Choosing a Development Model: Cohousing conference presentation

Choosing a Development ModelLessons from Self-Developed Communities

Why Consider Self Development?Potential cost savings Member-designed, unique homes and

eclectic neighborhoodFull control: ability to choose the design,

pace, approach and professionals for the project

Greater opportunity for creativity throughout the process (unique approaches, changes in mid-course, etc.)

Strong ownership among those who work to make it happen; value in overcoming obstacles together

Naivete can sometimes be a benefit (can do)

MethodologySource of communities:

Cohousing WebsiteSorted based on when developed

(past 10 years) and stage of development

Phone interviews with 29 communities; 27 complete or succeeding and 2 (un-named) that failed

Participating CommunitiesArcadia Iowa City CohoAshland Coho Legacy FarmsBurlington Coho Manzanita VillageDurham Central Park Coho Mariposa GroveElderberry Coho MilagroMeadow Wood Coho Peninsula ParkCapital City Urban Coho Rocky CornerEcho Hills SIskiyouCharlotte Coho Sunward CohoElderberry Coho Tamarak KnollElderspirit Turtle Farm Gainsville Coho Valverde CommonsGreensward Hamlet Woodard Lake CohoHundredfold Farm

Types of Self-Developed Communities

Fully planned development with single build-out

Fully planned development with phased build-out

Site development: lots sold and homes either centrally designed or member-designed

Re-purposing of existing buildings (homes, apartments, retrofits); condo conversions

Communities built on owned land, member land, leased land, donated land, land trust or combinations of these

Rental communitiesCollective householdsSize of communities ranged from 5 - 40

householdsProject costs ranged from $1.5 – 10 millionMix of urban, suburban, small town and rural

The Most Challenging IssuesThe right skillsThe condo monsterFinancingDecision makingZoning and permittingBudgetingRelationships

Let’s look at lessons learned and creative ideas for each of these…

The Right Skills: Lessons LearnedYou must have or hire the most critical skills and experience

◦Development consultant, housing consultant, or experienced builder with commercial experience

◦Project Manager (10-50 hours per week) Burnout is a huge issue due to time

requirements and strain on relationships

◦Facilitation and skills in relationship-building and decision-making

The Right Skills: Creative IdeasPay for specific tasks (creation of

business plan and budget, zoning and planning efforts, bank negotiations, etc.)

Get training in project management (university, state program, coho experts)

Ensure all consultants and partners have “skin in the game”: some portion of payment due on successful completion of project or phase

The Condo Monster: Lessons LearnedThe legalities of condos are

onerous and often takes much more time and money than expected.

There are differing views among attorneys as to the best way to legally collect equity (escrow, separate investment, private offerings). Explore options before deciding; draw on experience of Coho experts.

The Condo Monster: Creative Ideas Rent instead of buy: LLC builds and members pay

rent to LLC:◦ Avoids condo issues◦ Allows swapping of units◦ Prevents the need for large down payment◦ Allows ability to keep payments low

Use town home structure◦ Similar to condos but home/land owned◦ Avoids all condo legalities◦ Not doable in every state/county

Use Housing Cooperative structure◦ Members purchase a share in LLC for right to

occupy (can be ownership model or non-ownership)

Buy or build homes under a non-condo model and do a condo conversion later (budget for this ahead!)

Financing: Lessons LearnedMembers must have significant money to

invest; banks unwilling to take a lot of risk on inexperienced developers

Initial equity investment from members should be significant

Local banks generally more receptiveGenerally must own land outright to use

as collateralFor mortgage companies, finding

comparable homes (comps) is often an issue

Banks don’t value the Common House

Financing: Creative IdeasHire someone who knows how to

secure public funds/grantsFind private investors with good

standing in the communityBuild spec or model homes to show

capability and create compsPartner with the city (city buys land in

exchange for affordable housing; also some states and the Dept of Housing subsidize affordable housing)

Hire a mortgage broker to find financing

Financing: More Creative Ideas

Create an equity pool (can be anonymous)Involve all members in Money $hadow

workshopFind alternatives to funding Common

House ◦Use one of the homes as CH until later in

project◦Build CH first with member funds◦Build CH to be sellable as a single family home

in case of failure◦Buy property with building that can be

converted

Decision Making: Lessons LearnedThere are hundreds of decisions

to be made, many of them urgent; large-group consensus can bog down the process

Having a small, empowered teams works; must have delegation and trust

Key developers (often the founders) should have clear decision-making authority; clarify this early on in the process; evolve as appropriate

Decision Making: Many Models

Traditional consensus (right to block; some type of voting process if impasse; 3 meeting rule)

Sociocracy/dynamic governanceConsensus minus twoQuaker consensus (find unity)Majority rule or 2/3 majority3 round process (listen, respond,

resolution)Only equity members in decision

processNon-members pay to attend meetings

Zoning and PermittingLikely to take much longer than expected;

common for first zoning submission to failStart this process before any other (when

you are thinking about creating a community)◦Gives time to create relationships in

community and with county officials◦Allows time to pass new ordinances, e.g.,

cluster ordinance (can take years; will benefit others as well)

Know your county ordinances better than your county planner does

Zoning and Permitting: Creative Ideas

Hire a community organizer to educate the community about cohousing

Hire professionals who are known and respected by county officials

Volunteer for county government/boards during initial planning stage; become a known and trusted member of community

Hire a reputable local developer or attorney to assist with submission and boost credibility

Meet individually with neighbors; involve them in planning exterior designs that will be visible to them

Budgeting: Lessons LearnedHome prices nearly always more than

originally planned (common reason for loss of members)

5-10% contingency not enough; 15-20% much more realistic

Input from developer or builder is critical in planning the project budget

Make sure members know that home prices are not fixed and completion dates cannot be guaranteed

Budgeting: Most Common Over-runs

Site and engineering challenges; soil, topography, storm water management, erosion control plans

New regulations and codes; know what is being considered

Increasing building costs (labor and materials)

Common House; commercial codeUtilities, easements and parking

requirementsLegal fees (more consultation needed

than expected; esp for condos)

Relationships: Lessons Learned

Creating a culture of respect, appreciation and honest communication is crucial

Clear vision, mission and values must drive the process

Conflict and challenges can build a stronger community, but only if handled and addressed in a productive way

Integrate new members well – almost no community does this well enough!

Train, train train – very early and often in the process; re-train for new members

Relationships: TrainingGeneral training:◦Consensus, sociocracy or other decision-making process

◦Conflict resolution◦Facilitation

Recommended programs:◦Non-Violent Communication◦Money $hadow◦Blueprint of WE◦Crucial Conversations and Confrontations

Relationships: Creative IdeasSpend one weekend together

every month at a rented cabinEvery other meeting only social;

creating strong social bonds is as important as managing tasks

Establish a facilitator team and provide training for them

Plan a yearly getaway to have fun, renew vision and values

Sooo – Should You Self Develop?

Maybe, if:You have, or are willing to hire, the critical skills

(otherwise you may spend as much as it would cost to hire a developer)

You have a couple of key people who are willing to work 10-40 hours per week, possibly for years, to make it work; or hire a skilled project leader

You live in an area where there are not significant challenges in terms of state and county regulations

You are building on pretty straight-forward building site (topography, soil structure, access to utilities, other engineering challenges)

You can find a way to raise significant capital for the project outside of traditional banks

Would You Do It Again???

Of the 27 communities interviewed:

3 said they would hire a professional developer if they were doing it again

24 said they would self-develop if doing it again, but would learn from their mistakes

Quotes from the Interviews:What it Takes to Self-Develop

Takes big courage and a lot of compassionDevelopment is not for sissiesBe prepared for a spiritual journeyIf you want to build fast, hire a developerRequires relentlessness of spiritSo much work, so much stress, so much

personal growthJust plod throughRemember what you are enjoying while

dealing with all the shitAlways have a bottle of wine near at hand

For More Information

This presentation can be found athttp://www.cohousing.org/2015/docs

Or contact Mary Bennett at [email protected]

Thank you!!