Few housing associations have ever come as close to demolition -- and survived -- as Atlanta’s Tanglewood Garden did.
In 1993, the apartment project was considered one of the city’s most dangerous places to live. Overrun with drug dealing, prostitution and other criminal activity, Tanglewood Garden was deemed a public embarrassment. The blighted rental units sat along the route where the torch for the upcoming 1996 Olympic Games would be carried, prompting city officials to call for Tanglewood Garden’s destruction.
But then Alex Miller and NCB entered the picture. Their combined efforts gave Tanglewood Garden a new cooperative structure, revitalized leadership and the funding to rehabilitate the struggling housing complex. Nearly 20 years later, Tanglewood Garden has become a community housing jewel, what long-time resident Judy Cooper calls “a wonderful place to live.”
“Tanglewood Garden Cooperative is a true success story,” says Larry Mathe a senior vice president in NCB’s national real estate division.
Taking ownership of the property
The 55-unit complex has undergone a major transformation since its brush with demolition. Back then, Tanglewood Garden was a foreclosed property held by Freddie Mac.
“I’d driven by the property and it looked rough,” Miller remembers. “Over half of its units were empty, and half of those were vandalized.”
But Miller, a former Peace Corps volunteer, saw potential in Tanglewood’s ranch-style brick duplexes, each a two-bedroom, one-bath unit. “It was solid housing,” he says. “It could be good.”
Miller and his wife had been managing housing cooperatives for two decades. Using their joint line of credit, Miller bought Tanglewood in 1993 for $800,000. His wife, he says, was horrified after seeing the blighted property. Yet Miller saw two possible options. The more lucrative approach was simply managing the housing complex as a rental. The other option was transforming Tanglewood into a resident-owned housing cooperative.
“If we succeed as a co-op, we won’t make a lot of money,” Miller told his wife, “but we’ll create something good.”
Miller met with Tanglewood residents and discussed the property’s conversion to a cooperative. Eager to transform their housing complex and secure a safe community, they began working with Miller to form a cooperative structure. Most of the residents were single women who were the heads of their households.
“This was a very vulnerable group,” says Miller, a Minnesota native. “They had kids to take care of. They had moved from place to place to protect their children. They were ready to draw a line in the sand and not move from here.”
Cooper was among them. In 1993, the single mother was a recent arrival at Tanglewood. Her two children were just 5 and 10 years old. “I wanted to help bring about a full change,” Cooper recalls. “I wanted a safe place to come home to.”
Transitioning to a co-op
Miller’s restructuring plan called for raising rents from $395 per unit to $450, and educating residents about cooperative home ownership. By Christmas 1993, 50 percent of the residents had approved the transition to a cooperative structure.
“By becoming a co-op, we had more control over who lives here,” Cooper says.
More work followed. “We started making improvements: picking up trash, fixing doors, painting, installing new floor coverings,” remembers Miller.
Not happy with the changes underway, Tanglewood’s drug dealers burned down three units in the complex. “Their attitude was, ‘If you kick me out, I’ll burn it down,” Miller says.
Cooper recalls there were threats against Miller. But neither he nor the residents who were looking for a better community would give in. “Little by little, the ladies identified who needed to go,” Miller says. “They took ownership of the property.”
A co-op in need of financing
By 1995, Tanglewood Garden Cooperative was a credit-worthy, 100 percent resident-owned community. Cooper and her fellow Tanglewood neighbors were no longer renters but owners. Cooper became the first board president, a position she still holds. Four other residents joined her to serve on the co-op’s board. The renovations continued, extending to cabinets, kitchen appliances and door hardware.
But Tanglewood’s financial needs required more than Miller’s line of credit. In late 1994, Tanglewood Garden Cooperative had come into contact with NCB, which specializes in financing housing cooperatives. In May 1995, the cooperative received permanent mortgage financing for $850,000 from NCB. The funding was used to make additional property renovations and to repay the Millers for their previous investments in the property.
“NCB was the only financial institution that understood housing cooperatives and the value they provide for a community,” Miller says.
Tanglewood made more capital improvements, adding perimeter fencing and security gates. In time, the cooperative’s board voted to convert a unit into a multi-functional common facility for meetings and social events.
Round two of NCB financing
In 2010, Tanglewood refinanced its original mortgage with NCB. “The cooperative took advantage of historically low interest rates to borrow $1 million to pay off the original mortgage balloon and have additional cash to make more capital improvements without increasing its debt service payments,” Miller says.
The capital improvements included installing new high-energy windows and doors and increasing insulation in the units. That allowed the cooperative to pass on tax credits of $890 to each member-resident.
The new financing also gave Tanglewood Garden Cooperative a substantially lower interest rate and a longer term. The savings from the new loan will allow the co-op to keep from increasing its members’ monthly fees, which pay for much of Tanglewood’s operating costs.
“With any co-op we lend to, much depends on the residents’ ability to make monthly payments to the co-op,” NCB’s Mathe says. “If they can’t make the payments, the co-op can’t make its payment. But we deemed that a very, very low risk at Tanglewood, where the residents definitely have a vested interest.”
'My home forever'
Miller is proud of many achievements at Tanglewood Garden Cooperative. The residents have never seen a rate increase since the property converted to cooperative housing; monthly fees are still $450. In 1994, the housing complex was valued at $900,000; in 2010, it was appraised at $1.9 million. Occupancy is 100 percent.
This year, the housing complex is painting its units’ exteriors, building new porches and undertaking major landscaping. In fact, Tanglewood Garden Cooperative has so improved its Atlanta area that an apartment complex next door is being redeveloped, and new construction is underway a quarter-mile down the road.
“We took a liability, and terrible housing for the people living there, and turned it into an asset,” says Miller, who still manages Tanglewood Garden Cooperative. “We did it without government help. But you do have to have access to capital. That’s a challenge when you have run-down property. You need time to convert to a cooperative, stabilize the property and go to permanent financing.”
Life for Cooper and her fellow Tanglewood residents has improved dramatically. A few years ago, she moved from her original unit to another Tanglewood duplex, purchasing her share of the co-op’s shared equity membership for $3,500.
“We have a lovely, affordable place to live,” Cooper says. “This is where I’m going to retire. It will be my home forever.”
Once a neglected and struggling housing community, Tanglewood Garden Cooperative reflects the can-do spirit of many people.
“Tanglewood’s residents hung in there and put their best foot forward,” says Mathe. “Twenty years later, they have something to show for it.”
If you’re interested in discussing financing for your housing cooperative, contact NCB’s Larry Mathe at (703) 302-1909 or firstname.lastname@example.org.