“We would really like to have a project before the snow flies,” said Amy Fields, president of Northeast Investment Cooperative, NEIC. “It’s a chicken and egg situation. We need enough members to put in a credible purchase offer, and we know if we put in an offer, memberships will come.”
The goal: Buy, fix up, rent, and eventually sell commercial property on Central Avenue; for the first project, specifically near Lowry. Repeat. Several times.
“We hope to take on properties not now attractive to the usual investor. We’re calling it ‘patient capital,’ giving members a decent return on investment though they’ll wait a while to see it, meanwhile there’s benefit to the community as retail spaces get rejuvenated and attract the types of businesses nearby shoppers want to see.”
Fields said that, realistically, it’s at least a $300,000 proposition. Fifty members have put in $1,000 apiece cash, and 15 more have pledged.
It’s reminiscent of the 1st Southeast Corporation, incorporated in 1965 and operating for about 30 years buying and fixing blighted residential buildings in the areas around the University of Minnesota Minneapolis campus. One of the initial 1st Southeast investors, Arvonne Fraser, gave the NEIC group advice recently.
Fields said board members are working with their buyers’ agent to “put together a project that is feasible.” They’ve talked with real estate agents who know of property not currently listed, as well as looking at active listings. Meanwhile they’ve also met with prospective tenants, “one very strong that we have met with several times, four other possibles once and followup phone calls with another.” The group hopes that eventually a tenant would be able to buy an improved building they were renting from NEIC, freeing the invested capital to do another project.
“We know we’re going to need to do one project to get the ball rolling,” Fields said.
The group has had numerous information sessions where prospective members get their questions answered. These have also served to bring in potential tenants with business ideas. The next session is Wednesday, Aug. 22, 7 p.m. at the Eastside Food Cooperative’s Granite Studio space.
Current board members are Amy Fields, President; Steve Sylvester, Vice President; Joe Bove, Treasurer; Leslie Watson, Secretary; Chris Bubser, Jim Higgins, Greg Rachwal and Gavin Watt. Some of those active have been involved for years in other planning efforts, committees, neighborhood groups, and/or the East Side Food Cooperative. They’ve seen indirect measures take forever to have the desired effect and have seen how a democratic one-member one-vote cooperative can eventually produce a return.
Can any group move fast enough to get a deal done? “We understand that it’s a disadvantage of our model,” to have so many people involved. “The membership has empowered the board to make decisions,” Fields said. She reflected that “for a while we won’t have to worry” about being in competition with other enterprises. “After the streetcars are in and everyone’s queuing up, then maybe.” For the first two or three projects they expect to find sellers and tenants able to work at a deliberate pace on properties that no one else wants. If they get aced out by a single investor, it’s a sign that the property had more going for it.
Board member Jim Higgins, who describes himself as “one of the last old guys” on the Avenue, told the Northeaster “The people on the board are really working hard. Steve Sylvester, Joe Bove, Leslie Watson, six or eight of them I’m constantly getting emails from. Hats off to them for all the energy they put in. They’re working very hard at soliciting new members, working their networks.” Fields said they “pooled our Rolodexes.”
Higgins said his focus is four projects planned to improve his own Central Avenue properties, to “do it right and make a statement for the next 50 years. People call me a nut for spending what I’ve spent over the years. But I want to show that not everyone bled the Avenue dry.” He said some landlords who would have had the means to hire a good architect or designer would hire a handyperson to do storefronts on the cheap.
“I’m glad someone has taken an interest. It’s so fragmented. There’s not a Central Avenue Commercial Association anymore,” Higgins said. Individual businesses draw their own clientele, it’s much less likely now that people can get out and walk to two to three stores that have something they need. “Central deteriorated, I hope that has stopped” and that the NEIC effort will start to improve things.
Arvonne Fraser told the Northeaster something like 1st Southeast would come in handy again in her area, as they’re seeing a student body more attracted by new apartment buildings, potentially leaving old houses to deteriorate again. NEIC might get into rehabbing rental housing in Northeast after the commercial aspect takes off, according to their literature.
Fraser said, “My advice to them was get yourself enough money from the start, so you don’t have to do physical work.” She and her peers did physical work, but now “everybody works or is too old to be cleaning out debris. It takes real money to bring properties up to code.”
Another thing they had, hard to come by these days, Fraser said, is “a local bank that was terribly helpful. You don’t find banks like that anymore, they want such big down payments.” And have a lawyer, who knows real estate and will work with you at a reduced rate, she added.
Quoting from Northeast Investment Cooperative literature available online at www.NEIC.coop:
NEIC has been formally organized as a cooperative under Minnesota Statutes Chapter 308A. Our founding members elected a board of directors and adopted bylaws in March 2012. The board and NEIC’s three standing committees (Property & Tenant Development, Finance & Governance, and Membership & Marketing) have regular Sunday night working sessions from 6:30 to 8 p.m. at the Grace Center for Community Life, 1500 Sixth St. NE. We know that when selecting properties, NEIC will be guided by common concerns in our community, including absentee owners, stressed buildings, safety, and a lack of positive activity on our main commercial corridors.
Fields said that in addition to attending the information sessions as they are announced, potential members are welcome to observe the committees at work at the Grace Center meetings. The board meets on the fourth Sunday, other committees take turns on the other Sundays. (Use the southwest entrance off the parking lot.)
Email inquiries sent to firstname.lastname@example.org go simultaneously to all board members, so a person may get back a variety of responses. While there is not a centralized phone number, Fields is at the Eastside Food Cooperative, 612-788-0950.