Cohousing-L Mailing List: Re: Development Phase

[Sharon Villines (sharon]

On 21 Sep 2011, at 8:52 PM, R Philip Dowds wrote:

> 
> At Cornerstone, some individuals and groups are financially supportive of 
> other individuals — although the details of this are mostly, and 
> appropriately, kept out of public view.  Fine by me, and yet ... I am 
> personally uncomfortable with this sort of person-to-person subsidy.

It isn't a subsidy — its a loan with all the proper papers signed. Development 
in cohousing is not the same as walking out, looking at a house, selling yours, 
and buying a new one that the bank can have appraised. Cohousing is not a 
secured loan until it is built and the money has to be there before that even 
begins to happen.

People may have to put in $20,000 before they have sold their house or when 
they are young and don't have $20,000. Many people only have money in 
retirement accounts where it is not available for withdrawal in large sums. 
There are all kinds of situations where a private loan or even a joint purchase 
allows a household to invest when they can't write a check tomorrow.

The day we had to have 33 contracts attached to checks for 10% of the purchase 
price was announced with 48 hours notice. If we hadn't been able to get all the 
checks by 6:00 on Wednesday, we would have lost the land. I personally couldn't 
get funds out of my mutual fund that fast. A member loaned me the money. The 
treasurer handled the paper work. Others did similar things. Not everyone has 
parents who can loan them money.

> So what it boils down to is that some friends of so-and-so make private deals 
> of support — ones which usually involve a return on investment.  It is not 
> clear to me what this has to do with cohousing. 

In cohousing the group is investing in a group venture — a real estate project 
and a living situation where they have or expect to develop relationships. It's 
a time full of idealism and hope but also intense interdependency. You have to 
hit that 70-75% target on time or no one wins. It's all or nothing. You need 
that household with minimal funds but long term viability or no one gets 
anything.

Since move-in we have had other instances of helping people buy. Two renters 
were helped by other members to figure out how to buy — the financial 
ramifications and tax benefits — and found a friend who was willing to handle 
their mortgage on the support of other homeowners. I don't know if they 
cosigned the loan or not. The two renters bought the unit complete with a 
renter who had been renting the second bedroom 3 nights a week.

Another household needed to "move up" to a larger unit. I don't know the 
details but the selling household helped them in someway — probably selling at 
a lower price and holding a second mortgage since they were retiring and didn't 
need the money for a new purchase. Monthly income was what they needed.

These are private arrangements but can happen in cohousing because people know 
each other and "we know where you live." No one is moving out in the middle of 
the night without anyone knowing about it!

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