Cohousing-L Mailing List: RE: modular cohousing community

[Rob Sandelin (Exchange) (Robsan]

John Shryock wrote about creating a circle village in Montana of 
manufactored homes. 

>The  prospective
>dweller would purchase their own home ( a nice 1300 sq.ft. goes for >about
>60K) and then buy into the  non-profit cohousing corporation for about 
>15K.

I think you might have trouble trying to sell the bank on the "stock" idea. 
If the banks won't fund a stock cooperative, one idea might be to break into 
two legal organizations, one for land and property title, and one for 
creating the common elements.  Unless you set up the legal structure as a 
condominium, the bank may be fussy about mortgage money for common elements 
like a commonhouse, and raising enough money via assessment to build a 
commonhouse might be something the residents are not interested in. 
 Especially if the primary interest in a cheap place to live rather than a 
community.

One way to be creative about this is to build the common element costs into 
the price of the lots. You create a development organization, then sell the 
lots at a premium price, using the profit on the lot price to pay for 
commonhouse  construction.  For example, say the cost of the site and 
development will be $500,000, which divided amoung 20 lots is 25,000 per 
lot.  YOu sell the lots for $35,000 and use the $200,000 profit to build the 
commonhouse. Banks are used to developers making a profit and as long as the 
price of the lots was not hugely out of market reality they would go for it. 
 

 In order to do this and not loose 28% of the profit in income taxes you 
need to get a good tax advisor. One way you may be able to avoid taxes is to 
sell title for lots for $10, but still collect 35K for each lot as a 
development assessment.  If you phase in your assessment collections as your 
development costs come in, by only "selling" lots as you can use the 
captial, you should be able to cover all your costs, pay little taxes, and 
have the funds to build the commonhouse without anyone having to pay assessm  
ents.  Again, to get this right you need to consult with a good tax 
accountant and design your membership and buyin paperwork carefully.

There may be some other ways you can organize as a non-profit and avoid 
taxes - check with a local attorney.

Rob Sandelin
Sharingwood