As Grand Rapids faces hefty rent increases, the lowest rental vacancy rate in the nation and the displacement of residents, what role can housing co-ops play in the search for affordable housing?
As snow fell lightly outside the James Russell House
— a housing cooperative in a historic mansion that sits atop Fulton Street in Heritage Hill — on a recent Monday evening, people began to enter the high-ceilinged dining room, passing through a living room brimming with books and board games, some shaking ice from mittens, others shedding bags after returning from grad school courses and jobs at the library and nonprofits. They greet one another with hugs, and, as they scoop homemade beans, guacamole and more onto tortillas, they speak of the day that is nearing its end, about all those big and small things that make up life: grad school papers and new favorite books and snowy terrain and stories of family and philosophy.
It’s a scene that plays out similarly four nights a week, Monday through Thursday, all year round in a home that has evolved from a gigantic, one-family house owned by a wealthy banker to separate apartments and, now, a co-op that offers 24 bedrooms and communal living space, including kitchens and bathrooms, all of which are situated in the historic three-story abode that encompasses more than 10,000 square feet.
And, as a house that will soon be entirely owned by tenants who range in age from their 20s to 70s, it is a site that could be emblematic of the future of affordable housing in a city where rents are rising — dramatically in some neighborhoods — and housing vacancy rates are plummeting. Grand Rapids has the lowest rental vacancy rate in the country, according to a 2015 study by Zillow
, which, among other factors, causes rents to increase and residents, many of whom have lived in their homes for decades — and who have built up their communities — to be displaced because they can no longer afford to reside there.
“I started volunteering here before I moved in, and I saw it’s something incredible,” Derek Copp, a 27-year-old caterer and musician who lives in the James Russell House, says of the co-op. “You look at all these houses, and each house has their own cars, their own bills. Here, it’s one house where we each pay $35 a month for utilities.”
In addition to that $35, house members are each paying $90 per month for food, with many of them saying they don’t have to purchase any extra groceries.
“We eat really well,” says Kasey Gitzen, who is in charge of ordering the food for the James Russell House and moved into the co-op after her previous Grand Rapids apartment lease jumped in price. “Before this, I was stuck with the college diet of Ramen. Plus, in that $90 that we pay for food, that also pays for toilet paper, dish soap, sponges, a lot of stuff for the kitchen.”
Rent at the James Russell House is approximately $400, which is below market rate. For example, a quick search on Craigslist shows a nearby one-bedroom apartment at 325 E. Fulton going for $750 a month. Other one-bedroom Heritage Hill properties listed ranged in price from about $550 to $1,250.
Of course, the money isn’t the only reason members choose to live in the house — a big factor is the sense of community that comes with being a member there.
“People want to be here because they want to be a part of something,” says Mark Haines, who is the president of the Grand Rapids Alliance of Community Cooperatives, an incorporated nonprofit that is owned by the co-op’s residents and is currently leasing to own the James Russell House.
“I can get a 2,500 square foot house with 1.8 children and a dog, but that doesn’t do anything for me,” continues Haines, who grew up in Grand Rapids and now works at the Red Project
, a nonprofit that works on a variety of health matters, including preventing HIV. “It doesn’t address the ills of our society.”
Tim West, a 54-year-old “who’s going on 34” and works at a nearby library, says coming home to people makes a huge psychological difference in members’ lives.
“I’ve dreamed of living in a place like this for years,” says West, who grew up in Holland but has long called Grand Rapids home.
“Here, you can still live and have fun,” West says. “Just because it’s unconventional doesn’t mean you can’t be young for the rest of your life.”
The people who live at James Russell are there for a variety of reasons and hail from very different points in their lives, but, together, they represent a housing option that members said they hope will become more prevalent in a city that has emphasized wanting to retain a diverse population, including people who are minorities, seniors, artists, and recent graduates — individuals who can be hit hard by skyrocketing rent costs.
“I grew up in Grand Rapids, and I’ve watched a great number of my peers leave the city for Portland, for Austin,” Haines said at a Jan. 14 Planning Commission public hearing on a proposal to create a housing co-op at 1225 and 1237 Lake Dr. SE (the two addresses are currently connected). “They wanted a local agricultural scene, a local music scene; they wanted a city with a greater sense of racial inclusion; they wanted to live in a community and wanted affordable, sustainable housing. That’s what we’re doing [with co-ops in Grand Rapids]. The people who want to live in [the Lake Drive co-op], we want to pool our resources and achieve more together. I would ask that you allow us to do that.”
This idea, that housing co-ops can provide housing relief in neighborhoods where residents are sinking under the weight of hefty rent increases, is one that is being widely discussed in the city, playing out everywhere from the political sphere and city planning meetings to neighborhood homes and community associations.
So, what are housing co-ops?
Housing cooperatives are usually owned by a corporation, which in turn is owned and operated by all members of the co-op. A housing co-op typically incorporates shared common areas, such as living spaces and kitchens, as well as cooking, dining and maintenance duties doled out among members. Because all members are part of the corporation that owns the home, they usually run their household as a democracy: members vote on various household decisions and hold positions on committees that govern day-to-day matters. For example, members of the James Russell House hold numerous meetings each month to make decisions regarding everything from purchasing a new stove to holding holiday get-togethers.
The history of housing co-ops, in some form, dates back to as early as ancient Rome, with scholars noting that the Digest of Justinian — a compendium of Roman law — makes reference to separate living quarters, but common ownership of, a house. In the United States, there's some disagreement over where and when the first housing co-op first came to be (some say Philadelphia in the 1700s; others mention Chicago in the 1800s), though the majority of co-op organizations seem to agree housing co-ops did not make an appearance until the 1800s in New York City. (Harper’s Magazine makes note
of plans for housing co-ops in an 1882 article dedicated to the travails of finding affordable housing in the city.) Now, hundreds of thousands of housing co-op units exist throughout the United States, including about 425,000 limited equity housing co-op units and approximately 775,000 market rate co-op units, according to the Co-operative Housing International
Limited equity housing co-ops, which restrict the proceeds members can get from selling their shares of the corporation, as well as zero equity co-ops, in which the cooperative holds the equity to allow for membership fees or shares to be small, are able to offer below-market rents because members can pool their resources to leverage buying power (as seen with the $90 a month that James Russell members spend on groceries). The James Russell House is an example of a zero equity co-op — which is different than, for example, other co-ops in Grand Rapids, like the Stratford Townhouse Cooperative and Northlake Village Housing Cooperative, low equity models which were developed in the 1960s and 70s through HUD programs.
Typically, HUD co-ops offer individual members to have an equity share in the cooperative, whereas the Grand Rapids Alliance of Community Cooperatives, which owns the James Russell House, operates more like a food co-op, in which equity is held by the whole group.
Shared dinners are a feature at many co-ops.
What kind of need is there for affordable housing in Grand Rapids?
It’s no secret that Grand Rapidians are struggling to afford housing, and this is particularly evident in neighborhoods facing gentrification, such as the West Side, Heartside, Eastown, and others. Since 2000, rents in Grand Rapids have increased by about 35 percent, according to statistics from the U.S. Census Bureau. So, while the local economy is growing and some are able to afford $2,000 downtown apartments, that certainly is not the case for everyone. According to the National Low Income Housing Coalition’s 2014 Out of Reach report
, Kent County renters must, on average, earn $14.23 an hour to afford a two-bedroom unit at fair market rate — about $6 more than Michigan’s minimum wage of $8.15 in 2014 (it has now grown to $8.50), and $2.53 more than the average wage earned by Kent County renters —$11.28. Therefore, to afford a two bedroom unit, a renter making minimum wage would have to work about 71 hours each week.
Then there’s the complex question of how this affordable housing crisis came to be.
This, in part, can be traced to the city’s vacancy rate, which, as of March 2015, hovered around 1.6 percent — the lowest in the nation, according to the same Zillow study. The low vacancy rate translates to a small supply of rental units, which drives up the price of the available houses and apartments. According to Grand Rapids’ “Great Housing Strategies,”
a multi-tiered plan to address affordable housing needs in the city, this low rental vacancy rate is due to: an inability to purchase homes because of damaged credit following the foreclosure crisis, a high level of student and other debt limiting individual’s ability to buy a home, a slow economy and stagnant wages, an increased number of college students and limited campus housing, and a general growing interest to leave the suburbs and return to urban areas.
Grand Rapidians can expect to see more housing built in coming years, though the majority of that is market rate. According to a 2015 study by Zimmerman/Volk Associates
, the neighborhoods of Belknap, Creston, Heritage Hill, Eastown, Southtown, the West Side, Stocking, Grandville, Garfield Park, Midtown and East Hills are slated to absorb between 5,705 and 7,615 new housing units — about 72 percent of which will be market rate and 28 percent of which will be designated as affordable. This ratio of market rate to affordable housing was addressed by Grand Rapids’ previous mayor, George Heartwell.
“Downtown right now, downtown development is pretty evenly balanced between market rate and affordable housing that is some kind of tax credits or subsidies to reduce the rate, but all the new housing that’s coming on is market rate, so we’re going to have to find a way to keep those in balance and that’s not easy to do,” Heartwell said
just prior to leaving office in December.
To address the lack of access to affordable housing, the “Great Housing Strategies” report calls for residents to “have access to a variety of types of housing and housing ownership models that support vibrant and diverse communities,” including, the report notes, housing cooperatives.
“Housing cooperatives for seniors are increasing in popularity,” the report says. “In these cooperatives, seniors are able to maintain financial benefits of homeownership while reaping the benefits of community living. Cooperatives may become a compelling option for seniors as they become a demographically larger population. Cooperatives are also garnering attention for their cost-sharing capacity and focus on sustainability.”
To promote co-ops, the report encourages the city to define cooperative and co-housing models in its Zoning Ordinance, as well as incorporate them into existing policies and standards.
Jim Jones, a longtime co-op advocate whose family has lived in Grand Rapids since the 1880s and who originally purchased the James Russell House, which began accepting members in 2013, and owns another Grand Rapids co-op, the Madison Family Cooperative House at 300 Madison SE, notes that affordable housing must be approached differently than in the past, in part because residents are seeking different living situations than they were in previous years.
“People used to graduate, move to the suburbs, have kids, a garage — that doesn’t happen anymore,” Jones says. “People coming out of college have all this debt, and they don’t want to live in the suburbs.”
“People are a lot more concerned with how they spend money, and, a second thing, people are pretty mobile now, so how do you meet people?” Jones continues. “How do you get a sense of community? Housing co-ops are a way to ground yourself in community.”
Controversy over a housing co-op proposed for Lake Drive
In recent days, you may have heard of housing co-ops in Grand Rapids because of Jim Jones’ proposal for a co-op at 1225 and 1237 Lake Drive SE in Eastown, close to East Hills. The application to have 31 bedrooms, for which rent would be, on average, a little less than $400, and common areas for up to 37 tenants in the space that has held 45 offices has drawn both support and anger. Hundreds of letters have been written to city and neighborhood officials citing both approval and condemnation of the co-op.
The majority of speakers at a Jan. 14 Planning Commission public hearing voiced their support for the project.
1225 Lake Drive SEJoy Pryor, an East Hills resident and co-op advocate, notes that co-ops can be an integral part of the community.
“Co-ops, for me, value-wise, are like churches to other people,” Pryor says just before the public hearing, noting co-ops’ emphasis on community.
She went on to say that the Lake Drive co-op has garnered interest among a wide variety of individuals, from younger people to retirees.
“Co-op housing is one of the strongest ways to increase affordable housing,” Pryor says.
Janet Shelby, a senior citizen and homeowner in Eastown for 30 years, too is a staunch supporter and dismissed opponents’ concerns that the co-op would cause property values to drop.
“I own a house within 300 feet of the property and another rental about a block away,” she says at the hearing. “If I thought this project would bring my home values down, I would not be a supporter. I’m a very strong supporter.”
Shelby says that she would be interested in living , or being a non-tenant member, at the Lake Drive facility.
“As a senior citizen, I don’t like living alone, eating alone,” she says. “I’m one of those people that this would benefit me.”
Others, however, are not backing the project, including the Eastown Community Association Board of Directors.
The co-op “is not appropriate” and is not “harmonious” or “compatible” with surrounding properties, the board wrote in a December letter to the city Planning Commission (the entirety of which you can see here
Despite not backing Jones’ proposal, the ECA stressed in the letter that it is “not opposed to affordable housing or even cooperatives.”
“It is our belief that creative housing opportunities make for vibrant and diverse communities,” the ECA wrote.
Marisa Sandahl, the executive director of the ECA, notes this week that should the co-op be approved, the association will work closely with residents and the developer to ensure community concerns are addressed.
Others said they were concerned that, should the co-op “fail” and be sold to another entity, it could become something that would not fit in with the neighborhood.
“The only person who’s going to buy a 31 bedroom building is going to be one of those more dangerous investor-owned co-ops — fraternities, sororities,” Mark Johnson, who owns a home on Auburn, says at the hearing. “ … I am opposed to this development… When you suddenly double the amount of people that live in a neighborhood, that is naturally going to have a destabilizing effect.
“I chose to live in that neighborhood because it’s low density residential, “ Johnson continues.
In response to some residents saying they worry the site will be a loud “party house,” George Bartnick, who was born and raised in Eastown, testifies at the public hearing that he called the Grand Rapids Police Department and asked them how often they’ve been called to the James Russell House.
“Since their inception, a bike was stolen in 2014 and in May 2013 there was one single noise complaint,” Bartnick says.
Following the public hearing, planning commissioners decide to table their vote on the proposal and instead send it back to the Board of Zoning Appeals in order for them to rule on whether or not 31 bedrooms is the best option for the neighborhood.
While they tabled the matter, six of the seven commissioners agree the Lake Drive location could support a site with 31 bedrooms and 37 residents. Another commissioner, Reginald Smith, says he would back something along the lines of 15 to 20 residents.
The BZA will take up the matter at its meeting on March 17, after which it is slated to go back to the Planning Commission.
What role do co-ops play in other cities?
Morgan Crawford, the director of education at the North American Students of Cooperation, which works with up to 60 different co-ops across the country, including both student and non-student groups, says there is increased attention being paid to co-ops throughout the U.S., in part because of the need for affordable housing in cities nationwide, as well as the change in people’s living patterns (i.e. college graduates looking to live with roommates in cities) and a desire for community.
“There’s more interest than we can keep up with,” when it comes to groups interested in new co-ops,” Crawford says. “There’s a lot of interest. I think that this is in part due to the affordable nature of living in a community with other people, due to our current economic situation, but I also think that people see the value in living with, and working with, other people and people having control over their housing.”
In response to some residents’ concerns about property values decreasing in Grand Rapids, Crawford says he’s “not aware of co-ops lowering property values.”
“The co-ops we work with are very good neighbors,” he says. “Even with student-only co-ops, I’ve found that long-term neighbors of those student co-ops generally have positive opinions of them.The co-ops are a stable member of the neighborhoods. They’re engaged members of that neighborhood.”
As far as Jones’ Lake Drive proposal, Crawford says, “you’re looking at seniors, you’re looking at people potentially living with kids, people with spouses — this isn’t a group of people who are going to be having raging parties… it’s a great thing and should bring stability to the neighborhood.”
In addition to providing affordable housing, co-ops can have other positive impacts on a city, Crawford says.
“They provide an affordable space for people to live so they can experiment with other projects,” he says. “There are some co-ops that are so affordable that members can work in part-time jobs and the rest of the time be doing art, grassroots organizing to benefit their community, working with their neighbors, or raising healthy families. Across the board, co-ops create a space for people to be more financially secure as individuals and more engaged in their communities.”
Crawford notes that co-ops have thrived in areas across the U.S., including in places like Madison and Kalamazoo.
Mark Norton, a co-coordinating officer at the Madison Community Cooperative, which oversees 11 sites housing about 185 people throughout the Wisconsin city, says the co-op has played a significant role in ensuring low-income residents can remain in the area.
“They’re empowering,” Norton says. “If you’re in a low-income situation, a lot of your work can be not very empowering. In a co-op, you can have a lot of opportunity to train yourself and have opportunities to do types of work you might not be able to do otherwise, like finances and accounting for a house, or coordinate maintenance projects.”
The non-student co-op closest to Grand Rapids (that is not in the city itself) is the Kalamazoo Collective Housing, launched in 2006 with community support. The housing group has 26 members living at five properties, four of which were purchased through grant writing. Matt Lechel, the director of the housing group, notes that, in addition to providing affordable housing, the group has also invested significant funding into the community, transforming depressed properties into homes of which the neighborhood can be proud.
“As communities are looking to make economic development investments that they can personally reap the benefits from, cooperatives should be explored,” says Lechel.
Anna Gustafson is the managing editor at Rapid Growth. Connect with her via email ([email protected]) and on Facebook, Twitter and Instagram.