LAEV POG Retreat 12/6/08
Meeting convened in Community Room at 117 Bimini. Present for some part of the day:
POG Members: Andrea, Ann, Dave, Somer, Aurisha,Joe, Lara, Ron, Randy, Yuki (Absent: Angel, Federico, Julio Jr, Lois).
IC Members: Melba, Kathy*, Zoe, Becca, Thiago, Heather*, Dale, Jimmy, Michelle, Julio Sr. (*Notes)
In Process: Adonia, Bobby.
Review of present situation facilitated ably by Ron.
BACKGROUND (Lara)
Values developed in 2001, since then only one addition, have been adopted by US/TU.
Effort to develop “Bimini Green LLC” entity to lease property from CRSP lasted about 2 years, did not pan out.
2004 decision to create Beverly Vermont Community Land Trust (BVCLT) and Limited Equity Housing Cooperative (now Urban Soil/Tierra Urbana, US/TU).
BVCLT now incorporated as nonprofit corporation; poised to develop area within one mile of Beverly-Vermont Metro station.
BVCLT Mission: pedestrian-centered neighborhoods, affordable housing, work and neighborhood spaces environmentally and socially sustainable, integrate urban living with nature.
BVCLT to own our land in trust, lease the part under our buildings to US/TU with conditions (such as affordable rents). Property is permanently withdrawn from the market (affects value).
BVCLT: Tripartite board meets Jan. 15 (residents, principals, neighbors). $35 to be a member; includes many non-LAEV people, all US/TU encouraged to join.
US/TU will purchase buildings, collect rents and fees, pay “99-year leasehold mortgage” to BVCLT for land.
Legal assistance is now on board for realizing the cooperative (pro bono Public Counsel).
US/TU Mission: permanently affordable housing in LA to sustain a diverse community whose members join together to create a higher quality of life while minimizing negative environmental impacts.
POG - Prospective Owners Group - so far is limited to IC Members who participated in formative retreat 11/7, paid $300 each, signed agreeement. Individuals will be permitted to join subject to consensus of current POG members. Members: Andrea, Ann, Dave, Somer, Aurisha, Joe, Lara, Ron, Randy, Yuki, Angel, Federico, Julio Jr, Lois and Michelle.
Owners to purchase shares in US/TU, which may be sold later; resale value of a share increases over time in a predetermined way (not on speculative real estate market), and less than 100% of purchase price until end of “vesting” period. (=“Limited Equity.”)
Resident Owners pay fees (“Carrying Costs”) associated with units they occupy, do not own specific units.
Owners lease some units to Renters and cooperatively make decisions related to the property.
Focus of efforts to date has been largely to develop internal policies such as membership pathway and conflict resolution process, more recently on tasks of creating a cooperative.
“Team N” - Negotiating committee subset of Governance group for communication with CRSP (present owner).
“Governance” - Tasked with writing bylaws with legal assistance.
“Finance” - Tasked with working out money matters.
“Membership” = Tasked with addressing matters related to participants.
CONSENSED: Melba will frame Values for permanent display, Joe and others will do artistic versions first
FINANCE
Variables are interconnected; a change in one will impact all others (Yuki):
Loan Fund Creation
Other Loans (if needed for repairs or improvements)
Reserves (required)
Budgets and other financial planning tools
Share price
Ground Lease payment
Taxes (property tax and mortgage deduction)
Upgrades (Solar etc.)
Repairs (could be negotiated with seller/CRSP)
Purchase Parameters (Thiago):
Purchase Price likely $1 - 2 million
Length of loan 15 to 40 years, likely 25 years
Interest rate CRSP 1% (lowest) - any other lender, up to 5%
Mortgage pmt set at $8K (known to be doable; $10K would demand rent increase)
Annual ground lease $1 to $1000
Down payment 0 to 10%, influences interest rate and loan duration, influenced by number of purchased shares
Share price likely to be $1000 per owner
Vesting schedule (in the works)
Rent expected from lessors; “carrying charges” from resident Owners
Must prioritize capital investments: vital maintenance/upgrades; some may reduce overhead.
“Affordability” has to do with a HUD formula. Income predictions based on recent occupancy (roughly 3-5 units not occupied).
Pros and Cons of Interest-Only Mortgage at first (payment is same cost to US/TU, but principal goes to a Reserve account rather than paying down the debt): Financial advantage for us and no harm for CRSP; Addresses priority to upgrade building in a timely manner; Takes building upgrade out of the purchase price; CRSP wouldn’t have as much money to invest in community; Would allow us to build a cash reserve; Lengthens US/TU payments and increases overall interest payments; Without this we may have to take out a loan for building upgrades; Gives us some financial security considering state of the economy; Potential for investments that may reduce operating costs; Allows us to make important sustainability upgrades sooner to further our mission and give us “green cred.”
CONSENSED: Ask CRSP to finance purchase, for first four years interest only; use resulting funds for upgrades and reserve.
GOVERNANCE (Ann and Yuki)
Late fees, eviction/foreclosure policy, Revolving Loan Fund.
Desirable to help neighbors avoid eviction when special circumstances arise. A Revolving Loan Fund (RLF) is a source from which loans are made to one person or business at a time and, as repayments are made, funds become available for new loans. Discussed: What guidance are we going to give our RLF committee? What are pros/cons? How would we fund a RLF? To what degree do we want transparency vs. confidentiality? Consider: unmet repair needs so rent withheld. Suggest One month=committee handles, Month 2= committee takes to owners (board). Confidental until arrangements fail? Should finance committee address this? What is most efficient and transparent? Fixed management committee or rotating group? RLF to be separate from co-op assets, so that our ability to help one another is not dependent on the financial wellbeing of the co-op.
CONSENSED: Sourcing RLF $: X% of US/TU discretionary funds monthly; owners/friends/neighbors may give $ (and withdraw); Donations accepted; Interest charged. Management by a committee, constituents to be determined.
Need research on this.
CONSENSED: Non-Payment of Fees Policy (for bylaws). Non-payment of rents/fees will result in eviction/foreclosure in accordance with law.
Noted: Late fees will be assessed per current practice. By 35 days late, RLF loan process is mandatory. US/TU will reach out to late payers with clear communication about loan option. RLF committee to meet predictably. Funding for loans separate from co-op assets. If no arrangements attempted by 35 days, US/TU issues 3-day pay or quit notice and notifies owners. Loans paid to US/TU (not resident) - Loans may be in arrears, but rent stays current. Any debt or loan of more than 2 months’ fees triggers notification of owners.
MEMBERSHIP (MC)
Non-participating LAEV renters. Importance of participation. Tracking participation.
Email from Angel regarding participation (condensed version): Against tracking. Big supporter of participation, Components of living at LAEV and eventually USTU include participation through consensus, common area maintenance and beautification, building community and communication, demonstration project, impact of our lifestyles as a whole, individual contributions. We all play an important role. My participation contributes to all these, and what I bring as an individual contributes. L.A. is full of diversions, sometimes work gets hectic, relationships happen, these may draw attention away from the community. I hope that members and potential members make living at LAEV a part of their lives but if not possible, let us know and we’ll work with that. Just like in any relationship, communication is key. We need to make sure we encourage participation. Accountability has to come from the community and individuals need to be accountable for themselves and recognize that they play a key role in the functioning of the community. If I’m going to spend 6 months of my time coming to meetings and potlucks to get to know someone interested in becoming a member, I expect the same from them when they become members. When a member pulls out intentionally, then we could proceed with an exit strategy.
Discussed: difference between being unable to participate due to circumstances, and lacking in desire to take part. Agreed — many benefits to having full participation. Participation Matrix being updated by MC to be clear about many options. Is the community better off with or without this neighbor? What are their contributions to our mission?
MC will draft statement describing significance of meetings and potlucks and produce next edition of Transition Times.
CONSENSED: April, Leilani, Dore and Peter grandfathered to Long Term Renter category, to be reviewed 6 to 12 months post transition, before renewing leases. Lara will discuss this with them. Membership committee will place Brad and Arturo into “intentional renters” category, engage in a one-on-one dialogue, tell them they are missed, discuss plans to participate/contribute, expand possibilities for participation, and revisit in 6 months.
TIMELINE
December 08
Membership: Talk with Brad & Arturo, Revise Participation Matrix, Publish Transition Times
Finance:Make Interest-Only offer
Governance: Feedback from attys re. bylaws, Develop timeline for incorporation, Poss to purchase before incorporation?
January 09
Membership: Rights & Responsibilities draft, Finalize Participation Matrix
Finance: Develop Long Term Budget, Draft Purchase Parameters, Research share price
Governance: Finalize Bylaws, Make “eco-memo” with BVCLT
February 09
Membership: Finalize R&R document, Draft Relationships Diagram
Finance: Purchase Parameters decision, Finalize share price
Governance: Finalize ground lease with BVCLT, Draft Management Plan (w/Finance)
March 09
Membership: Finalize diagram, Publish Transition Times
Finance: Finalize transition details
Governance: File incorporation papers for US/TU, Revise Management Plan (w/Finance)
All: PARTY
Thanks to assiduous management and fine food, the retreat ended right on time!
Evaluations - Agreements on hard issues, answered questions, accomplished a lot, thanks, good things happening here, overcame inertia, cohesion, everyone contributed, set example in management, PLEASE FIX THE OVEN.