Aug 11, 2006 — discourse and over time the Board will develop policies to guide the to provide a marketing plan, real estate brokers/agents to sell.
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2 Acknowledgement Our thanks to LISC for providing the funding for this manual, and to Project for Pride in Living, Inc. for assembly of the information and documents. A special thank you to PPL™s summer intern, Andrew White, who tabulated the text and the appendix and provided technical support for the flow charts.
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3 How to use this manual: This manual was designed by a Midwest develo pment organization, with your use in mind. While there will be some regional differences, and the material was not designed for all markets, we hope that you will find the examples and information useful. For the sake of simplicity, sections of the manua l were divided by color. If you break out the colored pages you will have a guide to marketing, a guide to finance, a guide to project management, etc. If you are interested only in the examples and flow charts, you can print out the Appendix separately.
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4INDEX POLICIES 1. Mission/Strategic Plan..7 Project Selection Criteria Target Level of Development Activity Narrowing or Eliminatin g Production Activity 2. Governance Policies. .10 Board Members Articles of Incorporat ion and Bylaw Provisions Entering into Contracts Approving Deals 3. Working Capital, Cash Flow Manage ment, and Fees.13 Feasibility Advances by the Consultant Predevelopment Advances from the Consultant Predevelopment Borrowing 4. Interdepartmental Review and Approval.. 16 Plans and Specifications Operating Budgets Predevelopment and Development Budgets
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5INDEX (cont) ORGANIZING THE PROJECT – PROCEDURES Project FLOW Chart Œ Organizing and Managing the Project––––..19 I. Feasibility Analysis..22 1. Market Œ Market Study 2. Finance Œ Estimate Project Costs 3. Physical Building Œ Site 4. Stakeholder/Political Œ Support for Project 5. Project Management Œ Project Team 6. Board and Internal Œ Feas ibility Within Organization II. Project Assembly and Deal Making . .34 1. Market Œ Clients/Customers/Mark eting Materials/Sales or Lease-up 2. Finance Œ Applications 3. Physical Building Œ Architect/Gen eral Contractor/Construction Bidding 4. Stakeholder/Poli tical Œ Regulatory 5. Project Management Œ Consultants/Partnerships 6. Board and Internal Œ Recognition/Approvals III. Construction..51 1. Market Œ Marketing Office 2. Finance Œ Draws 3. Physical Building Œ Construction Schedule 4. Stakeholder/Politi cal Œ Events/Support 5. Project Management Œ Consultants/Services 6. Board and Internal Œ Response/Reports IV. Property Management or Sale.. .62 1. Market Œ Buyers/Renters 2. Finance Œ Fees 3. Physical Building Œ Completion 4. Stakeholder/Political Œ Relationships 5. Project Management Œ Turnover/Reso lving Problems of Past Projects 6. Board and Internal Œ Property Management
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9 Policy: Target Level of Development Activity Œ do as much as you can do with your limited resources Develop policies based on your capacity and your resources. Development activity depends on the availability of resources. Th e capacity of the organization will determine the size of projects that it will develop, and available sites will determine where development will occur, but the limiting agent fo r all production is the availabil ity of capital. Market rate apartments or homeownership units are not affordable to low income people; the development of these housing units requires subs idies and there is serious competition for the limited funding from government subsidized programs . Multiple financial products and partners will need to be assemble d for larger projects to succeed. The key components for targeting activity are: Availability of capital Subsi dy for rental or homeownership Capacity of the organization Political and neighborhood will Site availability Market forces Develop policies regarding where you will respond to needs. In addition to the capital you must raise and your organization™s capacity, the other key considerations for development will be a combination of determin ing where to locate a needed housing program and a neighborhood™s or community™s will to su pport or allow development of the program nearby. Assessing the market forces at work in a specific location will be necessary in making a final decision on where you will locate your project. In the end, the location and type of needed housing in your community and the neighborhood support will all be factors in determining your housing policy. Policy: Narrowing or Eliminating Production Activity Œ determine in what areas you are not going to be involved Develop policies that will limit what you will produce . Just as important as determining your target selec tion criteria and the level of your development activity, is having the Board decide the areas in which you will not get involved. The mission may fit, the resources may be there, the neigh borhood would support it, but these production activities you will not do. For example, you may decide not to do commercial development, or not to become involved in senior housing development, or not to provide property management services. You may prefer to do large mu ltifamily projects so you determine you will not build projects with less than 20 units, or you may focus on reha bilitation of buildings and decide not to build new construction. These preferences ma y be based on competition, location, capacity, availability, market or othe r reasons. Whatever the reas ons, they are part of your development policy.
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10 POLICIES (cont) 2. Governance Policies Board Members Articles of Incorporat ion and Bylaw Provisions Entering into Contracts Approving Deals The governance policies of the organizatio n (the CDC) may legally limit or set boundaries where the organization may work and may define their client/customer base. These policies may establish who has author ity to bind the organization, and how decisions are carried out. The organization should monitor its own actions to be sure they conform to the governance documents in order not to put its 501 c 3 status in jeopardy. Policy: Board Members Board members should be people who support the organization and its mission. It is critical to have members who represent di versity and members who work in different business sectors who are willing to ask questio ns, provide assistance and knowledge in all aspects of carrying out the missi on: real estate agents, attorn eys, human service providers, community residents, accountants and business managers. The Board should establish a policy on the recruitment of new board members, always seeking out those who are willing to share their skills and dedication. Articles of Incorporat ion and Bylaw Provisions The Articles of Incorporation limit the orga nization™s work within its mission (which established its 501 c 3 status), and the Bylaws provide authority for those responsible for oversight of the organization™s work. From ti me to time organizations that have served a specific community for many years find that th e boundaries have become restrictive and the organization opts to amend their documents in orde r to work outside of their designated area. Strategic planning will guide the organization on whether or not the documents should be amended to conform to an organization™s expanding mission. Documents can only be amended by a vote of the membership at a meet ing designated for that purpose, or by the Board if given that authority. SAMPLE ARTICLES OF INCORPORAT ION AND BYLAWS (Appendix A)
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11 Policy: Entering Into Contracts The organization should annually adopt, by resolution, provisions on who may sign documents and bind the organization contract ually, if the Bylaws do not specify an individual. The Board of Directors of the organization should approve by resolution, contracts and other legal instruments and especially loans that guarantee performance by the organization and where the organization provides security in the signing of the contract or other legal document. The organization may set a policy that contracts over a specific dollar amount must be approved. SAMPLE RESOLUTION FOR GENERAL AND PROJECT SPECIFIC AUTHORITY TO SIGN DOCUMENTS (Appendix B) Approving Deals An organizational chart will provide stru cture on how deals are approved. The Board of Directors has final approval; however, a series of approvals may be given at various steps in the process, by various entities in the organization. Final approvals by the Board of Directors are done by resolution. Se e Approval Steps on the following page.
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