Neighbourhood cooperatives for the integrated urban regeneration of mass housing areas: speculations on a proposed model

Abstract

Purpose

This paper seeks to define a theoretical model for the urban regeneration of mass housing areas based on citizen initiative, self-management and self-financing in the form of the neighbourhood cooperative. This paper aims to identify mechanisms for economic resource generation that enable the improvement of the urban surroundings and its buildings without assuming disproportionate economic burdens by the local residents based on two principles, the economies of scale and service provision.

Design/methodology/approach

The research is structured in three phases: a literature review of the different trends in self-financing for urban regeneration and the conceptual framework for the definition of a cooperative model; the definition of theoretical model by analysing community ecosystem, neighbourhood-based services and the requirements for its economic equilibrium; and the discussion of the results and the conclusions.

Findings

The results show the potential of the cooperative model to generate a social economy capable of reducing costs and producing additional resources to finance the rehabilitation process. The findings show not only the extent of economic advantages but also multiple social, physical and environmental benefits. Its implementation involves the participation of multiple actors, which is one of its significant advantages.

Originality/value

The main contribution is to approach comprehensive urban rehabilitation from a collaborative understanding, overcoming the main financing difficulties of the current practices based on public subsidy policies. The model also allows an ethical relationship to be built with supplier companies by means of corporate social responsibility.

Citation

Rosa-Jiménez, C., Márquez-Ballesteros, M.J., García-Moreno, A.E. and Navas-Carrillo, D. (2023), "Neighbourhood cooperatives for the integrated urban regeneration of mass housing areas: speculations on a proposed model", Social Enterprise Journal, Vol. 19 No. 5, pp. 575-597. https://doi.org/10.1108/SEJ-01-2023-0010

1. Introduction

The deterioration of living conditions in cities and particularly social housing neighbourhoods built between the 1950s and 1980s and consisting of large housing developments, mainly in the open-block city, has become the focus of attention of researchers and the concern of governments of the European Union (EU), especially in countries with a long track record in neighbourhood revitalization, such as Britain, Germany or France (Couch et al., 2011). Accordingly, important national rehabilitation policies have been developed since the beginning of the 21st century in Spain (Hernández Aja et al., 2014). Most of these policies are based on significant state funding and subsidies, especially in lower and lower-middle-class neighbourhoods (Watt and Smets, 2017). However, the 2008 economic crisis, the impact of COVID-19 or the current war in Ukraine have led to states of financial and economic uncertainty, with a significant reduction in funding to finance the rehabilitation and regeneration of those social housing neighbourhoods. This situation is aggravated for three reasons:

1. the lack of economic capacity of the owners, particularly in the case of lower-class areas;

2. the difficulties to financial mass aid for a large housing stock built between 1950 and 1980; and

3. the economic difficulties of the States (Ryan-Collins et al., 2017), beset by the strong liberalization process (Roberts, 2011), which involved the transition from a Keynesian and interventionist model to a Hayekian-neoliberal approach to economics (Bromley, 1998).

Recent economic, social, cultural and technological changes are arousing interest in new rehabilitation formulas not based exclusively on public funds (Cavalli, 2012) to make the regeneration sustainable and somewhat autonomous (González, 2021). Sacchetti et al. (2017) focus on organizational solutions based on cooperation for social regeneration, the location and development of financially sustainable processes, combining social and urban regeneration objectives and based on coordination between private enterprises and local authorities. The public–private partnership (PPP) seems to be the reference for new urban models in western cities (Longa, 2011) and has particularly become a rehabilitation alternative to the lack of financing from the state and owners in many EU countries (Egedy, 2010). However, this model has certain problems: the way in which risk can be reduced for the private sector and how regeneration costs can be recovered through economic development, even when the increase of housing density as an economic resource for urban rehabilitation cannot always be applied because many neighbourhoods were built with a very high housing density, which hinders the attaining of resources even further (OECDCP, 2000).

In a context where public investment in urban regeneration has been reduced, can rehabilitation based on PPP with certain levels of economic self-sufficiency and social control of the residents be developed? The adaptation of the self-sufficiency models based on social development to the social economy of the cooperative may be a strategy adapted to the comprehensive urban regeneration defined in the Toledo Declaration (Presidencia Española EU, 2010). This research puts forward the neighbourhood cooperative (NC) as a theoretical model of self-financing for the ongoing urban regeneration. It proposes the establishment of new relationships in the existing economic fabric as well as seeking a beneficial relationship in the rehabilitation processes in the field of PPPs. The NC potentially enables lower costs of the urban regeneration of the neighbourhoods by applying, on the one hand, the principles of the economies of scale and, on the other hand, to obtain own economic resources to undertake the rehabilitation. The model also seeks to exceed the current budgetary constrictions of the public initiatives while avoiding that the process reverts to external stakeholders with economic interests, which may be different to those of the local residents. Accordingly, the NC is potentially seen as an appropriate formula for residential neighbourhoods with a high building density, as it opts for keeping the existing buildings, unlike initiatives based on the demolition of existing housing and the construction of new dwellings. The NC can provide support for business management and organization to the neighbourhood self-sufficiency bases defined by Medved (2016), along with the intensification of the relations with regional economic stakeholders by resorting to large rehabilitation and service firms. The cooperative would be a driving force of the neighbourhood’s local economy.

For this, an applied and speculative methodology is proposed. The applied research solves practical problems based on empirical information and aimed at using the results of said research (Rezaul Islam et al., 2022). The scientific speculative methodology tries to generate hypotheses and theories from speculation and imagination. It is based on the ability to imagine possible scenarios that help to solve current problems. Speculative methods are typical in the field of sociology (Michael, 2016) and, recently in the field of corporate social responsibility (CSR), some authors call for a Lacanian approach that moves away from excessively scientific methodologies and towards a greater development of new proposals and theories (Crowther and Seifi, 2018), for the advantages of utopian and dystopian fiction in reimagining and rebuilding a better world (Hinchliffe, 2021). Along these lines, there are authors who argue that both speculative approaches and co-productive imagination make it possible to establish proposals and methodological tactics that allow progress on current problems (Duggan, 2021).

The aim of this paper is, therefore, to analyse the viability of the proposed NC model by identifying the main advantages and opportunities compared to previous experiences and in line with the current challenges of urban regeneration. To this end, the research is structured in three phases. The first provides a comprehensive literature review (section 2) of the different trends in self-financing for urban regeneration, as well as the conceptual framework for the definition of a cooperative model to reverse the process of obsolescence (physical, functional and environmental) that many of the social housing neighbourhoods built in the second half of the 20th century have undergone. In the second part (section 3), the proposed model of NC is developed, describing the community network that should support the cooperative, the different services to be provided, as well as the keys to the necessary economic equilibrium. Finally, the discussion of the results and conclusions will be subsequently carried out (section 4).

2. Literature review

2.1 Self-sufficiency in urban rehabilitation

Self-sufficiency strategies aimed at reducing or eliminating any kinds of assistance on public welfare programmes increase incomes and promote the ability of residents to become economically independent (Bratt and Keyes, 1997). Self-sufficiency and independence of neighbourhoods are the main conditions of their sustainability (Harvey, 1991). According to Medved (2016), an autonomous sustainable neighbourhood needs a socio-economic balance. It is based on promoting local economic activities with an economic exchange balance between the neighbourhood and the city, including a diversification of services. That is, economic self-sufficiency requires an activation of the local economy and the establishment of economic relations with external agents.

At the end of the 1960s, organizations aimed at managing the urban renewal processes emerged in the USA. On the one hand, there was the neighbourhood council, described by Sarchet and Wheeler (1958) as a community organization for renewal, serving as liaison between citizens and planners and supporting and supplementing the renewal programme even after the professionals have left the scene. On the other hand, there was the community development as a response to the urban crisis (Anglin, 2011, p. 50). The welfare reform and the shrinking and restructuring of federally subsidized housing – carried out during Reagan’s term in office (1981–1989) – forced self-financing strategies that resulted in the development of non-profit housing organizations and focused on economic development and community building as a key corner (Bratt and Keyes, 1998). These groups provided neighbourhood-based services, even when the government and private sectors failed (Rubin, 2000). They have now evolved into non-profit or for-profit developers and funded by a mix of public and private sources (Schwartz, 2010).

The direct involvement of local communities in urban regeneration initiatives was an emerging theme of the 1990s (Mcarthur, 1993). Community capacity building contributes to inclusive and sustainable local economic development and it can be achieved in a partnership of a social economy organization, the private sector and government (Noya et al., 2009). According to Anglin (2011), the community economic development institutions are organizations whose central mission is the physical, social and economic development of people and places, e.g. Mutual Housing Associations, community-based or community-centred organizations. In this regards, community development corporations (CDCs):

[…] are place-based non-profit organizations that provide leadership in revitalizing economically challenged communities (…). Help to coordinate community planning, act as developers of affordable housing and commercial development, create jobs directly through equity stakes in franchises or small business, provide a variety of social services to their target area (Anglin, 2011, p. 62).

Its connection to a specific place distinguishes a CDC from other non-profits organizations and it is a vehicle for physical development (Bratt and Keyes, 1998).

2.2 The neighbourhood cooperative model for the urban regeneration

The NC is an adaptation of the CDC model to urban regeneration policies. The cooperative is the non-profit organization that provides neighbourhood-based services for physical and social development and the neighbourhood as the specific place for urban regeneration. The term cooperative refers to an “autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically-controlled enterprise” (ICA, 2016). In the European context, a social enterprise is:

[…] an operator in the social economy whose main objective is to have a social impact rather than make a profit for their owners of shareholders. It operates by providing goods and services for the market in an entrepreneurial and innovative fashion and uses its profits primarily to achieve social objectives. It is managed in an open and responsible manner and, in particular, involves employees, consumers and stakeholders affected by its commercial activities (European Commission, 2011).

Nelson et al. (2016) differentiates between four main types: consumer producer, worker or multistakeholder cooperatives and producer cooperatives that could be use in different sectors of activity (health and social care, housing, agriculture, technology, etc.). Traditionally, housing cooperatives have enabled people in need of housing to build their homes collectively. However, housing cooperatives have undertaken comprehensive building rehabilitation – e.g. in Norway, see Hauge et al. (2012) – or provided social housing based on the collective self-organization of people with little interference from the state or the market: e.g. Baugruppen in Germany, user-initiated building groups that seek to provide affordable and high-quality housing options tailored to the specific needs of residents, prioritizing social and environmental sustainability (Seemann et al., 2019). Retrofit co-housing has recently also appeared as an alternative to urban regeneration, e.g. in France, Germany or The Netherlands (Droste, 2015; Tummers, 2016).

Previous experiences in urban regeneration based on Housing Associations (in the UK and Ireland) developed successful socio-economic models of cooperatives and community-based associations for major housing-led regeneration in the 1970s – e.g. The Eldonians, Castle Vale, Royds or Coin Street – where the physical regeneration was accompanied by policies of jobs creation and improvement of services through formulas of enterprises with social purposes, self-organization and neighbourhood mobilization (Somerville et al., 2009). In a more theoretical field, Tumbull (1975) proposed the Cooperative Land Banks (CLB) model, which provides for the self-financing purchasing of all the land and property without the need for outside financing. It harnessed the windfall gains in property to pay the costs of public facilities and services. All residential-space leases, with a depreciation period of 50 years, are transferred to their occupiers at a rate of 2% per annum (Swann, 1997). Furthermore, the CLB encourages the residents (owners or renters), commercial, institutional and non-resident owners of land to uphold, maintain and improve their property.

Other research has explored, and also from a theoretical perspective, the setting up urban regeneration cooperatives based on the standard operating of a housing cooperative applied to the sustainable urban regeneration of neighbourhoods (González et al., 2015). That is, in contrast to the European trend of soft financing that emerged after the 2008 financial crisis, which places the administration in a secondary role as a mere intermediary between the banking industry and/or private sector. It is also in contrast to the option of privatizing the regeneration action that is embraced by the current political framework with respect to urban rehabilitation if citizens are not in a position to undertake the refurbishments of their dwellings (Gaja i Diaz, 2015).

In a similar way to a CDB, the NC is located in a specific physical space of the city that is related to an urban/architectural reality and a certain population, the neighbourhood. The neighbourhood concept has been discussed in different approaches in the literature (Table 1). Clarence Perry’s “neighbourhood unit” (Perry, 1929) established its size based on pedestrian accessibility to local businesses and amenities such as schools (Barcellos de Souza, 2006). In the Chicago planning studies, Wirth (1938) also proposed a neighbourhood size that allowed for a ban on internal traffic (Talen, 2017). Rueda (2011) adapts the Writh principles to define the superblock as a group of 3 × 3 blocks in the area to enlarge Barcelona, all of which of similar morphology, types and density. Swann (1997) proposes a population range of 1,000–30,000 people as the population size.

2.3 Provision of housing services and the corporative social responsibility

The aim of the NC is to provide a wide range of neighbourhood-based services known as the provision of housing services (PHS). PHS offers every member access to an adequate, maintained and functionally updated service to housing needs at every moment of their life. In this regards, some scholars point out that refurbishment does not only raise the value of housing but the value of the service provided (Holm, 2000; Hauge et al., 2012). PHS is focused on a continuous regeneration and modernization of the neighbourhood, which avoids the obsolescence of the neighbourhood by adapting it to the needs and demands of its inhabitants within the normative and legal possibilities at any given time.

Pourebrahimi et al. (2020) have found 10 categories of building obsolescence, highlighting the economic and functional. In the urban regeneration, four of them stand out: physical, functional, environmental and economic obsolescence (Chavoya Gama et al., 2021). Physical obsolescence is related to physical degradation of the building. Therefore, building maintenance – or the provision of basic services of habitability (BS-H) – is crucial for urban sustainable development with a multifaceted significance: it maintains the quality of life, the economic and market value of their real assets and avoids a large amount of demolition waste (Yau, 2012). In other words:

• The BS-H avoids the functional obsolescence (related to the lack of accessibility or of new infrastructures) with the modernization of the building into new cultural and social needs of tenants and owners, proposing a model of high-quality residential offer integrating residence with supports and services (Fecchio and Casara, 2012).

• BS-H avoids the economic obsolescence (maintenance costs are higher than a new system). Adequate maintenance implies a continuous revaluation of the building and an extension of the useful life of the house, which allows the expected century of life of the building to be far exceeded (García Navarro, 1995).

• BS-H avoids the environmental obsolescence related to reducing the ecological footprint and improving energy losses or poor waste management.

According to the empirical, Aikivuori (1996) has reported 22 years on average between two consecutive large-scale refurbishment projects in the same building. Therefore, the rehabilitation of the neighbourhoods is an ongoing activity that, according to Cuchí and Sweatman (2011), should be capable of creating employment, a significant reduction of the ecological footprint and the increase of the biocapacity of the territory. When faced with this cyclical process (Machani and Nourelfath, 2012), the choice can be between undertaking repairs every 20 years and continuous regeneration that the NC would carry out based on the BS-H and on the collaborative and social economy based on CSR.

In the international context, CSR promotes global solidarity, where social justice is a fundamental element for solving the tension between the economy and ecology and the lower economic growth of Europe is an example (Cramer, 2017). The EU associates CSR as the voluntary contribution of companies to improve society and the environment and support the development of social enterprises with wider social, environmental and community objectives that prioritize their social impact over capital earnings (European Commission, 2019). Therefore, the NC as a social enterprise aims at CSR as the basis of its operation and, especially, in its relations with all stakeholders involved in the regeneration of its neighbourhood.

3. Speculative proposal of a neighbourhood cooperative for urban regeneration

3.1 Structure of the neighbourhood cooperative for the provision of housing services

The NC, as a theoretical model that potentially enables lower costs of the urban regeneration, would be a consumer and a worker cooperative that offers PHS to a specific neighbourhood. As a consumer cooperative, it is focused on modernizing the existing housing stock at cost price plus expenses without profit. The NC unifies the costs of property management and maintenance of all buildings in a single shared debt issued to the cooperative, not to the individual user (Figure 1). Two different spheres of the consumer cooperative are proposed:

1. Provision of services related to the building and jobs for the maintenance, upkeep and modernization of the neighbourhood. It is about providing habitability services, along with managing communal products and services to which the local residents currently have access.

2. Provision of services that seek return on investment. They are actions that seek to monetize on the underused resources and spaces of the neighbourhood, generating income that could be used to finance the rehabilitation process.

As a worker cooperative, it could provide complementary and other services focused on a very specific sector of the population, such as older persons, adapting to the specific needs of the neighbourhood. The members of NC can be incorporated where working together lowers transaction costs and eases dilemmas of collective action (Hoyt, 2004). This, for example, has been tested in the mutual work cooperative of Covicivi (Montevideo), where the rehabilitation of a historical building was carried out by the local residents being actively involved by contributing working hours (Vallés et al., 2011).

3.2 Neighbourhood cooperative’s network in the corporate social responsibility workframe

The NC has an internal organization (similar to any other cooperative) and engages with two important stakeholders for the development of effective CSR (Figure 2): external political stakeholders (local and regional government) and economic stakeholders (local trade, technical agents and cluster of suppliers companies).

1. NC’s internal structure. The neighbourhood cooperative (NC) has some singularities due to the special characteristics of its configuration. The membership assembly is formed by residents (either owners of real estate or not) and community associations of a same neighbourhood. Similarly to CLB, “all individual residents are automatically members of the community corporation if they live in buildings situated in the corporation” (Swann, 1997, p. 49). The urban characteristics and their size have to be considered when demarcating the neighbourhood or neighbourhoods. The NC is particularly designed for social housing neighbourhoods (1950–1980) in large housing developments of open blocks with similar construction and architectural solutions, which reduces the rehabilitation costs by simplifying the number of built solutions. As regards the size, the larger it is, the more benefits and discounts can be obtained due to economies of scale. However, community ties are weakened as they are created by relationships and proximity. Therefore, it is estimated that for the cooperative model to work, its size in number of members should not be under 1,000 people and not exceed the 5,000 residents of the aforementioned Perry neighbourhood unit.

   This represents a very large number of members, although the specific collectives of young people, people with functional diversity, people at risk of exclusion, immigrants, abused women or any other group have a special standing. These collectives are targeted by the NC for their training and potential incorporation into the labour market by the cooperative itself. On the other hand, at least the community associations formed by neighbourhood associations and homeowners’ communities should be part of the NC as civil organizations are generally more interested in local processes than individual residents (Egedy, 2010), encouraging and representing owners and residents.

   Like any cooperative, the management board is selected from among the membership assembly to run the NC, but specifically the NC must have an ethical management committee. NC holds an ethical code aiming at defining the behaviours and commitments, norms and principles of action that companies acquire in relation to stakeholders and relevant issues, whose control is carried out through an ethical management committee. In the frame of this ethical code, the manager is in charge of controlling and overseeing the reforms, advising the cooperative members on the management of the performances involved in the renovation of the properties. She/he manages the contracts with external companies and oversees and logs the maintenance tasks needed and monitors them in order for there to be a record of their upkeep and maintenance with the passing of time.

2. NC’s external relationship. The regional and local governments as political external stakeholders must establish specific support for the creation and counselling of potential cooperatives (e.g. establishing the NC as a special legal case of cooperative and creating training-and-exchange networks). For example, at regional government level, Germany has created a network agency whose agenda is three-fold: “participation-oriented knowledge transfer (for co-housing stakeholders, policy-makers, administration, planners and the broader public), helping kick-start concrete projects and lobbying at political level for co-housing friendly governance and policies” (Droste, 2015, p. 86). At local government level, they can with indirect financial aid (e.g. fee exemption for rehabilitation or deductions on property tax), creating professional platforms, municipal technicians’ support and other tools. For example, Bianchi (2015) points out that co-housing in Montespertoli (Italy) is recognized as a form of rehabilitation included in the regulations of the master plan as well as in Turin (Italy), where the Town Hall has signed a protocol with co-housing associations to promote the development of this model, thus resulting in a decentralized decision-making system.

   On the other hand, in addition to the local trade and technical agents, the setting up of a cluster of supplier companies (CSC) among the economic stakeholders is needed. Local trade is formed by medium-sized companies, professionals and franchises residing in the neighbourhood and which provide services to the residents of the neighbourhood. Technical stakeholders support the management of service provision: from technological solutions of rehabilitation of the buildings to those aspects related to the administration and management or the legal constitution of the cooperative, where advocates (Howell, 2015) and a professional team for intelligent rehabilitation (Gigliarelli et al., 2014) are recommended. The number of managers will depend on the complexity of the services to be offered, with there being at least a facility manager, given the large real estate assets to be managed by the NC. The CSC corresponds to the external trade formed by large building companies that carry out the rehabilitation, those providing services, together with banks and financial companies. Besides offering discounts in their budgets for returns to scale, such companies hire personnel from the neighbourhood, favouring employment, training and qualification of the workforce in the local community.

   In this regards, the NC offers PHS through its cooperative or through external companies by means of a special relationship based always on CSR. The execution of services exceeding the technical or formative capacities of the NC’s partners forces the outsourcing of services. However, the NC allows local companies to be selected and to prioritize the ones able to adapt their business formulas to the service model and a special relationship link to be established with the CSC. The ethical management committee guarantees the social and environmental benefit for the development of the neighbourhood, regardless of the economic benefit, checking the CSR both internally and externally by means of applying of the ISO 26000:2010. The ethical management committee compares the results of the evaluation of the different entities aspiring to provide services with a standard social responsibility profile. This task would be facilitated if political stakeholders should promote the creation of a standard of quality for corporate responsibility with the sustainable urban environment (CRSUE), which would be awarded to those companies committing to active participation in the process of urban regeneration (Table 2).

3.3 Economic equilibrium and service provision

From an economic point of view, the operation of the NC is financed through the cooperative conservation and maintenance fund (CCMF), which is made up of direct (I_d – social enterprise, I_m – efficient management and I_p – partner loyalty) and indirect income (I_i).

CCMF = Ii+ Im+ Ip+ Id

CCMF helps to fund the basic habitability services, with the NC’s objective being to reduce the contribution of the NC’s partners. The aim is thus to minimize the difference between incomes and the cost of basic habitability services and even when the basic habitability services do not entail any economic cost (Figure 3). Moreover, the NC allows, on the one hand, the transfer of the right of ownership of the partner to another one of use to be incorporated as income for those people with low purchasing power in exchange for the services; and on the other hand, the consideration of a salary as payment in kind in a similar way as Carmon and Hill (1988) have reported in Israel’s Project Renewal (1977–1984), where the participation of residents in the implementation of the project was carried out both as voluntary work and as paid employment.

As described in Figure 3, the following financing model is proposed for the CCMF, based on the economic flows that the different types of cooperatives can offer in terms of the services potentially created. NC income can be classified in four major groups:

1. Indirect incomes (Ii) and BS-H. Ii corresponds to the discounts of the BS-H obtained by the benefits of economies of scale in both housing and rehabilitation volume and by the number of potential consumers. Therefore, negotiation for the expenses arising from the physical rehabilitation can be carried out in a situation of competitive advantage. In addition, in the case of the Fordist housing estates from the 1960s to the 1980s, the repetition of typological, constructive and formal solutions of their buildings allows for an additional reduction of maintenance, conservation and rehabilitation costs. The administration can apply tax reductions, tax benefits and hire technical staff to assist the NC in consulting work, especially in the early implementation phase.

   BS-H are aimed at the environmental, functional and physical upgrading of the neighbourhood according to the established types of obsolescence. BS-H are actions that the cooperative assumes as a social economy company. The cooperative members are offered them to reach the basic habitability standard after analysing and diagnosing the obsolescence of the neighbourhood. It involves retrofitting the residential stock in aspects such as accessibility, common infrastructures (sanitation, plumbing and electricity), the improvement of the enclosure or the installation of solar thermal energy (Table 3). Furthermore, the provision of those services goes hand in hand with the maintenance needed to guarantee a proper state of upkeep during the 20 years estimated for each rehabilitation cycle (Aikivuori, 1996).

2. Direct incomes from efficient management and community-based services (CS). Direct income from efficient management (I_mb) is based on the expenses paid by the owners of the neighbourhoods for the management and maintenance of the buildings. The NCs act similarly to an energy service provider, optimizing the expenses by grouping services which are invoiced by companies or professionals of independently. The financing is obtained using community-based services which jointly manage the products and services to which the residents currently have access, such as the administration of communities, the maintenance management, cleaning of common areas, the review and updating of fire protection systems or the electrical supply. Unified management can lead to a significant reduction in spending due to economies of scale so that the savings are added to the CCMF.

3. Direct incomes of returns for partner loyalty and family services (FS). As regards direct income of returns for partner loyalty (I_p), the NC guarantees that the partners retain a good or a service in exchange for an economic return as a percentage of the purchase made (e.g. 3%) in FS. Joint management of the basic daily supply services and consumption of each family may be another considerable source of savings. A distinction must be made between internal consumption (in local businesses) and external (other companies outside the neighbourhood) to be able to boost the local commerce of those neighbourhoods:

   • Internal commerce within the neighbourhood. The aim is to foster partnerships between neighbourhood businesses by means of setting up an open commercial centre, allowing them to be more competitive while enjoying the benefits and support from the public authorities. The NC manages the purchases of its partners by means of a loyalty card, which allows a certain discount to be applied for the neighbourhood residents that can be allocated to the CCMF (around 3%). This is a way to bolster local trade, usually made up of small businesses which find it hard to compete with large one, with the ensuing reduction in travel. Furthermore, it boosts employment, as giving impetus to foster new business in groups that lack activity and increasing the ability to attract spending can be chosen as the commercial strategy for the neighbourhood.

   • External trade with companies with the CRSUE quality standard. The supply of energy (electricity and gas), telecommunications and contracting home insurance have been envisaged within the external services. The companies related to those services are usually national companies with high turnovers. This allows them to adjust their prices, by the mere fact of creating the loyalty of a certain number of customers, given the offer they can offer as if it was a single customer.

4. Direct income as a social enterprise and alternative housing services (AHS). Finally, as regards direct income as a social enterprise (I_d), the NC incorporates worker cooperatives whose profits are for CCMF. Two large groups of services – complementary and advance services – can be distinguished (Table 4).

5. (4.1) Complementary services (CS). The purpose is to improve the quality of life of the local residents so that people with the same needs and interests form a group to access specific services that – given the economic level of the majority of the members – are difficult for each to afford individually. Compared to the other services, they are the ones that do not have to be provided to all the residents of the neighbourhood but only to those who are really interested in accessing them. Some proposals would be:

   • Assistance for older persons. It is aimed at older persons who live alone. The NC proposes grouping those members by sharing housing adapted to their needs. They would thus be able to benefit from communal services (cleaning and help with housework), whereas the freed housing could be rented out, with part of the earnings being invested in the rehabilitation process.

   • Sustainable mobility (CS-SM). It involves setting up a car-sharing cooperative among the residents for the shared used of a specific fleet of e-vehicles. This is a means to contribute to the decarbonization process of the city, to reduce the number of combustion engine vehicles while reducing the individual maintenance costs of each of the vehicles currently in the neighbourhood.

6. (4.2) Advanced services. These services seek to obtain additional income for the regeneration of the neighbourhood and to generate alternative – economic and/or social – benefits for the residents belonging to the NC. Examples of this type of actions would be:

   • Leasing of neighbourhood spaces. These neighbourhoods have public and private spaces whose use can be managed by the NC, thus allowing the cooperative to increase its earning capacity. That is the case of empty housing, where renting them out can be an alternative source of earnings for the residents, at the same time as providing resources for the CCMF of the NC, as they are in charge of their management. Furthermore, the roofs of the buildings can be used for solar gain to produce self-consumption photovoltaic energy production or transfer its operating to external companies in exchange for monetary compensation. In the same way, those frontages with greatest visibility or adjoining main roads can be used for advertising, thus becoming an additional source of income for the NC.

   • Provision of services to manage the increase the buildability. Another of the actions to incorporate rehabilitation resources comes from the possible exhaustion of development sites for profit allowed by urban planning, or, as applicable, the establishment of a new urban reality by means of the specific modification of the prescriptive urban planning instruments in each case. In the Spanish case, it is a strategy introduced by the urban rehabilitation, Regeneration and Renewal Act (Act 8/2013, of 26 June), legislation that was introduced to drive urban rehabilitation and regeneration at local and regional level (Rubio de Val, 2015). It is likewise a formula used in other contexts, such as in Norway (Hauge et al., 2012).

   • Providing services to manage the neighbourhood as a project to offset emissions. Many companies or entities are seeking an alternative way to offset CO₂ emissions that they cannot reduce in their normal operations. The offsetting of those emissions is based on a certain monetary contribution being made for each tonne of greenhouse gas to be offset and which will be used to finance the projects to reduce emissions. Those reduction actions do not have to be located in the same geographical areas as those companies, as climate change is considered to be a global problem affecting the whole planet.

4. Discussion and conclusions

The NC is a theoretical model that potentially enables lower costs of the urban regeneration of the neighbourhoods by applying, on the one hand, the principles of the economies of scale and, on the other hand, to obtain own economic resources to undertake the rehabilitation. This last point is the main contribution of the approach proposed by this model. Urban regeneration has traditionally obtained economic resources from public funding. It is an exhausted model given the far-reaching budgetary cuts to rehabilitation public policy as the result of the 2008 financial crisis (González González, 2021). Given this situation, different national legislations in the EU have opened up the possibility of privatizing the regenerative action, seeking to generate financial gains, particularly in vulnerable contexts where the citizens are not able alone to undertake the rehabilitation of their dwellings (Gaja i Diaz, 2015).

Obtaining of own economic resources allows regeneration in areas where it is not possible or advisable to increase the buildability, as many of these neighbourhoods are characterised by high density.

It is, therefore, an alternative to rehabilitation models based on increasing the buildability, as in the case of the housing cooperative described by Hauge et al. (2012), where the profits obtained from increasing a plant enabled the rehabilitation of the whole building. Moreover, it is a model that also allows the generation of waste associated to the construction processes to be minimized, whereas reducing energy consumption and increasing the joint energy efficiency of the neighbourhood, by opting for a sustainable and continuous regeneration process based on the progressive adaptation of the provision of habitability service offered to the cooperative members on a 20-year timeline.

Although the model potentially offers tools aimed at self-financing the urban regeneration of a neighbourhood, it has limitations stemming from the very speculative nature of the model: the viability in Fordist neighbourhoods of the 1970s with some economic activity of local commerce must be proven. In addition, we found three potential uncertainties in the model: political, economic and social.

4.1 Political uncertainties

The NC acts as an element of control and social participation in the PPP state model described by Longa (2011), as it incorporates the standards of CSR through the CRSUE quality standard, thus modulating private action in rehabilitation. In a similar way to the CDC, the NC has the same goals as described by Anglin (2011): coordination, affordable housing, creating jobs and providing social services. The main contribution of the NC with the CDC would be, therefore, the ethical relationship with the suppliers through CRS and the development of social certification seals. The aim would be to modulate the influence and interests of the large companies in the areas of rehabilitation and a real formula to control the PPP with an important social factor. However, this requires direct involvement and support from the administration. In this regards, Lyon et al. (2018) argue that public policy support is needed to help the private sector achieve sustainability commitments.

Furthermore, this model would force a long-term relationship between firms and the NC, requiring a change in the business formulas by the corporate sector, as there are not yet financial, business and commercial products that may fit the formulation proposed by the cooperative. The NC model will succeed as long as the administration devises a series of support measures to make the incorporation of private capital attractive. Moreover, the administration should acquire the role of “guarantor” and facilitate the creation of economic funds for the constitution of cooperatives. The model would not completely eliminate administration subsidies but it would reduce them and focuses them at the time of implementation of the cooperative when promoters and technic agents can be directly financed. The proposal is thus in line with the aforementioned European trend of soft financing. Thanks to formulas such as “NC and associated company incubators” or “cooperative accelerators”, the consolidation of the cooperative can be helped to move towards a more advanced stage of implementation in the neighbourhood. But this requires a major change in public authorities, as they must take an active role both in the development of public incentive and accountability policies and as guarantors of NCs, an uncertainty that is difficult to determine and which is a major limitation of the model.

4.2 Economic uncertainties

Habitually, comprehensive rehabilitation is a major economic investment for homeowners, who must disburse it on time with or without a bank loan request. The advantage of NCs would be that they assume the expenses of the services, and their partners pay small monthly instalments according to the requested services. This is possible because the NC seeks additional resources and funding in order for the cost to be lower for the partner too, through four complementary financing options:

1. indirect income from reduced rehabilitation and maintenance costs (BS-H);

2. direct income from efficient management and community-based services (CS);

3. returns from membership loyalty and (FS); and

4. the direct provision of AHS.

One step further, the NC converts obsolescence into an economic engine for the neighbourhood in such a way that the partners’ investments also come under the common benefit. The NC would become a driving force as it fosters the economic activity of the neighbourhood and local companies, along with creating jobs associated with the services directly managed by the cooperative and the rehabilitation process. It would thus lead to social improvement of the neighbourhood, which is an equally decisive factor to reverse urban obsolescence processes (García-Vázquez et al., 2019).

However, the economic viability of the cooperative depends on numerous factors. On the one hand, the neighbourhood as a physical space linked to the cooperative facilitates the viability of the NC according to the similarity of the buildings: the more similar they are, the lower the rehabilitation costs will be as the solutions to be adopted will be similar, this makes it more difficult to apply in neighbourhoods or urban sectors with a great typological diversity. On the other hand, the degree of regeneration will depend on the functional and physical rehabilitation needs and these are not always homogeneous. Therefore, the NC faces a complex management challenge that will be proportional to the size of the neighbourhood and the level of services it wants to offer.

4.3 Social uncertainties

The NC incorporates the service provision model that offers those services that the administration alone cannot guarantee. However, that requires a new relationship between individual needs and community management and above all for the local residents to join the cooperative. The success of the model will be proportional to the degree of involvement of the participating stakeholders and the social and physical achievements that can be achieved. The NC can operate provided that dwellers are compelled to pay the compulsory disbursement of a large amount of money in a situation of forced rehabilitation (either imminent ruin or legal imperative). The proposed model shows that the costs would be much lower, with superior benefits being received in return. This would therefore reduce conflicts between partners and would facilitate its creation. Following Simmons and Birchall (2005), people are likely to participate because they can be confident of the individual benefits it will bring. According to Hauge et al. (2012), the residents’ main problem to carry out the rehabilitation of large housing cooperatives is the fear to increase the rent. Yau (2012) concludes that cost affordability of maintenance work and existing building conditions generally dominate the decision-making process, and conflicts occur because of the divergent interests of different stakeholders in deciding on the way forward for a maintenance project.

Another limitation is social acceptance and the optimum and maximum size of the neighbourhood for proper functioning. A neighbourhood as a large cooperative may have governance problems: the dichotomy regarding the optimal size of the NC, which must seek the equilibrium between large housing cooperatives and the economic advantages of scale economies, without thereby significantly straining the psychological and social ties of belonging to an involved community. The NC proposal, being a speculative model, would need to continue the research, especially in the social dimension, and analyse the degree of acceptance of a neighbourhood as a formula for regeneration, as well as advance in the multiple aspects not analysed in this article, such as of the partners (abandonment of the partners due to death or displacement) or of the participating companies (abandonment of the company due to economic bankruptcy), among others.

The usefulness of the NC as an organization dedicated to improving the quality of life of people living in obsolete neighbourhood has several implications. It can be an instrument that multiplies the public funds, as with the same ones it is possible to increase the number of neighbourhoods to be regenerated, thanks to the potential self-financing capacity of the NCs themselves. On the other hand, the NC helps to promote neighbourhood coexistence and is an instrument that facilitates citizen participation in regeneration processes, an increasingly demanded aspect. In this regards, the NC can become a source of social integration, offering training and employment opportunities for people with difficulties in accessing the labour market, in addition to technicians and workers related to rehabilitation and the provision of social services.

Finally, we can conclude that NC has shown not only the extent of economic advantages but also multiple social, physical and environmental benefits, which have been acknowledged in the constitution of a cooperative as well as the approach to comprehensive urban rehabilitation from a collaborative understanding. Its implementation comprises the involvement of multiple stakeholders. However, it is in the complexity of its design and application where its greatest advantages lie, as the NC would allow a sound, fair and sustainable management system based on the collaborative potential and on the resiliency of the people who live in those neighbourhoods. More than a project, it is a process capable of giving rise to a sustained transformation over time, and at the same time, it can generate resources, activity and social relations, thus empowering citizens as the main architects of the transformation of neighbourhoods.

Figures

Figure 1.

Internal structure of the NC with a description of the PHS that each type of cooperative offers according to the existing problems and the beneficiaries of the cooperative

Figure 2.

NC’s relationship structure and stakeholders’ function

Figure 3.

NC’s self-financing system

Table 1.

Comparison of different neighbourhood models

Neighbourhood model	Dimension
	Radius (m)	Block (m)	Surface (ha)	No. dwel	Inhabitants (inhab.)	Density (inhab./ha)
Neighbourhood unit Perry (1929)	400–550	800 × 800	64	–	5,000	78
Super-block neighbourhoods Wirth (1938)	–	400 × 400	16	–	3,500 6,500	220 400
European City Reconstruction Charter Krier (1981)	250–300	575 × 575	33	–	10,000	300
Super-blocks Rueda (2016)	–	400 × 400	16	3,525	6,234	389
Cooperative Land Banks Swann (1997)	–	–	–	–	1,000 30,000	–

Source: Authors’ own work

Table 2.

Responsibilities and guarantees of the CRSUE quality standard

Responsibilities

• The company will perform the service by advancing the capital of the investment that will be paid in instalments up to the amortization of it • To demonstrate their corporate social responsibility strategy in their management by means of showing their trajectory in this sense • To provide innovative services, products and business models • To show reliability and commitment in the relationship with their customers, as the provision of services to the neighbourhood cooperative is accomplished in the long term • Contribution of benefits to the Conservation and Modernization Cooperative Fund (CMCF) • To establish integration mechanisms in the community, such as training and contracting of people in the community (unemployed or other specific groups); collaborating and/or acquiring products and services from the local business fabric; and promoting specific practices in the community through campaigns, training or other activities • To implement intervention campaigns in the neighbourhood in other fields (environmental, cultural[…]), thus developing what is called integrating social action

Guarantees

• The neighbourhood cooperative will offer them a long-term relationship, transparency and trust, guarantee in the continuity of their businesses and viable margins of profitability • Recognition by the administration of the CRSUE quality standard • Reduction in taxes and aid from other administrations for the training and incorporation of people at risk of social exclusion

Source: Authors’ own work

Table 3.

Potential provision of housing services (PHS) served by an NC and its relation with obsolescence levels

Provision of housing services (PHS)	Service	Description	OL
			A	B	C
Basic Services of Habitability (BS-H)
AC	Accessibility	To guarantee minimum conditions of universal accessibility in the common areas of the buildings with the installation of elevators		•
CI	Common infrastructures	Updating of sanitation, plumbing and electricity network to current regulations	•
IE	Improvement of the enclosure	Improvement of the thermal and acoustic conditions of facade through external thermal insulation composite system or similar	•
STE	Solar thermal energy	Replacement of current hot water production by means of a community system with the support of solar energy	•
Basic Services from Community Consumption (BS-CC)
Community-based services(CS)	Administration of communities	The NC directly provides the service through its administrator. Other expenses and insurance are included		•
	Maintenance management	The NC provides the service directly through its maintenance manager		•
	Cleaning of common areas	The NC directly provides the cleaning service of common areas of buildings		•
	Fire protection systems	Hiring of a CRSUE to reasonably reduce the risk of fire to acceptable limits and ensure good use and maintenance		•
	Electrical supply	A cooperative of commercialization of electrical energy of origin 100% renewable will be contracted		•	•
Family services (FS)	Internal commerce within the neighbourhood (FS-IC)	To encourage local commerce through the creation of a cooperative card as a mechanism to manage purchases allowing a certain discount to be applied to the local residents		•
	External trade with companies with the CRSUE quality standard (FS-ET)	To unify the costs of electricity, telecommunications and insurance to make a joint offer and reduce spending		•	•

Notes:

OL = obsolescence level, A = physical obsolescence, B = functional obsolescence, C = environmental obsolescence

Source: Authors’ own work

Table 4.

Potential alternative housing services (AHS) served by an NC and its relation with obsolescence levels (revised)

Alternative housing services (AHS)	Service	Description	OL
			A	B	C
Complementary services (CS) Services self-managed by the neighbourhood to provide services to specific groups	Assistance for older persons (CS-AE)	The NC allows older people who live alone to be grouped into homes which will be adapted to a universal design whereas the rest are put out for rent to finance rehabilitation and specific assistance		•
	Sustainable mobility (CS-SM)	A community car-sharing service manages a fleet of non-CO2 vehicles (bicycles, e-bicycles, e-mopeds, solar vehicles, electric and hybrids)		•	•
Advanced services (AS) Creation of business niches	Leasing of neighbourhood spaces (AS-LNS)	Manage the available spaces – publicly or privately owned – in the neighbourhood to develop and generate direct income
		• Unoccupied housing: management in the rental of empty housing
		• Area for photovoltaic production: assignment of roofs as a catchment area for the production of photovoltaic energy for companies			•
		• Facades for creative advertising: the peripheral facades limiting with streets with a high housing density allow to host creative advertising (correct integration of advertising in the urban landscape)
	Increase of buildability (AS-IB)	Income for increasing buildability so that the profits generated by the sale or rent of the new constructions help to finance the process
	Compensations for emissions (AS-CE)	Income from the sale of CO2 emission rights when considering the neighbourhood rehabilitation project as a project with emission compensation			•

Note:

OL = obsolescence level, A = physical obsolescence, B = functional obsolescence, C = environmental obsolescence

Source: Authors’ own work