FAQ: About the Cooperative
What is a cooperative?
Cooperatives sell goods, services, or real estate, like other companies, but have a distinct ownership and profit structure. The owners and shareholders of a cooperative are its members, the people who use it. Cooperatives can earn profit, but profit is reinvested in the cooperative or returned to its members in proportion to how much they use the services, goods, or facilities provided by the cooperative. A grocery cooperative is owned by the people who shop there; a housing cooperative is owned by the people who live there. If a grocery cooperative makes a profit on selling you groceries, it returns the profit to the community, and to you in proportion to how much you spent there. Want to learn more about cooperatives? Visit the National Cooperative Business Association or Co-op Law (site temporarily under construction).
Commongrounds is a real estate cooperative
We are building real estate owned by its first- and second-floor tenants and their customers and community, so that everyone in our region can participate in the ownership of building projects for the mutual benefit of our community and the building tenant-owners. So, like other cooperatives, they are owned by the people who use them -- in our case, the first- and second-floor building tenants, and their customers and community.
Commongrounds is a Michigan nonprofit corporation that will be taxed as a cooperative under Subchapter T of the Internal Revenue Code. That means cooperative “profit” will either be reinvested in the property for the benefit of the community and our owners, or returned to the tenant owners. The cooperative has at least two classes of ownership: the first- and second-floor tenants (the tenant owners) and the community owners (people like you!).
What does it mean to be an “owner” of the cooperative?
You own a “community owner” share of the cooperative. With your neighbors, you are helping to make 416 Eighth possible. Learn more about your rights/duties as an owner at our first annual membership meeting, coming up this winter. But a few things are:
You have the right to vote to elect 2 community owner co-op board representatives.
You’ll receive insider updates on construction and cooperative progress.
You will have access to open book management meetings to learn about the cooperative financial operations.
You will have access to owner-only building amenities and perks, including annual gratitude party.
And, if we raise capital from community owners, you will have the opportunity to invest capital in the cooperative.
WHY BECOME AN “OWNER” OF THE COOPERATIVE?
When you become an owner, you make 416 E. Eighth St. possible and, as a result, you can earn a financial, social, and quality of life return on ownership. Returns on ownership include:
Financial: Opportunity to participate in community owner capital campaigns to make the building possible.
Social: Help build 416 E. Eighth to create a TC you want to see in the future, today. What does that mean? With help of community owners, we want to build space to: Provide downtown childcare and housing affordable for people who work here. Contribute to Eighth Street as a vital and vibrant corridor that celebrates the river for the enjoyment and health of all who live and work here. Create integrated workspace for nonprofits and small business. Support development of artists who live here and attract top shelf artistic talent to perform Traverse City. Purchase craft food and beverages that are sourced and manufactured in a manner mindful of supporting the people and places that make the food and beverages possible.
Quality of life: Together, help us create a building where you can eat, drink, refresh, work, create-- in general, be merry, and part of a vibrant work, live, and play space. In other words - we’re not just building the building to make a great space for your neighbors -- but for you, too.
WHO MANAGES THE COOPERATIVE?
Like other corporations, the cooperative has a board who retains most of the power to run the organization and make decisions, subject to authority it delegates to staff with oversight. The Commongrounds board will consist of tenant representatives from the first- and second-floor tenants (a majority of the board), representatives from community owners, and a river representative. Certain big picture decisions also require approval by the tenant- or community owners. At the first annual member meeting, members will officially adopt bylaws and vote for community owner representatives. Prior to the annual meeting, the cooperative is managed by an interim board. Current tenant board members are Chris Treter of Higher Grounds, Kate Redman of Commonplace, and Richard Anderson of Iron Fish Distillery.
What does it take to be an owner of the cooperative?
You pay $50 to buy a share and sign an annual membership agreement. That’s it! Every year you’ll be asked to renew a membership agreement and, once we build the building, there will be annual membership fees to access certain building amenities and benefits, which you can decide whether or not you want to pay on annual basis. If you sign up today, you are completing a membership application.
Do I earn a profit because I own a share?
Nope. There maybe future opportunities to invest in the cooperative and earn a return, but there is no economic return just because you are an owner. You may get some of the money back that you spend at the cooperative once we build the building: because we’re a cooperative, if we earn a profit on your use of the services and facilities provided by the cooperative, you’ll have a right to a return of a portion of that profit in proportion to your use. Sounds confusing, we know. But we’ll help make it clear at our regular open book meetings.
WHAT HAPPENS IF THE COOPERATIVE EARNS A PROFIT?
Depending on what the board decides to do with it, any cooperative “profit” is either reinvested in the property or returned to the community and tenant owners.
DO I HAVE TO INVEST IN THE BUILDING IF I JOIN AS AN "OWNER"?
Nope. Only if we launch a funding campaign and you decide it makes sense for you and you meet the criteria for investors. All investors must be owners; all owners do not need to be investors.
WHAT HAPPENS NEXT IF I JOIN?
We’ll keep you updated on the project and events. And, when we hold our annual membership meeting, we’ll ask you come join and sign your *official* share agreement, elect board members, and approve bylaws.
STILL HAVE QUESTIONS? LET US KNOW WHAT ELSE YOU’D LIKE TO KNOW! POST ON OUR FACEBOOK PAGE OR EMAIL US AT HELLO@COMMONGROUNDS.COOP.