What You Need to Know About Development Partnerships
Whether you’re planning a development project or repositioning your portfolio, many components need to come together for you to get your initiative off the ground—literally and figuratively. One of these components is your partnerships. Knowing who to rely on for what and when to bring them into the mix is essential. Here are our top recommendations of the types of partners to consider, along with a few tips for working with these groups.
Development consultants provide technical assistance in the pre-development and development phases; some offer compliance assistance.
- Good for sole developers or those in a co-developer role
- Best to procure early in the pre-development phase
- Usually a short-term partner, but can be used on multiple projects
Developers provide services in the pre-development and development phases, which involves buying land, obtaining necessary public approval and financing, doing constructing, and ultimately selling the property. Some developers also offer property management services.
- Good for those in a co-developer or turnkey role
- Best to procure early in the pre-development phase if in a turnkey role, and before financing if in a co-developer role
- Usually a short-term partner, but can be used on multiple projects.
Lenders provide construction financing and long-term financing.
- Needed for all roles, unless self-financing is an option.
- Procured during the financing phase of the development
- Long-term partner that can be used on multiple projects
Investors provide equity for the financing of a project throughout the first 15 years.
- Agency needs to understand limited partnership exit strategies and tax credit projects (i.e., low income, new markets, historic), unless self-financing is an option
- Procured during the financing phase of the development, but a relationship may be formed during the tax credit application
- Long-term partner that can be used on multiple projects
Relocation consultants provide relocation services or assistance.
- May be needed for projects that have relocations
- Procured during the development phase, but maybe best to procure almost immediately for RAD projects
- Short-term partner that can be used on multiple projects
Lawyers review contract terms for financing and partnerships. There are even lawyers who specialize in tax credit partnerships.
- May be desired for all kinds of projects
- Provide services during the pre-development, development, conversion, and exit periods of a project
- Short-term partner that can be used on multiple projects
Bottom line: Each development or repositioning project is unique, so choosing the right partners is essential. If you’re interested in learning how HAI Group can be of assistance, reach out to us at memberservices@housingcenter.com or 800.873.0242, ext. 291.
