New investment pool aims to jump-start retail development and revive Central Avenue.
The intersection of Central and Lowry in northeast Minneapolis also marks a crossroads of past and present.
There's the bowling supply store in the front of the three-story aluminum-clad Masonic hall, trophies shining in the window. Next door at Two Amigos Bazar, you can dispatch money to Latin America or buy Latino tunes. One storefront down, there's Sen Yai Sen Lek, a family-owned place where you can sit down or take out a bowl of spicy Thai noodles.
Up and down Central, Northeast's commercial artery has remained an immigrant-dominated marketplace, even as ethnicities change and the taste for kielbasa gives way to the smell of fresh pita or halal meats. Yet as a number of storefronts have gone vacant, neighbors are banding together in a unique effort to keep the avenue vibrant.
The leaders of the fledgling Northeast Investment Cooperative plan to pool the capital of Northeasters, leverage it with bank or other co-op financing, buy and rehab some of the avenue's most shopworn storefronts and populate them with promising entrepreneurs as tenants and potential future owners.
This pooling of capital through a co-op toward community development is an idea pioneered on the plains of Alberta to reinvigorate the business community of a flagging hamlet and tried only once elsewhere in the United States, for recycling battered housing in Milwaukee.
The Northeasters' sales pitch so far has attracted 52 people who have committed $1,000 each for a share of the co-op, but it's also unfamiliar enough that lenders are likely to be cautious in supplementing that with loans.
"There's no track record for this model," said Kevin Edberg, executive director of the nonprofit Cooperative Development Services, which is assisting the co-op with business planning.
The avenue saw its heyday in the first half of the 20th century, when grocery stores, clothing stores, cafes and other businesses thrived along major streetcar lines. But suburban growth after World War II took its toll.
"As retailing has become more consolidated in the big- box areas, the smaller storefront businesses have a harder time drawing in the retail customer," said Kerry Ashmore, editor-publisher of the Northeaster newspaper. Where there once was retailer after retailer, he said, service businesses and offices took root. Worries over vacancies date back to at least the early 1980s.
In recent years, other parts of Northeast have gotten hip. Arts organizations and the renewal of the Grain Belt brewery complex revitalized 13th Avenue NE.; riverfront reclamation and resulting high-density housing generated a retail recovery in the Central-Hennepin nexus. But with the exception of some smaller-scale mixed-use buildings, the retail heart of Central near Lowry has languished.
That's why co-op leaders are pursuing multiple bottom lines with their project. They plan on generating a modest profit for investors, but hope the community payoff will be larger, with more economic activity that they hope will keep spending in the community. They've also encouraged people such as insurance agent Jim Higgins, who has done business on Central for 40 years and owns the equivalent of two blocks along the street.
"I'm very optimistic that young people are interested in the avenue," said Higgins, who has joined the co-op board.
The co-op's leaders say adding members is critical, but they acknowledge that some potential investors are holding back until they see a specific rehab project.
"The only people who are going to be able to change Central Avenue are you," co-op board president Amy Fields exhorted a small group of interested residents last month.
She's also the manager of a food cooperative that has played an important role in conceiving the investment co-op and building cooperative expertise among area residents. The eight-year-old Eastside Food Co-op hopes to gross $7 million in sales this year and is turning a profit.
But membership in that co-op was only a flat fee of $100. The first obstacle the investment cooperative faces is persuading people to part with $1,000 -- with the idea that it will be tied up for five or more years.
One way to overcome that sales resistance is the co-op's money-back guarantee. If there's no signed purchase agreement for a building by next June 30, members can recover their $1,000 and surrender their share. Of course, the hope is that they'll extend their pledge, treasurer Joe Bove said.
The co-op is focused on several neglected buildings on Central. They're generally run down by years of deferred maintenance and therefore unattractive to some of the bigger property holders on the avenue. For example, there are the grungy adjoining storefronts at 2504-06 Central. They've been used to sell sofas and other furniture, hardware and ice skates, and marine supplies over the years. The price has dropped from $649,000 to $375,000 as the windows stay empty.
One advantage the co-op has is the experience of vice president Steve Sylvester, a small-scale contractor who rehabs one or two houses a year in the area. Council Member Kevin Reich, who represents the area, cites Sylvester's ability to handle the craft of rehabbing and the financial management of a project as an example of the "bankable set of talent" among co-op leaders who also bring co-op, computer and legal backgrounds.
Edberg said that a potential lender will factor in that experience and sweat equity, as well as the track record of potential tenants and the amount of equity the co-op brings, when deciding on a loan application. He said he expects a lender will seek $75,000 to $100,000 in member equity to dampen the risk of taking on a new concept. The co-op already has its first potential tenant, Recovery Bike Shop, a three-year-old business that has outgrown the storefront it rents on Central from the food co-op, which also is ready to expand.
Reich said he's confident in the business skills of the investment cooperative's leaders. "I think these are pretty frugal, cautious people. They hedge conservative because they know the stewardship of their neighbor's money and the importance of that."
Steve Brandt • 612-673-4438