Cohousing-L Mailing List: Re: Need help thinking through potential problems with community finance opportunity

[David Mandel (dlmandel]

  Hi; it sounds like a great opportunity, but I'm kind of surprised that
whoever the source is would be willing to make the subsidized loan when
your only concrete stated purpose is to see the capital grow. Are you sure
they're OK with that? I can't imagine it happening here (except with really
rich people and corporations that know how to game the system -- e.g. the
COVID recovery loans that went mostly to them with little or no
accountability and a lot of them simply forgiven).
The other thing that stands out and that you also flag is the potential for
disagreement among residents on how to use the money, eventually. I'd
advise a clear and transparent method for making such decisions in the
future.
Something that might address both issues would be a decision now to use it
for a socially/environmentally useful investment. What comes to mind for me
(because I'm wishing my community could do it) is a sophisticated
solar/battery microgrid where we could generate most of our power by using
the best roofs, share the cost and benefit. Is that a possibility? If not,
maybe you could loan it to us at 0.5%? 😁
David Mandel in Sacramento


>
>
> Message: 1
> Date: Tue, 29 Nov 2022 20:14:22 -0700
> From: Pare Gerou <paregerou [at] gmail.com>
> To: cohousing-l [at] cohousing.org
> Subject: [C-L]_ Need help thinking through potential problems with
>         community finance opportunity
> Message-ID:
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> CAP+GJ3hYGo3H_B5wnXWTAHLVSqFYf13OyPvWqvBmUfiaEYaQhQ [at] mail.gmail.com>
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>
> For all those financial strategists and out of the box thinkers- what is
> your take on this?
>
> Our Greek Village Cohousing Community has chosen a different legal vehicle
> from most in the US.  We did this in order to be eligible for subsidies and
> loans and tax write offs. We will only know in the future whether it was a
> mistake, but for now, it feels like it provides only benefits and still
> aligns with the traditional cohousing mission, so we are going for it.
> Wish us luck.
>
> Due to our differing legal structure, and due to the fact that there is
> more state aid in Europe generally, we have the opportunity this week for
> our community to take out a special type of EU and government sponsored
> 15-year loan at *.*35% (yes- less than 1% interest rate).  This loan does
> not need to pay for our construction, as we will finance that in a similar
> way to all US communities- bank loans and advance group equity payments,
> and all of that traditional finance is paid off by move-in.  So the loan
> monies we are thinking of applying for can instead be used, at least in
> part if not all, for capital reserve and operational expenses from move in
> day 1 - a luxury, and the group can invest this reserve at a higher rate of
> return and receive benefit for 15 years before repaying the loan amount.
>
> It seems like a boon for the community and will ensure a good size capital
> reserve, money for operational expenses, and a hedge against rising labor
> and material costs just in case.
>
> But cohousing is not a commune- we usually do not intertwine our finances
> past construction and move in.  This would mean our community, each one of
> us, would be part of a community wide loan for 15 years.
>
> The financial benefit seems clear, but what would be the figurative expense
> of doing this?  What could go wrong?  And how would it affect us socially
> to be jointly liable for loan repayment and investing together for 15
> years?  It cannot be hard to make more than .35%, so we will not lose money
> but gain it, but at what expense?  We will be 33 households eventually, but
> right now die will be cast by our 10 Equity member families.
>
> What are your thoughts about the social impact, and are there things you
> feel that could go wrong?  The deadline is coming up, and we need to
> decide.  We may not receive the loan or accept it if we are granted it, but
> we have to choose to apply or not by the end of the week.
>
> Thanks in advance for reading this and helping us decide about this
> opportunity.
>
> Kind Regards,
> PARE GEROU
> Greek Village Cohousing
> T. +1 (434) 962-7801
> A. Peloponnese
> W. www.GreekVillageCohousing.com
> <http://www.greekvillagecohousing.com/>
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