- 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:
- 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 feasible for the project and which are consistent with the non-profit’s goals for the development?
- 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.