Re: How to condoize
From: Raines Cohen (rc3-coho-Lraines.com)
Date: Thu, 28 Jun 2007 20:45:19 -0700 (PDT)

On Jun 28, 2007, at 8:15 AM, Rachel Wangen-Hoch wrote:

I posted a few weeks ago about an adjacent property for sale next to the
land where we will be developing our cohousing.

From your previous message, I see that your community is in Olympia, WA; you might want to note that in future queries of this sort, as property laws vary a great deal from state to state, and professional resources and helpful communities are largely tied to geographical proximity.

  There are a couple of
families seriously considering purchasing this property in order to provide a few affordable options for folks who want to be a part of the community.

That's terrific! It always warms my heart to see communities reaching out beyond their borders and connecting with the neighborhood around them, either formally or informally. It sounds like you are effectiely setting up a little housing development corporation; you might look at partnering with affordable-housing developers in your area, as there are ways to do it that potentially can tap all kinds of funding sources, but they are dependent on being set up properly at the beginning to qualify or be competitive and the process does require a great deal of patience and can come with many strings attached.

Next month's issue of Cohousing magazine has a big article about affordability strategies, and this is one that I've seen some other communities employ, including Songia (Bothell, WA) and Coho Cohousing (Corvallis, OR), with different strategies and priorities.

You don't say whether these families are already part of your community, or are planning to be, and whether tying up funds in this investment (and taking the time to manage it) could potentially detract from their ability to participate in your community.

The property has 3 homes on it on two lots which would not easily be divided due to an alley right of way that exists on one of the lots. We are talking about purchasing the property and condoizing it, but I don't have the first
clue as to how that would work.  Our plan is that those living on that
property would be affiliate members of the community.

At Berkeley (CA) Cohousing, where I live, our neighbor participates as an associate member, making monthly contributions in lieu of dues, cooking meals and cleaning, participating in meals and decisions except for reserves and capital contributions, and we've rearranged the fence at the property line to better integrate with his house. Someday we'll get around to actual defining associate membership, but what's the rush, it's only been a decade. ;-)

1. Would we purchase it as tenants in common and then condoize it down the
road?

This is the most common approach taken by retrofit cohousing groups. Temescal Creek Cohousing in Oakland, CA did this; there's an article on 'em in Cohousing magazine from around a year or two ago. A group in Aptos, CA is in process with this approach right now. In some cases, it is not necessary to condoize, as some banks now have TIC products that can be independently refinanced in the manner of condos, and some states have condo-like legal structures and contracts that provide similar levels of protection.

or
2.  Can we convert it to condos at the same time that we purchase it?

In my experience of groups I"ve worked with and talked to, the condo conversion generally follows; I've only seen it take place before move-in with new-build developments. It might be possible to take out an option on the property so the purchase doesn't complete until the planning approvals are in place for condo conversion... a real estate agent can advise on contracts and process for that path, which shifts some of the risk to the seller and can significantly postpone when funds are needed.

3.  How do we do all this anyhow?

You talk with other groups that have done it, especially in your state, and get recommendations for knowledgeable professionals, like realtors and attorneys specializing in this area.

Note that individual cities can have their own regulations on condo conversion, and in some cases it can trigger inspections and code- compliance reviews as though the project was being newly built. Mariposa Grove Cohousing (Oakland, CA) is having to remove windows that are too close to where a neighbor MIGHT build in the future and also document permits for a stove installed half a century ago by a previous owner as it goes through the process right now. Temescal Creek had to become, if I recall, two separate 4-unit condos to stay within conversion limits, and got caught up in laws that were becoming more restrictive and fees that were dramatically increasing during the conversion process. Berkeley Cohousing got a city ordinance passed exempting it from $30,000-per-unit condo conversion fees in exchange for being "permanently" (30 years from each resale) affordable. Many cities facing housing shortages or other resources and political or legal limits on their taxation ability will look for "new" developments, including condo conversions, to shoulder the burden through hefty fees and transfer taxes.

4. Can you point me to any books or online resources on how to do this?

The Community Associations Institute (CAI) is a national organization of condo Homeowner Associations (HOAs), and certainly has resources in this area, and listings of professionals who can advise. You may find a similar organization in your state; in California we have the Executive Council of Homeowner Associations (ECHO), but most of their resources are oriented around condo operation, not their creation.

Diana Leafe Christian's book, "Creating a Life Together," talks about some different structures for ownership and decision-making processes and some of the options in that area, but probably doesn't cover it in the depth you need, but you may find it helpful to understand the basic issues.

The bottom line is: you should just get an estimate from an attorney and factor in the legal costs as part of the property purchase costs.

Raines Cohen, Cohousing Coach
Planning for Sustainable Communities (at Berkeley (CA) Cohousing),
a Certified Green Business, Certified Senior Cohousing Facilitator, and Certfied Green Building Professional and Build It Green Member en route to Seattle to have dinner at Songaia and then catch the Northwest Intentional Communities Association (NICA) gathering this weekend, and maybe get to visit a few more communities

Regional Organizer, Cohousing California
where our (extremely part-time) lobbyist is planning to be in the state capitol building in Sacramento today to provide input on changes to the Davis-Stirling act that (heavily) regulates condos in California

Boardmember, Fellowship for Intentional Community
hosting the annual communities conference Aug 17-18 at Twin Oaks in Louisa,VA



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