucrative waterfront properties, development pressures have begun to move westward, away from the coast and toward higher elevation. Previously, urban renewal and the discriminatory redlining practices in the second half of the 20th century pushed African American and Afro-Caribbean communities out of Miami’s growing, predominantly white central business district and burgeoning waterfront. These lower-income communities now find themselves on the city’s highest elevations, situated along Miami’s limestone ridge. These communities are now at risk of a second wave of displacement, as climate change begins to motivate development away from more vulnerable coastal areas like Miami Beach. Today, Miami’s historically diverse neighborhoods are being slowly gentrified and their communities displaced. Households in neighborhoods such as Liberty City, Little Haiti, Little Havana, Overtown, and Allapattah, all predominantly communities of color, are at risk from these development pressures.

Many of these lower-density, primarily residential communities are now being targeted for new development as sea level rise and climate vulnerability worsen. This relationship between elevation, speculative development, and gentrification can be summed up by the term “climate gentrification.” This concept offers a simple “elevation hypothesis,” arguing that real estate at higher elevations in cities at risk for climate change and sea level rise appreciates at a higher rate than elsewhere. As these development trends continue, residents will have little agency to respond. Miami, a traditionally “rent-over-own” city, leaves its residents, especially its low-income residents, vulnerable to market-based spikes and gentrification. The city’s long history of inequity and racialized urban development has compounded with the adverse effects of contemporary development and increasing climate vulnerability.

Above Redlining Map, Miami, 1935 - “Redline Map for Miami, Florida,” Digital Public Library of America

There’s a dire need to rethink how housing can be developed in Miami, to respond to the phenomena of climate gentrification and to reclaim agency for the city’s most at-risk communities. One approach is to reconsider housing solutions outside of the traditional market, specifically not-for-profit housing cooperatives. Cooperative models have a long history in the U.S., and despite their lack of prevalence, they have been leveraged to address economic challenges for marginalized communities in times past. In her work “Collective Courage: A History of African American Cooperative Economic Thought and Practice” political economist Jessica Gordon Nembhard details examples of these cooperative models. “Cooperative business ownership, cooperative financial institutions, and coop housing have been solutions to past economic challenges, such as debt peonage under Jim Crow and lack of food, affordable housing, and financial services during the Great Depression.” Cooperatives can be leveraged, not just as a development model, but as a strategy with which communities can reclaim agency and take control over their homes in response to the pressures of climate and market speculation.

In times past, cooperatives have been able to “satisfy an economic or social need, to provide a quality good or service (one that the market is not adequately providing) at an affordable price, or to create an economic structure to engage in needed production or facilitate more equal distribution to compensate for a market failure.” Miami’s surplus of luxury real estate and lack of affordable housing options are indicative of “market failure.” Luxury development continues, despite several years’ inventory of existing luxury real estate. Many reports quantify that it would take several years to sell the inventory of luxury housing, taking into account those units already on the market. This surplus is in fact much larger when you also consider the many units under development.

In addition to enabling a strategy to work against climate gentrification, cooperatives also provide residents greater control over how they live, on their terms. Housing cooperatives are jointly owned and democratically controlled organizations in which community members share both power and responsibility. Additionally, nonprofit cooperatives typically operate “at cost,” meaning rent is calculated without the incentive of profit and the goal of the cooperative is to simply meet its financial obligations. The intention is that over time, the cooperative can be financed and managed in a self-

Above “Price out of Paradise” - Miami Herald Cover Image

supporting manner in the long term. As the loan is paid down, the monthly charges will also decrease. As such, housing costs will gradually decrease, making the cooperative more affordable in the long term. This long-term model, while requiring more of the residents, as both stewards and co-

managers, also works to create a stronger sense of ownership and responsibility. Residents tend to be more invested and care more for both their units and their cooperative’s shared spaces.

Collaborating with governmental agencies, cooperatives often lease public land (which lowers development costs) for affordable housing and work to make sure it stays that way in the long term. Collectives can thus leverage the cooperative as a development model, wherein they can garner agency over the design, programming, and management of their homes. While governmental intervention may be necessary to allow for access to land or loans, there are many foreign examples in which policy enables cooperative access to market-rate loans with limited equity upfront. In Switzerland, for instance, housing is guaranteed under the constitution, and co-ops have long existed as a development model that has received both community and governmental support. Many of this cooperative housing stock is in increasingly expensive cities. Cities such as Zurich have seen a resurgence in cooperative housing development in response to rising housing costs. Housing costs in co-ops are often as much as 20% lower than average rents in the private market. In the development of new cooperative housing, the co-op will often work closely with architects, offering input on design and intended use. Cooperatives can address the aforementioned market failure and in turn enable communities that have been systemically oppressed or that have suffered from lack of opportunity to operate with more autonomy. They allow for greater agency, control, and self-sufficiency.

Single-family homeownership is often considered the primary means of building wealth in the United States. Policy has worked in favor of this belief, and studies comparing homeowners to renters quantify that homeowners do have substantially more wealth. Yet the relationship between homeownership and wealth building is not so direct, especially for lower-income households, which might end up losing wealth as a result of homeownership.

“While direct investment in equity may be positive, the literature suggests low-income homebuyers generally realize less appreciation than higher income households, dedicate a greater percentage of their income towards mortgage payments (and away from potential investment vehicles, such as 401Ks or mutual funds), and are more likely to depend on high-risk financing, which increases their exposure to foreclosure.”

While arguments against collective ownership may point to the wealth-building potential of single-family homeownership, what they may neglect is the greater risk potential for lower-income households. Cooperatives can instead offer

Above Luxury Housing Surplus - Miami New Times Cover Image Photo credit Flicker

alternative means of building wealth and ensure stable housing. Cooperatives, while perhaps offering a more modest return on investment, may offer much greater returns in quality of life. Lower monthly housing costs could mean more money toward savings or the freedom to pursue a career change or higher education without the pressure of meeting rent. Additionally, cooperatives have been shown to address not just the cost of housing, but other forms of social capital, as well. The cooperative community can offer other forms of support, such as child care, elder care, financial safety nets, and food security.

FOTNOTES: 1 Marisa Moran Jahn and Rafi Segal, “CarePod: Designing for Care, Building Community,” NewCities, March 17, 2020, https://newcities. org/the-big-picture-carepod-designing-care-building-community/

2 Rene Rodriguez, “Miami Is in Dire Need of Housing That’s Affordable. These New Solutions Could Help.,” miamiherald (Miami Herald, July 14, 2019), https://www.miamiherald.com/news/business/real-estatenews/article231551978.html

3 Richard Florida, “ ‘Climate Gentrification’ Will Deepen Urban Inequality,” Bloomberg.com (Bloomberg, July 5, 2018), https://www. bloomberg.com/news/articles/2018-07-05/-climate-gentrificationwill-deepen-urban-inequality

4 Jessica Gordon Nembhard, Collective Courage: A History of African American Cooperative Economic Thought and Practice (University Park, PA, PA: The Pennsylvania State University Press, 2014). Page 15.

5 Nembhard, Collective Courage: A History of African American Cooperative Economic Thought and Practice. Page 2.

6 Hillary Hoffower, “NYC Has a Penthouse Problem, LA Has a Mansion Problem, and Miami Has a Condo Problem,” Business Insider (Business Insider, July 7, 2019), https://www.businessinsider.com/miami-condosurplus-nyc-penthouses-los-angeles-mansions-real-estate-2019-7 7 Jerry Iannelli, “Miami Has a Four-Year Backlog of Overbuilt Luxury Condos Amid Affordable-Housing Crisis,” Miami New Times (Miami New Times, July 24, 2019), https://www.miaminewtimes.com/news/ miami-has-a-four-year-luxury-condo-backlog-amid-an-affordablehousing-crisis-10218908

8 “Switzerland Archives - Co-Operative Housing,” Co, accessed January 11, 2021, https://www.housinginternational.coop/co-ops/ switzerland/

9 Meagan M. Ehlenz, “Community Land Trusts And Limited Equity Cooperatives: A Marriage Of Affordable Homeownership Models?,” Lincoln Institute of Land Policy (Lincoln Institute of Land Policy, 2014). Page 8.

10 Ehlenz, “Community Land Trusts And Limited Equity Cooperatives: A Marriage Of Affordable Homeownership Models?” Page. 4.

Adiel Alexis Benitez

Benitez is a first-generation Salvadoran American designer. He is a recent graduate of the M. Arch program at MIT. His interests lie at the intersection of urbanism, art, architecture, and social engagement. He resides and practices in South Florida.