Cohousing-L Mailing List: Re: Initial financing by early members

[Mac Thomson (mac]

Back in the early days, to join (become a member), households were  
required to make a $6000 non-refundable deposit ($100 stock purchase;  
$5900 deposit).  Here's the incentives/rewards we gave for that:

============================
MEMBERSHIP INCENTIVES
08/18/99

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 wasn't paid to HC, it could be earning  
interest somewhere else.
- To reward Members that join early for the extra work that they 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 are awarded to Members based on when they join during  
the development project. A Member household that joins before the  
following development milestones and is current in their stock  
purchase payments receives the following Equity Credit:

Site control (under contract for land)
May 22, 1997
$5000

Land Purchase
May 22, 1998
$3000

Receiving preliminary land use approval
December 21, 1998
$2000

Beginning of construction
August 12, 1999
$1000

So a Member household that joined after May 22, 1997, but before May  
22, 1998 and is current with its payments would receive a $3000  
discount off the price of their lot. If that Member selects a $54,000  
lot, they would only pay $51,000 for the lot. The credits are used at  
the time of final lot purchase.

============================

We also had a system of optional loans at market rate interest from  
members to the development corporation we set up.  I feel that all of  
our early financing strategies were very successful.

Good luck,
Mac

--
Mac Thomson

Heartwood Cohousing
Southwest Colorado
http://www.heartwoodcohousing.com


"Do not judge, and you will not be judged.  For as you judge others,  
so you will yourselves be judged . . ."
       - Matthew  7:1

"Do not judge, and you will not be judged.  For as you judge others,  
so you will judge yourself . . ."
       - Mac  8:3:59
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On Aug 15, 2006, at 7:26 PM, cohousing-l-request [at] cohousing.org wrote:

> Message: 1
> Date: Tue, 15 Aug 2006 11:10:38 -0700 (PDT)
> From: Tom Hammer <thammer302 [at] yahoo.com>
> Subject: [C-L]_ Initial financing by early members
> To: cohousing-l [at] cohousing.org
> Message-ID: <20060815181038.94209.qmail [at] web56102.mail.re3.yahoo.com>
> Content-Type: text/plain; charset=iso-8859-1
>
> Hi All,
>
> We of Concord Village are undergoing some re-thinking
> about how best to reward and encourage the most
> at-risk money that our "Equity Members" are being
> asked to invest in our forming community (we have two
> potential pieces of land that look very attractive and
> potentially feasible.)  We have 7 equity households.
>
> How does/did your community treat the initial
> investments of your first members, which are obviously
> very much at risk?  Loans?  Discounts on home prices?
> If loans, what interest rate did you offer?  Perhaps
> there are other incentives I haven't mentioned to
> encourage investment.
>
> Thanks in advance for your input.
>
> Still glowing from the National Conference,
>
> Tom Hammer
> for Concord Village
> http://www.concordvillage.org