Cohousing-L Mailing List: Re: Membership Levels, Financial Incentives, Refunds

[Dave and Diane (daveanddee]

Hi there,
Basically you're dealing withe a big algebra problem. You need to reach 
20% of the projected development cost before you can get a construction 
loan to pay for the rest, and after that the mortgages repay the 
construction loan. If the average down payment (equity member fee) is 
10% and you have someone putting down 2% you have to find someone else 
who can put down 18%. So a sliding scale can be very tricky to figure 
out. The way we did it was we had a "normal" down payment of 7% but 
low-income members could put down 5% and they could pay it on the 
installment plan. We made up the difference in loans. What other 
cohousing groups have done is require a "normal" down payment of 30% 
and then admit low-income members as they had room in the budget. 
Remember--you have to hit that 20% target somehow!
As far as refunds go, we were very clear that your equity down payment 
was not refundable until after the last unit was sold or unless you 
found someone to buy you out. The money is being spent as soon as it 
comes in on option payments, consultant fees, architectural plans, 
legal fees, etc. etc. so you can't expect to be giving refunds under 
these circumstances.
Since the mayor is a big fan of cohousing now that he's actually sen 
what it is, maybe you could work something out with the Department of 
Neighborhood Development (http://www.cityofboston.gov/dnd/)
I absolutely recommend a top-notch accountant to keep track of your 
funds--don't expect a member of the group to do it--it's way too much 
work--especially of you're going to have any kind of unusual payment 
system.
Good luck!
--Diane(:^]
outreach facilitator
jp cohousing  617-522-2209
Box 300420 boston ma
http://www.jpcohousing.org
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"The people who surround you define the quality of your life."

On Sat, 24 Feb 2007, at 08:34  AM, Kristen Simmons 
<simmonskristen [at] gmail.com> wrote:

> <snip> If you could start from scratch, how would you deal with the 
> money stuff?
>
> 1. Would you have a sliding scale for equity membership to encourage
> low-income members? If so, how would you do this?
> 2. Would the equity cash be refundable? Some groups make all or part 
> or of
> it refundable after all units are sold. For other groups, none is
> refundable. Do any groups refund equity cash during the development 
> process?
> 3. Anything else that you would recommend or absolutely discourage?