Private Finance Investors
Sionito Invites Private Investors Partnerships
Sionito is a social economy business model that began as an affordable housing provider and gradually has added other modules towards building an expansive community housing development and management corporation. The Sionito Model advocates for partnerships between the three sectors of a civil society; the government sector, the private enterprise sector and the non-profit charitable sector with a special emphasis on energizing and growing the non-profit housing sector. The model exists to sustain and increase each citizen’s independent life-ability, with a special emphasis on providing ADL dining supports to seniors, allowing them to live free of government interventions and delaying entrance into high cost supportive housing or long term care facilities.
In all its endeavors sustainability has been its strongest guiding value expressed in terms of i) project development, ii) property management and iii) program operations. (For details see the Sionito Model section).
Sionito and Private Financing Partnerships Have Been Successful in Toronto
1) Sionito Equity
Sionito, as a result of paying down mortgages on its property portfolio has at its disposal development reserve funds. These are used primarily for soft costs such as legal, accounting and real estate consultants who are needed to search for new development land and complete the due diligence prior to making offers on the land. Further equity in the form of land security is required to secure bridge financing if it is used to purchase the land. Then at this point further reserve funds are required to make the monthly payments until the government funding is available. Further funds are required to partner with the professionals such as non-profit housing specialists, accountants and quantity surveyors in order to prepare a class A or B budget acceptable to the government funders.
2) Private Bridge Financing
Sionito has been successful in achieving private bridge financing for new development projects. The alternative business plan would be for Sionito to sell its present properties and then search for new properties, however this would not expand its unit counts. Consequently, Sionito’s business plan is to place its present mortgage free properties as security for bridge financing loans to cover the purchase and development of new lands. As the planning process proceeds the new land increases in value which is a benefit for Sionito.
The non-profit sector in order to provide affordable housing with below market rents applies to tri-level government funding programs. The result is that Sionito provides the upfront money in order to develop the proposed budgets and other descriptions that the funders use to review the proposal. The major component of this money is bridge financing used to purchase land, zone it and take it through the Site Plan Approval stages. As indicated above the bridge financing is secured by the other mortgage free properties owned by Sionito.
3) Green / Ethical Financing
Sionito has been approached by parties with trust funds and we are actively exploring these partnerships. The non-profit sector is positioned to accept financing, both short term and long term, from financing institutions such as insurance companies, banks, credit unions and family trusts that are looking to complete the green or ethical components of their portfolio. Beyond the requests of their share holders for these type of investments it may soon be in the interest of the Federal Government to provide tax based incentives for these type of private investments in the private non-profit sector.
4) Private Options with Patient Land
The private sector, private non-profits and charities such as churches may own land that has development potential. Private developers can often receive density increases if they are placing an affordable housing complex on the same lands as their condo or townhouse developments. These are ideal partnership opportunities. Sonito refers to this as “patient” land sites. These land sites can go through the planning stages achieving a site plan approval without the upfront expense of the land purchase by the end user, usually a charity. However, whether it’s a church, a non-profit housing complex or a private developer seeking a second or third tower the end result is that the market values of the land increases on the way through as densities increase resulting in a win win for both parties; the present land owner and the future charity.