Since CCLF specializes in lending to smaller and newer organizations, we are very familiar with the challenges these groups face. In the spirit of "getting to YES", here are some common obstacles to accessing credit with suggestions for technical assistance resources to help you address them.

Understand what you are getting into when you are developing real estate…

• Do not underestimate how long it takes to develop real estate projects. To complete a project--from the time you start planning until you open your doors--can take up to 5 years, sometimes longer!
  
  
• Do not become "dead set" on a particular building--even if someone is willing to donate the property--without exploring other options first. Often the cost of rehabilitating a particular building may cost more than acquiring a new facility that better fits your needs.
  
  
• Just because someone has offered to DONATE a building to your organization does not mean that is the best choice for your project site. Ensure that the building/property is clearly appropriate for what your organization is trying to do, and that there are no hidden surprises, such as contaminated soil, attached to the property.
  
  • Find an environmental service firm to conduct a phase-1 environmental site assessment.
  
  
• Don't fall victim to "mission drift." This is an easy trap to fall into certainly. Many organizations feel they MUST develop affordable housing, for example, because there is such a deep need in their community. Especially at small or new organizations, staff is often already stretched so thin, there is really no "room" for huge new initiatives that could jeopardize other services or even the future of the organization itself.
  
  • Make sure that developing affordable housing or retail opportunities fits clearly with your mission. Find an organizational development consultant to help you think it through. Learn more about how one organization tackled this tricky issue.
  • Form partnerships with larger, more experienced organizations developing real estate in your communities; or community organize and lobby around creating more affordable housing or retail development in your neighborhood.
  
  
• Understand the connection between program funding (operations) and the ability to service debt. Especially for start-up organizations, sometimes it makes more sense to rent space first. You might wait until your program is up and running and funding is stable before acquiring additional debt by purchasing property. There are exceptions, of course, and one way to overcome this obstacle is to have a very strong and thorough business plan.
  
  • For fundraising leads and resources, visit the Donors Forum.
  
  
• Contrary to popular belief, nonprofits DO have to pay property taxes. While a 501-c-3 IRS status exempts your organization from regular income tax, filing for property tax exemption is the sole responsibility of the owner. The process can be complicated and there is no clear criteria for defining "charitable purposes," so exemptions are often denied. It is wise to seek legal counsel to help you negotiate the process. Meanwhile, to be on the safe side, include the cost of property taxes in your planning and financial projections.
  
  • Illinois Facilities Fund (IFF) publishes a Capacity Building Digest that addresses the "property tax exemption" conundrum. Call 312.629.0060 for more information.

Have questions? Feel free to email us or call 312.252.0440 ext. 203.

Spend a day with us! Learn more about what it takes to tackle community development real estate projects. Our next Project Readiness Workshop is coming up soon.

Find the right development consultant to help you with your project. Download our Community Development Resource Guide. Make sure you do your own research--find a consultant who has experience with similar projects as yours.

Get your organizational "house" in order. Learn more about other technical assistance resources and programs that can help.