Reviving Nordeast: An emerging co-op model for all communities
Since the Great Recession’s height, Minnesota 2020 has been advocating for cooperatives as a way to rebuild our local economies from the ground up. These business development models help individuals pool resources to gain economies of scale. In some cases they pull power away from just shareholders and give it back to workers and community stakeholders.
Minnesota has cooperatives in more than a dozen industries, from agricultural and food retail to newer models in child care and bicycle retailing.
A new Minneapolis cooperative is using its collective power to re-energize its neighborhood’s real estate market. The NorthEast Investment Cooperative (NEIC) plans to buy and rehab un- or under-utilized properties in the neighborhood. It recently attracted media attention when it purchased a major storefront on Central Avenue. Recovery Bike Shop is the first occupant and nearby Eastside Food Co-op fits into the future plans.
Mayors, council members, economic development planners and county commissioners for communities large and small would be wise to track NEIC’s progress, as this could provide a model for other neighborhoods and rural towns.
Furthermore, the NEIC’s officers and board members’ professional backgrounds suit them well for this endeavor. For example, Board President Amy Fields is general manager of Eastside Food Cooperative; Vice President Steve Sylvester is an attorney and licensed general contractor, and serves as president for Windom Park Citizens in Action; Joe Bove, treasurer, is a computer consulting business owner who also rehabs rental property; and Leslie Watson, secretary, has an extensive background in cooperatives and nonprofit organizations. She is also co-chair of the Northeast Minneapolis Chamber of Commerce.
NEIC is especially interesting because it addresses several recurring themes regarding economic development. Foremost among them, 135 members of the community have now invested more than $186,000 in equity to revive their neighborhood from the ground up. Loren Schirber, a board member, said NEIC has the goal of raising $350,000 from area people, at $1,000 each for an A-share in the co-op that would make for 100 percent community ownership. In its initial capital drive, NEIC is selling non-voting C- and D-shares for other amounts of investment that will be repaid at low rates of interest.
This start-up activity essentially accepts the notion that Minnesota and the nation will not “recover” from the Great Recession by putting back in place the economy we had before 2007-2008. Recovery now means rebuilding—starting new ventures and helping others expand. NEIC is believed to be the first commercial real estate investment co-op in Minnesota.
Board secretary Watson, an inactive attorney who just completed a master’s degree in public affairs at the University of Minnesota’s Humphrey School, said NEIC is using the traditional (308A) legal model. At the same time, it is drawing inspiration from the Riverwest Investment Cooperative (RIC) that has operated in Milwaukee since 2003, and the Sangudo Opportunity Development Co-operative (SODC) at a small community in Alberta, Canada.
Minnesota has adopted a newer, 308B chapter to the co-op legal code intended to help groups raise outside capital for co-op development. Watson said NEIC’s incorporation model is as old as any farmer-owned producer co-op, mutual insurance and finance co-ops, and consumer-owned food and healthcare cooperative that make Minnesota the most cooperatively developed state.
Like city life most everywhere, the Riverwest neighborhood in Milwaukee has undergone change even though the bonds of community created by Polish immigrants in the late 19th Century remain intact. The RIC website explains the community as having diversified. Along with long-time Polish families, the community now has neighbors of Puerto Rican, African American and less-specific origins, such as artists and 60s “hippies” that add a “counter culture” alongside home and family.
That makes for a exciting, eclectic community in Milwaukee. So, too, has change broadened and made even more interesting neighborhoods in Minneapolis Nordeast, St. Paul’s East Side and West Side neighborhoods, and every other historic neighborhood in the Twin Cities metropolitan area.
Schirber said groups from North Minneapolis, the University Avenue corridor and East Side in St. Paul, Richfield and other communities have started meeting with NEIC officers and members to study what the co-op is doing. This could lead to further reinventing and reviving of historic neighborhoods.
There are additional tools coming forth from new laws to assist community redevelopment plans, including cooperative developments. Dan Heilman, writing for Finance & Commerce, noted in February that the federal Jumpstart Our Business Startups (JOBS) act now allows individuals to buy stakes in offices and commercial buildings. These communities aren't waiting for the big banks and developers to restart their local economies. Instead they're taking advantage of good public policy and their own business and cultural backgrounds to improve communities one storefront and stoop at a time.