Affordable Cohousing: Sections 7 - 9
From: Chris ScottHanson (
Date: Wed, 11 Mar 2015 11:05:39 -0700 (PDT)
[submitted to cohousing-l in weekly installments, for comment and input.]

The strategies outlined in the series to follow have been collected over the 
past 20 years of doing cohousing projects across the US and Canada.  Many of 
the strategies outlined below are what I call Internal Banking.   These 
“internal banking” relationships are magical when they happen, and it would 
seem they can only happen when there is a strong sense of  community, and trust.

7. Maintenance Reserve Reinvestment

All home owner’s associations need to establish a maintenance reserve fund to 
prepare for the cost of maintenance and repairs in the future - roofs, hot 
water heaters, etc. Hopefully you won’t need that money for 10 or 15 years 
since you chose to build a high quality, durable building. The reserve fund 
comes from an initial contribution by first buyers followed by monthly 
additional contributions. This fund, which can run as much as several hundred 
thousand dollars, is normally invested in bonds, or other safe interest bearing 

Some of this money (NOT ALL OF IT) can be re-invested in your own community. By 
establishing a relatively large reserve fund up front you can make 1) internal 
subsidies (investments) are possible, and 2) lower monthly contributions to the 
reserve fund, lowering home owners dues.

Some communities will invest a portion of this fund in its own members, through 
a buy- down subsidy. Your community can buy a portion of a unit (or, buy down 
the price of a unit) for a qualified member. Then, the member can repay this 
subsidy when his/her income allows, or when the unit is sold.

Since the units will be resold at market price the value of the original 
subsidy/ investment rises with the value of the property. When the investment 
is returned, the community can either re-use this money to subsidize other 
qualified households, or simply repay the reserve fund. The finance committee 
will have to determine whether to co-own the subsidized units, or simply 
subsidize them and the decision will need to be balanced with the prudence of 
tying up the resources from the reserve fund, evaluating long term liquidity 

8. Unit Price Buy Down

Members may apply for a reduced price on their unit, financed by a buy-down 
subsidy provided by the rest of the membership. The price reduction will be 
determined by need according to certain criteria, including household size, and 
size of desired unit. At any time, a member can contribute an amount equal to 
initial portion of market price subsidized and thus buy themselves out of the 
obligation to return the subsidy upon sale of the unit. Otherwise, the member 
will return an amount equal to initial portion of market price subsidized 
proportional to the present market value of unit upon sale of the unit.

9. Design for Affordability - Capital Costs and Operating Costs

The project can be designed with affordability in mind. Simplicity and 
standardization are the goal to reduce capital costs (initial construction 
costs). In addition, making smaller units available will make your project 
affordable to more people - once they understand and believe in the value of 
the common house and how it can fit into and suppliment their lifestyle. These 
smallest units might be located close to the common house to allow for 
convenient use of CH facilities as a supplement to the small units.

Designing for affordability also means building a durable, low maintenance 
project. Obviously, you want to reduce long-term operating costs. Of course 
this competes with keeping capital cost down and a balance has to be achieved. 

Chris ScottHanson
(206) 601-7802

The list of 13 strategies:
1. Internal Down Payment Assistance 
2. Outside Down Payment Assistance
3. Second Mortgages
4. Co-purchase Options
5. First Time Buyers
6.  The Reduced Monthly Condo Fee Subsidy.
7.  Maintenance Reserve Reinvestment
8. Unit Price Buy Down
9. Design for Affordability - Capital Costs and Operating Costs
10.  Shared Units
11.  Community Owned Rental Unit
12.  Participating Nonresident Owners
13.  Purchase of One or More Units by an Outside Affordable Housing Entity
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