1225 Lake Drive. (43,473 sq. ft.) of land. There is also a large brick garage on the property, and a great deal of paved parking (48 spaces).

Transcription

1 1225 Lake Drive The property The Thresholds building is located at 1225 Lake Drive. Once used as a small hospital in the 1800s, the west side of this building was later used as a funeral home before becoming the offices for Thresholds, Inc., a non-profit serving Kent County residents with developmental disabilities. It s a very large structure, including a connecting corridor to a house to the east that once was a singlefamily home. The combined building has 12,870 square feet of floor space and sits on nearly an acre (43,473 sq. ft.) of land. There is also a large brick garage on the property, and a great deal of paved parking (48 spaces). The following history of the west side of this building, constructed in 1003, is online: 1225 Lake Drive, S.E. Occupied as the residence of the Catholic bishop of Grand Rapids from 1921 to 1941, this 3-story brick dwelling re-opened its doors as the Grand Rapids Osteopathic Hospital in December It subsequently served as the Jonkhoff Funeral Home. This building was later connected to a single family home to the east with a hallway and basement. More recently, the property was purchased by Thresholds, Inc. (a non-profit organization assisting people with developmental disabilities). Thresholds is consolidating their operations to another large building on South Division, and they have decided to put this property up for sale. Thresholds has divided the property into a large number of offices and a few conference rooms. There are approximately 45 offices in the building now. There is also a full basement below both buildings and the connecting passage and a very large, well built brick garage (shown right). The property is on the No changes are proposed at this time for the large garage, which is being used for storage. Page 1 of 10

2 corner of Lake Drive and Auburn Avenue. Proposed new use of 1225 Lake Drive We are requesting Special Land Use approval for an unlisted use, similar to a rooming house or SRO, but different. There is currently no definition in the zoning code that quite fits what we are doing, but similar cooperatives are successfully operating in many places around the country. There is a definition in the Building Code, however, that fits the proposed use. In that code, definition reads, Congregate Living Facilities: A building or part thereof that contains sleeping units where residents share bath and/or kitchen facilities. The City may soon have its own definition, which is currently under consideration by the City s Great Housing Strategies task force. A draft description of a housing cooperative presented by the Grand Rapids planning staff for the group reads: Cooperative Housing is an ownership structure that can apply to many different types of housing. Simply put, the building/complex is owned by a corporation, which in turn is owned and run by members. All residents of a cooperative are members of the corporation, and typically have some shared common areas, as well as shared cooking, dining, and maintenance duties. This description is intended to distinguish member-owned cooperatives from other types of superficially similar housing such as fraternities and sororities. User-control, on the basis of one member, one vote is a defining characteristic of all cooperatives, whether for housing, food, agriculture, credit or other purposes. Description of use We wish to establish a cooperative with 34 bedrooms and a number of common areas, including a large kitchen, dining room, and living room on the west side, and second living room and a smaller snack kitchen on the east side. With this number of rooms, we will be able to offer affordable rates, which in the first year will range from $319 to $592 per month, with an average at roughly $373 (see section on rental rates below). The large lot has 1,278 square feet of per member. Currently, much of the land is paved over, with roughly 48 spaces including the garage. Because we need far fewer spaces, we hope to remove a significant amount of paving over time to make space for a community garden, screening and other green space. However we don t know for sure how many spaces we will need, and we plan to wait and learn that number from experience. In the meantime, we will convert an unnecessary drive on the east side of the lot to additional green space Lake Drive will be master leased from the owners by the Grand Rapids Alliance of Cooperative Communities. Incorporated as a nonprofit consumer cooperative under Michigan law, GRACC has leased 535 E. Fulton on this basis for the last three years, and they will be purchasing that property early in The intent is for the cooperative to purchase this property as well, probably in five years. In a sense, this is a lease-to-own concept, with an option to purchase at a fixed price in the master lease. The Grand Rapids Alliance of Cooperative Communities is also leasing 300 Madison SE for family housing. With the addition of 1225, the co-op would have roughly 68 members, including six children. This will eventually give them a strong financial base for further expansion. Our cooperative model is unique in the sense that it provides a growth model for affordable housing that does not rely on grants or subsidies from other sources, in many ways acting more like a land trust controlled by its residents. As an organized group, GRACC is governed by a board of directors elected by the membership, and each of the houses meet regularly. Circles (committees) have been formed to discuss and work on operational issues ranging from membership and recruitment to maintenance, grounds and food service. All members contribute labor toward food preparation and cleaning, maintenance, etc. This selfmanagement and self-reliance for housekeeping activities help to keep the costs at a minimum, as does group food purchasing in bulk. Page 2 of 10

3 Transportation and shopping Public transportation for this location is ideal. Buses on Route 6 stop frequently outside the front door. These buses travel to the downtown area (west 1.5 miles), East Grand Rapids/Reeds Lake area (east 2 miles) and to the major malls (about 5 miles). This access to public transportation is particularly important to the Millennials, which many of whom opt out of car ownership when possible. Nearby neighborhood shopping areas (Eastown, Wealthy, etc.) are also a strong draw. Property conditions The property has been kept in excellent condition over the years. Even though there will need to be significant changes inside, little will be needed on the exterior or with the electrical system. It should be noted, however, that the heating systems on both sides are very old and inefficient. Proposed dining room, with a view of the west stairs to the second floor. View of the back entryway. Page 3 of 10

4 First year rental rates 2016 Rent by unit/room Floor Room Rent/mo. 1 West A 391 B D East Page 4 of 10 Market conditions and affordable rates Grand Rapids currently has the lowest rental vacancy rate in the nation at 1.7%. Hundreds of new apartments are being constructed, most offered for very high rents. Nonprofits are also constructing many new units for people with very low incomes. The net result is rapidly increasing market rates for older apartments, with a large need emerging for those with moderate income. In February of 2014, Jim Harger of Mlive.com reported, Grand Rapids is the best market in the U.S. for investing in rental property, according to a survey by All Property Management, a Seattle firm that advises property managers and investors. While property values and rental rates are still fairly moderate by comparison with the coasts, the median sales price increased by 4.6% compared with the previous year. Moreover, the unemployment rate in the Grand Rapids metro area has dropped to 3.9%, down from 6% a year earlier. Writing for fortunebuilders.com, Than Merrill commented on April 3, 2015 that: The state of Michigan has demonstrated an increased propensity towards an expansive economy. In fact, the economy of Michigan has outpaced the rest of the nation and improved modestly in a short period of time. One city, in particular, helped Michigan get to where it is today: Grand Rapids. Outside of the most popular metropolitan areas on either coast, Grand Rapids has proven to be one of the hottest real estate markets in the country. He continued, With a median home price of $136,000; Grand Rapids real estate is considerably under the national average ($208,067). However, with C 371 strong fundamentals in place, Grand Rapids real estate has appreciated at a rate of 8.5 percent over the course of a year. That is nearly 3 percent higher than the national average over the same period. It isn t until you go back approximately three years that the true value of Grand Rapids real estate is revealed. Over the past three years, Total per month 12,695 homes in the Grand Rapids region appreciated at a rate of 34.6 percent, whereas the national (Food and electricity are not included in these average was just over 28 percent. figures. These are billed separately in midmonth.)

5 Density and organization There are 34 bedrooms proposed for this property. Kristin Turkelson, Assistant Planning Director for Grand Rapids, has estimated that the maximum number of residents on the property if apartments were built would be about the same. The smaller side of the house, to the east, will have 10 bedrooms, and the larger side will have 24. GRACC intends to reserve the east side for those who prefer a more quiet environment. While both sides will have kitchens, meals for all will be served out of the commercial kitchen to be constructed on the west side. Target population The group most interested in cooperative group housing is not students, but rather post-college young adults ranging in age from their mid-20s to mid-30s. While the James Russell House has a few students, it also has members in their 40s and even older (one member is 75). At the Madison house, there are also children, ranging in age from one to seven years old. However, the great majority of those living in the current houses are non-student Millennials. The Millennial generation is roughly defined as the group coming of age beginning with the turn of the century. The White House Council of Economic Advisors states in its report titled 15 Economic Facts about Millennials: Millennials, the cohort of Americans born between 1980 and the mid-2000s, are the largest generation in the U.S., representing one-third of the total U.S. population in With the first cohort of Millennials only in their early thirties, most members of this generation are at the beginning of their careers and so will be an important engine of the economy in the decades to come. This group is different from previous generations in many ways. Renting has become the norm for Millennials after graduation, while staying single longer, moving frequently, preferring to live in the central city, and searching for value in work have become hallmarks of the culture of this generation in their late 20s and early 30s. They enjoy living in neighborhoods where they can bike, walk or use mass transit rather than relying on an automobile. While they use social media to communicate, they often feel isolated when living in apartments. While the Millennials are a different from Richard Florida s creative class, there is an important overlap. Florida and many other people believe that the communities able to attract and retain this young creative group will have the best chance to prosper. With the large number of educational institutions in and around Grand Rapids, the biggest challenge is to attract those with valuable creative skills to stay in the area. We believe that our approach to housing is a strong tool for retention. In a Forbes article titled The Millennial Marketing Mix: Community, Innovation And Values, Alyse Lorber writes: there is the feeling of community, which is inherent in a generation raised on social media. Millennials want to feel like a vital part of a lively, desirable group. A recent straw poll of residents at the James Russell cooperative house in Grand Rapids indicates that there are roughly similar numbers of members who joined because of cost, community and convenience. While social media and other tech-centered advances have increased one form of communication, a cooperative living environment can bring a strong sense of community. And cost, of course, is also an important concern for this group. According to the White House Council of Economic Advisors, total student debt surpassed $1 trillion dollars for the first time in 2014, and over 50% of college students now borrow money through student loans, up from 30% in the mid-90s. Our group housing speaks to both of these concerns. About the Grand Rapids Alliance of Cooperative Communities Page 5 of 10

6 The Grand Rapids Alliance of Cooperative Communities (GRACC) is incorporated under the consumer cooperative statute in the state of Michigan. The group signed it s first master lease, on 535 East Fulton, now known as the James Russell House, on January 1, There are 24 bedrooms in the eight apartments at this location, with the residents eating dinner together on the first floor. GRACC signed a second master lease on a four unit building located at 300 Madison S.E. in early There are four families at this location. The cooperative is governed by a Board of Directors, and it is responsible for managing the properties that it leases. The board meets bi-weekly, with committee (called circles ) and membership meetings in the alternate weeks. GRACC has an contract to buy the property at 535 E. Fulton, and a closing is planned for early January. There will also be an option to buy in the master lease for 1225 Lake Drive; our projections suggest that the group will be able to purchase this property in A master lease on 1225 Lake Drive will result in a combined membership of approximately 71 adults (not including five children at 300 Madison). This will allow the group to hire a part-time manager, who will be based at 1225 Lake Drive. The group hopes to hire a full time manager and eventually other staff as they lease and purchase additional properties. This model of cooperatives is nearly unique among affordable housing providers in that it uses no grants or public funding for property purchases. In this sense, it is different from other Grand Rapids cooperatives such as Stratford Townhouse Cooperative and Northlake Village Housing Cooperative, which were developed through subsidized HUD programs. Typically, HUD co-ops and similar groups, are apartments, townhouses or a group of detached homes, where each member has an equity share in the cooperative. GRACC and similar cooperatives have evolved from different roots and use a model more like a food cooperative or credit union, where the equity is held in common by the whole group. The group equity difference The group equity model is different in several ways: An emphasis on involvement and community. Because of the transient nature of Millennials, a strong sense of community is essential for creating a sense of stewardship for the property. While many members join these cooperatives to save money, others join because of the strong communities that are formed. This sense of community grows out of personal involvement with both decision making and labor, which together may take up to four to seven hours per week, depending on the cooperative. Labor is generally required, and at the James Russell house, participation in committees (called circles) is also required. This contribution of time is understood to be integral to the success of the cooperative, both as a business and as a social entity. An emphasis on self-management and member labor. Organizing member labor to do as much of the work as possible, whether administrative work or household tasks, is a hallmark of these cooperatives. Cleaning, cooking and maintenance tasks are all done by members to whatever degree is possible, in addition to planning, accounting and other work. Substituting member labor for hired labor saves money, but it is also seen as a value in itself. A zero-equity model. While debates rage in the broader cooperative movement over limited vs. market equity models, this has never been a concern of students and other young, transient groups. Young people generally stay in cooperatives for only a few years, and the concept of housing as an investment means little. Membership fees or shares are generally small. The equity is held by the cooperative. Expansion to serve an increasing number of members. While some group equity housing cooperatives begin with a single building and continue that way forever, many others embody an ethic Page 6 of 10

7 that values expansion even above low cost. This has lead to the large, scattered site systems found in many locations around the U.S. and Canada, including the Inter-Cooperative Council at the University of Michigan, with roots dating to 1932, housing 550 members in 18 locations; and the MSU Student Housing Cooperative, with its first group founded in 1937, and now housing over 200 members in 15 locations. The newer non-student groups are following this same expansion model. Inter-dependence and support. For decades, the larger group housing cooperatives around the United States and Canada have worked together to support and assist the growth of cooperatives. Large, established groups have also made loans at low interest rates to help establish new cooperatives. Affiliations The Grand Rapids Alliance of Cooperative Communities is a member of NASCO, the North American Students of Cooperation. NASCO is a bi-national association (United States and Canada) based in Chicago. Through an affiliate called NASCO Properties, they own property leased to local housing cooperatives in California, Illinois, Ohio, Texas, New York, Kansas and Michigan. Another affiliate, NASCO Development Services, assists groups with property development and refinancing. NASCO staff visits cooperatives in Michigan at least once a year for training and education, and they have a conference in Ann Arbor drawing over four hundred participants every fall. Historic roots Cooperative housing using a group model is by no means a new idea. The first known example of this kind of housing is found in Chicago in 1892, called the Jane Club after Jane Addams, who assisted with starting the cooperative as one of her first projects after opening Hull House. An article in The Examiner in August, 1897 told the story of its beginnings: The Jane Club, a co-operative boarding club at 241 Ewing street, Chicago, furnishes an example of unique and successful co-operative effort among working girls. The club takes its name from Miss Jane Addams of Hull House, who had much to do with its formation, and who has been continually interested in its progress and success since its establishment, five years ago. At the beginning the club contained but five girls and occupied but a single flat. It now uses five flats and has a membership of somewhat more than thirty. At times there have been as many as fifty young women in the club. A membership of from twenty-five to thirty is considered the most desirable. The original building, shown at left, was a typical Chicago 3-flat building. It was converted to group use by turning the common rooms on the second and third floors into bedrooms, and using the kitchen, living and dining areas on the first floor for the whole group. This is essentially the model that s still used across the United States and Canada today. While the Jane Club was for young working women, the model was adapted for use by university students, particularly during the Great Depression. At both Michigan State and the University of Michigan, groups of students incorporated as cooperatives, first renting rooming houses in the campus area, and then purchasing property, often through land contracts with the owners. There are now around 10,000 students living in cooperative housing around North America, including 550 in Ann Arbor and about 275 in East Lansing. While there were non-student group housing co-ops (such as the Jane Club, but often less formal) in the early 1900s, they began to fade away by World War II. But beginning in the 1990s, many groups of non- Page 7 of 10

8 students again began to use the model to serve a new set of needs. Searching for a way to find community and reduce the cost of living, the Millennial generation discovered this model and made it their own. There are now young people in housing cooperatives using this group equity model from California, Oregon and Washington State to Boston, New York, Philadelphia and Washington, D.C. Chicago, Minneapolis, Madison, Cleveland, Buffalo and other Midwestern towns are particularly hotbeds of cooperative development. Other similar cooperatives. Although there are numerous housing cooperatives for students in the United States, including large organizations in both Ann Arbor and East Lansing, the model has been particularly interesting to post graduates over the last twenty-five years. Below are examples of non-student community co-ops similar to those of the Grand Rapids Alliance of Cooperative Communities. 1. Kalamazoo Collective Housing ( Two small group housing cooperatives (five members and ten members) and six private apartments in three houses with a shared garden. Left: Fletcher Collective; right: Maristem. Vision of Kalamazoo Collective Housing: We envision a strong and diverse network of cooperative housing throughout Kalamazoo that addresses the needs of low- income residents, supports the local community, and exemplifies sustainable living. Kalamazoo Collective Housing will take an active role in continually expanding c ooperative housing opportunities in the city. from the K CH website 2. Cooperative Housing Expansion of Austin ( Comprised of Sasona, a sixteenbedroom group housing co-op in a former home for run-aways, and La Reunion, an apartment building with twenty-two two-bedroom apartments. Sasona founded 1988, La Reunion in Left: Sasona. Above: La Reunion. Although La Reunion is physically 22 apartments around a courtyard, all members are expected to perform several hours a week of work and take part in a meal program. From the Sasona website: We strive to create an open and diverse community in which all people and lifestyles are accepted and valued. Our Open Membership policy ensures that anyone interested in the benefits of cooperative living has the opportunity to live at Sasona. Prospective members must attend two house meetings before being accepted. This allows people to see the house and learn about how the system works before deciding if Sasona is right for them. Page 8 of 10

9 3. Cooperative Roots ( Two houses next to each other in Berkeley, California. The two groups, Fort Awesome and Fort Radical have a combined membership of thirty-three. The group was founded and purchased their first house in 2003 with the help of a land trust. Left: Fort Awesome. The original two story house was lifted and a lower level constructed. The house next door was purchased later. Mission statement: Cooperative Roots builds sustainable, affordable housing, empowers people to create democratic cooperatives, and strengthens local communities through shared resources and education. - - from the website 4. Nickel City Housing Cooperative ( Two houses in Buffalo, New York, purchased in 2002 and Ol Wondermoth (left below), was the first purchased and largest with 14 bedrooms. Plankton is smaller and older, with 10 bedrooms. For the last decade, Nickel City Housing Cooperative (Nickel City Co- op) has been building on its mission to create a sustainable m odel of affordable and community- oriented housing in Buffalo. Founded by University of Buffalo graduates as a way to retain creative, community oriented young people, the project began with the purchase and renovation of the Granger Mansion on North Street. Since then Nickel City Co- op has grown and now operates two resident- owned and managed houses that have attracted hundreds of creative and innovative individuals. These residents have left their mark on a project that continues to grow and provide unique opportunities for its residents and Buffalo. - - Excerpt from Nickel City Housing Cooperative 10 Year Anniversary, Artvoice Blog by jill, posted June 9, Page 9 of 10

10 Information on the purchasers Jim and Linda Jones will be purchasing the property, with the intent of leasing to the cooperative, which will have an option to buy. Current projections are for a purchase in roughly seven years, assuming a 3% increase per year in rents. Jim Jones grew up in Grand Rapids, leaving for work in He has worked professionally with cooperatives since that time. His specialty areas are housing cooperative development and management, accounting and cooperative education. He is in the national Cooperative Hall of Fame for his lifetime of work with cooperatives and educational programs, including the Emerging Co-op Leaders Program, held in Washington from 2007 to He is in the Hall of Fame of the North American Students of Cooperation (NASCO) as a Founder. Jim Jones first moved into Michigan Cooperative House as a sophomore at the University of Michigan in He founded the MSU Student Housing Cooperative in 1971 and served as its first manager ( ). He then managed the College Houses Cooperatives in Austin ( ), the University of Texas Inter-Cooperative Council (1971 and ), and the Inter-Cooperative Council at the University of Michigan ( ). Nationally, Jim was NASCO Executive Director twice ( and ), General Manager of NASCO Properties, a national title holding company for cooperatives ( ), and Executive Director for NASCO Development Services ( ). He participated in the founding of all three organizations and served on their boards before his work as staff. He has also served on the boards of the National Cooperative Business Association, the University of Michigan Credit Union, Wheatsville Food Co-op, the Michigan Farmers Union Foundation, and the High Five Brewing Cooperative. Since 2010, Jim has produced a documentary film and written a book on the cooperative community in Austin; and helped start the first housing co-op in Grand Rapids. Linda Jones is a retired music teacher, who also has experience with cooperatives dating back to 1977, and with housing co-ops and management. She is also a founder of the Grand Rapids Food Cooperative Initiative and has served on the board of directors of a credit union in Austin. Page 10 of 10