The co-op boardElected by members
Member-only.
MemberChairMemberElectedMemberElectedMemberElectedMemberElectedMemberElectedMemberElected
What protects a member is written here, and it is not up for negotiation with anyone outside the membership.
PartnersClear Capital
Outside money sits here. Not on the members’ side.
Clear Capital Holdings is the company through which investors and property contributors take part in the cooperative’s assets.
The Holdings boardClear Capital Holdings
Its own company. Its own board.
ChairElectedCo-opReservedCo-opReservedNeutralJointOpenFreeInvestorFinancialInvestorFinancial
Two investor seats, two reserved for the co-op, a neutral seat named jointly, one open seat, and a chair who is directly elected.
Neither board can quietly become the other, which is the point of there being two.Co-op seat count illustrative
01The split
The land is why this works for both sides.
Member equity accrues in the structure. Appreciation accrues to the land, which backs construction borrowing as the portfolio grows.
Members hold01
The structure.
Bought down through an Equity-Lease Participation Agreement, ending in a Clear Deed.
The co-op holds02
The land.
Permanently. Selling it is a reserved matter that cannot pass without the co-op.
Contributors hold03
Shares.
Yield-bearing shares in Clear Properties, pro rata, on the same terms as everyone in the pool.
Two balance sheetsThey do not touch
The landConstruction borrowingBacks
The landCredit lossesNever
A member’s savingsAnother member’s creditNever
02Contributions
Not a sale, and not a fund raise.
Property comes in under section 721 for yield-bearing shares issued by value. Nothing is trued up with cash, so there is no boot.
Figures illustrative
Property in$640,000One duplex, at appraised value
Shares issued640,000One for each dollar of value
The poolClear Capital’s position shrinks as more property comes in.
Issued byValueSameContribute at appraised value, receive shares one-for-one against it.
Clear Capital’s own positionSame pool, no prioritySameExactly the terms every contributor gets. No preferred return, and no priority.
DistributionsPro rataSameThe project pays taxes, insurance, upkeep and management. The fund sets reserves, takes its fee and distributes the rest.
Tax distributionsMandatorySameRequired by the agreement, so no holder gets a K-1 for income they did not receive in cash.
The mechanics are identical at any size. What changes at scale is the diligence, not the structure.How a single-property contribution works
03Protections
Structural, not promises.
A promise is a policy, and a board reverses a policy in an afternoon. These are written where a future board cannot.
No preferred returnAnywhere in the stack
Preferred return
Sponsor catch-up
Every holderClear Capital included
Including for the sponsor. There is no waterfall in which somebody is paid before you.
Reserved mattersFive of them
- Selling landNeeds the co-op
- Diluting membersNeeds the co-op
- Amending the purposeNeeds the co-op
- Replacing the managerNeeds the co-op
- Related-party deals above a thresholdNeeds the co-op
None of the five can pass on a Holdings vote alone.
Board compositionFixed by kind
- Two reserved seatsCo-op class
- The reserved mattersCo-op class
- Two investor seatsFinancial class
- A neutral seatNamed jointly
- The chairDirectly elected
Investors hold two Holdings seats. The co-op board is elected by members and stays member-only.
The ledger is publicOpen source
Balances, credit lines and title records run on contracts held by an ownerless foundation.
04The downsides
The honest downsides.
The same five as a single property, and none is softened because the contribution is larger.
Five costs, and one moreRead before you sign
- 01LiquidityShares are illiquid compared with cash.
- 02ControlYou do not control the properties.
- 03PaperworkYou get a K-1, which arrives later than a 1099, and your accountant will charge for it.
- 04Deferred taxThe deferred gain still exists, and comes due if you ever sell the shares.
- 05ConcentrationRisk moves from your one building to a fund. Usually better, but a change, not a removal.
- 06One corridorEarly cohorts sit in one corridor by design, because that is what makes the merchant and housing sides compound. Anyone underwriting this should price that.
05Next
We do not publish terms, rates or projected returns.
You should be sceptical of a housing cooperative that does.
What you get from usIn a private conversation
The structureWalked through with you
The documentsSent to your advisers
Your CPA and counselEvery question answered
What you will not find hereBy design
RateNot published
TermsNot published
Projected returnNot published
We are not your tax or legal advisers, and nothing here is advice about your situation.
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