Democratic Finance for Affordable Space in NYC
Apr 26 2016
New York City is the quintessential melting pot. People from all over the world come to the city in search of culture, cuisine, art and opportunity. Yet for many New Yorkers, their ability to stay in the city they’ve helped create has been compromised in recent years by soaring real estate prices.
Between 2000 and 2012, rents in New York City increased by 75 percent, according to CNN Money. In that same timespan, residents of cities such as Portland, Oregon, and Austin, Texas, saw only 7 percent increases.
Commercial rents have climbed in tandem with residential prices. Steep rents drive early-stage entrepreneurs, activists, and artists elsewhere—along with their creativity and innovation. Small businesses and cultural institutions with deep roots in communities throughout New York City are forced to close down. Communities of color and recent immigrants, historically denied equal access to the American financial system, are disproportionately affected.
It is in this regard that hundreds of concerned residents have banded together to form the New York City Real Estate Investment Cooperative. NYC REIC is a democratic financial organization that exists to secure permanently affordable space for civic, small business, and cultural use. Consistent with the principles and spirit of the cooperative movement, NYC REIC aims to make long-term, stabilizing, and transformative investments for the benefit of its member-owners and communities.
Member investments are the heart of the cooperative. Within two years, NYC REIC’s goal is to become an independent, cooperatively governed organization that provides financing. But during the start-up phase, NYC REIC needs charitable contributions to support operating expenses.
Core to the organization is the principle of one member, one vote. Member can join for a minimum of $10. Larger investments are both necessary and encouraged, although they do not give the investor greater control over the cooperative’s decisions.
In order to qualify for an NYC REIC investment, a project must: be located in New York City; support culture, small business, cooperation, or community; benefit populations with historic barriers to stable residential or commercial locations; be financially sound; and be restricted from future transfer to a market commodity through legal mechanisms in their deeds.
RSF Social Finance and NYC REIC have been working together since April 2015. In just one year, using a small grant from RSF’s Seed Fund, NYC REIC organized 350 members into seven active working groups; they met over 150 times, raised $1.3M in investment pledges, and democratically elected its first steering committee. NYC REIC has also received support from Spaceworks, 569Acres, Fourth Arts Block, Brooklyn Law School, and Fordham Law School.
Groups hailing from six cities nationally have been inspired by NYC REIC’s efforts. Public meetings garner over 700 attendee reservations, and regularly reach capacity.
NYC REIC members know that their efforts are a long-term project. In building a cooperative that educates and empowers New Yorkers, they aim to ultimately prove that development without displacement is possible.
Megan Mendenhall is a Marketing Associate at RSF Social Finance.