Financial questions related to cohousing depend a lot on what model we choose to implement: In a co-op model, everyone buys shares in the entity that actually owns the property and/or holds the mortgage, and in a condo model, everyone owns their own individual unit and contributes to maintenance costs via fees etc.
The financial structure of each of these is different, so the financial burden on individual owners/members is also different. In a co-op, the group entity gets a mortgage, so the demand on an individual is relatively small — but co-op financing can be more expensive, because not as many financial institutions do it. Therefore the up-front financial commitment might be larger than some other models. (More)
Cohousing research notes:
“The Financial Services Commission of Ontario (FSCO) is the government office that registers organizations conducting business as a co-operative. In most cases, if the co-op is planning to sell shares to more than 35 people, or if the sale of additional shares increases the number of shareholders in the co-op to more than 35, the co-op must file an offering statement.”
“Since the units are not owned by the individual tenant-shareholders, mortgage financing is initially secured for the building as a whole, and is often referred to as a “blanket mortgage.” In this situation, the corporation is usually the mortgagor. Each tenant-shareholder contributes toward the blanket mortgage, and if one tenant-shareholder is in default, the others must increase their payments to meet the deficiency or risk a foreclosure.” (More)
Applying for a plan of condominium:
On February 17th, Kris talked to Amanda Warren (email@example.com) of Trent Lakes planning department about what is required to move forward. Her answers apply to any property in Peterborough County that isn’t currently zoned for residential development, and should presumably be the same elsewhere in Ontario. She said that Ontario governments, at the provincial and municipal level, are just beginning to talk about cohousing and creating planning rules that apply specifically to cohousing developments, but that this is still in the very early stages.
A provincial committee has been formed to study the topic, but realistically (especially given the election coming up next year) it will be at least 2 years before there is any progress. She recommended that we proceed with the current planning options. However, it is encouraging that Ontario has at least recognized cohousing as a concept and municipal councils may be receptive to the idea. (More)
Quimper Village model:
A cohousing community in Washington state, Quimper Village set up a corporation called Townsend Meadows Co-op whose shareholders put up the initial financing to buy the land. The co-op contracted with First Federal Bank for a construction loan, and members made periodic Required Capital Contributions (RCCs), in return for equity — contributions that paid for early development costs such as the down payment on the property, design and engineering work, etc. When the project is complete, members obtain mortgages or use other funds to purchase their homes from TMC.
Those who put up the initial financing through RCCs will have their contributions credited against the final cost of buying their home. Once the project is complete, the co-op will transfer control to a Quimper Village Owners Association, which will then manage the day-to-day operations of the community. Members will own their home as a condominium residence, as well as a 1/28th share of the common elements of the village (e.g, the site and Common House), and exclusive use of certain elements, including front and back yards, and garages or carports if purchased.