As we reopen recruitment, it is important to tell incoming members what we expect from them as their first financial contribution towards The Reef.
Meanwhile, we expect to spend about 252K in 2025, mostly in architects fees.
Two possible logics
We can ask new full members to contribute based on two different logics.
1. A fairness logic
If we want to prioritize fairness, we would ask incoming full members to pay the same contribution that the accord préalable group did. If we want to keep the same division key as that of the accord préalable, it comes down to 1,088 EUR per m2 – call it 1,000 for simplicity This would amount to:
The Reef will have 1,900 m2 vendable.
Of these, 1,004 have been claimed by the accord préalable group; 200 are allocated to Oak Tree.
This leaves 1,900 - (1,004 + 200) = 696 m2
696 x 1,000 = 696,000 EUR.
2. An incentivizing logic
If we want to reduce the barrier for incoming full members, we could ask for a contribution that will cover all the costs for 2025. This would give them more time to out their finances in order, liquidate assets etc. Even so, the accord préalable group would not need to front any more money in 2025.
This result is achievable asking for a contribution of 500 EUR per m2. 500 x 696 = 288,000, enough to cover our estimated financial needs for 2025.
Some more thoughts on this
We could also combine the two logics, choosing a value between 500 and 1,000.
Another important piece of information for the incoming full members is going to be a deadline. The accord préalable group had about 6 months to work on our contributions. The fonds propres variable is critical. Full membership now requires more than “just” will and financial solidity: it requires financial speed, the ability to put on Coral Reef’s account 50-100K in a few of weeks.
We could also offer more lenient condition to lower-income families, needing to go through Fond de logement, etc.
Proposal-ish
On the whole, I lean towards an incentivizing approach – seems less risky, where the main risk is to not be able to complete the group. Alternatively, we could ask for a higher contribution (like 800 EUR x m2) and expect more delays in joining.
Looks good, sorry for my late review! Probably worth to have a look also at last year’s loan proposal, where we suggested that newcomers would pay the average percentage that first movers paid, with an exception for Fonds de logements and the 4% mark-up would kick in at construction start. Login – Nextcloud
I am not sure this was ever consented to though, in the agenda from 13/09 it was mentioned merely as an “exploration”.
For the sake of completion: we discussed this on Saturday and concluded that this is probably an error in the agenda document. The fact that everybody signed the contract should also point in that direction.
I gave this some further thought, and I’m not sure whether asking for a higher contribution necessarily leads to more delays in joining.
On the other side of this, I think it’s important to give some thought to what the possible implications could be on group dynamics. If there is one group who has a high financial stake, and another one is much less exposed, I worry that this will lead to unecessary tensions and reproaches. So for me that could be an argument for equalising the contribution (with an early pay-back for early movers).
I agree with the incentivising approach. Based on experience and what I hear from family and friends, the contribution is quite high. Especially since there are still 3 3bedroom-units for sale, which means a higher contribution in absolute numbers, and more likeliness of attracting people who need to sell another property for buying their unit (and thus less savings available).
Hi @alberto , I felt free to comment on this… I’m not sure that 600 feels like a true compromise between 500 and 1088, but I do understand Hannah’s argument. As mentioned during the plenary, I believe it would feel fairer to request a contribution higher than 500. If asking for significantly more were to cause delays in joining, I understand that we could then decide to lower the amount below 1000. However, immediately settling on 500 or 600 doesn’t seem entirely fair to me at this stage.
We propose a high contribution (1,000 EUR per m2) with flexibility. The logic is: if people can pay, they should pay, for fairness reasons.
However, we would tell incoming full members that, if this is a problem, they should flag it and we will find a solution. For example, any full member going with Fond de logement would likely be exempt. For these members I would propose a contract where they promise to buy their unit at the agreed-upon the price, similarly to Oak Tree’s lettre d’intention. But also people in the situation described by Hannah:
The logic here is to share the burden not equally, but fairly: the strongest carry the most weight.
Limit scenario: every single unit gets allocated by the end of Q2 2025, and everybody pays the full contribution (on 575 m2). This would leave Coral Reef with a surplus of 363K, which we would then redistribute to the entire group (both extant and incoming members. We would then be able to reduce everyone’s contribution to something like 850 EUR x m2. When the permit is assigned, the contribution will no longer depend on how much ready cash members have, because, with the permit, we will go to the notary, sign the second deed and activate loans. At this point, the contribution by square meter will go down to a bit over 700 m2, but we will be using the casco price of unit as the new division key.
@hannah, you have ideas, could you please peer review?
Hello, @Jook and I have a two questions about this, which we hope you could take into consideration in the decision on the contribution amount for new full members:
Would this mean that the contribution of new full members will have to be paid by them with their proper funds, because they cannot get a loan until the signing of the notarial deed by which they obtain their share in site? This would mean that, at the moment that the new full members will be able to apply for a loan, the amount of their proper funds will be significantly reduced, which limits their loan capacity and is a disadvantage to obtain a lower intrest rate. Or is there a solution for this problem?
Will there be other payments required by new full members after the “entry contribution” of € 1000/m², but before they can get a loan?
Hello Axel, the site was indeed paid for by a mix of fonds propres and intra-group lending. So, the group as a whole had enough money to pay for the site, but individual members took “solidarity loans” from other individual members. However, I have to disagree with this:
Because:
What we hear from banks is that your share of the site counts as a collateral. Which is reasonable – it is property, after all. So, if you pay – say – 50K for the site and then take a loan of 150K for the construction, it is treated in the same way as somebody taking a loan of 150K with 50K of cash for a 200K apartment. This is because the value of the collateral is, in both cases, 50+150, and the loan is only 150.
At the permit in late 2025 we should receive also the contribution from Oak Tree. So, at the time of taking loans, we will be redistributing some of the money back to the members. So there should also be some cash sloshing around in our current accounts.
No. Loans get unlocked at the time of the second deed (think Dec 2025 or Jan 2026). Between then and now we need to finance only two things: the site (+ taxes + notary) and the work of the architects and experts, necessary to obtain a building permit and issue an appel d’offre to constructions companies. These two items add up to an estimated 1,392,093. Of these, 1,142,389 were paid in 2024, and the remaining 249,703 are to be covered in 2025 (see here).
At the plenary of 5 February we consented to this (copy from minutes):
incoming new members default contribution of 1000e/m² with flexibility (between 500 and 1000) with an average of at least 500e/m² (to cover cost for 2025); each household treated individually, conditions: alignment with the statutes and gain clarity on communication (helping circle)
Once we have consented to the revised statutes (which have a clause on the entry price), I would like to re-open this decision. We currently have a Full Member who did not contribute 500 euro, so I am not sure why now all of a sudden we would insist on that. On the other side of it however: if all the new members would only pay 500 euro, there will (largely) not be enough money to cover all the costs.
As for the task on communication (long overdue), I have for now worded it like this in the checklist (point 3.5 p. 9) (Onboarding Package: Login – Nextcloud):
How much: the default contribution is 1000 euro per m² gross. If you are in a situation where this would be a problem, please flag this when applying for Full Membership, and we will try to find a solution. We dearly need the money, but we don’t want this to be an obstacle to membership.
I’m not sure it’s a good idea to continue this discussion in writing, I just wanted to flag that I would like to talk about this again, at a moment when we are all clear-headed.
So the consented proposal is for new members to pay - when becoming full member - 1000 euro/gros m2. (with some openess towards that amount if that would be a problem).
A question I got from an exploring member: can i have a timeline about when i need to pay what amount. I don’t think such a document exists and would be personally in favor of sb creating this. There is a start in the checklist, but not a whole overview. (I can work on this, but don’t want to overstep it )
if the new member will be able to pay that amount => will that amount cover for their site contribution + the fees of architects and all other costs till building permit? And if not, when will this difference need to be paid?
the 1000 euro/gros m2 also covers for the 4% markup (for site, architects fees and other costs part of casco up untill construction)? If not, when does this need to be paid?
if the new member will not be able to pay that amount but less = when will the difference need to be paid? On the moment of taking up the loan?
After the building permit, there will be the fees for the commune/region to be paid (about 210 000). That is an amount to be paid before the selling of the site from the 5 reeflings to the different FM/taking up a loan. I guess the current and new members will need to contribute to that as well?
In 2024 + 2025 (counting the second deed in 2025) we spend 15% of the budget. So, for a new member to be in sync with the project at that point (building permit acquired, notarial deed done), we will need to have paid 15% of the cost of our units. If the total average cost per square meter (including balconies, parking spaces, private gardens etc. etc… which some families will not pay) is something like 5,100 per m2, 15% of that is something like 765. So, with a complete group, 1,000 EUR per m2 more than pays for that.
But we should probably not count on there being a complete group. So, I would say this if 3 new households join this year (and pay up front) then again yes, 1,000 EUR x m2 is more than sufficient. Even if it is 2 households with large units. Any less, and we will need to integrate.
1,000 EUR x m2 does not cover anything. It is only an advance payment and does not influence the price of your unit. In the end you will pay the same price, deducting the advances you made. The 2-4% (if we even manage to keep that) will be charged during the construction phase, or even at its end.
After the deed, households are able to access banking loans. At that point we expect everyone to have 100% of the finance ready to go. Then, if they take a loan they will be charged as the construction proceeds. If they don’t take a loan, they need to frontload 100K, then “top up” as the construction proceeds, as per the statutes.
The fees for the building permit are included in these estimates, as a cost that must be carried by the entire group. Again, the members at that point will advance, and then will have to pay less for construction, and the price of the units remains the same.
thanks, it was not yet clear in the optimal case , when the group would be complete.
Just a consideration (but maybe you have checked this with the banks allready), i wonder if banks will free extra money during construction phase (for people taking a mortgage to pay for the casco and finishing), i mean an amount that is bigger than what is mentionned on the invoice of the contractor (which would be the markup)
