Mosaic Commons - Meeting with Chris ScottHanson
March 11, 2002 6:30-8:30

Present: Stephanie, Dwight, Cat, Dave, Zach, Kim, Gabe, Rosa, John, Judy, Roxanne, Chris
Location: Home of John and Judy
Notes: Catya, Dwight, and Stephanie

Discussion:

Property Proposal The meeting focused on the latest property identified by Chris approximately 2 weeks prior to this meeting. Chris sent a detailed end-of-month report which was not reviewed at the meeting, but referred to at several points. This report is as follows:

As you know, in the past week I have focused my attention on the O'Grady property in Stow.

I believe I already reported that I have talked to Robert O'Grady twice on the phone and he remains interested in working with us and selling us the property. As agreed, I sent him an email confirming our discussions. Within the next week I will send him and his mother a soft proposal, or letter of interest. He would like to get together with me in Framingham, where he and his mother live, in early April when I am there.

I had numerous meetings on Friday - with Stew Mayer the developer, Russ Karlstad the architect, as well as Karen the Town Planner in Stow, all in research of the O'Grady property. Stew and I also spent about an hour and a half driving and walking around the 65 acres property. We roughly located the property boundaries, and became familiar with the water courses, wetlands, oak woodlands, significant hill, and three meadows. We also investigated the immediate neighboring properties on all sides.

Estimates and Calculations:

The property is about 65 acres, zoned partially residential and partially industrial There are about 20 acres of woodland, mostly hillside and hilltop land There are about 40 acres of open meadow, most of which has been farmed in the recent growing season There are about 5 acres of wetland and water courses. About 15 acres of the property appears to be within the residential zone About 50 acres of the property appears to be within the industrial zone

We learned the following from the planner: As is, the property can support only about 10 new homes under the current zoning All housing development would have to be on that small portion of the property which is zoned residential Only about 5% of the current housing stock in Stow qualifies as affordable under the Mass. guidelines Average new home price in Stow is something in the range of $650,000 or more. They are seeking more affordable housing The town would be very open to a friendly 40B application to the Commonwealth of Mass. Under a 40B application we would not be limited to current zoning restrictions Under 40B it appears that we could build 40 to 60 units, anywhere on the property

Based on the two telephone calls I received from him, the seller has indicated what appears to be a willingness to sell to us for something in the range of $1,500,000. According to some basic calculations, with an approved 40B project, this land could be worth on the order of $3,000,000 to $5,000,000.

I met Dave Belfer-Shevett on the property just before dark on Saturday evening and had a quick look with him, so that he could get some photos and video footage.

I am planning to be at your house, John, at 6:30 pm on Monday evening for a meeting with the membership.

See you then. Chris ScottHanson

Chris then began a discussion about the possibilities that lie within this property.

1. With a 40b we could build 40-60 cohousing units on the property, using more than just the land zoned as residential. Without the 40b we can only build approx. 10 units. (See the report above for town friendliness to this.)

2. With a 40b, we could divide the land into two parcels, build a cohousing project on one half (24-30 units) and partner with a developer (Nexum) to build a for- profit Sr. Housing project on the other half.

We spent the vast majority of the meeting discussing option #2, as it as several possible advantages for our community. Stow is, evidently, wanting a senior development in their town and Nexum is interested in building such a project. The biggest reason to consider doing this is the ability to off-set our cost of land. The potential off-set is significant - we might be able to end up shifting the cost of our land over to the other, for-profit project.

Once the property has gone through the 40b process, it will be worth substantially more money, to the tune of 3-4 million dollars. If we can come up with the up-front cash to shepherd the property through the 40b process, all of that reward is ours. We could then sell off a chunk of the land to Nexum for the SR. project. If we keep all of the affordable units in our project, this would probably cover the our entire land cost! If we want the Sr. project to take some of the units, we would not be able to sell that land to Nexum for as much money, but would still be ahead.

If we can't come up with all of the cash needed to shepherd the property through 40b, our option is to bring Nexum in now to share the risk and reward with us. Under this scenario, we would still do well in terms of the property value appreciating, but we would not have the major win of selling the land off to Nexum - instead we would be splitting the land with them and receiving only half of the appreciation of value.

Pros and Cons of this arrangement:

Pros: This would help make all of our units much more generally affordable; might help the town to be even more friendly to our 40b application since they seem to want a Sr. Housing development.

Cons: Could we get enough people to qualify for 40b affordability? How would having so many "affordable units" ake resale difficult? Complex.

San asked several questions in email which were answered:

1. How long does it take to get approval on a 40B application?

Chris said he believes he could move the process through in about 6-12 months, but didn't commit to any time frame.

2. What does it mean for the town to be "very open to a friendly 40B application"? What does "friendly" here mean?

A 40b can be used to override a town's zoning regulations, but Stow has already let us know that they would be open to a 40b (and wouldn't contest it) if we follow their requested guidelines: 1 unit per 1.5 acres = 40 units for this site. The town would also be open to us adding additional units, at greater density, for sr. housing under their existing zoning laws. Chris figured this would work out to roughly 20 sr. units = 60 units for the entire property.

3. Would we work with someone in the town government to put together something the town would accept? DOES the town have to agree to the application, or are they forced to take it once the state approves it? If the town gets to say yes or no to the application, would there be a way for us to get, for example, a nonbinding motion to accept it passed in the town government before the application goes all the way through the state hoops? What I am concerned about here is the possibility of us being told by some people in town that they like the application, then we wait wait wait while it goes through the state, then it comes back to the town and is presented to everyone and lots of folks object (other town officials, the public).

We would work with someone in the town since they are friendly to this 40b.

4. Would we purchase the land before the 40B application went through? If not, would there be some contingency for that approval in the sale?

We are at low risk buying the land if the 40b doesn't come through because the resale cost of the land is higher than what Chris believes we will pay for the land.

5. Do we know who farmed the land? I would be concerned, e.g., about what kinds of pesticides were used.

We don't yet know who farmed the land, but Chris believes it has been farmed as recently as last summer. Chris will start researching this asap. During feasibility, we can also do some thorough studies to find out the environmental safety of the land (Laura Fitch's husband does this kind of soil testing and would be a great potential resource): Phase I Environmental Study: Cost of $5k or less Phase II Environmental Study: Cost of $10-20k. This would involve comprehensive testing of the soils.

Chris thinks this land and proposal of doing the dual project is a really great idea. In fact, he said he would even go ahead and buy this land and develop it with Nexum if we decide we didn't want to go forward with it. He says this land has the potential to produce the highest rate of return on investment he's ever seen in his cohousing years.

He said he would also be willing to take on the entire early risk of feasibility, usher the land through the 40b process, and front the capital for this and the purchase and sale - but would then sell 1/2 of it back to us for the 1.2 million in our current budget. This would, indeed, reduce our risk, but it would also remove the financial incentives for this land.

Dave reminded people that we should be guardedly optimistic as there are some uncertain factors here - namely the property owners. While they've talked to Chris and indicated their strong interest, they could potentially come back with a higher asking price.

Steph, wanting to know more about how bringing in a development partner for the second project would work, asked, "When we would bring in the development partner in this model as opposed to the already known streamlined development model?"

Answer: When we've raised the required money. We would need approximately 70% of the shepherding money: $100,000 plus or minus $50k sooner than later, 100% total. Chris also said that Nexum (or whoever develops the 2nd project) could buy that part of the land for approx. 60k/unit.

The financial team needs to poll members and prospectives for their ability to come up with these funds.

Kim asked if the state requires that affordable units be spread across all unit types? Answer: Not certain, but probably. We'll assume so for the initial budget until found out otherwise.

Project Management

Chris acknowledged that there has been no commitment to hire him as our project manager once we have found land. He would like to do this project, but would also be willing to help us find an appropriate project manager if we would like to work with someone else, or someone more local. Some of the P.M. options that he presented:

* Cohousing Resources - As stated, Chris would love to do this project. He's going to be out here for the next two years anyway working with JP. He also acknowledged, though, that his partner, Kelly, would like him home more. Steph asked if he would commit to completing the project if hired - answer is a solid yes. The pro's of this is that we know him and he knows us. Chris believes he could do this cheaper and faster for us than any of the other options.

* Cohousing Resources + a local partner - Chris would be willing to work with a local partner, such as Peter Jessup and John Abrhams. Or we might be able to look into hiring Peter as P.M. alone. The pro of this is that he's local. Cons is that he doesn't know us well and he's a developer by nature - he would "vision" the project differently.

* Daylor Consulting Group - They are a very high end, large firm that builds developments but also can provide smaller services around feasibility, permits, etc. They would be very expensive and we'd almost need to have a full time manager within the group to manage them.

* Tim McHale - He was the project manager for New View, and also a member, therefore is familiar with cohousing. Chris would be willing to "train" him in his streamlined development style, but doesn't feel that he would be a very good fit with the group.

* Bob Engler and Russ Tanner were names also thrown out but not in detail.

Next Steps:

Chris:

1. Chris will provide us with 3 budgets: (1) 40 units, no split in the land, friendly 40b with several affordable units; (2) We do all cash for the 40b process up front ourselves, don't involve development partner until later, and we take all 15 affordable units (if we do 60 units). All Risk, All Reward. (3) Bring in the development partner earlier on, share the cash outlay and risk and reward, and we take 1/2 of the affordable units.

2. Chris will continue to gather information for putting down a proposal. This will entail Cost of feasibility, Time needed for feasibility, and the exact number of units this site can accommodate.

3. Meet with the owner of the land in early April to make an offer (if approved).

Mosaic:

1. Decide, by March 31, if we want Chris to make an initial offer to the owner of this land.

2. Decide on a Project Manager

3. Approve 1.75 million for this offer (it may not cost this much, but need to be prepared)

4. Determine how much cash we, as a group, can come up with in the upcoming months. We need to raise approx. $200,000 in the next year.

Next Conference Call: Wednesday, March 20 at 12:00 ET Next time Chris is in town: April 4th - 8th

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Last modified: June 11, 2002