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Varnum Structures QOZ Fund to Benefit Nonprofit Senior Center Project

January 23, 2019

Varnum worked with a municipal client operating a nonprofit senior center located in a Qualified Opportunity Zone (QOZ). The client had plans to expand the center and had begun initial steps to seek financing from a commercial lender.

The project presented a unique challenge for our QOZ team because the senior center had traditionally and historically been operated on a nonprofit basis and Opportunity Zone benefits can only be captured by for-profit ventures. The creative answer was a public-private partnership.

Varnum worked with the client to structure a QOZ Fund for the project in cooperation with a private developer. The structure and documentation included formation documents for the Fund itself, the private placement and investor documents necessary to bring investors into the Fund, the summary documents used to educate the municipality's own decision-making team as well as the investors, and the agreements needed to document the partnership between the city and the developer. This inventive structure provided the client with a vehicle to replace traditional commercial loan financing with investment from the QOZ investment fund.

Varnum attorneys Fred Schubkegel and Katie Roskam provided tax and corporate work on the matter.

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