Re: Affordable cohousing | <– Date –> <– Thread –> |
From: David L. Mandel (75407.2361compuserve.com) | |
Date: Tue, 28 Mar 1995 07:51:36 -0600 |
Geoff Mamlet of the Commonweal group in Mass wrote: >We've been planning a community of 30 units, all at market rate. We've been >given to understand that the town where we are buying land to develop has a >strong interest in gaining more affordable housing. The idea is to offer to >add units that will qualify as "affordable" in return for being able to >increase the density of our development (we are already having to go through >a rezoning process just to be able to cluster units, instead of being subject >to the existing "snob" zoning of 1 unit per acre). So instead of a community >of 30 market rate units, we would become, say, a community of 30 market rate >and 5 "affordable" units. >If we price the "affordable" units based on the incremental cost to us for >adding them (e.g., we were going to put in the road, septic, common house, >etc. already, to service the market-rate units), we should be able to get the >price low enough to qualify. >How does this sound? Have other groups explored similar ideas? I >particularly like the minimal red tape, compared to other "affordable >housing" alternatives I've heard about. We're not interested in adding more >delay to our development process. I'm replying via the list because I think this is of general interest. Yes, it would minimize red tape, and it's definitely an admirable idea, but I'm skeptical as to some of the practicalities and the potential effect on group solidarity. Here are some issues that occur to me: 1. How to calculate the incremental cost of adding the units? My experience when similar questions arose here (not in connection with affordability issues) is that it's much more complicated than you'd think. Hard to quantify what the "pure" infrastructure costs are, since they're inexorably linked at many points to the specific units. 2. Even if you do come up with a well-developed estimate of these pure infrastructure costs, I'm very doubtful they'd add up to enough for five more units. 2. No matter how you calculate it, the bottom line in the scenario you describe remains that some members will be subsidizing others, now and for as long as everyone is paying mortgages. This embodies a potential for resentment, guilt, and so on. True, the market-rate buyers may be convinced they're paying the same as they would if the affordable units weren't there, but a real estate appraiser would conceivably value these market units lower due to the resulting higher density. Even if you don't mind the effect of higher density, it could lower resale values, if you're concerned about that type of thing, and most of us are, given the realities of the housing market under capitalism. And if your costs run up higher than first estimated (most projects find this occurring), carrying the subsidized units could put your costs over these (possibly lower) appraised values. Then you'd be up a creek in getting mortgages unless everyone can afford a bigger down payment. 3. Will the affordable units be otherwise identical to the others in size, amenities, etc. (allowing for standard variations in number of rooms)? For reasons of group cohesion, I would strongly advise against creating two classes of units. 4. A related question: In most projects, certain individual options are available -- for a price. Will the low-income buyers be able to include these? If not, and if you have significant options of this sort available, again you're creating two classes of residents from the get-go. 5. You'll need to have clear criteria as to what constitutes low-income. And will it matter whether a buyer is slightly or a lot below that line? Will the level of subsidy be the same for all? Getting more complicated, isn't it? 6. When a low-income buyer sells a few years hence, will she/he reap a windfall by selling at full price? How would you feel about that? Or will you institute some way of keeping the unit affordable by requiring the person to sell only to another low-income buyer? Is that legal in your state? Even if so, it will involve complex legal documents. ... So there would be some red tape after all. 5. The bottom line, if you indeed to this route, is that the fact of an internal subsidy needs to be made entirely clear to all involved, the market buyers and the low-income buyers. In addition, you should work through all these long-term issues before committing yourselves to the plan. Recruit the low-income buyers early and make sure they're involved in all aspects of design and development. 6. Finally (and this applies to any community with large disparities in income, whatever the source of the subsidy, if any), think of the impact of such disparities on future financial issues. Will homeowners' fees be identical, regardless of income? When most residents want to have a special assessment to add some common improvement, will a low-income resident have to block consensus simply because she/he can't afford it? How will you deal with that. As a mixed-income community here, we are already dealing with these types of issues. It's a challenge, but one we anticipated. The last thing I want to do is discourage the ability to add some affordable units. But perhaps if your town is truly interested in encouraging it, it has a scheme in place or can create one in which the subsidy is coming from the outside. We accomplished that for 11 of 25 units through silent second mortgages from the city housing authority, scaled according to level of need and with provisions for maintaining affordability upon resale for at least some time. Yes, there was a lot of red tape and complication as a result, but with all sides eager to achieve this, we were able to do it. If this is a potential solution for you or any other group, we'll be happy to share our legal and financial documents. There are also many other potential ways of obtaining outside subsidy, as you're aware if you've been following this thread. MCCs, state-backed loans for first-time buyers, Affordable Housing Program grants through the Federal Home Loan Banks, private donations, developer mandates. All of these have been done by cohousing projects. ... And I'm sure there are other sources that haven't occurred to folks yet. Also, if you choose to build in a neighborhood that itself is very low-income, these and other doors may well open wider. Hopefully, the more these are done, the easier they'll be to apply to cohousing and the red tape factor should diminish. Please do let us all know how you decide to proceed. While, skeptical, I am very curious to see how it will work if a group does undertake a major internal subsidy -- transfer of significant resources from some members to others. Has anyone tried it yet? David Mandel, Southside Park Cohousing, Sacramento.
- Re: Affordable CoHousing, (continued)
- Re: Affordable CoHousing Rob Sandelin, March 21 1995
- Re: Affordable CoHousing John Gear, March 21 1995
- Re: Affordable CoHousing vicky de monterey, March 21 1995
- Re: Affordable CoHousing Mark Frauenglass, March 28 1995
- Re: Affordable cohousing David L. Mandel, March 28 1995
- Affordable CoHousing Harry Pasternak, September 1 1995
- Affordable Cohousing Michael Arnott, April 29 2001
- RE: affordable cohousing Ellen Orleans, October 4 2002
- Affordable cohousing Louise Conner, November 16 2004
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