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Don and Beverley Metz have bought themselves a piece of New York on the prairies: a cooperative apartment in Medina.

After raising five daughters in a single-family home and then moving to a townhouse in Plymouth, they were looking to downsize further and to find a place with a sense of community.

"Sometimes when you get old, your schedule wanes. We could go two or three days and not get out of the house," said Don, a physician who retired in 1989. "Not that we were lonesome, but we needed that social contact."

The Metzes and others like them are fueling a boom in co-op apartments, not long ago a barely visible part of Twin Cities real estate. Now, they've become a hot ticket for those 55 and older -- a category that includes the first three years of baby boomers.

Don and Beverley Metz

Richard Sennott

Star Tribune

The co-ops have been appearing so rapidly, said Terry McKinley, CEO of the Senior Cooperative Foundation in St. Paul, "I don't think anyone has a total." He estimates that the state has about 60 for seniors.

The Metzes have bought a 1,270-square-foot, two-bedroom, third-story unit in Gramercy Corporation's Elm Creek development. The 87-unit project, for people over 55, is designed to suggest Lake Minnetonka's turn-of-the-century resort hotels.

Elm Creek is Gramercy's 10th co-op; an 11th is planned for Chaska. All but one, at 66th St. and Lyndale Av. S. in Richfield, are limited to people over 55.

Sense of community

Before buying into Elm Creek, the Metzes visited other Gramercy co-ops and liked what they saw. At one, said Don, residents have dinner together in the party room Friday nights. "It's a social atmosphere there.

"Once you get in, it's hard to tell whether it's a condo or a co-op," said Alice Finley, a condo manager for Ebenezer society, a Lutheran-based organization that manages all types of senior housing.

"It's the hottest trend in senior living," said Pam Pelletier, Gramercy's executive vice president for marketing.

The National Association of Realtors reported a record 996,000 existing-unit sales of condo and co-op units in the second quarter. Their market share grew 33.3 percent in a decade, from 9.6 percent of existing-homes sales in 1993 to 12.8 percent in 2003. Most of that apparently is condo sales. Association spokesman Walter Malony said that nationally, co-ops are a decreasing share of the market.

But they've caught on in Minnesota, especially for those over 55. Nationally, about 5 percent of all community associations are co-ops, but more than half of all senior co-ops are in Minnesota, said Greg Petterson, president of the Minnesota chapter of the Community Associations Institute (CAI). "It's a burgeoning market," he said.

McKinley dates the popularity to 1976, when the Ebenezer Society opened 338-unit 7500 York in Edina. Ebenezer's Finley said it was the nation's first senior co-op. Ebenezer began managing independent living condos and co-ops in the 1980s, and "the cooperatives for the seniors is what's exploding," she said.

Co-op development in the Twin Cities area really caught on in the 1990s, when developer Realife, followed by Gramercy, entered the market.

Realife founder Dick Hanson assisted in developing 7500 York. The Burnsville company says it is dedicated to providing affordable and high-quality cooperative living for people 55 and older. Realife lists managed cooperatives in south and central Minnesota, the Twin Cities area, and in Iowa, Michigan, Nebraska and Wisconsin. It has buildings opening this fall in Bloomington and Hibbing, and one scheduled to open next summer in St. Cloud.

Gramercy co-ops are more upscale -- $183,000 to $313,000. Other companies are following that lead, and occupancy appears to have proved the concept: All completed Gramercy buildings are full, and some have waiting lists.

Gramercy, which began in 1995 in Rochester, also runs a co-op in Duluth and eight in the Twin Cities area. Lake Shore Drive and City Bella in Richfield are high-rise buildings. Gramercy manages the buildings it develops. The 10 contain 990 units.

Different from condos

Buying into a co-op is not a real estate transaction. Buyers sign an agreement that entitles them to occupy a unit as long as they pay a monthly charge. That attracts those who no longer want to be troubled by transactions, McKinley said. He estimated that 90 percent of seniors don't want to borrow.

"Most of the co-ops have been financed with 'master mortgage' financing," he said. The co-op carries the financing much as a rental building would, and the members' monthly charges pay the operating cost, taxes and the debt service "without the member ever incurring any liability for the debt," he said.

Pelletier said two types of co-ops are prevalent in Minnesota. Most are "limited equity." Owners make a down payment and participate in a 40-year FHA-insured mortgage. Members accrue equity at the rate of 1 percent a year. Gramercy has seven such co-ops.

But many buyers prefer to pay cash. Some people profiting from selling single-family homes don't want to be limited by 1 percent return, she said. So Gramercy "went back to the model of cooperatives in New York. Those are market-rate co-ops. ... The co-op is owned by a nonprofit corporation and the people are shareholders, but their homes appreciate at market values" with condo as comparable pricing.

In both types, the stock certificate reflects the value of the home at move-in, and people participating in mortgages can deduct interest, she said.

Member control

A cooperative may allow its members to have landlord-like control of who gets in. Members must follow antidiscrimination laws but can choose tenants on the basis of their histories.

"Seniors will tell you that a reason they buy into anything as they age is security -- not just from crime but from unpredictability," McKinley said. "Being able to have something to say about your neighbors is a big deal and that is not available in a condominium."

McKinley said co-ops also differ from condos because the co-op also is responsible for the insides of the units. "It provides the appliances, carpeting and fixtures and maintains them and has the ability to control what kinds of physical changes can be made in the unit; you can't just tear down a wall."

He thinks most seniors like the fact that the co-op also is responsible for maintaining and replacing appliances and for carpeting and painting.

Don and Beverley Metz won't be in before January, which is none too soon. They're squeezed into a one-bedroom apartment while waiting for the co-op to be built.

"I don't know if I can stand this 'halfway house' too long," Beverley said.

At Elm Creek, they bought the second-smallest floor plan, "the one they featured as the best deal," Beverley said. As a "preconstruction special," it was $185,000, she said. "Now, that same apartment would go for $230,000." The monthly fee is about $350.

Neal Gendler is at ngendler@startribune.com.

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