Establishing Site Control

Once an appropriate site has been identified for a supportive housing project in which units of housing are being developed, the next step is to secure “site control” through the negotiation of acceptable terms and conditions (e.g., price, timing on closing, deposit), and the execution of legal documents identifying those terms and conditions. The term “site control” is widely-used in the development community, and simply means some form of right to acquire or lease the site. There are several potential forms of site control:

Offer Letter from Owner – An offer letter simply states that the property owner is willing to sell or lease the property to the organization for a specified price or rent.

Letter of Intent to Sell – A letter of intent is somewhat stronger, stating the property owner's intent to sell or lease the property to the organization at specific terms, including a time-frame to close.

Option Agreement – Still stronger, the option agreement legally binds the property owner to sell the buyer the property within the option period, often if the purchasing organization exercises its right to buy.

Contract of Sale – This is the strongest form of site control, and binds the seller and buyer to specific terms of sale.

 

Analyzing a Potential Supportive Housing Development Site

After site control has been achieved, a thorough analysis of the site must be performed. This stage in the development process is known as the “due diligence” period, consisting of a variety of analyses, studies and investigations to ensure that purchasing the site is a sound decision for the development of the project.

Each of the following key components of a site analysis must be performed during the due diligence period:

1. Community Acceptance Processes – The analysis of the potential support or opposition for a proposal to develop supportive housing on a particular site should begin before or during the search for appropriate sites, and is an important criterion for selecting a site.
2. Appraisal Report – An appraisal is a professionally prepared report that establishes a market value for a property and will typically be required if the source of the funding to acquire the site is a bank, non-profit lender or government agency.
3. Zoning Analysis – Every locality has laws and regulations regarding the building of properties within its boundaries. The goal of the zoning analysis will be to determine whether the development planned for the proposed site fits under those regulations.
4. Environmental Analyses and Other Inspections – For nearly every site, lenders will require a Phase One Environmental Assessment. This is an analysis of prior uses of the site, adjacent sites, information about proximate underground storage tanks and the results of a site reconnaissance conducted by an environmental engineer.
5. Relocation Study – If a potential site has current occupants, either residential or commercial, that will be displaced as a result of the development project, relocation requirements must be carefully considered.
6. Financial Feasibility Analysis – Before acquiring a site, it will be important to determine whether the project will be financially feasible, if developed.

 

For more detailed information on establishing and negotiating site control, please download Establishing Site Control.

For more detailed information on analyzing a potential supportive housing site, please see Site Analysis for Supportive Housing Developments.

For detailed information on obtaining and understanding an appraisal report, please see Guide to Appraisal Reports.

Sample Purchase Agreement, New York

Sample Purchase Agreement, California

 

Next: Searching for and Selecting a Location for a Sponsor-Based or Master-Leased Supportive Housing Project

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