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NALCAB Conference 2301 Mission St, Co – Ownership Model

NALCAB Conference 2301 Mission St, Co – Ownership Model. Presented by : Luis Granados, Mission Economic Development Agency September 4, 2007. MEDA Background. Incorporated in 1973 Most Capacity Focused on Loan Packaging In 2001, Revised Mission Vision Revised Vision, Mission

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NALCAB Conference 2301 Mission St, Co – Ownership Model

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  1. NALCAB Conference 2301 Mission St, Co – Ownership Model Presented by: Luis Granados, Mission Economic Development Agency September 4, 2007

  2. MEDA Background • Incorporated in 1973 • Most Capacity Focused on Loan Packaging • In 2001, Revised Mission Vision • Revised Vision, Mission • Changed Understanding of Its Role Relative to Its Community and Constituency • Developed more Comprehensive Set of Services

  3. 2008 Vision and Mission • Vision: We envision generations of Latino families that, inspired by the past and present life of the Mission District, are a part of vibrant, diverse, proud and forward-thinking communities in which residents own their homes and businesses, and are rooted and actively engaged in the civic and political life of their neighborhoods and the institutions that affect their lives. We see these families as having sufficient assets to provide them and future generations with the opportunity to call San Francisco their home permanently. • Mission: To achieve economic justice for San Francisco’s low- and moderate-income Latino families through asset development

  4. Strategic Goals • Direct services: Enhance MEDA’s role as the leading channel for providing effective asset development services to San Francisco's low- and moderate-income Latino families. • Policy advocacy and development: Building on our existing work, play a major strategic role in policy development and advocacy efforts that engage and further the asset development standing of San Francisco's low- and moderate-income Latino families. • Organizing: Building on our existing community engagement, and coordinated with our asset development service and policy work, play a major strategic role in organizing to empower San Francisco's low- and moderate-income Latino families to improve their asset development standing. • Research and analysis: Building on our existing work, perform research and analysis to clearly understand the socio-economic conditions and asset development needs of San Francisco's low- and moderate-income Latino families, and to evaluate and improve the effectiveness of and client satisfaction with our asset development services. • 2301 Mission Street / Service Integration: Through the successful development of the 2301 Mission Street project, further the provision of a full spectrum of family support and asset development services to San Francisco's low- and moderate-income Latino families and enhance the long-term sustainability of community partners providing these services. • Organizational development: Continue MEDA’s organizational development to improve and systematize efficient and effective program and operational work, financial health, and a sound and sustainable workplace.

  5. 2301 Mission Background • Wholesale Neighborhood Displacement • Strengthening of Organization’s Financial Standing • Significant Increase in Real Estate Values • Market Rate Housing is Most Prominent New Development

  6. Intent of Project • Provide a stable location for MEDA to provide services • Assist other organizations serving the same constituency to secure a stable location for service delivery • Develop system for coordination of asset development and family support services

  7. Desired Goals/Outcomes

  8. Elements of Building Purchase • MEDA to establish a Limited Liability Corporation (LCC) • Limited Liability Corporation to purchase building • MEDA guarantees bank loan

  9. Co-Owners • Potential Co-Owners will initially be tenants • Rents will market rate and will cover mortgage, operating costs and reserves • Will participate in service integration plan

  10. Facility Management • Building LLC will be managed by a board of directors composed of co-owners • MEDA will always retain 51% of control of board of directors

  11. Ownership Interest Variables • LLC will own building • Size of ownership interest will determine share of proceeds and/or debt • MEDA will own at least 51% of membership interest • Remaining 49% will be divided in proportion to the amount of capital contributions

  12. Conditions for Co-Ownership • Provide asset or family support services to target constituency • Make a capital contribution to the LLC • Amount to be based on: loan payment needs, building maintenance needs, number of co-owners • First co-ownership opportunity at year 7, and thereafter at refinancing • Become a co-guarantor of bank loan

  13. Sale of Ownership Interests • If co-owner sells its interest, then MEDA will have first right of refusal • Co-owners will have 2nd right of refusal, outside groups will have 3rd option • If MEDA decides to sell, co-owners will have second right of refusal • Price based on project value, % of membership interest, & rate of inflation

  14. Conclusions • Leverage Lead Organization’s Financial Standing to Engage in Real Estate Acquisition • Engage in Co-Ownership Model to Share Benefits and Risks with Partner Organizations Leading to Long-Term Sustainability • Increase and Improve Access to Service Delivery Through Service Integration

  15. Remaining Questions • Do risks, benefits justify involvement by lead and partner organizations? • What are benefits to consumers without a service integration system? • Is model replicable?

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