Cohousing-L Mailing List: Re: Deposits, Earned Interest, Discounts

[Sharon Villines (sharon]

On Mar 11, 2009, at 4:59 AM, Liz Ryan Cole wrote:

> > Some time ago I read that it is sometimes possible for people who
> > put money into a project "early" to treat that as a deposit that
> > can be computed into a lower total purchase price (rather than
> > having to earn taxable interest).  Can anyone point me to folks/
> > projects where that has been done?  Thanks.  liz

There are more messages on this in the archives. The one below is  
edited from an earlier message.

For those who deposit money at the beginning, I think it is better to  
pay interest (which is very low now anyway). No one in the group wants  
to feel obligated to anyone and  no  one wants to resent having  
deposited money when the project is taking much longer than expected,  
which is typical.

You also don't want to attract any house holds that think there are  
rich people in the group who will take care of the development costs.  
Starting out in a business like mode will pay off later.

In treating it like a down payment on their, I think you owe people  
the same "interest" in discounted prices on their unit. This not only  
deals with the money in a business like way, it encourages people to  
join and to invest. Why join early if all you get is more work? Some  
households, at least, will feel this way. You will need names on  
dotted lines.

We had latecomers complain "you got cheap prices" as if they were  
being cheated. Some old members feel guilty about this. I don't think
they should.

First, it is customary in condominiums and housing developments for  
early purchasers to receive discounts on the expected final pricing of
units. Purchasers who buy after the first people move in may also pay  
even more than the middle purchasers if there are cost over runs or  
the market rises.

In cohousing, there is much more risk taken by early members and most   
have put in _years_ of work. Marketing in radio interviews,
orientations for potential members, and speeches to neighborhood  
groups. Months spent looking for land. Hours of meetings to sort out
unit design and financial feasibility.

Late comers put in none of this  effort.

In addition to taking more risk and putting in more work, early  
members often put in more pocket change here and there to pay for
incidental expenses for which there are no reimbursement funds.  Spend  
more for babysitting and travel to all those meetings. Put
double the food into pot lucks to entertain potential members. This  
adds up. It isn't cheap in cost or time.

The early birds have earned the interest or lower cost of their homes.

Sharon
----
Sharon Villines
Takoma Village Cohousing,Washington DC
http://www.takomavillage.org