Event:2015/10/29 Buy the Building

Conference Call with Broccoli

last time: https://omnicommons.org/wiki/Event:2015/10/20_Buy_the_Building

who's on?

• yar, jenny, broccoli

notes

• broccoli's been running it through his head. baclt is like a property manager. has a different idea, didn't want to be rude...
• 2 problems. 10-30 year thing, risk of being bad guy. 16k/mo you're currently paying is painful. he has a scheme. radical rethink. if only cost is basically maintenance, whole thing becomes a lot cheaper. 6 properties his nonprofits own. set up llc to buy property. have it owned by Iceberg Lettuce (501c3 managing 3 properties already). have llc board designed around that entity. have the tenant (omni), iceberg (owner of llc), and whoever else can be helpful, trying to keep building running. initial capital (1M + fees) would come from iceberg. llc would pay olr 5% back each year, unless omni says "ok here we're gonna pay that off, with permanent rent abatement". so rent is calculated as what does it take to keep the thing going + 5%. 11k/mo assuming 70k/y maintenance & repair fund. pulled out of air.
• "at some point the place is gonna look pretty shabby"
• doesn't have to do any more than keep itself alive. 10-16k was to try to get it paid back. so if it's never paid back then we're down at 11k/mo. and if you want help - rick lewis can help. seems like dynamite guy. if you want his advice go for it.
• omni would be triple net
• back in the day bought out group house from 2 other guys in cabbage patch. people said "don't sell out" they liked what it was. they love it, it works. deal is, as long as it's not a hassle, if they do everything, i don't need any more out of it. money just goes into fund they use to do repairs out of. i paid it off.
• what does it mean to own it? we have a nonprofit that does this.
• would be on this track forever
• iceberg started as celeraic. 5 years ago renamed and became 501c3. public charity 10-15yrs. owns two buildings, one doesn't have a tenant. "MB/nb"? that owns mustard house. housing for np workers.

doc

Possible approach with OmniCommons: KISS

• Set up an LLC to buy the property:
  • LLC would be owned by the Iceberg Lettuce (501c(3))
    • which owns 3 properties for permanent non-profit use already
  • LLC would have a board: omni, Iceberg, maybe bay area land trust fellow?, others?
    • Initial capital for purchase would come from Iceberg
  • LLC would pay Iceberg 5% of initial capital amount each year, adjusted cpi
• Rent to the occupants would be calculated as
  • capital-cost + ($50k/year if $1M initial capital)
  • taxes + (apply to welfare exemption for maybe $20k onetime lawyer fees)
  • lawyer&accounting&insurance + ($1k+$1k+15k? based on Brassica building)
  • maintenance-and-repair-fund ($70k/year ? guess maybe could be lowered later).
• maybe $135k/year or $11k/month? (then would move up with CPI)
• OmniCommons would get 10 (?) year lease from LLC and seat on board of LLC
  • It could raise the initial-capital cost at any time and then get a permanent rent abatement.
  • Omni could contract with Bay Area Land Trust fellow to advise if they want to help with budgeting.