Purpose
of Acquisition Program |
This program is offered to existing
owners who wish to sell their manufactured home communities
to non-profit 501(c)(3) corporations. Non-profit ownership
is recommended for the following reasons:
 |
Non-profit
organizations have access to tax-exempt bond
financing, allowing them to borrow at the lowest
possible rates. |
|
35-year
financing of tax-exempt bonds helps stabilize
community rents over a long period. |
|
Non-profits
are able to provide many additional services
and benefits to community residents, thereby
helping to maintain 100% occupancy. |
|
Non-profit
organizations are often able to assist residents
in purchasing their homes. |
Benefits
to Community Sellers |
|
An
exit strategy for owners |
|
Cash
from the sale of the community |
|
An
opportunity to retain community management |
|
The
potential for preferential tax treatment |
|
The potential elimination
of prepayment penalties on outstanding loans |
|
An opportunity to
carry back subordinate tax-exempt securities |
Benefits
to Community Residents |
Once a non-profit corporation purchases
the manufactured home community, residents enjoy the
following operational privileges and community assurances:
|
Residents
participate in the formation and implementation
of community rules. |
|
Residents
provide input on the use of funds allotted to
the community for infrastructure improvements,
such as clubhouses, utilities, and streets.
|
|
Future
rent increases are controlled and minimized
by bond financing Regulatory Agreements.
|
|
Housing
affordability and property health are maintained
for 35 years. |
Once a community owner decides to
sell the property, KND puts them in contact with an
established non-profit 501(c)(3) corporation. The
price and conditions of sale are negotiated per a
proposed bond financing.
Following a successful purchase negotiation,
bond documents are prepared and circulated to members
of the financing team which includes the issuer, the
manufactured home community owner, bond counsel, disclosure
counsel, financial advisor, underwriter, 501(c)(3)
corporation and counsel, rating agency/insurer, and
trustee.
Documents are approved by the issuer,
the rating or insurance process is finalized (if applicable),
and the bonds are marketed and sold.
Following the sale of the bonds, a
bond and escrow closing occurs, and the project changes
ownership to the non-profit 501(c)(3) corporation.
|
