Cohousing-L Mailing List: Re: Lot development, coho financing

[Merlin Porter-Border (merlpb]

    I agree with Sherri, and what follows is our particular experience with
self-development and financing: it may strike a chord with some of you who have
been through it, or it may help wanna be cohousers forming in an area where
cohousing is new.
     We at Liberty Village, Maryland have had a strong Design Team of home
buyers including, among others, an architect, a civil engineer, and a person
with the combined credentials of having worked on development projects, a
degree in architecture, a masters in city planning, and now a real estate
associate broker license (we lack a Sherri Rosenthal).
    We are an LLP and we are self-developed, and, as a group, up to now, have
no track record  for development. We are selling zero lot line lots, with the
price including infrastructure (roads, public sewer, public water, storm water
management, communications conduit network, area lighting system, private well
and distribution system for the grounds-garden-orchard), the land, and common
house.  Katie and Chuck, long ago, advised us not to attempt to get financing
without help.
    We had put about $500,000 into the project.  We owned the land, engineering
completed, State and County approvals completed, had 21 of 38 lots under letter
of intent to purchase.  We felt pretty secure, and we struck out on our own to
get financing by a bank. Our presentation was professional.
    We were striking out, badly.  The banks were not sufficiently familiar with
cohousing, were unimpressed by the professional character of our team, and
wanted to see a legitimate [read "local"] developer in control.  Bottom Line:
from their perspective, the project looked risky.
    Through dumb luck, we were referred to a person who is well connected in
the local financial community and who specializes in arranging financing for
difficult-to-finance projects.  The Team and he had instant repoire ("So,
that's where you 60's guys are!").  We offered him 1% of the development loan
(not including land, houses and common house - a $9000 fee).  He had two banks
competing for the project within 10 days.  He talked to bank presidents or
CEOs.  That was after we spent weeks working with bank VPs ("Head Cashiers" our
guy said).   One of the contending banks had shown no interest earlier.  We
began construction shortly after selecting the bank.
    It could be easy for the next cohousing community, in this area, to get
financing.  No guarantees. Listen to the cohousing pros about financing: Katie
and Chuck and Zev and Chris and Jim.  Or, have a Sherri in your group.

Merlin Porter-Borden
Liberty Village, Maryland
Where the cohousers are great, the neighbors are supportive, and the roadwork
grading is complete.