Long-Term Ownership by Non-Profits

For some non-profits, long-term ownership is ideal, allowing the non-profit to maximize the financial benefits and maintain control of its property.

Here are some of the key questions to consider before assessing a development project and long-term ownership:

 What are the non-profit’s goals for development of an under-utilized property?

  • Raise capital for missions, essential capital improvements, and/or ongoing operations?
  • Create affordable housing as a mission?
  • Upgraded space for current and future programs?

Key factors to consider for a development project:

  1. What can be built on the site under current zoning?
  2. What population does the non-profit wish to serve?
  3. Which public subsidy programs, if any, are most beneficial for the project?
  4. Does the non-profit prefer to sell, lease or continue to own the property?

What are the potential benefits of ownership of rental housing through a site development agreement with developer partner, the “turnkey”  model?

  • Affordable rents for the residential units
  • Maximizes financial benefits for the non-profit
  • Minimizes financial risk to non-profit through a “Site Development Agreement” with an experienced developer

What does ownership of the project mean for the non-profit?

  • Non-profit contributes land and receives payment for the land
  • Non-profit receives share of cash flow over 15 years and all cash flow thereafter

What is the Site developer’s role in the development process?

  • Assembles an experienced team for the project
  • Oversees design and construction
  • Obtains financing commitments for debt and equity
  • Provides pre-construction funds and guarantees, as needed
  • Provides for professional long-term management and operation of the property
  • Retains minority interest in general partner, if required by lender or equity investor
  • Receives share of developer fee