We are implementing a Resident Operated Non-Profit model. The Bay Area Community Land Trust will hold title to the property. We will form a non-profit corporation to lease the house back from the land trust and operate it. The board of the local non-profit will consist of house residents and a representative of the land trust.
Financial obligations for residents consist of two parts:
1) Room rent
Room rent is based on current rental market value… see the table below. The six smaller rooms qualify us for a substantial non-profit property tax reduction, provided their residents meet a federally set income test (currently $ 51,500, or $58,860 for a family of two). Income must be certified and documented yearly. Anyone who is above the income limit is welcome, but will be responsible for paying the additional taxes their income triggers, about $ 250 monthly per room. The two large suites are well above the affordability limits, so no income limitations apply.
Monthly Room Payments
Plus additional 6% collective fundraising obligation, see below
|Second Floor Suite||1600|
|Third Floor Suite||1600|
|Second Floor Center BR||1050|
|Second Floor SW Deck BR||1150|
|Second Floor NW Deck BR||1000|
|Third Floor South BR||800|
|Third Floor Garret||700|
|First Floor Rear BR||1000|
2) 6% collective fundraising obligation
We were unable to get the 4% loan we originally planned around; we will have to pay 5.75% interest (assuming interest rates hold until we close the deal). This results in mortgage payments 6% higher, or about $600 total more per month. This 6% higher rent will have to appear in the residents’ lease agreements, but rather than just leaving it up to each resident to come up with the additional money, we have agreed to take on fundraising the $600 each month as a collective responsibility.
Proforma spreadsheet with financial details is here
Cost of Buying the House
House ownership is currently divided between Jon Katz (50%) and his three sons (50%).
Based on an appraisal in the summer of 2014, the house is worth $1.55 M; the appraisal was updated to $ 1.70 M in the summer of 2015. A copy of the appraisal is available here: Appraisal.pdf
Initial House Expenses
The house needs some cosmetic fixup, including light exterior carpentry, exterior painting, additional floor sanding, and interior painting. Minor structure-related work includes replacing one attic skylight, deck re-surfacing, re-supporting the bricks in front of the living room fireplace (the chimney itself is sound). No substantial structural problems are known. The yard needs to be cleaned up, trimmed, and replanted, and the fence replaced.
Taxes are currently about $12,000 per year, with 40% of the house’s value still under Prop 13 protection. While the Alameda Assessor will not provide advance information about reassessments, we would expect property taxes to approximately double, possibly somewhat more, if the house were completely reassessed to current values. If six out of eight rooms get exempted from assessed property tax (fixed and special assessments of about $ 4,000 are unchanged), property taxes should be around $ 9,000 (for the first year).
|2015 Assessed value||580875|
Maintenance and Repairs
- House projected $800/month
- Yard $ 200/month
- PG&E$300/month average
- Water$ 120/month