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:
- What can be built on the site under current zoning?
- What population does the non-profit wish to serve?
- Which public subsidy programs, if any, are most beneficial for the project?
- 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