Long-Term Ownership by Non-Profits

  1. Long-Term Ownership by Non-Profits

For some non-profits, long-term ownership is ideal.  It can allow the non-profit to maximize the financial benefits and maintain control of property it owns. Here are some of the key questions to consider before assessing a development project and the option of 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?
  • Upgrade space for current programs or create new space for future services?

Key factors to consider before undertaking 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 feasible for the project and which are consistent with the non-profit’s goals for the development?
  4. Does the non-profit prefer to sell, lease or continue to own the property?

What are the benefits of developing rental housing with a developer-partner, through a site development agreement (the “turnkey”  model)?

  • Model can create units with affordable rents
  • Potential for maximizing financial benefits for the non-profit
  • Potential for minimizing the financial risk to the non-profit through a “Site Development Agreement”

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

We can assist you in assessing the options for your non-profit.