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Why would you leave out the form specified by the GP? Representative (republican) government where the 40 members would hold an election to nominate a smaller number of representatives to decide on what should be done and bind everyone to abide by their decisions.

If you require unanimity then everyone has veto power over every decision which is difficult to manage even with 40 people. If you select 5 or even 3 people out of that group of 40 then it become much easier to make a decision. If everyone can nominate and vote for their representatives then they should feel it is fair when they have to abide by their decisions. At such a small scale you have very direct access to your elected representatives so you should feel that they have heard everyone's opinions and will hopefully do their best to accommodate them and if they don't then you should not elect the same people again.

At this scale you really can't call it threat of coercion, the land isn't owned by a separate entity so individuals could choose not to participate and all participants have direct access as well as a significant weight to their vote. It is a self-binding agreement if you choose a representative.

Sure, there's no threat of coercion for OP's street (or whatever) since nobody involved has any license to exercise power over the collective. But I thought the person you replied to was speaking of any group of people in general.

In the case of the 40 people, if a few of them consider whatever proposal stupid they can ignore it (e.g. not pay their share of something).

If they organize a republican government and have 4 representatives, some of the citizens could still refuse to pay (even if they accepted at first the election of the Street Senators). Coercion is what makes, say, Rhode Island, different than that person's street because if a few Rhode Islanders decide property taxes are stupid and refuse to pay, eventually all their land will be confiscated and they'll be dragged off of it by armed police.