Next Steps for Phase 2 Associate Members (P2AM's)
After more Phase 2 details are nailed down, including resolving all concerns from regulatory agencies and a firm estimate of lot and home costs (probably in March or April of 2021), P2AM's will be invited to sign up to become Phase 2 Homebuyers (P2HB), which involves completion of three requirements:
Because there are many more P2AM's than there are available homes in Phase 2 (14), the first two requirements will be completed by a first deadline. The 14 P2HB spots will go to the to 14 P2AM's highest in the lot selection queue who have completed the first two requirements by the first deadline. Those 14 P2HB's will make their $12K deposit by a second deadline. All other P2AM's who have completed the first two requirements by the first deadline will be given an opportunity to be put on the P2 Waiting List in case one of the 14 P2HB's has to drop out during the development process. Getting added to the P2 Waiting List requires an additional fully refundable deposit of $2K, bringing the total fully refundable Waiting List deposit up to $3K.
Committing to Phase 2 is really about making two commitments:
Once we open Phase 2 Homebuyer Commitment, Associate Membership will go away. P2AM's at that time will need to complete requirements #1 and #2 and either make a $12K nonrefundable deposit to go onto the P2HB queue or a $3K fully refundable deposit to go onto the P2 Waiting List. All other P2AM's will lose their place in the queue.
$12K Phase 2 Homebuyers Nonrefundable Deposit
The $12K P2HB's deposits will be used to finance the development of the Phase 2 homes. That is, they will go towards paying for engineering, design, roads, water, sewer, home construction, and all the other costs related to developing the Phase 2.
If a P2HB drops out for any reason, they will forfeit their deposit. They will not be able to sell it to someone on the waiting list. We're sorry that P2HB's have to shoulder that risk, but risk is a reality of the development process. The high disruption cost of members leaving during the development process was one of our hard learned lessons from Phase 1 development 20 years ago. We allowed members to sell their spots and found it to be very disruptive and costly to the community. When you become a committed P2HB, you will have real skin in the game and therefore you'll be invited to participate in the design of your future home. The home designs will reflect the needs of specific members. During P1 development, we found that when those members left, the architect had to spend extra time trying to accommodate the needs of the new member. This is just one example of the cost and disruption.
We want P2HB's to be fully committed to buying a home and living at Heartwood. We understand that life circumstances may get in the way. That would be unfortunate for all involved. The $12K deposit that would be forfeited would cover the costs of the disruption to the other P2HB's.
The only reason that the $12K deposit would be refunded would be if we fail to get someone's home built by a yet to be determined construction deadline (probably sometime in 2027).
$K Phase 2 Waiting List Fully Refundable Deposit
The $3K P2 Waiting List deposits are fully refundable at any time for any reason if a household decides that they no longer wish to remain on the Waiting List. Any Waiting List deposits still held after all P2 homes are sold will be refunded.
Early Bird Credits
Early Bird Credits are rewards that households receive for becoming P2HB's early in the development process. We recognize that making a $12K non-refundable deposit is a risky proposition. That’s one of the big reasons that anyone making the commitment to become a P2HB when it is first opened will receive a $10K Early Bird Credit to be applied towards the eventual purchase of their home. If there are any P2HB spots still open later, those Early Bird Credits will decrease as the development progresses and risk decreases. Risk is tied to reward. The risk is greatest at the beginning so the Early Bird Credit is the greatest.
The other main purpose for Early Bird Credits is to incentivize people to get off the sidelines, get into the game, and make the commitment to buy a home. Without sufficient committed homebuyers at each major development investment milestone, we cannot safely move forward. We need to know that we have enough committed homebuyers to warrant spending the big bucks on engineers, architects, lawyers, bank financing, construction, etc.
Future Cash Requirements
We don’t yet know the exact amounts or timing of additional future cash requirements. In order to obtain construction financing, we’ll need to put up a certain amount of money and the bank will loan us the rest. We still need to contact banks to find out how much we would be required to put up and then we’ll be able to figure out how much of that will need to come from P2HB's, how much from private investors, etc. All that will be determined before we open Phase 2 Homebuyer Commitment.
Pod House
We may build a pod house or two in Phase 2 if there are homebuyers that want to do so. A pod house is a home that is designed for several independent households to live together under the same roof. The independent households might be singles, couples, or possibly even families. The exact design of the pod house has not yet been worked out, but it is likely that each household in the pod house would have their own bedroom (or two) and a bathroom, with everyone in the pod house sharing a kitchen, living room, and possibly other rooms. Everyone living in the pod house could potentially be an owner or perhaps only some of the people would be owners and others would be tenants.
The potential advantages of building a pod house:
It is vital to figure out which P2AM's want to be part owners of a pod house before we open P2HB Commitment. Each P2HB is committed to buying one home in P2 so multiple owners of the same pod house would only commit to buying one P2 home and therefore taking just on P2HB spot.
Mortgage Financing
Here's a list of mortgage lenders recommended by P1 members:
After more Phase 2 details are nailed down, including resolving all concerns from regulatory agencies and a firm estimate of lot and home costs (probably in March or April of 2021), P2AM's will be invited to sign up to become Phase 2 Homebuyers (P2HB), which involves completion of three requirements:
- completion of Heartwood's Prospective Member Checklist
- signing and submitting the Heartwood Phase Homebuyers 2 Agreement (which is still being drawn up by our attorney)
- payment of a $12K Phase 2 Homebuyers nonrefundable deposit
Because there are many more P2AM's than there are available homes in Phase 2 (14), the first two requirements will be completed by a first deadline. The 14 P2HB spots will go to the to 14 P2AM's highest in the lot selection queue who have completed the first two requirements by the first deadline. Those 14 P2HB's will make their $12K deposit by a second deadline. All other P2AM's who have completed the first two requirements by the first deadline will be given an opportunity to be put on the P2 Waiting List in case one of the 14 P2HB's has to drop out during the development process. Getting added to the P2 Waiting List requires an additional fully refundable deposit of $2K, bringing the total fully refundable Waiting List deposit up to $3K.
Committing to Phase 2 is really about making two commitments:
- Becoming a member of Heartwood Cohousing. That's what the Prospective Member Checklist (PMC) is all about, giving you enough information about life at Heartwood for you to make a well-informed decision as to whether you're a good fit for Heartwood and Heartwood is a good fit for you. Completing the PMC takes time so you are encouraged to get started on it right away. Contact your buddy if you have any questions.
- Becoming a Phase 2 Homebuyer. Based on the home cost estimates that will be provided and your personal financial situation, you will need to determine whether you can afford to purchase a home in Phase 2 and make a commitment to do so. Because your $12K Phase 2 Homebuyers deposit will be nonrefundable and P2HB's dropping out during the development process adds development costs for all of the other P2HB's, it is crucial for you to make sure that buying a P2 home is financially viable for you before signing and submitting the Heartwood Phase 2 Homebuyers Agreement. You are strongly encouraged to consult with a mortgage lender and get pre-qualified or pre-approved for your home mortgage.
Once we open Phase 2 Homebuyer Commitment, Associate Membership will go away. P2AM's at that time will need to complete requirements #1 and #2 and either make a $12K nonrefundable deposit to go onto the P2HB queue or a $3K fully refundable deposit to go onto the P2 Waiting List. All other P2AM's will lose their place in the queue.
$12K Phase 2 Homebuyers Nonrefundable Deposit
The $12K P2HB's deposits will be used to finance the development of the Phase 2 homes. That is, they will go towards paying for engineering, design, roads, water, sewer, home construction, and all the other costs related to developing the Phase 2.
If a P2HB drops out for any reason, they will forfeit their deposit. They will not be able to sell it to someone on the waiting list. We're sorry that P2HB's have to shoulder that risk, but risk is a reality of the development process. The high disruption cost of members leaving during the development process was one of our hard learned lessons from Phase 1 development 20 years ago. We allowed members to sell their spots and found it to be very disruptive and costly to the community. When you become a committed P2HB, you will have real skin in the game and therefore you'll be invited to participate in the design of your future home. The home designs will reflect the needs of specific members. During P1 development, we found that when those members left, the architect had to spend extra time trying to accommodate the needs of the new member. This is just one example of the cost and disruption.
We want P2HB's to be fully committed to buying a home and living at Heartwood. We understand that life circumstances may get in the way. That would be unfortunate for all involved. The $12K deposit that would be forfeited would cover the costs of the disruption to the other P2HB's.
The only reason that the $12K deposit would be refunded would be if we fail to get someone's home built by a yet to be determined construction deadline (probably sometime in 2027).
$K Phase 2 Waiting List Fully Refundable Deposit
The $3K P2 Waiting List deposits are fully refundable at any time for any reason if a household decides that they no longer wish to remain on the Waiting List. Any Waiting List deposits still held after all P2 homes are sold will be refunded.
Early Bird Credits
Early Bird Credits are rewards that households receive for becoming P2HB's early in the development process. We recognize that making a $12K non-refundable deposit is a risky proposition. That’s one of the big reasons that anyone making the commitment to become a P2HB when it is first opened will receive a $10K Early Bird Credit to be applied towards the eventual purchase of their home. If there are any P2HB spots still open later, those Early Bird Credits will decrease as the development progresses and risk decreases. Risk is tied to reward. The risk is greatest at the beginning so the Early Bird Credit is the greatest.
The other main purpose for Early Bird Credits is to incentivize people to get off the sidelines, get into the game, and make the commitment to buy a home. Without sufficient committed homebuyers at each major development investment milestone, we cannot safely move forward. We need to know that we have enough committed homebuyers to warrant spending the big bucks on engineers, architects, lawyers, bank financing, construction, etc.
Future Cash Requirements
We don’t yet know the exact amounts or timing of additional future cash requirements. In order to obtain construction financing, we’ll need to put up a certain amount of money and the bank will loan us the rest. We still need to contact banks to find out how much we would be required to put up and then we’ll be able to figure out how much of that will need to come from P2HB's, how much from private investors, etc. All that will be determined before we open Phase 2 Homebuyer Commitment.
Pod House
We may build a pod house or two in Phase 2 if there are homebuyers that want to do so. A pod house is a home that is designed for several independent households to live together under the same roof. The independent households might be singles, couples, or possibly even families. The exact design of the pod house has not yet been worked out, but it is likely that each household in the pod house would have their own bedroom (or two) and a bathroom, with everyone in the pod house sharing a kitchen, living room, and possibly other rooms. Everyone living in the pod house could potentially be an owner or perhaps only some of the people would be owners and others would be tenants.
The potential advantages of building a pod house:
- Affordability / Income Diversity
- Aging in Place
- Companionship
- Flexibility (depending on design)
- More P2AM’s can become Heartwood Members
It is vital to figure out which P2AM's want to be part owners of a pod house before we open P2HB Commitment. Each P2HB is committed to buying one home in P2 so multiple owners of the same pod house would only commit to buying one P2 home and therefore taking just on P2HB spot.
Mortgage Financing
Here's a list of mortgage lenders recommended by P1 members:
- Josh Groner at Universal Lending in Denver (720-296-1740) (Maria)
- Amerisave (Scott)
- Bank of the San Juans (Barry)
- Credit Union of Colorado (Barry)
- Peter Pritchard at Animas Mountain Mortgage (Alana)
- Anita Nickels at Central Bank (Sondra & Paul)