Cohousing-L Mailing List: Re: Unit Entitlements

[Sharon Villines (sharon]

> On Jul 7, 2024, at 5:37 AM, Pare Gerou <paregerou [at] gmail.com> wrote:

> Over the years, I've been following all of the knots communities tie 
> themselves into legally without proper legal design workshops, and it almost 
> feels to me like learned helplessness in doing such a great job of 
> architectural design but not so much with legal design. [SNIP] I've been 
> gathering some materials over the years and would be up to trying a "beta" 
> test workshop with a small group if they wanted to more comprehensively 
> tackle a few of the foundational legal design issues and set their legal 
> house in order.

This should be very welcome I think.

Whenever the discussion of fees/percentages begins it quickly peters out with 
"check your local laws." This is important advice but wholly insufficient. 
Local laws rarely address the fairness of condo fees as appropriate sharing of 
financial responsibilities. This is complcated by voting in most commercial 
communities being based on percentage interest. Large unit have larger votes.

Understanding and getting legal agreements in order is important but more 
fundamentally understanding what you consider to be fair and equitable. State 
laws don’t address this.

Some communities seem to be happy with charges per adult in each household or 
per bedroom. Who counts as an adult? Are recounts done regularly? How can these 
counts be consistent or accurate? What defines a bedroom—the initial sales 
offering or the way the room is used?

Some divide the “cohousing” or social costs from other costs. I view cohousing 
as a wholistic concept of life and living. All parts are part of the whole and 
each benefits from the other. Just as house prices are based on the surrounding 
neighborhood as much as on the quality of each house. Each activity in 
cohousing contributes value as much as the front porches.

The bulk of monthly condo fees go to facilities maintenance, repair, and 
replacement as operating costs and reserve fund deposits. So a calculation 
based on SF of privately owned space might be the best. But how does the 
internal square footage coincide with the costs of roofing, wiring, plumbing, 
etc dedicated to that unit? Do some units have large roofs over porches not 
included in the interior SF charges?

Understanding the cost of replacing the roof over units with the same sized 
roofs — one roof over one three-story unit supported by one fee and one roof 
over 3 stacked units supported by 3 fees — makes this difference real. When we 
had to replace our fire sprinkler heads the range was 7 sprinkler heads in the 
smallest units and 21+ heads in the larger units. The cost to the community was 
3 times greater for the larger units, but people don’t like charging the larger 
units three times more in fees so the small units end up subsidizing the larger 
units. 

When I started trying to find an equitable base for apportioning annual 
assessments I realized why developers design cookie-cutter condos. This 
building is all one-bedrooms, that building is all two-bedrooms, etc. It isn’t 
just more economical in terms of construction but it also prevents arguments 
over extra windows or no porches on this side, etc., should pay more. 

In cohousing, to avoid ghettos of small units separated from large expensive 
units with more amenities, our designs are mixed up. The allocation of fees 
gets weird.

Communities have all kinds of arguments for the justification of whatever model 
they use. One I was told was that no one would buy the large units if the fees 
were three times higher. Another was that the large units have more children 
and families can’t afford those fees. "If we want children we can’t charge so 
much for those units." (It is not true, by the way, that large units = 
children.) That’s how the small units end up subsidizing the large units.

We are now 25 years old and have a long history of resales so I’ve been looking 
at apportioning costs based on the market value of the unit. I know what is 
inside the units in terms of upgrades, etc., but Zillow doesn’t and buyers 
don’t. Prices are pretty standard for all units with three bedrooms, three 
bedrooms with parking, 2 bedrooms with a balcony, etc. I consulted a realtor in 
Manhattan who has sold millions of condo units. Her view of prices is that 
units sell by size, number of bathrooms, location, neighborhood, houses on the 
block or in the building, etc. Other amenities like a new kitchen or floors 
will make the unit sell faster but not substantially change the market price. A 
unit with the original 30-year-old kitchen will take longer to sell and will 
not sell for significantly less.

I have been looking at the costs of repair and replacement by unit looking at 
things like the number of SF of balconies that have to be washed and stained 
every 2-3 years. Some units have no balcony, others 1, and some 3 or 3 plus a 
porch. The details become very complex as in the example of sprinkler heads. If 
each sprinkler head costs $20 to replace the cost for the smallest unit could 
be $140 and for the largest $440. Dividing the total cost equally between units 
would not be equitable. To fairly base the annual fees on those numbers means 
calculating that difference for every foot of plumbing, foundation, etc.

One argument for not trying to include the costs of amenities in the percentage 
interest is that they contribute to the total look of the community and add to 
the value of each unit—in the long run it’s not worth the dickering.

The question is what do we base the percentage interest on? The initial unit 
sales price is probably the most common. Then interior SF of each unit. Then it 
gets complicated adding a percentage for balconies, porches, basement storage, 
basements, attics, backyards, etc. I haven’t been able to find anything that 
discusses equitability for charges for varied unit sizes, amenities, etc. 

I’m just saying you need to look at the costs of maintenance, repair, and 
replacement before you decide what to base the percentage on.

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