Cohousing-L Mailing List: The economic realities of Cohousing development

[Rob Sandelin (floriferous]

Here are some more detailed points about why I think affordability will not
be the definition of cohousing.

Up to this point, cohousing development in America  has been done by: 1.)
Middle class people with money to invest upfront or  2.)professional
developers.

A group meets and decides to do an affordable cohousing project. Who is
going to carry the costs for the initial development work? These costs
include, securing a building site, planning and zoning costs up to working
permitable drawings, plus legal costs, and some other consulting fee?

These fees usually add up to several tens of thousands of dollars. Who is
going to pay these costs? Up to this point in cohousing history either the
group itself pays these costs out their own pockets or a  real estate
developer or company has covered these costs. You will not get a dime out of
a commercial bank until you have an approved project with a developer signed
on. To get to this state will cost lots of money. And it is very high risk
capital.

Back to our affordable cohousing project. They have no resources, that is
why  they are making an affordable housing project. They approach a local
affordable housing  group. Oops. Cohousing requires lots of time commitments
and community building work. Hmmmm. This is undesirable  from the
non-profits point of view, too much is required.  No thanks, we'll pass on
this project, since we already have the next  3  years worth of block grants
targeted.

Cohousing as it has become established in America is real estate
development, which is not cheap, nor particularly easy. And so, to do
cohousing successfully, based on what I know of the built groups in America
takes a couple things. 1. Money and 2. People with a high level of drive to
succeed under difficult circumstances.

Over the years I have the privilege of  visiting a fair number  of cohousing
communities. From my experiences, Currently, cohousers are people that are
almost uniformly middle class, college educated, who have good paying jobs.

Real estate development excludes people that  have no assets, are not
mortgagable, and have little drive to succeed. That is the reality. New home
real estate  development does not happen by magic, it takes money and
commitment.

And Yes, there are examples where people with money and drive were able to
include others who did not have money. And this is great.

However the commonest forms of failure in start up groups are, you can guess
this: no funds, not enough drive. In my estimation  in my own area, for
every built cohousing project, there are 3 that have  failed to even secure
a site. I have seen lots of groups meet for a year or so, then  disband.
Those that succeeded had: Money enough to cover the initial project costs,
or a  compelling enough project that a developer partnered with them. But if
you talk with folks that partnered with developers, guess what? They
required a vast majority of the units be pre-sold to approved mortgagable
buyers.

I do not know of any real estate development companies that provide start up
funds for affordable housing, carry all the costs, and then find grants and
funding for people. But I would  love to find one and steer them to a couple
cohousing projects I know that are struggling.

And while there is housing money around, it has some strings attached which
make it difficult  to access for cohousing projects. Not impossible, but
pretty hard. Vashon cohousing did it.

So in my opinion, cohousing will not succeed as affordable housing for
anything but a small minority of units, which currently I estimate to be
about 10%. Because there is little start up capital to get the project real
enough to secure a site and permits enough to carry it to bank financing.
And so far, there is limited  interest from affordable housing organizations
in cohousing because it is way too demanding.

Philosophically this sucks, but It's the reality as I see it. And I am not
personally optimistic that things will get  much better as far as affordable
housing goes in the US. It certainly does not seem to be talked about much
by the  politicians in my area and I have little trust or belief in my
government to do such things.


Rob