Here is a very rough forecast of financial flows for The Reef in 2025, to be presented at the plenary of 2025-01-15.
What we know (or assume)
By the end of Q4 2024 we had committed to the project 1,181,450 EUR, give or take a few bills previously paid to the architects, the géomètres, etc. Around 15K in all, so call it 1.2 Mil. Most of these were spent in Q4 2024 purchasing the site and in architects bills, with 38,611 EUR leftover. Since Coral Reef has no bank account, these 38K live in the bank accounts of individual Reeflings (see column M in this table).
S&F’s contract specifies the phases of the work when they bill us. The planning document puts dates to these phases.
Based on the offer for designing the acoustic insulation, we assume that 60% of the fees of the bureaux d’étude for the special techniques will have to be paid during Q2.
Based on the new recruitment process, we assume that all new full members will sign up during Q2 2025; Oak Tree will start committing financial resources after the permit is issued in Q3. A precise calculation of how much this is is difficult to make at this stage. Conservatively, I estimate about 500K for each of these.
Results
In 2025 we will likely not start construction. All of the year’s costs are then relative to services: designing the building (Q1), obtaining the permit (Q2), doing the second deed (Q3), launching and evaluating the appel d’offre (Q4). In the following chart, the green line represents the money planned to come into Coral Reef from members: in Q4 2024, we are speaking of current members, whereas in 2025 we are speaking of future members (guesstimated). The gray line represents expenditure, computed on the basis of the contract we already have with S&F and a guesstimation of what we expect to happen with the bureaux d’études. The red line is the difference between the previous two: when it stays above zero, there is no need for the current members to commit additional resources to keep the project going.
Good news: as new members and investors join, they will pay contributions in line with those already paid by the current members. This will largely cover our needs for 2025.
Bad news: … except for Q1. We cannot expect any new member until well into Q2; and the unspent balance from Q4 2024 is insufficient for paying the bills of Q1. We should prepare to finance an estimated 66,478 EUR from the pockets of the current group.
Word of caution: the relatively low stress in Q2 is predicated on incoming full members being able to commit about 100K per household more or less immediately. This may be difficult for some, and impossible for any household relying on the Fond de logement to finance its Reef unit. That money will only arrive after the second deed, in Q3. So this is something that @reef-recruitment might want to keep an eye on.
A follow-up question that @reef-recruitment will need to answer to, is how much newlings will be asked to contribute per square meter to the société simple when they become a Full Member.
I’m thinking this will need a proposal that goes through the plenary. Would you or someone in @reef-finance be willing to come up with a number at the plenary of 25 January?
Calculate the average share of the final price of our units we, the current members, have paid so far. This requires a stable plan and the choice of the units, so I did not even try and guesstimated we would get 500K from newlings in Q2 (probably conservative) and 500K from Oak Tree in Q3 (maybe this one is a bit optimistic).
Harmonize so that we all end up having paid a similar share (does not have to be perfect).
Ask newlings to front the same harmonized percentage.
We are in the 20% ballpark. We could also just skip the entire dance and tell newlings they need to front 20%.
If we ask of newlings that they pay the same percentage as we did, they are as screwed as we are (i.e. possibly needing loans, emptying bank accounts etc), which is something I don’t wish to anyone. It also somewhat undermines the 4% mark-up idea (though not completely).
I believe the idea that we briefly discussed when we were discussing everybody’s contribution to the purchase of the site, we said something like “guestimate the costs we incur before the building permit and divide those by the total number of sellable square meters”. Back-of-the-enveloppe this would come down to 1.700.000 euro divided by 1900 m² = 900 euro per square meter?
Readjustments for the units’ weighting I think is something that can wait until we sign the deed. What is not clear to me is when the mark-up needs to be paid. I reckon this can also wait until the deed, so that we have 100% clarity on the amount?
@reef-finance, I know it’s short notice, but just in case: would you be willing and able to bring a proposal on this to the plenary of this Saturday?
Yes that looks realistic and aligns you with the 20% figure Alberto mentioned before. If I understand your first paragraph correct then you would prefer to not communicate that figure to an interested audience at this point? Or did you mean you would prefer for joiners to contribute less than current members?
I would like to communicate the price at the presentation on the 29th. For now it says +/- 1000 euro per m². Ideally it would be mire accurate and confirmed by consent, but no prob if that’s not possible.
As to your second question: it’s not that I want newlings to pay less, it’s more that I don’t see the point of insisting they pay as much as we do.
Even though, I do see that an argument in favour of asking for a little more is that this would allow us to get a payback ourselves, so that we can pay back any loans we may have needed. It’s a bit of a double-edged sword, because exactly this approach may force the newlings to need a loan themselves.
It’s an easy thing but it’s also really not easy .
If I may add to that, I believe it’s reasonable to ask for a little more from the new members, even though I understand why you wouldn’t. The reality however is that some of us, ok not many of us so I will only speak for myself, are in a position where we’ve had to borrow from other full members to fulfill our commitment… Asking for a bit more would give me the ability to recover from this as soon as possible… Which I would prefer… Happy to discuss in person.
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