Cohousing-L Mailing List: RE: Keeping Cohousing Affordable

[Rich Lobdill (richardl]

Kathleen Henry wrote:

I read about a Cohousing community which used
"soft loans" and would like to know more about how they worked.  If your
group used some sort of creative financing, please let me know about it.


At Tierra Nueva we provided a source of funds of 'soft seconds' or 'silent
seconds' available to the long term members who had put part of their life
into our development (with little or no financial return) but were going to
be priced out of the project by the rising costs. We're talking about a rise
of probably 25% in cost compared to our original optimistic estimates.

The loans are held by the Homeowners Association and are to be repaid
if/when the house is sold. The amount paid back will be in proportion to the
sale price of the house but no less than the original amount. Other than
that there are no monthly payments on the loan. The buyers still had to come
up with a real cash down payment based on the final cost of the house.
Otherwise the bank would not loan on the first mortgage.

We made this available to members who were active before we obtained title
to the land. They had to make a case to the finance committee regarding the
necessity of the loan. Some folks who really could have made a good case
chose not to pursue it for personal reasons but were still able to buy their
house. We ended up loaning less money than we had allocated.

When the construction budget was being formed we included a line item for
soft seconds which added to the total cost of the project and hence housing
costs but personally I feel it was a great way to honor the risk and energy
and effort that the stalwart members put forth during the dark days.

Rich Lobdill
founding member
Tierra Nueva Cohousing.