Nareb conference presentation june 2012

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  • 1. The Foreclosure Market and The NonprofitBeth BergmanManaging Partner at BERGMAN and ALLDERDICE
  • 2. • Discussion Outline:• Neighborhood Stabilization Program – Eligible uses – First Look Program• The Marriage between a Nonprofit and a For-Profit – Guideline for the Nonprofit – Guidelines for Joint Venture 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 3. The Neighborhood Stabilization Program(NSP) was established in 2008 to stabilizecommunities that have suffered fromforeclosures and abandonment throughthe purchase and redevelopment offoreclosed and abandoned homes andresidential properties. 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 4. Eligible UsesActivities which include, but are not limited to:•Establish financing mechanisms for purchase andredevelopment of foreclosed homes and residential properties;•Purchase and rehabilitate homes and residential propertiesabandoned or foreclosed;•Establish land banks for foreclosed homes;•Demolish blighted structures;•Redevelop demolished or vacant properties 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 5. The First Look ProgramThe First Look Program was established in 2010 as apartnership between HUD and the National CommunityStabilization Trust to collaborate with Fannie Mae,Freddie Mac and others to provide nonprofits a firstcrack at purchasing bank owned properties for thepurpose of acquiring, renovating and selling them tolow-income buyers. 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 6. The Marriage of a Nonprofit & For-Profit1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 7. Guidelines for the Nonprofit1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 8. • Is the project in alignment with the nonprofit’s mission?• Does the nonprofit have experience in affordable housing?• What are the nonprofit’s assets and capabilities in this area? 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 9. • Is the project in alignment with the activities listed in the nonprofit’s 1023?• Has the board approved the joint venture?• What benefits would the nonprofit receive from aligning with a for-profit? 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 10. Guidelines for the Joint Venture1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 11. • Have you clearly identified the charitable purpose of the venture?• Does that purpose further the nonprofit’s charitable mission?• Does the venture avoid “private benefit”? 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 12. • Does the nonprofit control the venture in such a way that its charitable purposes are not subordinated to the for-profit’s motivation to maximize profit?• Are you aware of the “commerciality doctrine”?• Do you have a plan to limit UBIT? 1200 WILSHIRE BOULEVARD, SUITE 610, LOS ANGELES, CA 90017 | WWW.B-ALAW.COM | 213.736.5101
  • 13. The Foreclosure Market and The NonprofitBeth BergmanManaging Partner at BERGMAN and ALLDERDICE