Royal Oak, Michigan: Affordable Housing Co-Op Preserves Senior Housing and Resident-Led Operations

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Royal Oak, Michigan: Affordable Housing Co-Op Preserves Senior Housing and Resident-Led Operations

 

CSI Support and Development Services is a nonprofit developer of housing cooperatives (co-ops) operating in Michigan, Massachusetts, California, and Maryland. Founded in 1945 in response to social and wealth disparities that emerged during the Great Depression, CSI created co-ops throughout the United States. In 1973, CSI expanded its development footprint to Royal Oak, Michigan, to create Royal Oak Manor, an affordable senior housing co-op developed with support from HUD’s Section 236 program.

Royal Oak, a suburb of Detroit, has grown economically over the past decade and is home to a vibrant, revitalized central business district. Royal Oak Manor’s downtown location near Main Street offers residents pedestrian-friendly access to healthcare services, shopping, entertainment, and public transportation. The Henry Ford Medical System, a newly constructed, state-of-the-art facility, is just blocks away.

In 2018, when the HUD use agreement originally in place for Royal Oak Manor was set to expire, CSI decided to recapitalize and renovate the property to continue the development’s half-century legacy of affordable housing in downtown Royal Oak. Unlike a typical housing co-op, in which residents own an equity share of the co-op building and grounds, Royal Oak Manor is a rental co-op following a cooperative management system model that empowers residents to make building-related decisions.

The 11-story renovation project, led by a resident-informed design process, continues to uphold CSI’s seven proclaimed benefits of cooperative housing — affordability, democratic control, co-op way of living, social opportunities, safety and security, diversity, and continuing education — and received the National Affordable Housing Management Association’s Vanguard Award for Major Rehabilitation of an Existing Rental Housing Community in 2022.

Royal Oak Manor Renovation

CSI’s renovation of Royal Oak Manor upgraded the property’s 243 units as well as the interior and exterior common areas. Unit upgrades included a heating and cooling system that reduces annual energy costs by 16 percent, new kitchens and baths, and the reconfiguration of 13 units to be fully accessible. The co-op structure facilitated resident-informed decisions on improvements to the common areas. The changes include an expanded wellness center with upgraded equipment; the enclosure of the balconies on each floor to create larger community spaces; and the expansion of an adjacent parking lot, relieving a financial burden for residents who previously were paying for offsite parking. The first floor serves as a multipurpose area containing two service coordinator offices, a library, and meeting spaces for Royal Oak Manor’s volunteer leaders.

Public funding from the state and federal government supported the preservation of the affordable senior housing project. The Michigan State Housing Development Authority (MSHDA) designated CSI as a Community Housing Development Organization (CHDO), which qualified the development for a MSHDA construction loan, a first mortgage loan, and CHDO-set aside funds from the HOME Investment Partnerships program. Since the project opened in 1973, it has remained a HUD Section 236 property with 193 units designated as market rate. CSI, in keeping with its mission, has kept the rents of these units low enough to serve people earning up to 50 percent of the area median income (AMI). As time passed, however, CSI found it challenging to reinvest in the aging building without economically displacing its tenants — a significant concern considering that neighborhood rents had risen over the past 10 years and 60 percent of Royal Oak Manor Co-op tenants now earned less than 40 percent of AMI.

The first solution to displacement risk was obtaining $2.6 million in HOME-CHDO funds (table 1). Then, after closing on financing in December 2020, a local project in the area opted out of its Section 8 contract, prompting HUD to notify CSI of the opportunity to transfer 55 more units of Section 8 housing to Royal Oak Manor. The transfer, which increased the number of Section 8 housing units to 105, took place under HUD’s Section 8(bb) program and allowed the developer to leverage an additional $1.4 million for construction upgrades to the building. For residents who were unable to afford the $50 post renovation rent increase, a 5-year rental reserve was offered as financial support.

Table 1: Royal Oak Manor Financing

The Co-op

Members of the Royal Oak co-op elect a council composed of a president, vice president, secretary, treasurer, and resident leaders from each floor. Members can serve on one of 19 volunteer committees that include leasing, maintenance, and finance. Recently, the council and residents approved motions awarding a maintenance contract and revising onsite parking rules. Residents can also elect a co-op member to CSI’s nationwide board of directors, where they influence the strategic direction for all properties the developer manages.

Volunteers plan card games, potluck dinners, and community outings and run a store for residents to purchase convenience items, drinks, and nonperishable food. Service coordinators funded by a HUD service provider grant and employed by CSI meet with each resident individually to connect them to services that include transportation, mental health, and nutrition. The service coordinators’ offices are accessible and centrally located in the building for equitable access. During construction, service coordinators continued to organize commodity and grocery deliveries.

The leadership structure proved especially helpful during the design and construction phase, which occurred during the pandemic. The leadership board facilitated resident participation through virtual meetings. CSI provided tablets for the co-op’s volunteer leaders, who used them to solicit resident feedback and input on flooring, common area decorations, and other interior design aspects. The communication also helped keep residents informed about the renovations process, which included temporary relocation of residents to hospitality suites within the building. Each resident in the ADA converted units was relocated to another apartment in the building for 4 to 6 weeks while their unit was being substantially modified. Residents of units that only received new kitchens and baths were relocated to a hospitality suite for 8 to 10 hours during the day their unit was being updated. The level of engagement during renovations reflects the principle of democratic control residents continue to exercise. This governance structure serves all residents, reduces social isolation among seniors who are aging in place, and leverages lifelong skills, contributing to a quality living environment and sense of community.