RE: question from a grad student
From: Berrins (
Date: Tue, 16 May 2000 22:27:07 -0600 (MDT)
In a message dated 5/16/2000 8:27:01 PM, olevy [at] writes:

<< No, the problem is not government, it is the bankers.  ....the
hard cold reality is that if we want to build, we need to make our
development bank happy.

The problem is, our development bank wants us to pay 23% of the project cost
upfront plus any expected over-runs.  And we recently got an updated bid
from our contractors only to find that their prices have gone up 15% since
last Fall -- the Seattle building market is absolutely out of control at the
moment.  Even this wouldn't be too much of a problem except that the banks
we talked to won't attach a monetary value to our common facilities.  So in
effect, we have to consider the common facilities as a cost over-run.  In
practical terms this means we have to come up with that much more money up
front. >>

At Pathways we got lucky; the Pathways development entity (who we were before 
we were owner occupied) never had to go to the banks.  Our 
contractor/developer agreed to lend us money, at decent market rates, after 
we were willing to lend ourselves a bunch of money in advance (I think it was 
10% of the total budgeted costs, but I'm not sure).  This made some money for 
the developer (which would have gone to the banks) and saved us about $50,000 
in bank fees.   If you can find an enlightened developer who would like to 
make a few extra bucks on the project by loaning you money, you may be able 
to bypass the banks also.  Good luck.

    Roger Berman
    Pathways Cohousing
    Northampton, MA

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