Cohousing-L Mailing List: Re: Financial structure needed for forming group

[David Heimann (heimann]

Hi Tom,

	During our developing time (JP Cohousing) we had two types of 
membership.  These were equity members, who had paid in a capital 
contribution of 5%-7% of their prospective unit costs, and associate 
members, who had paid a nominal ($115) fee.  Both types of members could 
participate (and indeed were expected to participate) in general and 
committee household had a low income and so had trouble coming up with the 
capital contribution we had an arrangement by which they could pay it in 
installments.

	There was no time limit to associate membership, so a household 
could participate indefinitely without needing to come up with significant 
money.

	We did not have a cash-call system.  If we were going to hit a 
period of exceptional expenses (much of which could be anticipated), we 
solicited voluntary member-household contributions, which (unlike the 
capital contributions) paid interest, and/or solicited outside lenders and 
investors (including some on this list -- Thanks again!!).

        Hope this helps.  All the best!

Regards,
David Heimann
Jamaica Plain Cohousing


Tom Hammer wrote:
> Our forming cohousing group is looking for land,  and
> we are in negotiation with a motivated seller.  We are
> presently financially structured this way:
>
> We have 8 "equity households."  Some of the households
> are "full equity members" and pledge to meet future
> calls for capital up to a limit of 10% of the
> approximate cost of their future home.
>
> The other households are less able or willing to take
> the risk associated with the project and have stopped
> meeting cash calls after committing $2000. Our present
> agreement allows this and classifies this group as
> equity members with full input on decisions but with
> no ability to block consensus on "critical issues" as
> defined by the full equity members.  Several of the
> 2nd group say they are fully committed to the project
> but cannot take more risk at present, but members of
> this group would like to have a full say in all
> consensus decisions.  We all recognize a need for more
> capital in the near future, and the limited equity
> members recognize that their status puts more of a
> financial burden on the full equity members.
>
> Some folks reason that we will attract more equity
> members if we maintain our different levels of
> financial commitment to encourage more to join,
> especially families with young children. Others say
> that we would be better served if all equity
> households made equal financial commitments and all
> answered cash calls up to some pre-determined cap.
>
> We have incentives in place for early full cash
> commitments and site selection priority for full
> equity households  as well as offers of high interest
> on loans by early lenders.
>
> We very much need advice from successful communities.
> Did you allow large differences in financial
> commitment such as we presently have, or did you have
> a fairly large basic financial commitment that was
> required of all to be a full decision maker?
>
> Could you please inform us how you structure(d) your
> membership and membership contribution? Please let us
> know what worked and what you would have done
> differently. Thank you.
>
> Tom Hammer
> for Concord Village
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