Common House minutes: 2003-07-12

Minutes:

Present: Elph, Rod, Melissa

Offices Budget Appliance

Announcements: Elph has sample chair to look at. Stacks 40 high (upholstered version may stack less high). Nice styling, easily moveable, lasts a long time.

Hope also bought 72 chairs from South Quad under the understanding that we might not use them.

Offices(Elph, Melisa) 2 people strongly felt they needed and office, 3 people want to share and we have 3 available, so it seems like it might work well.

Elph talked to "a guy" who suggested that $20/sq.ft. 120 sq.ft X $20/sq. ft./year X 12 months = $2400 = $200/month Is the $20/sq.ft/year realistic? Seems like a baseline for rents around Ann Arbor.

Can we figure out how much the space is costing us? Hard to figure out a way to break that out of the overall figure. So how do we figure out what WE should charge?

Melisa has brought a revised draft of the office policy (went out in email already).

Changes: primary renter may sublet/share with people outside the community; renter assumes all risk.

Questions about rate increase: "up to" 3% or set AT 3%. Elph suggests setting at 3% and leaving it there. Another suggestion: index at inflation rate for the year.

Once office is rented, tenant can roll this over each year.

Priority: GO members first, then other cohousers, then wider community members.

Some discussion of keeping an office available for "hotelling" use. Decision to not include it in the proposal per se, but put something in the background section about making an office available for GO member use or community use, possibly on a drop-in basis. There could be a proposal to the community to spend GO money on this.

MONKEY: Melisa will produce another (hopefully final) draft Budget (Rod)

added by Dale: Actually, there are some figures I did in May about the cost to the community of the offices. Here they are again, some revisions (since I was addressing the issue of using office income to offset loans for the garages and/or common house loan).

The bottom line: It costs the community no more than about $132/month/office, including utilities, insurance, loans, etc.

Disclaimer: as I understand it, I'm the only person interested in fully renting out one of the offices.

The following are some back-of-the-envelope calculations, which you are welcome and encouraged to check. (For loan payment info, I'm using http://www.umcu.org/fintools/loan_wizard.html, recommended by Willie.)

Assumptions: interest rate on loan is 6.5%, term is 20 years. CH has 3,500 square feet, and will cost $650k to build (see below for less conservative estimate). Offices are 10x12 ft. Utilities for the community (mostly CH) will be about $6,300/yr, and insurance (not all of it attributable to the CH) will be $10,000/yr.

Amy N has furnished office rental rates for this area as being an average of $15/sq ft per year (probably not including electricity), ranging up to $20/sq ft/yr. However, it also seems to be the case that smaller offices will cost more. For our 10x12 offices, this comes to $150/month to $200/month at the $15 and $20/sq ft rate.

What does it cost the community per office? Each office is 120/3500 (ft^2) of the CH, which cost $650K to build. This is $185/sq foot to build, or $22,286 per office. Since this is financed by people's mortgages (say at 6.5%), we collectively pay $166 per office per month. (Yes, $150k will likely be financed through a separate loan, paid through association fees, but it all comes out of our pockets in the end.) Utilities and insurance comes to about $560/year/office (based on the proportions above) or $47/month. With these extremely conservative estimates, it costs the community no more than roughly $213/month per office.

The per square foot cost for office construction is actually much, much less than the $185/sq ft figure here; I'm basing the square footage on the originally designed 4,300 foot CH and reducing it to take into account design changes since then. So this figure is all but guaranteed to be high.

A more realistic, but still conservative, figure for the cost per square foot for the office part of the CH would be $120/sq ft, which is $14,400/office to construct and hence $107/month/office for loan cost. Why? The offices do not involve the same complexity of construction as the other parts of the building like the kitchen--it's more like standard commercial space. Recall that JD was originally budgeting about $120/sq ft for our CH construction, and that included things like the kitchen, dining room, etc.--offices themselves should be even lower than that. Likewise, it seems more realistic to use a figure more like $25/month for insurance & utilities (e.g., about $10k for both utilities and insurance, realizing that both cover not just the common house, but insurance of all the residential buildings, exterior lights and water, etc., and that the offices are 120 sq ft out of more like 4,000 sq ft in the CH), for a total cost to the community of $132/month per office.

If you like, we can put it another way: if we had the space and had added even more offices, it would likely cost the community less than $132/month/office. Any income above that level is pure income to the community.

Hope this helps.

Anyone willing to take a first cut at producing an annual operating budget? Deadline looming.

MONKEY: Rod will will take a first stab at the dollars and hours for CH, pass it on to Elph, who will pass it on to others. MONKEY: Melisa will work on CH use policy

Appliances (Rod)

We need to decide on major appliances stove, ovens, refrigerator, Hobart sterilizer; lower priority: hot water dispenser, shelving waste disposer, exhaust

MONKEY: Rod will talk to Tom about working on this and try to report back by next week

Kitchen (Melissa) Melissa bought some flatware. (Wallace--service for 12 + some serving utensils, 65 pieces X 7 = place settings for 84). The committee oohed and aahed. Total price: $285.00. "Awesome!" -- Elph Morgan. Suggestion that she should buy two more set so we'll have 8 of everything plus one extra.

Melissa also bought some dishes at a good rate. More info later.

Meeting broke up at 12:00.