LEGAL ENTITIES
We'll establish two legal entities: first a development corporation and later a home owners' association.

Development Corporation
The development corporation has been set up as a Sub-S Corporation and is called San Juan Cohousing Development Corporation (SJCDC). SJCDC will be responsible for buying and developing the land, constructing the SJC-built homes, and then selling individual lots and/or completed homes to Member Households. Once the project is sold out and construction completed, profits will be used for community expenditures or distributed to shareholders (Member Households) and the corporation will be dissolved.

Home Owners' Association (HOA)
The HOA will be a non-profit entity made up of Member Households which will be established to manage the community once it's occupied. It may also be necessary to form a separate for-profit entity to manage ongoing activities that don't legally qualify as HOA activities, such as possibly day care, meals, etc.

FINANCIAL STRATEGY
According to the current cash flow estimate, SJCDC will need financing of ~$2 million and possibly another $165K for an escrow loan. All of these funds will be paid back once all of the Members buy their homes and lots and SJCDC is dissolved.

Required Members' Investment
Members will be the shareholders of SJCDC and will each be required to invest $6000. $100 of the investment will go towards purchasing 100 shares in the corporation and the other $5900 will be an Earnest Money Deposit, which will be applied to their lot purchase. Members also have the opportunity to earn up to $4000 in Equity Credits if they invest early. Shares will be redeemed when the corporation is dissolved and shareholders (Members) will receive $100 plus or minus any profit or loss of SJCDC. As shareholders, Members will control the corporation. The entire $6000 investment will be unsecured, which is fully described in our Stock Purchase and Earnest Money Agreement.

Profits & Pricing - The project will not be budgeted to make any profit. Lot and home prices will be determined just prior to their going on sale and will be determined based on a zero profit budget and will include a 10% contingency.

Optional Members' Investment
Members may invest money in SJCDC in excess of their required investment. Investment will be unsecured and will earn the member investor a discount on their lot or home price.

Bank Financing
The bank will expect that the project is at least 20% - 40% financed by investors. They'll charge us ~1 point (negotiable) plus ~prime + 2% interest for their lower risk loan. They may require that investors personally guarantee the loan thus putting the investors at risk for more than their original investment.

SOURCE	TYPE	FUNDING	REPAY PRIORITY	RETURN	P & L SHARING	REPAYMENT
Members	Equity & Debt	$140,000	3	(Equity Credits)	100%	At dissolution of SJCDC.
Investors	Debt	$360,000	2	Purchase Discount	-	At time of lot & home sales.
Bank	Debt	$1,500,000	1	Prime + 2%	-	At time of home sales.
TOTAL	-	$2,000,000	-	-	100%	-