Cohousing-L Mailing List: Re: Consultant fees

[Rob Sandelin (robsan]

Sounds like you are in the classic limbo of finding a financial core 
group. Based on our experience I would advise you to do a thorough 
financial assessment of your members ability to make a mortgage if you 
haven't already.  The Puget Sound Cohousing Network put together a 
Feasibility survey as part of the Cohousing Getting Started Kit which 
among other things screens for members income levels.

One of the 4 deadly cohousing "traps" is when people who want to be 
members, or who may be members don't really have the financial 
wherewithal to make a mortgage.  The typical financing formula used by 
banks out here is:
2 years in the same line of work
no credit problems (collections or bankruptcy)
Max loan at 2 1/2 times income.
 I have heard of several groups who thought they had enough core 
members but once they tried to actually committ to buying a site they 
found out many of their members didn't qualify for loans.
Of the four projects in Puget Sound  that have built or are building, 
the average home/unit cost is well above $100,000.  So to qualify for a 
loan a member needs to have either lots of equity or an income of over 
$40,000.  This has unfortunately excluded some excellent people from 
cohousing.  It is much better to screen prospective members up front 
then have them put a bunch of time and energy into a dream that they 
can't realize.   Although I have heard of at least one group who is 
successfully working  a low-income project (The Pacifica group in 
Pacifica Ca) it is not easy to get subsidy for low income members.

Good luck on your endeavors

Rob Sandelin
Puget Sound Cohousing Network
Sharingwood Cohousing Community
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From: "Laura Bagnall"  <netmail!laura_bagnall [at] terc.edu>
To: Rob Sandelin
Subject: Re: Consultant fees
Date: Thursday, January 13, 1994 10:46AM

        Reply to:   RE>Consultant fees
Don't forget that there are two places to think about spreading costs.  One
place is during the development process, and the other place the final cost of
each unit.  We're still working out our strategy, but it looks like we will
adopt the same strategy of dividing costs equally on a per household 
basis, with
possible waivers due to extraordinary circumstances.  However, once the
construction is finished, all of the money that each household has contributed
is credited towards the downpayment of their unit.  At that point, the 
different
units will cost different amounts.  Again, we are very early in the process and
haven't decided how to set the prices for the units, but I'm presuming that it
will be based at least partly on unit size, so that single member households
will probably need a smaller unit than a larger family household, and will thus
end up paying less at that point.

By the way, I haven't yet introduced myself to this list.  I belong to a group
that just started up in July of 1993.  It is temporarily called NorthWest Inner
Suburban Cohousing (NWIS), but we are actively working on choosing a better
name.  We are basically looking for a site in Arlington, MA, which is located
just to the northwest (surprise!) of Boston.  We are actively looking for new
members to join us, and that is actually our main focus at the moment.  We have
identified a possible site, but we can't move forward until we have more
members. I am on the Finance/Legal committee, so I have been actively
participating in the process to work out the financial side of things.  Any
readers of this list in the Boston area who aren't currently affiliated with a
group should feel free to contact me!

Laura Bagnall
Laura_Bagnall [at] terc.edu

--------------------------------------
Date: 1/13/94 9:51 AM
From: jcallen [at] world.std.com
   From: SMITHMCC [at] delphi.com

   The problem is that we are debating the issue of spreading the cost 
out on a
   per person or perhoushold basis.  The single member housholds feel that they
   would be paying more because they do not have the resources that multiple
   person housholds have.  Any thoughts???

So what about single-income, multi-adult households? What about salary
differences? What about households with larger expenses. due to, say, a
large number of children or support of disabled parents? What about...

You can go crazy trying to be "fair." Our group spent an extraordinary
amount of time and angst on this and finally ended up doing everything per
household. This may not be fair, but at least it is clear and unambiguous.