Presenter pitches limited-equity co‑ops and Drake’s Creek conversion as permanent-affordability tool
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Summary
Steven Watts laid out the limited-equity cooperative model and described Drake’s Creek Cottages, a 60-unit Barnes-funded conversion in Goodlettsville, as a preservation strategy that he said can lower operating costs, increase resident stability and provide modest accruing equity for low-income households.
Steven Watts, representing the Nashville Equitable Housing Cooperative and Southeast Center for Cooperative Development, told the Metropolitan Housing Trust Fund Commission on Oct. 28 that limited-equity housing cooperatives can preserve affordability and build resident control.
Watts opened by describing Drake’s Creek Cottages, a 60-unit market-rate complex in Goodlettsville that project sponsors are converting to a limited-equity cooperative with Barnes Fund support and other public financing. He said the site pairs a community land trust that holds the land with a resident-owned cooperative that holds the buildings and that residents buy shares entitling them to occupancy and a vote in governance.
In the presentation Watts cited comparative findings he said show co‑ops often operate 20–25% cheaper than limited-dividend rentals and reported much lower delinquency and turnover in converted buildings in high-cost cities. He described the Drake’s Creek financial model as having a $1,000 initial share with a $500 Barnes Fund match and an annual share-accrual rate of 3% per year; units are targeted to serve households at or below 50% of area median income.
Watts argued the coop structure changes incentives: monthly carrying charges are set to cover operating cost at‑cost rather than to maximize owner returns, which he said leads to lower recurring costs for residents and the ability to reinvest surplus into the property. He gave examples from other cities where converted co‑op buildings remained in better physical condition and reported higher resident retention than comparable rental properties.
During questions, commissioners and attendees probed financing pathways, local lender capacity, resale and intergenerational transfer of benefits, and the mechanics of community land trusts. Andy Zhu (MFX Ventures) said HUD multifamily cooperative loans are the primary long-term takeout product for projects of this type and that local banks in the region currently have little experience underwriting them. Watts confirmed that the land trust holds long-term ground-lease rights (typically a 99-year lease) and said cooperatives and land trusts include resale and occupancy controls to maintain affordability.
Watts urged the commission to consider prioritizing conversions of market-rate multifamily to nonprofit/community-owned forms, to prioritize projects with resident democratic participation, and to consider a dedicated funding bucket for permanently affordable co‑op or community-owned projects.
The presentation concluded with an invitation to commissioners to support outreach, lender education and possible rubric adjustments for Round 16 to accommodate cooperative and permanently affordable ownership models.
