Mom in a pickle with charity's property

[Jamie C.]

(posting this for a friend who’s not on BP)
Situation: My mom and dad have big hearts and made a nice gesture but unsound “personal finances” decision years ago. My mom runs a charity and to ensure the loan would be approved for a new property for the charity, they co-signed a mortgage. They also used my dad’s life insurance as collateral. My dad passed, life insurance payout was applied to the mortgage, my mom paid off the remaining mortgage balance. All of my parents’ financial contributions were under the premise that it was a loan to the charity. My mom’s trying to retire and extract the money owed her by the charity (which the charity’s board desperately wants to make her whole). It’s all very amicable between her and the charity. The plan is to sell the property, and the equity proceeds will pay her back in full and have enough left over for a down payment on a new property for the charity.

Issue: They put the property up for sale, on the market for 5 months, received fours offers…all from other charitable organizations… but the city rejected the offers. The city is hyper vigilant about recent increases in the homeless population. The offers weren’t from homeless shelter organizations per se, but they were affiliated with low-income type of residents, rehab, assisted care, etc. and the city doesn’t think those organizations fit in the neighborhood. They have history with my mom’s charity and know they don’t cause problems but they’re worried about similar new charities. My mom’s lawyer (though he’s not super versed in real estate law) evaluated and said, not much chance of forcing the city to allow acceptance of one of the offers.

Zoned as:
Address type: Residential
Address subtype: Group quarters
Zoning description: Residential neighborhood
Property has 10 bedrooms, 13 baths, 1 big-ish kitchen

No offers came in from an individual family looking to reside, nor from non-charitable businesses. No immediate need to make my mom’s finances whole, but I am the executor of her estate either now or when she passes, I don’t know how to resolve this.

Me: Not sure how to advise my friend, could really use the help of the forum. Leaving the names of his mom, city, and charity out, just in case anyone from the city reads this and also to keep his mom’s personal business anonymous.