General

​

​

What is the Fund?

​

Shaker Lee Development Fund, LLC (The Fund) is a new Ohio LLC formed by the Shaker Heights Development Corporation for the purpose of acquiring, upgrading, leasing and managing mainly commercial real estate properties located on Lee Road between Chagrin Boulevard and the Cleveland city limits south of Chagrin, also known as the “Lee Road Corridor.” As a community-based economic development entity, our primary goal is to redevelop and revitalize the Lee Road Corridor to benefit the residents of Shaker Heights by providing affordable and attractive office space in an area currently under-utilized and in need of revitalizing.  We believe the Lee Road Corridor could then serve as a more attractive connection between the City of Shaker Heights and surrounding neighborhoods, as well as increase the tax base for Shaker Heights. 

​

Who is managing and operating the Fund?

​

A new board elected by investors would oversee Fund operations, working with Shaker Heights Development Corporation (SHDC), an Ohio non-profit recognized as a 501c3 charitable organization, as the manager and operator. As Fund Manager, SHDC will, in a fiduciary capacity, carry out the operations of Fund.  These will include development services, which consist of identifying and negotiating the acquisition of properties, contracting for improvements, and developing and implementing the Fund’s business plan, for which SHDC will receive a Development Fee in the amount of 2% of the net Offering Proceeds..  SHDC will also manage the properties that we acquire, which will include leasing, promotion, rent collection, tenant relations, and property maintenance and repairs, and SHDC will receive a management fee of 4% of annual revenues from the properties.  Services will be carried out by the staff of SHDC, who will do so in addition to their other duties as SHDC employees, although SHDC’s staff will continue to utilize the SHDC’s group of trusted experienced independent contractors, professionals, and consultants to oversee the properties, assist in due diligence, protect the Fund members’ interests, and run our day-to-day operations. 

 

The overall mission of the SHDC is to encourage commercial revitalization in Shaker Heights to strengthen the city’s neighborhoods, and diversify and increase the city’s tax base. SHDC envisions an enriched Shaker Heights community that seamlessly blends the city’s innovative history into a vibrant future by fostering entrepreneurial opportunities and stimulating economic growth. 

 

What is the Fund’s purpose?

​

The Fund’s  purpose is to provide an opportunity for the Shaker community to take an active funding role in the development of the Lee Road Corridor.  By participating, residents have the opportunity to directly contribute to and shape commercial growth in their city. 

​

Has this model been tested?

 

This model, on a much smaller scale, has already been used in Shaker Heights. A cornerstone of SHDC’s mission is to acquire and redevelop property to stimulate private sector investment resulting in additional economic development for the community. Two prior examples include the Process Canine project at 3710 Lee Road and the Shaker REDO project at 3700 Lee Road, which were undertaken in large part because of individuals who invested in and championed the projects.

 

 

The Properties

​

​

Is there a list of properties already acquired?

​

While we have not identified any specific properties to acquire yet, we are actively working to evaluate potential properties to acquire beyond Shaker REDO, LLC, and SHDC’s 3725 Lee Road Shaker Hts. LLC, which will become properties of the Fund through transfers to the Fund of the ownership interests in these two companies. 

 ​

How will properties be chosen?

 

We believe that SHDC has deep and longtime relationships with many stakeholders including residents, property owners, and various community organizations.  We intend to rely on these relationships to identify those properties in the Lee Road Corridor where the owners are considering or would be open to selling their property to the Fund. As a community-based entity, we may also source deal flow from Members.  We also plan to cultivate relationships with brokers working in the Lee Road Corridor.

 ​

How will the Fund decide who to lease to?

 

Once we acquire properties, we plan to lease some or all of the available space to businesses and other enterprises at rates consistent with our community-based economic development purpose.  Shaker Heights-based businesses will be the main priority, as our Fund is striving to provide opportunities for these local businesses. We also intend to create opportunities for minority-owned entrepreneurs and business owners as part of our commitment to diversity and equity.

​​

 

Raising Funds

 

 

What is the offering for investors?

 

We are offering a minimum of 550 and maximum of 5000 Membership Interests in the Fund in the form of Class A and Class B Units, at a price of $1000 per Unit, regardless of the class of Unit. The rights of the two classes of Units are the same, except that eligibility to purchase the class of Unit, and number of Units that must be purchased, are based on income and net worth, and each Class will have its own representation on our Board of Directors.  We are doing this to allow and encourage participation by a larger number of persons, many of whom we expect to be residents of Shaker Heights or persons with close ties to our city, and who wish to support our purpose of economic development of the Lee Road Corridor.

 ​

What are the requirements for investors?

​

Specifically, persons whose net worth and income make them eligible to purchase Class A Units (and therefore ineligible to purchase Class B Units) must purchase a minimum of 10 Class A Units for a total minimum capital contribution of $10,000.  They may purchase additional Class A Units in increments of $1000.  The eligibility requirements for purchasing Class A Units are either (a) a minimum net worth of $250,000 (excluding primary residence, furnishings, and personal automobiles), or (b) minimum net worth (as defined above) of $100,000 and gross income of at least $70,000 for the prior year and anticipated gross income of at least $70,000 for the year of investment, provided that in either instance investors’  total investment cannot exceed 10% of their net worth.

​​

How will the Fund use the proceeds of the Offering?

​

We plan to use the proceeds of the Offering, after payment of legal and other offering expenses (including filing fees), marketing and promotion costs, and the SHDC Development Fee in the amount of 2% of the net Offering proceeds, to purchase properties, improve them as needed, and, overall, to conduct business.

​​

How will acquired properties be paid for?

​

We may acquire properties with the use, in part, of bank or similar loans, which would be secured by a mortgage on the property or properties.  We expect  financing to be at prevailing interest rates for comparable commercial properties in Shaker Heights.  We may also seek to refinance some or all of the properties prior to expiration of the initial loan terms.

In general, if we use financing in connection with the purchase of properties, we plan to seek monthly payments based on an amortization schedule ranging from fifteen (15) to thirty (30) years.  See the Offering Circular for additional potential financing terms. 

​​

Will members see profits?

​

Our primary goals are economic development and enhancement of the Lee Road Corridor, rather than to generate profits and cash for distribution to our Members.  We do anticipate that at some point we will generate sufficient revenue in excess of our ongoing costs from which we can make modest distributions to our Members. 

​​

What are the risk factors?

 

• ​As a community-based entity whose main objective is economic development of the Lee Road Corridor, earning profits and making distributions to our Members is not our  principal objective. 

• Although SHDC has significant experience in community development, the Fund itself has no prior operating history.  Until we receive investor contributions for Units, we will have no capital or properties.  We have no current properties or other assets and no revenue.

• Other than two properties that we will own through the contribution all of the membership interests in 3725 Lee Road, LLC and Shaker REDO, LLC, we have not identified any additional properties for purchase.

• If we raise only the Minimum Offering, or close to it, we will be very limited in the number of properties we can purchase, thereby increasing the risks from the inherent lack of diversity resulting from the fact that we will only purchase properties in the Lee Road Corridor.

• The Lee Road Corridor is an economically depressed area of Shaker Heights, and many properties are in need of significant repair and upgrade and/or lack aesthetic appeal.  For these any many other reasons we may have difficulty attracting tenants, or tenants who can afford market rates.  We may also experience a high rate of default by tenants.  There is no assurance that we will be successful, and prospective investors must consider the possibility that they may suffer a complete loss of their investment. For more risk factors, please review our Offering Circular.​

 

PLEASE NOTE : All of the above must be read in conjunction with the Shaker Lee Development Fund LLC Offering Circular. You may not rely upon this document alone in making a decision to invest in the Fund and must obtain and review the Fund’s Offering Circular and Operating Agreement prior to investing.