Key lessons

Cornerstone’s renter equity program is an innovative strategy for decreasing poverty and increasing opportunity in low-income areas. Officials in other localities interested in developing similar programs could encourage non-profits to consider the model and contributing financing to project development and/or funds for the renter equity credits. Cincinnati’s renter equity program offers lessons for local officials interested in replicating the program:

• The renter equity program established in the Over-the-Rhine neighborhood of Cincinnati is socially beneficial for participants interested in belonging to a community
• This program allows renters to build financial wealth and security
• Renter equity programs can serve as an alternative to traditional structures of affordable housing
• While renter equity may not need or involve government partners, local governments may help explore the idea with nonprofit providers and collaborate in its implementation
• This program model tends to attract older individuals who are more settled because younger people tend to be more transient and less likely to agree to program requirements.

Description

The renter equity program was implemented in the Over-the-Rhine neighborhood of Cincinnati, a predominantly low-income and Black neighborhood that has experienced significant unemployment and crime. Cornerstone Renter Equity started in 1986 as a community development loan fund that invested in socially responsible projects. The fund developed the renter equity program as a way to have a greater social impact in Cincinnati. The program provides “equity credits” to residents each time they complete a “renter obligation.” These obligations include paying rent on time every month, attending monthly tenant meetings, and participating in assigned apartment community upkeep assignments. In addition to spending about one to two hours per week maintaining portions of the property, community upkeep assignments might include participating in ad hoc property management or other meetings to help design improvements to community facilities. Participants can earn a maximum of $10,000 in equity credits over ten years, which are maintained in a reserve fund established by Cornerstone. The credits are vested after five years, after which participants can withdraw their credits as cash. Participants are also able to borrow against their credits, such as for financing education or paying off debts.

According to Cornerstone, the model has a limited target audience; it cannot serve very low-income households without deep government subsidies and it is not suitable for households that only intend to rent for a short period of time. Cornerstone is thus targeting working-class residents with limited financial assets who do not own currently own a home or plan to purchase a home and thus do not have a means of accumulating home equity.

Renter Equity Agreement, the Resident Association Agreement, and the House Rules 

Three components serve as the foundation for the program: the Renter Equity Agreement, Resident Association Agreement, and House Rules. These three documents outline expectations for participants in the program and the structure of the property management system. Residents must fulfill obligations outlined in the three documents to earn equity credits.

The Renter Equity Agreement describes the responsibilities of residents and the owner of the apartment community, in addition to outlining the benefits of a renter equity-based property management system. For residents, benefits include the ability to earn equity, assist with the management of the property, participation in the community, long-term housing stability, and the opportunity to learn new skills and knowledge, such as budgeting and financial literacy. For property owners, the advantages of the program include savings on property management and maintenance costs that are attributable to the higher occupancy rates, low turnover, and residents’ participation in management responsibilities associated with the program. To earn equity credits, residents must pay rent on time, keep assigned areas of the property clean, and participate in management activities, such as reviewing plans for renovations or additions to the apartment community. Residents are assigned activities according to ability, and they receive statements each quarter with details of the credits they earned.

The Resident Association Agreement establishes a Resident Association for each apartment community and outlines its responsibilities. The Association is primarily responsible for creating and maintaining a community atmosphere that is beneficial for all residents but also managing the maintenance of the property and related expenses. The agreement requires the Association to participate in maintaining the property, reporting any issues to the property owner, and recommending possible improvements to the property. The Association is also responsible for planning community events and welcoming new residents to their apartment community.

The final component of the program is the House Rules, established by the residents themselves, which outline a code of conduct for all residents in the apartment community. The rules differ depending on the property, but all are expected to cover overall guidelines for resident behavior, guest rules, and the use of communal areas on the property.

Before entering the program, prospective residents must participate in a lengthy orientation process. Interested residents must attend three monthly orientations before they can apply to reside at the apartment community and join the rental equity program, and each adult resident of the household must attend all three. These orientations allow potential applicants to meet current residents, work with Cornerstone’s staff to determine eligibility, and fully understand the requirements and expectations of the apartment communities before applying to live in one.

Many residents have cited the orientation process as being crucial to fostering a community atmosphere. Once in the apartment community, residents benefit from community events such as block parties, summer camps, monthly management meetings, and even building a playground together in 2018.

Process and timeline

As detailed below, Cornerstone launched its renter equity program in 2000 in one apartment community. The program has since expanded to additional apartment communities, and Cornerstone has changed its model to offer expanded support to residents such as financial goal planning and budgeting.

2000-2002

Cornerstone selected the Over-the-Rhine neighborhood for its renter equity program due in part to the neighborhood’s large number of deteriorated and abandoned buildings, as well as many area residents’ dissatisfaction with these conditions and desire to leave the neighborhood. To recruit participants for the program, Cornerstone staff sent postcards to residents in the neighborhood inviting them to join an affordable housing complex that would rely on self-maintenance and reinvest in residents. In partnership with several additional community organizations and with financial support from the Franciscan Friars of St. John the Baptist in Cincinnati toward development costs, Cornerstone established the first apartment community, St. Anthony Village, in six abandoned buildings that were converted into 22 housing units using Low Income Housing Tax Credits. Interested community members held monthly meetings in which they developed ideas of how they wanted their community to be operated, including how maintenance tasks would be delegated and the expectations of the residents. The construction of St. Anthony Village was completed in 2001 and occupied in 2002.

2006

The second apartment community, Community Views, was a 12-unit development in 5 buildings. These units were renovated in 2006, and the community was added to Cornerstone’s rental equity program.

2012

Friar’s Court, the third and most recent apartment community added to the program, was completed in 2012 as a 25-unit complex in eight buildings surrounding St. Anthony’s Village. Friar’s Court also received funding from the Franciscan Friars. In 2016, the complex was expanded to 50 units.

Due to the popularity of the program and positive outcomes for participants, Cornerstone’s former management team founded Renting Partnerships in 2012 as a 501(c)(3) organization dedicated to scaling up the renter equity program.

2016

Due to falling participation in the program, Cornerstone reconfigured the program model in 2016 after holding a series of focus groups and community discussions. Participants noted the need for greater flexibility in the program’s structure and how participants could engage in community responsibilities. As a result, Cornerstone implemented changes that allowed participants to make up meetings they had missed and decided to evolve into a more comprehensive and family service-focused organization in 2019.

2019-2020

As part of the evolution into a more family-centered organization, Cornerstone launched a pilot project, Renter Equity Generation 3, which broadened the renter equity program to include a system of Family Coaching that focuses on serving families in a comprehensive way. Two new family coaches were hired to work directly with families in providing personal financial coaching and education. This program utilizes a four-pillar model to increase incomes and reduce poverty in the area: (1) strengthen community building, (2) individual asset development, (3) children’s programs and supports, and (4) individual development support services. Residents in the program can earn renter equity through working with their Family Coach.

According to Cornerstone, a significant share of participants in the pilot increased their income and made progress toward personal and financial goals. For example, one participant was able to achieve their goal of enrolling in phlebotomy school. Two participants registered their businesses. Overall, 33% of people increased their income. The pilot program was rolled out to all residents as a part of Cornerstone’s programmatic approach in 2020.

Outcomes

Participants reported greater financial security and satisfaction with their apartment communities as a result of the renter equity program. In accumulating equity credits, renters were able to fund longer-term ventures. For instance, a six-year resident of the program reported that she was able to borrow against her equity to pay for her child’s college tuition. A 2013 evaluation of the program found that a majority of residents stay for five or more years and accumulate more than $2,000 in equity. Residents intended to use their equity for a variety of objectives including investing it or buying a car or home, but in practice, most ended up using the funds to pay off debt or cover medical expenses.

Residents reported that one of the appeals of the program was the opportunity for control over the management of their property and its quality; however, the 2013 evaluation found that of all aspects of the program, participants indicated they most valued the community atmosphere built through the program.

Policy significance

Nationally, renters do not build wealth at the same rate as homeowners. The ramifications of this discrepancy have been exacerbated in recent years as more Americans are renting their homes after the Great Recession. Home equity has historically made up a significant portion of a household’s total wealth, and this is particularly the case for low-income families and families of color. Cornerstone’s renter equity program provides an avenue for renter households in Over-the-Rhine to build assets that might otherwise be difficult to accumulate.

Additional resources

For more information on asset-building programs, see Local Housing Solution’s brief on this topic.

Related resources

• As More Households Rent, How Can We Encourage Them to Save? (Center for American Progress, 2014)
• Cornerstone’s Renter Equity Property Management System: Final Evaluation Report (Corporation for Enterprise Development and Ohio Housing Finance Agency, 2013)
• Making the Renters vs. Homeowners Competition a Thing of the Past (Next City, 2014)
• Cornerstone Renter Equity Website