Cohousing-L Mailing List: Re: Losses

[Craig Ragland (craigragland]

 Note: this is my personal opinion, and not some type of "official position"
of Coho/US, which does not offer "official" advice.

There is, I think, a lot of wisdom in this lesson.

As long as you can carry on and complete your project, there's a reasonable
chance that any "financial mistakes" can just be absorbed into the project,
and become a very small percent of the total budget (today, most cohousing
communities are multi-million dollar real estate development projects). That
being said, actually coping with the doubt and fear from "large mistakes" is
very hard, especially for smaller core groups.

My community, Songaia Cohousing, made some serious development mistakes -
including our original legal structure (we were a highly values-driven Coop
vs. a practically-focused LLC/HOA) and our initial architectural
designs (first we designed custom homes and then designed production
housing). The financial cost of these mistakes were relatively modest, but
the project delay costs were large - we lost many wonderful folks - who are
not among my Songaia neighbors. In our case, the loss of these members
didn't affect our project schedule (much), but it sure affected our morale.

Some Forming Groups have choosen to spend their limited resources on
relatively unimportant pieces of their project - I've heard many of these
stories of late. If you spend a lot early, without a feasible project in
hand and without addressing the group's core needs, then your project and
group lives in risk. This makes it very hard to continue onward. If your
group does dissolve, all is (typically) lost and groups that "cut their
losses" early loose less money.

Personally, I vote for making good decisions, being cautious about spending
on project components that are best delayed. Do consider whether your group
is reinventing wheels. I'm quite sure that a higher percentage of the groups
that have built have taken advantage of the many people that are available
to help you succeed. These folks include grass roots cohousing advocates
from Coho-L and the Cohousing Website, as well as Cohousing Professionals -
where the hope is that your money focuses positive attention and effort on
your behalf.

I suspect that the two Songaia mistakes I noted could have been avoided if
we had adopted less of a Do-It-Yourself ethic (we self-developed). I regret
not having sought more cohousing-specific advice from sources like Coho-L.
In our case, people with strong Cooperative values were most persuasive, but
most of them had little Cohousing experience. And our architect, who was
also new to cohousing, was excited about custom-designed homes - it was
infectous and we spent our money on essentially useless designs before the
second, production-home designs. If we had been less together in our group
dynamics we might not have ever built.
On Mon, Apr 21, 2008 at 4:01 PM, Sarah Florreich <sflorreich [at] gmail.com>
wrote:

>
> On Mon, Apr 21, 2008 at 6:27 PM, Catya Belfer-Shevett
> <catya [at] homeport.org> wrote:
> >  In terms of how the accounting works, we basically put it in a line
> item
> >  as a project expense, along with all of the other project expenses.
>  Our
> >  fabulous finance person reads the list, so she can say exactly which,
> >  but it might have gone in the marketing/membership line item?
> >
> >  Honestly, rolled into the final project bucket?  Even 6 digit money
> >  doesn't break the bank. (Says me, anyway.)
> >
>
> Yes, our project is so large that even at $200K of sunk costs, it is
> not really noticeable to the bank (2% of our oveall budget), so in
> that way we were "lucky".  From what I've learned, one could allocate
> it out to the lines it was spent on (legal, engineering, etc), or lump
> it all in one unrelated, generic category like we did, as long as it
> doesn't cause that line item in the budget to look greatly out of line
> to what a bank would normally expect for that line item.
>
> No one who has ever bought in after we did all that prior work has
> objected to having to pay for this, as we make it clear it's the price
> to get where we are.  Often one has to try a few times to get the
> right land/buildings at the right time, when the stars are aligned and
> all that.  :-)
>
> - Sarah
>  _________________________________________________________________
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>
> --
> Craig Ragland
>
> Coho/US executive director
>
 http://www.cohousing.org
> craig [at] cohousing.org
>
> Please try email first, include your phone number (w/time zone) - or give
> me a call: 425-487-3550 (Pacific)... communicate!
>