Minnesota is home to more than half of senior co-op living in the country. Here’s why

ANGELA DAVIS: Say for the past few decades, senior housing cooperatives have become an appealing option for middle-income folks who are aging but don't need the 24/7 care of a nursing home. Here's something you might not have known. The idea for senior-specific housing co-ops originated here in Minnesota. In fact, we have more than 60% of senior co-ops in the country right here in the state. Joining us to share how the idea came about and what it looks like now is Dennis Johnson, the chairman of the Senior Cooperative Foundation based in Shoreview. Welcome, Dennis. Thanks for taking the time.

DENNIS JOHNSON: Well, thank you. I appreciate it. Glad to be here today.

ANGELA DAVIS: Say, what's the story behind senior housing co-ops starting in Minnesota, for goodness sakes?

DENNIS JOHNSON: It is an interesting situation. One of the senior execs at Ebenezer back in the early to mid 1970s was observing the population in Richfield, Edina, which was basically a blue collar population as they aged in their homes, dealt with raking leaves and mowing lawn and shoveling snow and changing storm windows and cleaning gutters and looking at what other alternatives they might have to get away from that.

And frankly, there weren't any. I mean, it was basically going from a single family home to a skilled care facility. And so he developed several objectives for a senior housing facility. And it should be one that the seniors could age in place, one that was adaptable for aging in place, one where they would have maximum control, could live independently and not have to pay for unneeded or unwanted services.

And he bounced that idea around for a while. And finally, somebody suggested, you're talking about a cooperative. And that's what he did. He then pursued the development of a senior housing cooperative, and Ebenezer was the developer, 338 unit building in Edina 7500 York.

ANGELA DAVIS: Oh for goodness sakes, that big building in Edina? That was one of the first. I did not know that. That must have been a big story at the time.

DENNIS JOHNSON: And that was an incredible venture considering a new concept and going to a large building with 338 units. And it turned out to be a success. And Ebenezer has management services, and they've managed that building on behalf of the seniors ever since.

ANGELA DAVIS: So you buy into it as a senior, right?

DENNIS JOHNSON: Correct. You buy a share in the cooperative. The Cooperative owns the building, the land, all of the appliances, all of the floor coverings, all of the window treatments. So it takes care of any maintenance requirements that go along that. And the purchase of your share entitles you to live in a specific unit in the building. And so you're really a tenant in a building that you are an owner in.

ANGELA DAVIS: What are you hearing from folks that live in senior co-ops? What's the experience like for them?

DENNIS JOHNSON: I have worked with senior housing cooperatives for over 40 years. And in that period of time, I think there's two parties that I finally recommended they move out because they didn't seem to fit. It's interesting. When you ask people why they moved in, their two main criteria are location and no maintenance. Most of the seniors that live in these buildings come within a couple of miles of the location.

After they've been there a while, you ask them what they like most about the cooperative and number one is the people, and number two is the activities. They're constantly active. It's amazing that the activity they go through, which is a real benefit because they live very active lives, and we believe that that helps live a longer, healthier life. There are many seniors in these buildings today that are approaching or right over 100 years old. They're living independently.

ANGELA DAVIS: So it's an example of a place where you can live well into your later years, live as fully as possible into your later years.

DENNIS JOHNSON: Correct. Exactly. And I mean, the building is owned by the members, so they elect their own board of directors to govern the building. And the board establishes committees to help them with that, the building and grounds committee, social activities, library committee, finance committee, marketing committee. They generally hire a management company to help them with day-to-day operations and so forth. The seniors are extremely busy and very active in their cooperatives.

ANGELA DAVIS: Nothing, of course, is cheap nowadays as you know. The state in a nursing home, the monthly stay, is incredibly expensive, so is assisted living. I'm going to assume that senior co-ops are not cheap either.

DENNIS JOHNSON: Well, they are and they aren't. The member purchases a share in the cooperative, which is generally around 50% of the total unit value of the unit. The rest of that is financed with the master mortgage that the cooperative has. And the member pays a monthly fee that is their share of the master mortgage and the interest on that. Their share, the real estate taxes, their share of the insurance and their share of the operating expenses for the management company and the common areas generally runs about $1 to $2 a square foot.

And so if you're in-- and that includes the mortgage payment. So if you're in a 1,500 square foot unit, it's around 3,000 a month. But that's your mortgage payment as well as the operating expenses. Your share of the real estate taxes and your share of the the interest on the mortgage is deductible on your personal income tax under the IRS rules.

ANGELA DAVIS: I'm wondering, when I think of 7500 York, of course, Edina, that whole area has been quite developed for a number of years, obviously. You're close to Minneapolis Saint Paul. What about rural options when it comes to senior co-op housing? Any options out there for folks in greater Minnesota.

DENNIS JOHNSON: Yes. There are some. There are probably about 25, 30 co-ops in rural Minnesota. Some of them have been developed by real estate equities. There's one in Fergus Falls, in Saint Cloud and Worthington Redwood Falls, Saint James, Waseca, Owatonna. So there are some out there, not as many as in the Twin Cities. And part of that is that the market is much bigger in the Twin Cities than it is in rural areas.

But there are many cooperatives out there. In fact, when 7500 York was constructed, the person who headed up the construction project, the superintendent, liked the idea so much, and his wife was helping with the marketing of that project, and once that was completed, they created a real-life development services, and went to southern Minnesota and created real life cooperatives in New Ulm, Waseca, Owatonna and Saint Peter.

ANGELA DAVIS: Well, a question here for you, Dennis. And I'm wondering as more and more of us age and decide to downsize and find other housing and with the baby boomers certainly taking up that space, I'm wondering, will there be a number of additional senior housing co-ops being added into the market?

DENNIS JOHNSON: The development has slowed right now because of interest rates and construction costs. But there are only about 10,000, 12,000 seniors living in all of the senior housing cooperatives there are right now. So there is a tremendous market opportunity. The question is whether or not there will be enough development to meet that demand. And I'd have to say there isn't, because right now many of these cooperatives have waiting lists of one to two parties per unit waiting to get in.

And so they can be on a waiting list for up to 10, 12 years before they're eligible to get in and before they move up the waiting list to get in. So there is a huge demand, potential demand, but I think the demand is constantly going to exceed the supply.

ANGELA DAVIS: Interesting. Well, Dennis, thank you for the history lesson. I appreciate it. Thanks for joining us, too.

DENNIS JOHNSON: Thank you. Appreciate it. Thank you very much.

ANGELA DAVIS: Dennis Johnson is the chairman of the Senior Cooperative Foundation in Shoreview.