Cohousing-L Mailing List: RE: Equitable distribution of costs

[Rob Sandelin (robsan]

Another point of view is to ask, why should costs be equitable? In most 
cases the people who come in early take all the financial risks, put in 
most of the effort and do much of the vision. Why shouldn't they be 
rewarded for that with a price advantage? Or, to put it the other way, 
why would anyone want to take the risks and make the effort if they can 
wait and buy in when everything is figured out, at the same cost 
without any of the effort?  All four built out groups in our area 
(Winslow, Puget Ridge, Sharingwood and Talking Circle) all had trouble 
getting people on board when there was lots of risk and design and 
other work to do, but had a large influx as the project neared, or was 
close to finalizing.
   At Sharingwood Cohousing, the founders paid cost for the lots 
($20,000). The last lot sold was at $43,000.  Some of that difference 
in cost was reflected in the development costs accrued but also some of 
that difference went into the common account of the group, and for 
those who bought an extra lot to give the group development capital 
when it was desparately needed, that difference is profit for them.
   The founders took all the financial risks, did all the development 
efforts and got essentially value returned for that work and risk in 
the form of cheaper lots. Now that all the work in our first phase is 
largely done, its amazing how many people we have who want to join the 
first phase and how none of those same people are interested in doing 
the development work in the second phase.
   That's why we are selling the first three memberships in the second 
phase (first phase is sold out) at a reduced rate and the rest of the 
memberships for $8,000 more.

Rob Sandelin
Sharingwood Cohousing
Puget Sound Cohousing Network
----------
From: "Fred H. Olson WB0YQM"  <netmail!fholson [at] maroon.tc.umn.edu>
To: Rob Sandelin
Subject: RE: Equitable distribution of costs
Date: Wednesday, January 26, 1994 8:19AM


I've been reviewing the messages from the last month about assessing
member fees.  I plan to use them as the basis of an article for
our local newsletter. Note that I have not been a part of a cohousing
core group that has gotten so far as raising significant amounts of
money for development costs.  The scheme I currently like is similar to
New View's but in thinking about it I think my wifeand I have had an
insight that I'd like your comments on.  Suppose:

Money would be raised to cover early development costs as they arise
from member households in some equitable way - per household maybe with
an adjustment for household size. Records would be kept of who paid what
and would later be counted toward house purchase.  Costs would be added
to the cost of the houses and common space shares.  Thus when the
community is completed the development costs are paid for in proportion
to house cost.

But if costs are eventually in proportion to house cost what difference
does it make how members raise this money as long as enough money can be
raised? Why, for example, not essentially borrow from members who have
liquid assets that they can essentially prepay toward their house?

Note the case of the community that fails and everyone looses the money
they have put in so far (no post failure transfers). In this case people
would lose in proportion to the fee assessment formula.  Thus an
equitable fee assessment formula essentially spreads the risk equitably.
It also enforces a level of monetary commitment among members.

Similarly, I'm inclined toward keeping a record of hours worked but I'm
also sympathetic to arguments about individual circumstances. The group
has the potential to take these into account in enforcement. Keeping
track would allow differences in time to be open knowledge and exert
some peer pressure for members to do what they can rather than a source
of private resentment.

Fred Olson   Minneapolis,MN     Seward Cohousing Group   *and*
             fholson [at] uci.com    Anderson Lane Core Group
             COHOUSING-L sysop  Hopefully one of them will get built!