Cohousing-L Mailing List: New York Times article on the Rocky Corner foreclosure (Steve Welzer) and (Sharon Villines)

[Thomas Lofft (tlofft]

On 11 Feb 2022, Steve and Sharon sent the following:
From: Steve Welzer <stevenwelzer [at] gmail.com>

This article will appear in the print edition of the New York Times on
Sunday (Real Estate section):

https://www.nytimes.com/2022/02/11/realestate/connecticut-cohousing-foreclosure.html

-- Steve Welzer

Debt by itself is not the critical issue. Cohousing is a typical capitalistic 
enterprise, financing our future with other peoples' money.

The critical issues are controlling development costs from the very beginning:
Issues are:

  1.  Paying too much for the land, and buying it too soon, before being 
certain the total project will be affordable to the buy-in prospects.

  1.  Overdesigning the project with costs higher than affordable to the buy-in 
prospects; e.g., common house too large; homes too large and overpriced for the 
budgets of the buyers; luxuries such as extreme energy conservation that is not 
affordable.

  1.  Not being fully aware of jurisdictional development regulations and 
restrictions, costs and fees for development, roads, utilities, development 
fees, social welfare burdens passing on for the rest of the jurisdiction and 
state;
  2.
  3.  Getting experienced professional real estate agents, attorneys, land 
planners, engineers, architects, and a cohousing experienced project manager.
  4.
  5.  Assuring that there are enough committed buyers who have invested funds 
for down payments that cannot be withdrawn before completion of the project.
  6.
  7.  Being sure the lender will fund the project for both site development and 
construction, and permanent mortgages for homebuyers, conditional on 
traditional credit and affordability issues.

Land acquisition should always be with an option contract which allows ample 
time to meet all zoning and other jurisdictional compliance requirements before 
going hard with the money.

Cheers and best wishes for more affordable cohousing communities.

Tom Lofft
Http://www.Libertyvillage.com

From:  Sharon Villines <sharon [at] sharonvillines.com>


This is a very sad story about a failure that was more common in the 1980s than 
now. This community had been under development for 11 years and had a wide 
array of investors. The article is a good one in that it gives a clear 
description of all the things that can go wrong in real estate development. It 
has taken the movement a long time to realize that cohousing is a real estate 
development. It involves land and bricks and mortar and that is hugely 
complicated. And it takes professionals involved from the beginning to avoid 
pitfalls. The work has to happen before any money changes hands.

One of the major pitfalls in our financialized capitalism is debt. The heavy 
carrying costs start when you borrow the money whether the house is built or 
not. You may eventually have a $200,000 house, but no matter what, the bank 
will get $200,000 plus carrying costs? the interest can be double or triple for 
the bank whatever benefit you receive from the loan. The money in capitalism is 
no longer in producing wealth with creativity, but in enticing (and even 
forcing) people to go into debt and paying interest. Debt is a much more 
lucrative business than actual construction.

As you can tell I've been reading David Graeber who writes about how our 
economy is constructed to keep the 99% in debt to the 1%. And the 1% are 
getting rich even faster than the Robber Barons did. The Robber Barons at least 
discovered oil and built railroads. Wall Street builds nothing, and goes on 
vacation.

To understand what happened to Rocky Corner, start with this article, then read:

?Debt: The First 5000 Years?
https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years

 ?The Democracy Project. A History. A Crisis. A Movement."
https://en.wikipedia.org/wiki/The_Democracy_Project

The Democracy Project is Graeber?s memoir and analysis of the Occupy Wall 
Street movement ? why it was so extraordinarily successful and why it 
ultimately failed. He explains so clearly the interplay of money, democracy, 
dreams, anarchy, consensus, horizontalism, liberalism, journalism, and how they 
all trip over each other. Very insightful about how debt is used to control 
people and communities.

The article also explains why choosing land is so hard ? out in the country it 
is less expensive but you have no idea what is underground. Even in the city, 
it's iffy.

My condolences to all the Rocky Corner people.

Sharon
----
Sharon Villines
Takoma Village Cohousing, Washington DC
http://www.takomavillage.org