Overview of finances
There are two times to join the community: During its formation and after its formation. To start up the community will require a certain amount of capital, a percentage of which we will need in cash to buy land and start development.
The following is all speculation and I'm not an expert at all in financial matters, but ... Let's say we decide to buy land for $500,000 and need $100,000 for development. If we want to come up with a 20% down payment for the land ($100,000) and there are 20 members, each member would be responsible for contributing $5,000. We (the community entity) would take out a loan for $400,000, perhaps at 5.5%, which comes out to a monthly payment of $2,271.16 (for thirty years). On top of that, if we (the entity) get a loan of $100,000 for development (by creating a "shoebox bank") at 8.5% interest, that amounts to a monthly payment of $1,239.86 (over ten years, to pay back our investors quickly).
What that means is that the community entity would have to come up with $3511.02 a month to repay its loans. In the joint ownership scenario, each members owns a fraction of the land but doesn't hold title to a specific plot; so if there are 20 members, each member contributes $175.55 per month. (That doesn't include cost of living expenses, just the amount needed to pay down the loans.) However, the community has other sources of income, chiefly leases for businesses (land for Demeter Farm, offices, etc.) This income could go toward improving the community (and therefore oftentimes the land value).
In a cohousing scenario, each member owns title to a plot of land and owns a fraction of the common land, managed by the homeowner's association. Each person would be responsible for their own mortgage and also pay dues to the community entity (which would use these dues to pay off the loans for the purchase and development of the common land.) People could still lease space on the common land for businesses.
However, we may not have 20 people to start with, and that changes the numbers.
Financing the community
What about all the money we need to put a down payment on land and start developing it? We will try to raise that money by seeking out investors and asking for loans that will be paid back by the community. Anyone who wants to invest in the project and get a nice return may do so - including members if they wish, but it's not required of them. The community will repay the loans with money from sites lease fees, join fees and dues over a period of several years. This is all in the case of collective ownership structure; we will probably go with this model, but in the event we choose a cohousing model, members would have to buy their parcels and it would be definitely be more expensive than the collective model.
Financing the community
To start up the community we must raise enough money to make a down payment on land and begin developing infrastructure. In the case of collective structure, the community entity will take out loans which will be repaid through join fees and site leases; in the case of cohousing, individual members will pay for and own deeded land plus a share in the common land.
There are major differences between these two structures and that affects how much capital people need to join the community, how living arrangments are organized and a host of other issues. So there is much TBD.
Procuring loans will be a key issue as we get close to buying land. We may try to get loans from private individuals, members, cohousing lenders, organizations, a bank or owner financing. We could form a "shoe box bank" that members with capital and friends/supporters invest in, paying a very respectable interest rate in the 8.5% - 8.75% range. We could use this fund to pay off a loan from the bank or owner financing; we would then pay back the investors of the shoe box bank through site leases/homesite sales, join fees (if applicable) and dues. In the case of cohousing, people may have mortgages to repay.
Cost of joining and living at SDFE
How much will it cost to join SDFE after it is formed? New members will need to pay a join fee ($5,000 or less). After joining there will be monthly or quarterly dues
(TBD) and a site lease fee (we are not sure right now how much
the site lease fee would be, but it would not be due right at the
moment of joining and payment plans would be available). There will be
additional personal cost of living expenses.
We have to decide how everything gets paid for - cost of community membership, use of common facilities, land management and maintenance, utilities, the Common House, and so forth. There will be some community-wide services that are paid for by dues and other services will be covered by optional co-ops. For instance, use of the common house will be covered by monthly dues. Most utilities will probably be covered by dues. The common meals operating out of the common house will be organized by a co-op, and people may form smaller eating co-ops as well.
In additional to monthly or quarterly dues, people will be responsible for the cost of building their homes. We can build houses cheaply by doing the work largely ourselves, using natural building materials and helping each other out. Some people may choose to form co-ops and live in a larger house together.
The actual cost of living is hard to predict and will also depend on what arrangements members create to get their needs met.
Jobs
"How will I be able to make a living?"
Possibilities:
--Even in our semi-rural community it will be possible to commute every day if you have a job in a nearby town.
--Telecommuting.
--Start a business on-site. This could be a personal business, a cooperative, on your own land, on land you lease from the community, and so forth. The community DOES NOT take a percentage of the profits from your business. See the Vision and Community pages for more info.
--Work for an on-site business. Businesses started by community members may need workers.
The farm
The worker-owners of the farm must raise capital and secure loans to start up the farm, although the loans may come from the community. You do not have to have capital or put money down to be an owner of the farm (financing will be available).
The process
We need to develop a detailed financial plan and budget before actually creating SDFE's legal entity and buying land.
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