Cohousing-L Mailing List: RE: financial planning

[Mac Thomson (ganesh]

Based on ideas from other groups, we¹ve put together the following 
incentive PLAN:

PHILOSOPHY
Membership Incentives are offered for a number of reasons:
?  To reward Members that join early for the high level of risk inherent 
in the development project during the initial phases.
?  To reward Members that join early for the use of their money for a 
longer period of time.  If it wasn¹t paid to SJC, it could be earning 
interest somewhere else.
?  To reward Members that join early for the extra work that they¹ll put 
in at the beginning.
?  To encourage Members to sign up early, especially at critical points 
in the development process.  Our Membership Threshold Goals must be met 
for us to move ahead with development.

CHOICE OF LOT
The order in which households become Members is the order in which they 
will get to choose lots.

To avoid any misunderstanding, it should be understood that lots will be 
priced differently depending on their relative market values (views, 
trees, topography, etc.).  These prices will be determined before lots 
are chosen.

EQUITY CREDITS
Equity Credits of $1000 each are awarded to all Members at certain 
points in the development project.  Every household that's a Member gets 
a $1000 Equity Credit at the time of:
1)  Site control (under contract for land).
2)  Receiving preliminary land use approval.
3)  Beginning of construction.

So a family that¹s in from the beginning would receive a $3000 discount 
(3 Equity Credits) on the price of their lot.  The credits can be used 
at the time of final purchase.

What this means is that if a Member is in from before we have the land 
under contract and selects a $47,000 lot, they would only pay $44,000 
for the lot.

> We are an early stage group doing our financial plan for large sum
> investments.  We have read all the archives on the subject and finding
> some good ideas but need much more detail.  We have decided that we
> would like to create an incentive to invest early, by increasing the
> buy-in as the risk of the project goes down.  For example, when the
> county issues permits to build, the buy-in price would go up.  Another
> way to do this would be to pay out an interest payment to the current
> investors, thereby increasing their value invested.  New members would
> then have to contribute that amount.  We are also considering paying
> interest to all members for their investments, and paying interest to
> members who have invested above the target amount.  We welcome
> suggestions on how to do this, and copies of bylaws containing this
> information in detail.  What success have completed projects had in
> paying out interest to their early investors?  Was there enough money at
> the end to make the payments? Another major unanswered question for us
> is how to handle members who have made large sum investments who want to
> leave the group.  When/how do they get their money back, assuming the
> project goes through to completion?  Do they get paid interest for
> having their money tied up for a period of time?  Do they get their
> money refunded as soon as another household joins the group or at the
> completion of the project?  We have made our dues non-refundable, so
> this is only applying to the large sum investments. Thanks!
> 
> Leslie  Maniccia Cascadia Cohousing Seattle, WA

-- 
           Mac Thomson                   San Juan Cohousing
           ganesh [at] rmi.net                Durango, Colorado

"The world is a comedy to those who think;
     a tragedy to those who feel."
                             - Horace Walpole