Cohousing-L Mailing List: Re: affordable coho options

[David L. Mandel (75407.2361]

Just a quick reminder following recent comments by:
1) Mary Ann Swain about getting hooked up with nonprofit housing developers and
local government agencies to subsidize some affordable units in a mixed income
project through creative financing ideas;
2) My neighbor Pam extolling the positives about our (Southside Park Cohousing)
mixed-income nature and the fact that some of us have relatively affordable
mortgages.

How we did it financially, aside from the hard work of our lawyer and bookkeeper
members and the broker who arranged for Pam's loan (how I wish she had been in
the business earlier for the rest of us, but that's a different story) ... is
precisely along the lines of what Mary Ann proposed. A lot's been written about
this in this forum and in the cohousing journal, so I won't carry on at length.
But for newcomers at least I want to connect these two thoughts and to endorse
the view that it can be done. In fact, the more it is done the easier it will be
for others (and it sure was not easy for us).

VERY briefly, what our plan involved was: a lot of friendly consultation from
some nonprofit developers, though they were reluctant to get directly involved
in a project that was not entirely or mostly low-income; and financial support
from the local housing agency, which had targeted the very low-income,
dilapidated neighborhood we chose for an infusion of tax-increment
("redevelopment") funds and wanted to see exactly the type of mixed-income
project we had in mind. The agency provided $330,000 in supplementary
construction financing, plus allowed us to pay it for the land ($415,000) after
the units were built and as they sold. Then this latter amount was used to
provide second mortgages to 11 of the 25 buyers, covering up to 49% of the
unit's value, the exact amount depending on the buyer's ability to qualify for a
first mortgage. These seconds are due upon resale or many years down the road;
repayment will involve a share of appreciation as well as principal; and the
resale of the units in the meantime is restricted as to price and income of
buyer.

Anyone who wants more information on this, please inquire. We're also happy to
share the legal documents we drew up to put it all together. You supply the cost
of postage and photocopying.

By the way, I don't mean to imply that the exact way we did it is best or would
be acceptable by every local housing agency. On the contrary, there's a large
variety of financing methods within this general approach. It takes energy and
creativity, but here at least is proof that it is possible.

David Mandel, Sacramento