(Matt) #1

There’s a few properties we’ve looked at that require taking on tenants and I have not seen a good discussion about what that means or what it could cost, or the work required and who will be responsible. I think we should open that discussion sooner than later so we can feel comfortable closing on such a lease.

From a organization side, taking rent is fine as a 501c3, as it is excluded from unrelated busniess income, given certain stipulations that I believe we meet.

However, the below post is specific to sharing space and receiving rental income, and makes it seem a bit more perilous.

Here I see that if the “landlord” does not provide additional services beyond being a landlord, it’s a safer bet.
(yes, this is related to a church.)

In terms of management, who is going to do what?
One option is to hire people. This of course will take a cut of the rental income, which means we would need to increase revenue to cover that as well.

Who is going to find the tenants? who will make sure these tenants are good, stable candidates?

What makes a property attractive when it requires tenants is to lower the total cost of maintaining that part of the relationship. Do we even know what those costs are? What would we need to provide to the subtenant, and who will do it?

Will we need more insurance? Will we have cash on-hand if there’s some large issue we need to cover?

I also have called a few offices in CA to see if there are CA specific concerns with Unrelated Business Income Taxes (UBIT) and have not found anything specific yet there or on the web. Seems a bit hard to track down the exact answer.

Anyways, I think there’s a lot to chomp on, and we probably should have a good plan. And unless someone is an actual lawyer or has experience doing this kind of thing (I really hope so! please let us know.) I dont think bikeshedding legal interpretations will help, though it would be very useful to know what needs to be clarified.

(Tyler Maran) #2

Totally agree with all of the above. We are very short on time for our move. Lease is up in August (is this August 1 or August 31 btw?) and it will take minimum 60 days to find a new space and move. If we have a sublet or co-tenant we will NEED a real estate attorney to write up our lease contract. This will be a minimum of $10,000.

What we still need to do:

  • Decide on a location
  • If a Tenant is needed - begin subcontract negotiation (around 30 days)
  • Lease negotiation (around 30 days)
  • Notice of vacating current space (30 days before we leave our current space)
  • Some time to remodel or improve the new space
  • At least two weeks to move eveything currently in NoiseBridge. Even with a ton of volunteers, we need to disassemble, organize, pack, and will need at least two runs with a 20ft truck.

Rough calculations is: we are already out of time.