|Re: Financing site purchase and construction||<– Date –> <– Thread –>|
|From: Lynn Nadeau (welcomeolympus.net)|
|Date: Wed, 20 May 1998 10:45:20 -0500|
You ask how money was found for site purchase and how people's early financial contributions were valued, relative to later comtributions. One has to find a balance between nickel-and-diming and acknowledging the very real risk of early financial investors, as well as the value of the thousands of hours early group participants put in. At RoseWind Cohousing, we relied a lot on trust: doubtless there are more business-like ways of doing things that would afford more security. So this isn't a recommendation, per se, but an account of how one group handled it. Successfully, in this case. We were fortunate in finding a piece of land that the seller wanted to sell gradually, so as not to incur big tax consequences for himself. We made a purchase agreement by which, of the 9 or so acres, we would periodically (every 6 months?) initiate purchase of another acre, with a down payment of $5000, then make monthly, or quarterly, payments, at low interest, on whatever we had thus initiated to date. At the same time, we paid the (low) taxes on the whole parcel. Early members put in $10,000 each, but when that ran out, or ran short, we raised needed money just by individuals' being able to pony up more (we need $500 more, who can put it in?). We kept track of how much each had contributed. On a couple of occasions, we were loaned money by members, at interest. We had no bank loans. When our Planned Unit Development process had succeeded with the City, and our land was thus replatted into our site plan (rather than the 57 little rectangles it had been in), RoseWind lots became a legal reality and we could buy title to our lots. At this time, members had credit against their purchase for the money they already had in. No interest was figured. To acknowledge the thousands of hours the early members put in --- about 5 people did all of the major work in crafting the PUD documents, designing the site, creating the legal documents, etc---when we figured the buy-in prices, once lots were legally available, we included a "pioneer discount" -- I believe it was something like a thousand dollars for every year a family had participated. One error we made was in figuring the "non-profit" angle too close. We figured what we thought the project would cost, total (land, infrastructure, etc -- though not houses, as we are a lot-development model) and divided it up to come to the price tags for the real estate (home sites) we would sell. Theoretically, we would thus come out "even". What we didn't calculate was that this process was going to stretch out over years, during which the costs of building a common house, for example, would rise faster than the real estate prices could. Now we are down to our last few lots, and wish we could lower their price, but to do so leaves us short in our common house budget. My advice for anyone going this self-development, lot-development, route would be to figure you will sell "almost all" of your lots, but not tie yourself to needing the money from that last lot -- for whatever reason, that last lot will be the hardest to sell, and what if it doesn't? Give yourself a little cushion, when figuring the "non-profit" break-even point. Nonprofits are allowed to have "reasonable reserves" so you presumably won't get in trouble if you end up with a little extra, which will doubtless not be extra by then. Lynn at RoseWind Cohousing, Port Townsend Washington Where we still have a few lots for sale; 20 member families; 12 homes built.
Financing site purchase and construction Eleanor Chandler, May 19 1998
- Re: Financing site purchase and construction Jim Snyder-Grant, May 20 1998
- Re: Financing site purchase and construction Lynn Nadeau, May 20 1998
- Re: Financing site purchase and construction Denise Meier and/or Michael Jacob, May 20 1998
- Re: Financing site purchase and construction LouHarr, May 20 1998
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