National Retirement Infrastructure – Part 3

By J.D. Alt

1. Why we can afford it—2. Why we need it—3. How we can build it

3. How we can build it.

Cohousing, as briefly explained in Part 1, offers a uniquely supportive context for retired living. Cohousing communities consist of between 10 and 30 privately occupied and maintained dwelling units which share certain common facilities, amenities and, in some cases, social responsibilities and activities. It is this “commons” sharing that can potentially provide a retired person with benefits they otherwise could not afford to have, or have easily. For example, the shared facility might include an apartment for a live-in nurse-assistant/care giver who would provide assistance, in each of the private dwellings, as needed. Or, the “commons” might include a small exercise pool that individual retirees can utilize for a daily work-out. “Traditional” cohousing projects typically include a common cooking and dining facility where at least one meal a week is a shared community event—(individual dwellings have their own small kitchens as well.) In general, the goal is to create a comfortable balance between private autonomy and community activities.

This all sounds fine, but how can we expect retired U.S. citizens, on a national scale, to organize themselves into the small, cooperative groups necessary to initiate cohousing projects? And how can we expect those groups, should they somehow be formed, to have the skills required to plan and manage the construction of a cohousing project? These questions become all the more crucial when we consider why cohousing—in spite of its many benefits and successes—has had such a relatively small “footprint” in the U.S. housing market.

“Traditional” cohousing, as briefly noted in Part 1, is a challenging and time-consuming process. It involves a core group of two or three families initiating an “intention” to develop a cohousing project, attracting other families to join the effort, holding discussion and planning meetings to develop and agree upon (usually by a formal consensus process) a formal Mission Statement, creating a limited liability corporation to own and manage the project, developing and agreeing upon—again, by consensus—the LLC By-Laws, setting up LLC bank accounts and collecting initial “buy-in” deposits, finding a property for sale that meets the criteria of the Mission Statement, hiring an architect team to work with the group through a design process visualizing and reaching consensus on designs for the individual dwellings, common structures and amenities, evaluating contractor bids for construction, reaching consensus on “value engineering” decisions (changes in the design) to bring the construction bid in line with the construction budget, seeking and gaining approval for construction financing (often extremely difficult because of the “out-of-norm” ownership model), writing and agreeing upon Community Rules governing how the common facilities and activities will be used, managed and maintained…etc.

In short, traditional cohousing is a tedious, time-consuming, and challenging task that requires, above all else, a strong core leadership (which has done considerable research and gathered much data and information), a persistence and gumption to overcome disagreements, build consensus, and endless patience to rally from setbacks and disappointments. Given all this, how can we expect retired U.S. citizens, on a national scale, to undertake and implement such a formidable set of tasks? And given the fact we are suggesting it all be paid for by the federal government issuing sovereign currency—how could this possibly happen without the involvement of some massive, regulatory bureaucracy?

If I said it would be done by creating a new, smart-phone app there would likely be a few chuckles—yet, more or less, that is precisely what I have in mind. The general proposition is this: if Uber can organize millions of private citizens with cars into what amounts to a national public transportation system, why couldn’t a similar strategy be used to organize millions of retirees into cohousing “committees”—and then provide them with a simplified decision-making process enabling each “committee”, in a reasonable amount of time, to initiate, plan and implement their own cohousing project? Here is a quick sketch of how it might work—and, most critical, how sovereign spending could pay for it with minimal bureaucratic involvement and opportunities for corruption.

The NRI Co-op

This is an “umbrella” co-op that every U.S. citizen automatically becomes a member of at age 65. Retirees can choose to “activate” their membership, or ignore the opportunity (which, presumably, they might do if they own their own dwelling outright or are wealthy enough to provide it for themselves.) If a retiree “activates” his or her membership, they are invited to join a local cooperative group which is either in the process of planning and building a cohousing project, or is managing a completed project with dwelling units available for occupancy.

The NRI Co-op is not a regulatory bureaucracy—it exists for only three purposes: (1) to hold title to all the cohousing projects in the National Retirement Infrastructure, (2) to build and maintain the Cohousing App and Database, and (3) to disburse sovereign spending funds to the NRI cohousing projects as needed. Let’s consider each of these purposes in turn. 

Cohousing Title

When a property is purchased for the purpose of NRI cohousing, the legal buyer—and new owner—of the property is the NRI Co-op. The NRI Co-op disperses the funds at closing and holds title to the property in perpetuity. The local cooperative which actually develops the property into cohousing acts as an agent of the NRI Co-op—and is given complete control over the project, so long as it proceeds within the parameters of the Cohousing App and Database.

Cohousing App & Database

A simple overview would be that the database enables participants to (a) find each other, (b) find locally available properties for cohousing development, and (c) find resources for cohousing implementation—such as facilitators, architects, builders etc. The Cohousing App then enables the group to go through a simplified, step-by-step decision-making process that results in:

  • A formal Mission Statement.
  • A “program” for architectural planning and design (implicitly incorporating NRI standards for a cost per dwelling unit) which will guide the design process.
  • A limited liability corporate (LLC) Operating Agreement and By-Laws (which are automatically filed with State authorities.)
  • A formal statement of Community Rules guiding the use, maintenance and management of shared facilities, amenities and/or activities.
  • Establishment of a local bank account in the name of the local NRI cohousing group.

With this package in hand, the local cooperative is then able to retain an architect team and begin the design, construction documents, and bidding process resulting in completion of the cohousing. I’ll not go into details here (since this essay is in the context of an economics dialog) except to say that, so long as the project stays within the NRI parameters generated by the Co-housing App (which includes a maximum cost per dwelling unit), the local cooperative and its architect are free to design and build whatever they collectively choose. Oversight is implicitly managed by feedback within the Co-housing App itself which continues to guide the process through construction, occupancy and the management of occupancy turn-over.

Disbursement of Sovereign Spending

What is most unique and compelling about NRI cohousing, of course, is the fact that the Dollars used to acquire the properties—and then pay for the planning, architectural and construction services to create the cohousing—will be Dollars issued “out of thin air” by the U.S. federal government. These will NOT be Dollars that have been collected from the U.S. taxpayers, nor will they be Dollars “borrowed” from citizens of the U.S. (or any other country.) In this sense, the NRI cohousing will be constructed with exactly the same fiscal methodology as was the great U.S. Navy fleet, Air Force and Army that defeated the Axis powers in World War Two.

The actual banking operations, whereby the Treasury deposits Dollars in the NRI Co-op’s account, which are then deposited in the local co-op bank accounts established by the Co-housing App, are probably uninteresting. What is interesting, however, is the fact that what matters is not the actual “cost” of the NRI cohousing produced (the federal government can issue however many Dollars are necessary), but whether that “cost” is viewed as both “fair” and “corruption-free” by the general public—and whether or not it causes a general increase in prices across the economy.

The “fairness” issue boils down to this: Are U.S. retirees being “given” free housing which they have not “earned” and, therefore, don’t deserve to have? This question is colored by the “quality” of the housing itself: certainly, if the NRI consisted of cohousing with luxurious accommodations and high-end consumer amenities—wide-screen home theaters, Olympic swimming pools, Premier cabinetry kitchens, etc.—there would be considerable objection. But even if the NRI cohousing dwellings are quite modest (which I imagine them to be) do our cash-strapped retired U.S. citizens—those who have managed to save essentially zero money for their retirement years—deserve them? Would the general public believe this to be the case? I would argue that since no Millennial today knows for certain whether or not they will find themselves, 35 years down the road, in exactly that situation, it is entirely possible this sense of “fairness” could well be established.

Could sovereign spending funds, on the scale we are here imagining, be issued and disbursed without wide-spread “waste and corruption”? My belief is that the basic structure outlined here would, for two reasons, minimize “waste” and make any kind of significant “corruption” uniquely difficult.

The first reason is that each and every local cohousing project is overseen by a relatively small—and highly focused—group of citizens: the retirees forming each cohousing cooperative. Even though they are not spending “their own” Dollars (in fact, they actually are) they are highly motivated (and enabled) by the Co-housing App to manage and track project costs in order to maximize quality of the dwellings within the parameters established by the app—quality which they, personally, will benefit from. Wasteful spending, the Co-housing App will make apparent, could be applied to higher quality or extra shared amenities.

The second reason is because development of the National Retirement Infrastructure will be tracked, on a nationwide basis—again by the Co-housing App. Data from each local NRI cohousing project is compiled and analyzed by the App, creating a range of weekly, monthly and quarterly Reports which are transparently available to the general public. Anomalies in the data would be quickly flagged and identified.

National Retirement Infrastructure: WHY NOT?

I leave it to readers to comment on why we should not, as a collective nation, pursue something along the lines I’ve described here. We can “afford” it, because we can issue the currency needed to pay ourselves to make it happen. If general prices began to spike, we can temporarily curtail the program, raise taxes, or issue “NRI bonds” at some attractive interest rate. There can be no doubt that for tens of millions of retiring U.S. citizens—whether Democrat or Republic, conservative or progressive—the need for retirement housing will soon become a crisis. And the need will be even greater when the Millennial generation enters its own retirement phase. Finally, there’s little doubt that the real resources the effort requires—labor, materials, technology and energy—not only exist but are substantially idle as I write. So the question again is posed: what would it be that holds us back?


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