88 Oak Street, Burlington, Vermont
Oak Street Co-op is a start-up real estate co-op seeking to purchase the building at 88-90 Oak Street in Burlington.
To do this, we are recruiting Vermont residents as co-op members, with a target return of 6% on member shares.
For the past 10 years, the Skinny Pancake has operated the commissary for its restaurants, as well as The Chubby Muffin cafe, out of the building at 88-90 Oak Street. At this point, the Skinny Pancake has out-grown the capacity of the building, and will be moving its commissary operations to a larger facility by March 15th, 2020.
Because of the cafe’s role as a neighborhood hub, as well as the capacity and design of the commissary space for food production and processing, a group has been in conversation with the Skinny Pancake for the past year about purchasing the building with community support through a Real Estate Cooperative.
Emily and Abby Portman
The vision is for the commercial space to be leased to two “Anchor Tenants.” Emily and Abby Portman plan to run a breakfast and lunch cafe during the mornings and afternoons. In the evenings, Maria Lara-Bregatta will offer the Dominican food she’s become known for as Cafe Mamajuana. In addition to the anchor tenants, we’re actively exploring various possibilities for other food businesses to sublet surplus prep and storage space. Upstairs is a three-bedroom apartment that we plan to rent out to a residential tenant.
The plan is to purchase the building as the Oak Street Cooperative, which was recently incorporated with Emily Portman, Maria Lara-Bregatta, Matthew Cropp, Alissa Faber, and Reggie Achilles as the founding board of directors. The “real estate co-op” model for community-supported property acquisition has been utilized in recent years in places like Minneapolis and Oakland, and has been optimized for the Vermont context in the past year.
In December, we signed a Purchase and Sale agreement committing to purchase the property for $650,000 provided that, by March 1, 2020, we raise at least $175,000 in equity investment from the community, and are able to leverage that equity into a $520,000 mortgage. If successful, the anchor tenants will aim to start construction on improvements, and we’ll aim to close, on March 15th.
We’re aiming to raise that equity by selling member shares in the co-op to Vermont residents! The minimum investment is $1,000, and folks are encouraged to invest more (up to a maximum of $25,000), with the caveat that no member may own more than 10% of the total shares. A few key things to understand about co-op membership include:
Voting: All co-op members are entitled to one vote, regardless of how many shares they hold. Members are entitled to both run and vote in annual board elections, and on certain other major decisions defined in the bylaws.
Dividends: Each year the co-op board will vote to declare a dividend, which is legally allowed to be up to 6%, and it must declare a dividend of 6% before any profit is returned to renter-members as a patronage refund. The board may, in response to financial and/or strategic circumstances, declare a 6% dividend, and defer to a subsequent year the cash payment of part or all of that dividend. In years in which there are outstanding deferred dividends, their payment will be prioritized over current year dividends until the co-op is fully caught up.
Exit: Members may request the repurchase of their shares by the co-op at face value, and the redemption of those shares will be at the discretion of the board, which could pay for their redemption with new equity, retained earnings, the proceeds of a mortgage refinance, or other sources. We expect not to be in a position to redeem shares in at least the first three to five years, so community supporters should consider this to be a long-term, illiquid investment.
Pledge to Become a Member!
Like this idea? Interested in helping us make this a reality? Here’s how:
Read the steps on How to Make Your Investment to the right
Please make your investment pledge in the Pledge Box to the right.
Sign the Member Agreement and send it with a check (or you can use bill-pay through your financial institution if you don’t have a check-book) for your intended investment amount to Milk Money Investing, PO Box 81, Charlotte, VT 05445.
Your check will be deposited in a designated account at VSECU.
Upon reaching the campaign minimum raise of $175,000, your funds will be converted to co-op membership shares. If we fail to reach the minimum by March 1, your funds will be returned to you.