2020 Cohousing Open
Time Slot 3 (12:40PDT, 1:40MDT, 2:40CDT, 3:40EDT)
Title of session: Be Your Own Bank
Convenor: Betsy Morris & Alice Green
Who participated: Raines Cohen, Jennie & Dean (Sunnyside Village), Brian Hall (Colorado), PaulaM (Oakland), karla meehan, Alan Ohashi, Elsbeth, Andrew Chandler (Fair Oaks EcoHousing), David Redding, Aprilani McIlwraith, Tim Silk
Key Points & Actions:
Examples of Peer Lending
- Alice was original member of Berkeley Cohousing, and she loaned her inheritance to the community for retrofit/remodel work, and it paid her rent during that process
- Community became a condominium association, and Alice’s original loan rolled over to be her down payment for the new organizational structure
- Early founding members of cohousing/intentional community projects invest their savings early in the community building process
- Betsy: was one of the investors in Fair Oaks EcoHousing (multi million dollar project). Set up a self-directed IRA to invest $50k in Fair Oaks – 3 years at 6% interest (tax-free since it is a Roth IRA)
- “Slow Money for Homes” inspired by funding arm of “Slow Food” movement.
- Yes, it is risky. But a different kind of risk, spread out differently through relationship.
Sunnyside: has land
- Banks hate risk
- They dont like lending to LLCs without securable assets and a track record
- They hold every person responsible, and like to mainly deal with folks with lots of assets
- This makes it hard to create an economically diverse community… or even to find people with enough resource to make a project possible
Squirrel Fund (Alice/Betsy)
- National lobbying campaign, went to HUD
- Helped educate them about cohousing condos being compliant, eliigble for reverse mortgages
- Community set up as “moderate-income” “limited equity condo” with price caps agreement with the city, instead of $30k/unit condo conversion fees (to get out of city rent control), or just one unit (of 14) super affordable.
- But City of Berkeley affordability restrictions were out of line with federal standards – all parties, all lawyers including city, community, feds all made signfiicant errors along the way that got replicated and had challenges, so property was technically not eligible for FHA approval needed for a federal “HECM” reverse mortgage
- Do a reverse mortgage without a bank: crowdfund it through friends/community network
- Current income (social security) not enough for mortgage, homeowner dues, food, property taxes
- Built on existing relationships.
- Betsy’s the City & Regional Planning PhD with experience in community economic development
- HOA dues going up with inflation to cover increased expenses (water, insurance, maintenance) – could displace Alice
- Explored partnership with Community Land Trust – but they don’t have resources to buy it
- But since we only need a little supplemental income each year (under $15k) we can come up with that through individual loans
- One party provides “guarantee” to fill in if other lenders need $ back before Alice dies or if we can’t find new lenders in a given year for that year’s $
- Squirrel Fund: aligned with our values and priorities
- Squirrel Fund:
- Original “Help Alice” campaign: https://www.AgingInCommunity.com/help-alice/
- Relational, not transactional
- To innovate legally and financially requires expensive attorneys with diverse experience
- But working with established nonprofits with this kind of experience and capacities (like land trusts) can help.
- Using WeFunder crowd-investing platform
- Able to publicly solicit investments
- First you have to get a bunch of testimonials and commitments from friends to show them you are serious
- Many different models for sharing returns with investors.
- Invest as little as $100