8 Responses to “Ripples from a troubled senior co-op”

1. Terry McKinley Says:
   October 15th, 2008 at 9:35 am

   For a copy of the Senior Cooperative Foundation Bulletin that addresses this issue, including the list of important consumer protections, send an e-mail to info@seniorcoops.org

   Terry McKinley, President
   Senior Cooperative Foundation

2. Barbara Perrin Says:
   October 15th, 2008 at 11:19 am

   Thank you, thank you for printing this vital information that has been provided by the experts in this industry.

3. Melissa Duffey Says:
   October 15th, 2008 at 12:27 pm

   I think an article similar to this should go to print as a follow up so everyone has a full understanding of the differences in Gramercy Club of Edina and HUD insured Cooperatives.

4. William Vogel Says:
   October 15th, 2008 at 12:37 pm

   I would appreciate haveing this Blog printed in the newspaper as a service to those who do not have access to compters. Not to do so would be a great disservice to those seniors who do not have access to computers. As a result, they may avoid senior housing cooperatives which have advantages, including financail advantages, for many seniors

5. Barbara Murphy Says:
   October 15th, 2008 at 3:13 pm

   Too many seniors are misinterpreting the article regarding Gramercy Club of Edina, so I strongly urge you to research senior coooperatives, educate your readers on the different types of senior housing co-ops and share some of our senior’s inspirational stories. Most senior cooperatives have fabulous reputations and offer seniors a community that fosters independence, ownership, financial stability and the framework for inspired retirement living. I have worked in the business for over 16 years and daily see the incredible positive impact that senior cooperative communities have on seniors and their families and it saddens me to hear of the fiasco at Gramercy Club of Edina. Most professionals in the business are mission driven to provide stable communities and a positive lifestyle that can not be replicated in other types of senior housing. We at 7500 York Cooperative are celebrating thirty years of senior cooperative living this month and will continue to advocate on behalf of co-op members and other seniors for the many benefits of senior cooperative housing in HUD insured cooperatives.

6. James Shiffer Says:
   October 15th, 2008 at 4:03 pm

   Thanks for the comments. I do intend to follow up on what happens with the Gramercy Club of Edina, although I think it might be more useful for one of you to write an opinion piece for our paper, since the value of co-ops wasn’t really the subject of my story.

7. Dennis Johnson Says:
   October 16th, 2008 at 11:48 am

   The opinion piece is a good idea. Terry and I will draft the piece on behalf of the Senior Cooperative Foundation.

8. Pam Pelletier Says:
   October 21st, 2008 at 12:37 pm

   As part of the original Gramercy team, my business partner, Lou Stocco and I would like to weigh in on this issue. Mike Conlan started Gramercy Corporation in 1994. Mike asked Lou to join him even though there was no money for salaries. I, on the other hand, waited until 1995 and then signed on with the fledgling company. Ten years later, Mike passed away prematurely. In 2005, when the Gramercy name was sold to Tim Nichols, upper management left to start Avanti Consulting. Since then we have specialized in helping developers who seek success in the cooperative housing niche.

   During the last 13 years, we have been involved in the development, marketing, and management of 7 cooperatives with HUD insured master mortgages and 5 cooperatives that allow the co-op members choice in the way they finance their dwelling units.

   As those in the co-op development business know, HUD has two insurance programs, the insured advances and insurance upon completion. Both have specific requirements and include pre-sale requirements which can range from 60 to 90 percent or more. Under the insured advances program, the developer meets all requirements before construction begins. The HUD insured mortgage and the members’ shares fund the project. Under the insurance upon completion program, the developer secures a construction loan along with the risk that loan entails. Once the pre-sale requirement is met, HUD insures the mortgage.

   We have also used a Fannie Mae program which eliminates the master mortgage altogether. Once the single family home is sold, members can secure conventional financing from an approved lender or pay in full for their dwelling unit. To illustrate how this works, look no further than St. Louis Park. In 2007, we opened a 106-unit co-op which allows members control over their financing options. Statistics indicate 20% of the members took out mortgages while 80% paid cash to keep their monthly carrying charges as low as possible.

   The St. Louis Park cooperative also refutes a misconception expressed earlier in this blog. Bill Oemichen, president and CEO of the Minnesota Association of Cooperatives, wrote: “Apparently, a limited number of developers do not seek HUD guarantees because it may negatively impact their ability to build a solely ‘high end’ cooperative.” On the contrary and as an example, the redevelopment agreement between the City of St. Louis Park and the co-op developer is aimed at keeping shares affordable and includes both income and asset limitations for members which even a HUD insured mortgage does not require. The City also limited equity accrual “to keep shares affordable for the next generation of purchasers.”

   This said, we are living in a “buyer beware” age and everything possible should be done to protect the senior cooperative consumer Our legal documents contain a Subordination, Non-Disturbance, and Attornment Agreement. This purpose of this Agreement, signed by the Cooperative, the Member, the Developer, and the construction loan Lender, is to protect the Members’ rights, title and interest in the Cooperative in the event of a foreclosure.

   Regardless of what form of financing is used, our experience with 12 cooperatives has demonstrated that ALL co-ops foster a unique sense of community, pride of ownership, shared responsibility, democratic control, a say in how things are run, and a commitment to caring for one another that resembles an extended family.

   We hope that the leaders in the cooperative community will be able “to cooperate” with one another to restore the respect senior housing cooperatives have earned and richly deserve.