NONPROFIT DEVELOPERS NEGOTIATING
JOINT VENTURE AGREEMENTS
If a nonprofit developer chooses to go the partnership route, it should choose a joint
venture partner that has sufficient expertise and financial strength to successfully complete the joint venture project.
The nonprofit developer should also determine if such a partner is compatible. Many projects encounter difficulty when the partners are unable to get along
Negotiating Strengths of Each Party
- The partnership agreement should be structured so as to take advantage of the strengths of each party.
- Typically, the non-profit partner's strength lies in such areas as;
- Community organizing
- Community planning
- Access to public agencies and funding,
- The private developer typically is strong in certain areas which include:
- An established relationship to private lenders.
- An established relationship with an architect.
- An established relationship to a building contractor
Role for the Community Based Organization in the Partnership
- Although some nonprofit developers have more housing development and
property management experience than others, it is possible for any
organization to carve out a role for itself in a joint venture.
The nonprofit developer should assess its capabilities and, when negotiating the
partnership agreement, should press firmly for appropriate roles and
responsibilities and appropriate percentages of the partnership
benefits. In some instances, it may be appropriate for the nonprofit to be
paid fees for specific services performed).
considering possible tasks and duties for which it night be
responsible, each nonprofit developer would analyze all phases of the development
process and select services that they can possibly and reasonably
provide. These services might include, without limitation, the
- Providing market analysis of the housing project area.
- Identifying and selecting eligible sites and properties.
- Putting together financial packages
- Obtaining financing or funding from governmental or foundation sources.
- Selecting or assisting in the selection of contractors, subcontractors, and others required in the development process.
- Obtaining needed zoning changes or approvals.
- Complying with any federal, state or local displacement rules.
- Complying with any environmental impact regulations.
- Acquiring the site and any improvements thereon.
- Actively assisting in planning and designing the improvements consistent with the data provided in the market analysis
- participating as a contractor or subcontractor
- obtaining governmental permits and approvals such as building permits and certificates of occupancy.
- Marketing units in the housing project.
- erating and managing the project once it is completed (rental).
ongoing home counseling to tenants especially regarding the care of
their apartment units so as to minimize maintenance expenses.
What the Nonprofit Can "Bring to the Table"
- In contemplating possible joint ventures, each nonprofit developer should understand that
a private developer has little incentive to joint venture unless the nonprofit can provide services or make contributions that the developer needs and cannot easily get himself.
- Therefore, each nonprofit developer must thoroughly analyze its ability to make contributions during any or all phases of the project.
- For this reason, The nonprofit should attempt to perform as many services prior to obtaining a joint venture as it possibly can.
- For example, the nonprofit could develop an economically feasible housing concept
and obtain control of the site and any property located thereon,
especially if it is county or city owned. Thus the CDC would be able to
obtain control of valuable property that a developer otherwise might
not be able to acquire.