The Cohousing Development Process – Part One

So how do we actually build a cohousing community? It’s a long process from a group of “burning souls” with a great idea to a physical and vibrant community. There’s so many things in between – establishing group norms and processes, agreeing on a common vision and how to get there, making sure there’s enough money to get the thing built (while dealing with site evaluation(s), zoning, and permits), and creating a group of neighbors from strangers. While all groups have a different journey, many share similar steps. This two part post shares an overview of how Richmond Cohousing is traversing the Cohousing Development Process.

Some cohousing projects are initiated by professional developers, but most, like Richmond Cohousing, most are initiated and driven by an early group of ‘burning souls’ who plan to live in the community they create. They are people willing to put in time, energy, effort, and funds to support the realization of their shared vision, through a process that will take many years. If the early group is able to effectively organize itself and develop a functional and collaborative group culture, they begin to turn their vision into a move-in ready cohousing community. They hope that their some-years-long project pays off in a many-years-vibrant cohousing neighborhood.

Along the way, the forming group begins expanding with new members who are drawn to the vision for the community and who are also willing and able to contribute energy, time, and money to the process. Existing members help newer members learn about the project and find ways to engage and contribute. All full members share equal power; earlier members do not have any special rights and have no more formal power or authority than newer members. Over time the goal is for every member of the community to share a deep sense of ownership, responsibility, and buy-in to the project and the community as a whole.

Most groups who have developed a functional process and a committed membership of between a third and a half of their eventual households move to engage qualified development professionals who can help turn their vision into a reality. There are many ways to do this, but the most common is for groups to seek an experienced developer who is willing to act as a fully engaged partner. This developer will work closely with the group to design the site, homes, and common house, manage the physical development of the community, and oversee approvals, permits, and construction. Ideally, the developer also helps with site selection and construction financing.

Real estate development – cohousing or traditional – is inherently risky and it is important for members to understand those risks and to work together to mitigate them where possible. Depending on the details of the formal agreement between the Cohousing group and their Development Partner, the group will typically have to put some “skin in the game” to show that they are committed to the process and will not back out on a whim, leaving the Development Partner high and dry. This means that the group membership usually invests significant funds in the project, often in the form some portion of members’ home down-payments which are contributed prior to the start of construction. This can be up to 20% of the sale price of the home, which is applied to members’ home purchases upon completion.

In the case of Richmond Cohousing, members earn discounts on the final price of their home by loaning funds to the project. Early loans earn higher discounts than those made later in the process to reflect the higher risk earlier in the process. These member loan funds may be used to purchase a site and/or to cover pre-development work (e.g. site and architectural designs, permits and approvals, and professional and consultant services). Additionally, Richmond Cohousing may also seek interest-bearing loans from friends and family and members who have maximized their discounts but have additional funds to lend. Group-generated loan funds that are not used for site purchase or during the pre-development phase are applied to the construction phase. In addition to reducing risk, this reduces the amount of interest the group has to pay to a bank, keeping those dollars in the hands of community members, friends, and family instead.

Part Two will dive into more details around what happens after a potential site has been identified, and how we plan on getting from land acquisition to move-in. Stay tuned!

 

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