Pittsburgh's cooperatives are a little-known sweet deal

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Sheraden was a middle-class stronghold when Russ Hamilton's family moved to the new Sheraden Park in 1965.

Federal mortgage insurance guaranteed reduced interest for people of lower and moderate incomes to buy into the 188-unit cooperative on Allendale Circle. Mr. Hamilton recalls classmates at Langley High relating their parents' "there goes the neighborhood" attitudes about it.

But almost 50 years later, Sheraden Park is mortgage-free, operates with reserves and rarely has a vacancy, while much of Sheraden has lost property value and struggles with foreclosure and blight.

A decade earlier, Belmar Gardens, the country's first black-owned cooperative with a federally insured mortgage, created a similar stir in Lincoln-Lemington when its 110 units were built on Vann Road and Tilden Street. It, too, is paid off, operates with reserves and has "a waiting list a mile long," said board member Elaine Hudson.

Policy and societal shifts began eroding cities within a decade after the cooperatives formed. The same middle-class homeowners who fretted about the co-ops moved from the city and left behind a paradox: Today, the cooperatives are among the most stable residential areas in Sheraden and Lincoln-Lemington.

The nature of cooperatives may explain why.

Their survival depends on an all-for-one-and-one-for-all attitude. Everyone's satisfaction is tied to his investment in the corporation. When you buy in, you buy a share and get your unit in return. There are no deeds. Each resident pays a carrying fee for services including snow removal, replacements, repairs and the like. Each co-op has an elected resident board.

"If we don't maintain," said Ms. Hudson, "no one's going to want to be here."

Counter to most incentives for property investment, cooperatives were established to resist price inflation and speculation. The FHA still insures mortgages for co-ops, but few banks offer mortgages for individuals to buy into them because the amounts are relatively small. Most people get personal loans, which partly explains why buy-ins stay affordable.

The Sheraden Park co-op's average unit price of $21,000 is less than half the average in greater Sheraden. Most units sell by word of mouth or on the Internet, said Steve Baskin, the administrative manager and president of RSI Property Management Corp. "We have 30 to 35 percent Asian or Asian-American, 10 to 12 percent African-American and a mix of elderly, singles and single parents."

The board at Belmar Gardens declined to disclose its average unit price. It remains predominately black, with a mix of young and old but not many children. Residents pay utilities, water and sewer, but carrying fees cover other needs and have not increased in 19 years, Ms. Hudson said.

Shadrach Moon of the Hill District was just out of the Army when he saw an ad for the proposed Belmar Gardens in the Pittsburgh Courier in 1954. He said the set-up seemed a good fit for his mother as she aged.

"We thought [the cooperative idea] was odd, but it was something new and it sounded pretty good," he said. "Little did I know that I would live here. I moved in with her and never left."

Mr. Hamilton still lives at Sheraden Park, where he is president of its board. He remembers from his teenage years the elderly residents "who liked the idea of having everything done for them, and young families who were looking for an opportunity to buy in and save."

Both cooperatives are laid out similarly -- a series of brick buildings amid landscaping along a horseshoe-shaped drive that connects on both ends to a street. Belmar Gardens' flat-roofed buildings have short driveways and large setbacks. Sheraden Park's buildings, interspersed with small parking lots, sit closer to the street, which is heavily wooded.

Other co-ops in the city include the higher-end Bristol apartments, built in 1957, and University Park Apartments, in 1958, both in Oakland. Several other cooperatives operate in the metropolitan area.

Housing co-ops date to the 19th century but took off after World War II, when the FHA ensured veterans could get a unit at 1 percent interest. Of 1 million units in the country, half are in and around New York City, Greg Carlson, president of National Association of Housing Cooperatives, said.

Belmar Gardens was organized in response to real estate discrimination against blacks. The Rubinoff Co. manages it and does criminal and financial background checks. The co-op board votes on potential buyers.

At Sheraden Park, the board vets potential buyers but gets involved in a property transition only if a resident dies or has to leave before selling. Otherwise, "a shareholder can make his own deal based on his equity," said Mr. Baskin. "But we are so far below comparables."

Sheraden Park and Belmar Gardens have little turnover, in part because equity is so far below what people would need to buy anything half as desirable elsewhere. But value goes beyond equity, Mr. Hamilton said.

"The money you save every month in a cooperative is a considerable amount of what most people spend on a mortgage," he said.

Ms. Hudson said she thought she would be at Belmar Gardens for a few years but has been there since 1995.

Jay Trower moved in several years ago to downsize after retiring from teaching school.

"I drove around at different times of day and night" to make sure it was the right atmosphere, he said. "I wanted to be near family, I wanted a place to be maintenance-free, affordable, safe and without a lot of kids. I plan to be here until I can't get up the steps anymore."

The national association needs to better educate the public and government about the cooperative housing model, Mr. Carlson said. "When the recession hit," he said, "homeowners got hit, condo owners got hit, but very few foreclosures hit cooperative housing."

The service fee that was $154 when Mr. Hamilton and his parents moved into Sheraden Park -- the equivalent of about $1,100 today -- is now just $440.

"From the beginning, the board was meticulous about everything," he said. "We worried about every dime and saved if we needed a truck because we couldn't use the property as collateral."

The board recently spent $2 million for upgrades with a line of credit it paid off without service fee increases, he said. "We've kept things low because our families have counted on us doing that."

Diana Nelson Jones: djones@post-gazette.com or 412-263-1626. Read her blog City Walkabout at www.post-gazette.com/citywalk.

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