How Should I Proceed With This Development?
This project is larger than what I normally get myself into, but based on some responses I am getting, I know I have found something good.
I have 250 acres under contract. A corporate entity with significant cash holdings is willing to contribute a contiguous 125 acre tract. The development will have commercial retail, commercial office, medical complex, governmental, affordable housing (apartments, townhouses and single-family), and potentially industrial. 250 acres are under LOI. Owner of 125 wants to contrinute it to a JV, but will only contribute minimal capital. I have a affordable housing developer interested in a JV, and a potential commercial developer interested in JV. Nothing has been signed as of yet. I also have 3 end-users interested....BUT I have not secured the needed investment capital needed to take down the land. I also have a flexible seller in regard to takedown of the 250. What are some options you all would recommend as to how to proceed. I may or may not secure the needed capital to take down the property.
Assuming the current zoning permits the uses you described, first I would tie the 250 AC property up with due diligence contingency for at least 120 days in addition to land devel/subdivision approval contingencies (since you indicated that nothing had been signed yet).
I would get civil engr to do overall conceptual plan to see how it would lay out, hopefully being able to isolate the res'l from the non-res'l uses. Depending on the layout, the property might be subdividable into larger parcels--res'l on the one hand, and non-res'l on the other with perhaps sub-parcels in each of these 2 categories.
My thought is that perhaps what you would be able to do is flip out the parcels/sub-parcels to the various developer buyers you mentioned by the time you would be required to close with the seller on the 250AC property so your out-of-pockets would be primarily soft costs (engrg, legal, etc) and not be on the hook for closing on the property and installing site improvements. The costs will, of course, be one of the key feasibility issues, in addition to timing and the logistics. If it can be done, each of the sub-parcel buyers would be on the hook with the municipality for their site's proportionate share of the overall improvement costs. However, if you are not a builder/developer (thus not accustomed to evaluating the improvement cost ramifications of municipal demands), you should get the "flipees" involved in the approval process so that you don't wind up agreeing to municipal approvals that will devalue the parcels because of "overkill" site improvement costs.
If you want/need the contiguous 125AC in order to make the development layout work, then your contract with the 250AC seller would also have to be contingent on your being able to tie up the contiguous property by X date and on terms satisfactory to you. If you can tie up the 250AC parcel, perhaps you'll be able to negotiate more favorable terms with the 125AC parcel owner.
I realize that this is a major undertaking, but I don't know that the JV route would be feasible insofar as the overall 250AC (or 375AC) picture. It sounds like the 125AC parcel owner would be the only candidate for a big picture JV. Otherwise, you'd have to form any number of separate JV's with any number of corresponding sub-parcel potential flipees. I would think the objective should be getting some sort of conceptual or master plan approval from the municipality followed by subdivision of sub-parcels, with flip-outs as indicated earlier.
I apologize for the length of this reply, but there is no short answer given the major issues, questions and variables in your scenario.
Thanks for the insight. FYI, we have completed the initial land use proposal which shows the locations of various large pods. We have also completed some soil and water test. We have zoning in place, so its just determining how we structure everything assuming we do not receive our private investement capital to purchase the land ourselves.