RE: covering startup and infrastructure costs
From: Rob Sandelin (
Date: Mon, 12 Jul 1999 09:33:10 -0500
What Lynn said for Rosewind also applies to Sharingwood. The difference
perhaps is that we have always had the benefit of member investment beyond
personal lot costs. For example, we self financed our Commonhouse by loans
from members which we repaid, with interest as we sold the last of our phase
2 lots. Most non-cohousing communities form this way, by using the resources
available and building over time instead of all at once as one big capital

I know of several cohousing groups that covered their early startup costs by
just charging a small monthly assessment and accumulating funds. For
example, $10 a month is not enough to scare anybody away and with 15 members
will provide for marketing and such funding. As you get further along and
need capital to put down to hold property members need to make more serious
investment. This is stressful, and often will show up any problems in your
group process. It is typical to lose a few members at this point, because
the dream is nice, but often groups do not seriously engage about money
matters and folks without the capital want to hang on to the dream as long
as they can. WHen the cash call comes, they have to leave, and it can get
very emotional as a favorite family leaves the project because in
reality,they can't afford it. Almost every group goes through this to some
extent, they have early fantasies about low income, low cost housing, then
nobody really does the work it takes to secure the financials for low income
and the real costs come in from the bids, and YIKES! it ends up being
significantly more expensive than people first thought, and on it goes with
turn over and tears.

In many cohousing groups there has been an unequal financial contribution by
one or more members. For example, most banks will require that the developer
(thats you) put up a percentage of the A%D loan money. (Acquisition and
development which means buying off the land and the first infrastructure).
On a $4 million cohousing project this is ton of money that the membership
has to come up with. People will sell their homes, etc. to raise that money.
This is the place where self developed groups can come up critically short
and fall apart. Its OK to let a few members loan the group this money, just
be very clear about the terms and expectations. If you get to this stage and
you realize you have no real money in your group, its time to do a very
critical evaluation. Real estate development is neither cheap nor easy and
that is what you are doing. If you can not generate the assets you need to
do the development work you will need to sell your project to a developer
that does, and accept that they will take a profit of your endeavor. This
will raise your costs some but maybe not as much as you might think.

Another way this is dealt with is that everybody puts in their 10% house
downpayment, which often will cover your percentage of the A&D loan. It is
pretty much a standard of home loans that you must come up with 10% down
(cash) and this is another area where people may have unrealistic
expectations. Home ownership, even groovy cohousing home ownership, requires
certain amounts of income and job stability in order to get a bank mortgage.
The "alternative" part of cohousing can sometimes draw people who would make
great neighbors but will not be able to secure a mortgage. The more you can
do up front to work this out early, the better off you will be.

By the way, you want to document all the money you spend very carefully
because there are tax consequences in some states and they can charge
outrageous penality amounts that dwarf the actual tax originally owed. Be
sure you are hip to this in your area, it can come bace and bite you hard,
and not all states have such taxes.

Rob Sandelin
Northwest Intentional Communties Association
Building a better society, one neighborhood at a time


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