Editor's Note: This article was produced by the Institute for Local Self-Reliance, as part of its Community-Scaled Economy Initiative, which produces research and partners with a range of allies to implement public policies that curb economic consolidation and strengthen locally owned enterprise.
The intersection of Central and Lowry Avenues in northeast Minneapolis is bustling. On the northwest corner is a trifecta of local businesses: A bike shop, a cooperative brewery and a bakery, in buildings with eye-catching exteriors of rough-hewn wood and silvery porcelain bricks. The neighborhood grocery co-op is one block up the street.
This commercial stretch didn’t always look like this. In 2011, where these three businesses sit, there were two vacant buildings. The empty space was not uncommon along Central Avenue, a long corridor that was created to be the Main Street of the neighborhood, but that had suffered from decades of disinvestment. While a few businesses dotted the avenue, many other storefronts were neglected.
“A lot of people looked at it as too big to tackle,” explains Leslie Watson, who lives nearby.
In 2011, a group of dedicated neighbors came together to change that. In November of that year, five of them, including Watson, became the founding board of the Northeast Investment Cooperative, a first-of-its-kind in the U.S. cooperative engaged in buying and developing real estate. NEIC created a structure where any Minnesota resident could join the co-op for $1,000, and invest more through the purchase of different classes of nonvoting stock. The group began spreading the word to prospective members, and started looking for a building to buy.
One year later, NEIC had enough members to buy the two buildings on Central Avenue for cash. The co-op quickly sold one of the buildings to project partner Recovery Bike Shop, and after a gut renovation, which it funded with a 2 percent loan from the city and a loan from local Northeast Bank, it leased the other building to two young businesses that had struggled to find workable space elsewhere, Fair State Brewing Cooperative and Aki’s BreadHaus.
Today, NEIC’s impact spreads beyond the intersection of Central and Lowry. It’s catalyzed the creation of new jobs, engaged its more than 200 members in reimagining their neighborhood, and given residents a way to put their capital to work in their local economy.
“Collectively, that wealth will stay in our community,” says Watson. “If you want to take the long view, that’s the goal.”
While NEIC is unique in the U.S., similar investment cooperatives are sprouting up in Canada, where they’re aided by programs designed to help them grow, as well as favorable policies. Though the model is new, and small, it holds outsize potential for the many communities struggling with northeast Minneapolis’s familiar set of problems, from business districts languishing half-vacant, to essential commercial spaces being controlled by faraway landlords or big retail chains with no regard for neighborhood needs.
In the vacuum left by both traditional economic development and Wall Street’s approach to finance, community real estate investment cooperatives offer a glimpse of a better way to channel capital, with benefits that include new jobs in the neighborhood, strong incentives for people to shop locally, local sources for key goods, closer ties with neighbors, and a return on investment.
And it represents a way for these communities to do it themselves.