“Our ambition is to bring properties into collective ownership and use”

This interview is an excerpt from the book Funding the Cooperative City: Community Finance and the Economy of Civic Spaces

In what context did you begin to work on Stad in de Maak?

This is an initiative that started from – and currently thrives in – the afterlife of the current financial crisis. A crisis that started out with toxic debts and real-estate speculations, emblematically bringing down Lehman Brothers on September 15, 2008. Amidst the unfolding of this crisis, the non-for profit housing developer Havensteder bought these two buildings where we are today with the idea of demolishing and redeveloping them. At that time, in 2009, this probably still looked like a viable plan but that did not last very long. When the mortgage crisis hit the market in the Netherlands a little bit later in 2010, for real-estate owners, the world in which they operated suddenly changed.

For instance, the value of real-estate started to drop. As a result, they had buildings that in their accounting books were still listed at the pre-crisis value, while their actual value in the real-estate market had diminished significantly, which brought them into financial trouble. At the same time, during the years leading up to this financial crisis, the group of non-for-profit developers, to which Havensteder belongs, would move away from their core mission of providing affordable housing towards other products with a higher return on investment. The government also encouraged them to experiment to yield more return, which could then be invested into housing. During the crisis however, these risky operations started turning against them, resulting in financial deficiencies of billions of Euros. For instance, one of these non-for-profit housing developers, Vestia in Rotterdam, embarked in derivatives for almost 10 billion Euros, something that went terribly wrong. All the non-for-profit housing developers had to come together to rescue the ones which were about to go bust, which made a huge dent in their financial reserves. To add insult to injury, they were subsequently forced to make contributions to the state budget, because the government also found itself in trouble due to the financial crisis. As a result, the investment budget of these developers withered away.

How did housing developers react to this situation?

Building renovated by Stad in de Maak. Photo (cc) Eutropian

At that moment Havensteder found itself in a situation in which it could not any longer sustain part of its real-estate portfolio, so it had to focus on keeping the healthy parts. This means that there was suddenly no budget anymore for troublesome locations such as this one. In 2010, Havensteder made a quick-scan of the two buildings, with the help of two collectives from Rotterdam, Superuse Studio and Observatorium, to see what to do with these locations. It must be understood that within Havensteder this is seen as a controversial idea: why would they start investing in derelict places in times of crisis? There are other priorities. But there were also people within the organisation, who challenged this idea and wanted to protect the quality of the street and maintain the value of the assets, as they owned the majority of the buildings on the street. The commissioned quick-scan revealed that if Havensteder wanted to keep the buildings up and running, they would have to accept a loss of 60,000 Euros in the coming 8-10 years. That is actually not so much, even though it is in a period of crisis.

Following this, things slowed down, and it looked as if the study to revive the buildings would end up in a drawer. One of the people involved in the study, the artist Erik Jutten, took the initiative to push things further. He came up with an unconventional proposal: if Havensteder is willing to take the loss of 60.000 euros anyway over the period to come, why not take that loss entirely in day one instead? In this way, it can be handed over as an investment budget to a group of people that would take care of the two buildings and any remaining risks. In a certain way, this would allow us to ‘common’ the buildings with this group of people for a period of ten years, after which the properties would go back to the owner, if it was still there.

What role did you take in this process?

Meeting in front of the Growery. Photo (cc) Eutropian

Ana Džokić, Piet Vollaard and myself joined Erik and put this proposition together. Our common motivation in the beginning was mainly curiosity: to see if we could do things differently. We spent a lot of time going through the details, like the economic model we had to get in place. The big challenge was of course finding a way to manage the buildings for ten years without us defaulting on it. We figured that, if Havensteder was ready to put in 60,000 Euros, around 75% of it would have gone into contractor costs, therefore we proposed to execute half of that work ourselves instead of outsourcing it. By doing so, we could free up a substantial part of the budget – because we could do things ourselves cheaper than a contractor, but it would also allow us to schedule and prioritise works differently, as we needed to urgently divert money to make some of the spaces inhabitable and create a cash-flow through renting them out. This is because we have to pay the bills, we have to pay the insurances, we have to pay the taxes… And we basically had no money ourselves, so to prioritise works to create an economically sustainable cash-flow was very urgent for us.

How did the housing developer like these ideas?

New workspaces and housing. Photo (c) Stad in de Maak

For Havensteder it was a deal with an untested partner: we had never worked with them before. But it was interesting for them because they hardly had any financial risks, no contingencies, and no management costs any longer. We would take all of this upon us for the next 10 years. After that, we just give back the property with no further economic loss than the 60.000 they had already booked. And while we negotiated over a period of many months, some level of trust began to develop amongst all the parties involved.

In October of 2013, we signed the agreement. A month later, work on site began: the buildings were in ruin and we had to quickly make them inhabitable. We had gone through a huge excel sheet for months and months, but we did not have much experience with doing these sorts of things, so we took on things quite intuitively. Meanwhile, we have grown a handful of buildings, and a few principles have emerged.

How do the buildings function economically?

The principles of Stad in de Maak

First of all, we try to make each building a self-sustaining node (in economic, social and environmental terms) within a network. This is done to foster a more robust network, in which difficulties (or even the ‘collapse’ of one node) do not pose a threat to the viability of the overall network of buildings. In economic terms, this means that each building should generate enough resources to cover its own costs. In social terms, each building should take care of its own governance and use. In environmental terms, it should aim to become resource flow neutral (energy, water, etc.). We aim to create a common finance pool for the maintenance and expansion of this platform. All the inhabitants and users of the buildings, through payment for the right of usage, generate a (modest) flow of finance that contributes to this common finance pool. From this, the activities to sustain the platform (a baseline income for those responsible) are being financed. Given enough nodes in the network (scale), a revolving investment fund to expand the network could be created.

From the very beginning on, we have maintained a minimalist (or no-nonsense) approach to investments. If affordability is at the core, invest what is minimally necessary. For instance, by putting functional, rather than aesthetic concerns at the core. By re-using, upcycling, or working with donated materials. By improvising if the use span of a building is limited, as long as safety is not compromised. And by being prepared to lower the comfort threshold in exchange for lower existential pressures (usage fee).
While working on the first buildings, we discovered that it would be important to replace monetary flows with non-monetary alternatives, where possible. As both the inhabitants and users of buildings and the platform itself face a lack of mainstream money, part of the financial pressure can be diverted by conducting transactions in other ‘currencies’: worktime or materials, for instance.

How do the activities taking place in the buildings impact the neighbourhood?

Stad in de Maak process diagram. Image (c) Stad in de Maak

We try to bring community activity, but also production back into the buildings, into the streets, and into the neighbourhood. Some things are being tested right now, like a workshop. There is a community brewery starting up, a micro-cinema, a launderette, even some production of detergent … In the coming months there we will have a number of trials to see how we can create a neighbourhood economy. It is crucial to keep space open for such uses and experiments. Each building therefore, has a commons (“meent” in Dutch), accessible for social or productive undertakings. We decided to keep financial pressures away from these common spaces, and cover the costs to keep them open through a contribution from all the users.

We said straight from the beginning that City in the Making – with its current temporary use of buildings – is a sort of training condition for what is yet to come. For us, the next step is to go beyond this temporary exploitation of vacant properties. Now we can do this because there has been an economic crisis but this is not sustainable in the future. Our ambition is to take the properties out of the market, to make them available for affordable housing and work, and to bring them into collective ownership and use.

Interview with Marc Neelen on 26 May 2016

The post Stad in de Maak – from crisis to a shared ownership model appeared first on P2P Foundation.

This is an excerpt from the upcoming book Funding the Cooperative City: Community finance and the economy of civic spaces.

In the past decade, with the economic crisis and the transformation of welfare societies, NGOs, community organisations and civic developers – City Makers – established some of the most important services and spaces in formerly vacant buildings, underused areas and neglected neighbourhoods. Consolidating their presence in the regenerated spaces, these initiatives are increasingly looking into the power of the local community, the dispersed crowd and new financial actors to invest in their activities.

Two years ago, the cultural centre La Casa Invisible collected over 20.000 euros for the partial renovation of the building including the installation of fire doors and electric equipments to assure the safety of their revitalized 19th century building in the centre of Málaga. A few months later, East London’s Shuffle Festival, operating in a cemetery park at Mile End, collected 60.000 pounds for the renovation and community use of The Lodge, an abandoned building at the corner of the cemetery. In order to implement their campaigns, both initiatives used the online platforms Goteo and Spacehive that specialise in the financing of specific community projects. The fact that many of the hundreds of projects supported by civic crowdfunding platforms are community spaces, underlines two phenomena: the void left behind by a state that gradually withdrew from certain community services, and the urban impact of community capital created through the aggregation of individual resources.

The question if community capital can really cure the voids left behind by the welfare state has generated fierce debates in the past years. This discussion was partly launched by Brickstarter, the beta platform specialised in architectural crowdfunding, when it introduced to the public the idea of crowdfunded urban infrastructures. Those who opposed Brickstarter, did in fact protest against the Conservative agenda of the “Big Society”, the downsizing of welfare society and the “double taxation” of citizens: “Why should we spend on public services when our taxes should pay for them?”

Nevertheless, in the course of the economic crisis, many European cities witnessed the emergence of a parallel welfare infrastructure: the volunteer-run hospitals and social kitchens in Athens, the occupied schools, gyms and theatres of Rome or the community-run public squares of Madrid are only a few examples of this phenomenon. European municipalities responded to this challenge in a variety of ways. Some cities like Athens began to examine how to adjust their regulations to enable the functioning of community organisations, others created new legal frameworks to share public duties with community organisations in contractual ways, like Bologna with the Regulation of the Commons. In several other cities, administrations began experimenting with crowdfunding public infrastructures, like in Ghent or Rotterdam, where municipalities offer match-funding to support successful campaigns, or with participatory budgeting, like in Paris, Lisbon or Tartu. Yet other public administrations in the UK, the Netherlands or Austria invited the private sphere to invest in social services in the form of Social Impact Bonds, where the work of NGOs or social enterprises is pre-financed by private actors who are paid back with a return on their investment in case the evaluation of the delivered service is positive.

Largo Residencias, Lisbon. Photo (cc) Eutropian

Alternatively, some cities chose to support local economy and create more resilient neighbourhoods with self-sustaining social services through grant systems. The City of Lisbon, for instance, after identifying a number of “priority neighbourhoods” that need specific investments to help social inclusion and ameliorate local employment opportunities, launched the BIP/ZIP program that grants selected civic initiatives with up to 40.000 euros. The granted projects, chosen through an open call, have to prove their economic sustainability and have to spend the full amount in one year. The BIP/ZIP project, operating since 2010, gave birth to a number of self-sustaining civic initiatives, including social kitchens that offer affordable food and employment for locals or cooperative hotels that use their income from tourism to support social and cultural projects. In 2015 the experience of the BIP/ZIP matured in a Community-Led Local Development Network, as identified by the European Union’s Cohesion Policy 2014-2020, which will grant the network access to part of the Structural Funds of the City of Lisbon. The CLLD is a unique framework for the democratic distribution of public funds: it foresees the management of the funding to be shared between administration, private and civic partners, with none of them having the majority of shares and votes.

While, as the previous cases demonstrate, the public sector plays an important role in strengthening civil society in some European cities, many others witnessed the emergence of new welfare services provided by the civic economy completely outside or without any help by the public sector. In some occasions, community contribution appears in the form of philanthropist donation to support the construction, renovation or acquisition of playgrounds, parks, stores, pubs or community spaces. In others, community members act as creditors or investors in an initiative that needs capital, in exchange for interest, shares or the community ownership of local assets, for instance, shops in economically challenged neighbourhoods. Crowdfunding platforms also help coordinating these processes: the French Bulb in Town platform, specialized in community investment, gathered over 1 million euros for the construction of a small hydroelectric plant in Ariège that brings investors a return of 7% per year.

ExRotaprint, Berlin. Photo (cc) Eutropian

Besides aggregating resources from individuals to support particular cases, community infrastructure projects are also helped by ethical investors. When two artists mobilised their fellow tenants to save the listed 10.000 m2 Rotaprint in the Berlin district of Wedding, they invited several organisations working on moving properties off the speculation market and eliminating the debts attached to land, to help them buy the buildings. While the complex was bought and is renovated with the help of an affordable loan by the CoOpera pension fund, the land was bought by the Edith Maryon and Trias Foundations and is rented (with a long-term lease, a “heritable building right”) to ExRotaprint, a non-profit company, making it impossible to resell the shared property. With its sustainable cooperative ownership model, ExRotaprint provides affordable working space for manufacturers as well as social and cultural initiatives whose rents cover the loans and the land’s rental fee.

Creating community ownership over local assets and keeping profits benefit local residents and services is a crucial component of resilient neighbourhoods. Challenging the concept of value and money, many local communities began to experiment with complementary currencies like the Brixton or Bristol Pounds. Specific organisational forms like Community Land Trusts or cooperatives have been instrumental in helping residents create inclusive economic ecosystems and sustainable development models.

Homebaked, Liverpool. Photo (cc) Eutropian

In Liverpool’s Anfield neighbourhood, a community bakery is the symbol of economic empowerment: renovated and run by the Homebaked Community Land Trust established in April 2012, the bakery – initially backed by the Liverpool Biennale – offers employment opportunities for locals, and it is the catalyst of local commerce and the centre of an affordable housing project that is developed in the adjacent parcels. Similarly, a few kilometres east, local residents established another CLT to save the Toxteth neighborhood from demolition. The Granby Four Streets Community Land Trust, with the help of social investors and a young collective of architects (winning the prestigious Turner prize), organised a scheme that includes affordable housing, community-run public facilities and shops.

The economic self-determination of a community has been explored at the scale of an entire neighbourhood by the Afrikaanderwijk Cooperative in Southern Rotterdam. The cooperative is an umbrella organisation that connects workspaces with shopkeepers, local makers, social foundations, and the local food market: they have developed an energy collective in cooperation with an energy supplier that realises substantial savings for businesses in the neighbourhood; a cleaning service that ensures that cleaning work is commissioned locally; and a food delivery service for elderly people in the neighbourhood.

With community organisations and City Makers acquiring significant skills to manage welfare services, urban infrastructures and inclusive urban development processes, it is time for their recognition by established actors in the public and private sectors. The EU’s Urban Agenda, developing guidelines for a more sustainable and inclusive development of European cities, can be a catalyst of this recognition: it can prompt the creation of new instruments and policies to enable such community-led initiatives. While the Cohesion Policy 2014-2020 has developed the CLLD framework, not many Member States chose to use this instrument. The Urban Agenda could therefore envision the adoption of more methods to be experimented by City Administrations, to allow for a more sustainable and inclusive allocation of resources. Whether through matchfunding, grant systems, or simply removing the legal barriers of cooperatives, land trusts and community investment, municipalities could join the civil society in developing a more resilient civic economy with accessible jobs, affordable housing, clean energy, and social integration.

Lead image from homebaked.org, Liverpool UK. All other images from Eutropian.

The post Community Capital in Action: New Financial Models for Resilient Cities appeared first on P2P Foundation.