How the Co-op Works
One of the Elgin Agrarian Community's calling cards is the cooperative ownership of the residential section and farm. Instead of purchasing the house itself, residents purchase a "membership share" in the cooperative. This includes the exclusive right to live in the house, a vote on co-op matters, and a share in common areas like trails and the community building, and in the farm.
Members are expected to make a 10% down payment for their share; the remainder of their chosen home's value will be financed through "share loans" rather than a traditional mortgage. Residents will get a loan from the bank of their choosing for 70% of the home's value. The remaining 20% will be owned by the co-op, which will assess fees to each member to cover that cost. Residents will also pay a monthly fee of $200 to $250, half of which goes toward the farm and for 10 pounds per week of produce; the rest covers insurance and maintenance of the house exteriors, common spaces, and rooftop solar panels.
Members build equity in their membership share just as they would in a traditional home purchase. When a member decides to move, he or she can use a real estate agent and sell the membership share for whatever price the market will bear. The bylaws give the co-op the right of first refusal, though in most cases the organization will allow the membership to be sold to anyone who agrees to abide by the occupancy agreement. If a co-op member dies, the membership – effectively, the house – can be inherited by an heir, as long as that person complies with the occupancy agreement and co-op policies.
Not all of the development is cooperatively owned. The Mary Christian Burleson Foundation owns one acre, Osmo's Daughter brewery will own its parcel of land, and Garretson and his partners will retain ownership of the event center and wellness center. The residential co-op, farm, event center, wellness center, and brewery are "condoized" parts of the whole and will form a condominium association that manages maintenance of sidewalks and streets.
While not owning one's house might seem strange, Brian Donovan of the Cooperation Group notes that the structure still confers the tax advantages of home ownership: Co-op members can deduct the interest on their share loans and their portion of the co-op's property taxes from their income. And the co-op may have additional advantages, if the farm is successful. Garretson and farmer Colin Mitchell say they anticipate the farm eventually producing more than the 800 pounds of produce per week necessary to provide the 80 households with their shares. Proceeds from the sale of the excess would likely be split between the farmer and the co-op itself, and the co-op's share could go toward paying down the 20% each member owes the co-op, building up emergency reserves, or reducing members' monthly charges in the next year's budget.
"The farm should and will be looked at as a business asset," Garretson says. "It's a potential profit center. It's dependent on how effectively the co-op will function to provide direction to farm and farmer, to generate profit and pay down that debt."