1 / 11

Alternative Financing Sources for Development Projects

Explore the benefits of alternative financing sources like TIRZs/TIFs, B-Bonds, tax exemptions, and public financing for development projects. Panelists share case studies and insights.

gshenk
Download Presentation

Alternative Financing Sources for Development Projects

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Getting the Most Out of Alternative Financing Sources Moderator: Tom Dixon, Boston Capital Panelists: Raquel Favela, City of Dallas Steve LeClere, Monarch Private Capital Ray Miller, City of Houston

  2. Tax Increment Reinvestment Zone (TIRZ)Tax Increment Financing (TIF) TIRZs/TIFs are specified areas created by a municipality to attract new investment in an area. TIRZs/TIFs help finance costs of redevelopment and encourage development in areas that would otherwise not attract sufficient market development Taxes attributable to new improvements are set-aside in a fund to finance public improvements within the boundaries of the zone.

  3. TIRZ Case Study In Houston, a local TRIZ was used to finance $2M of public infrastructure that included sidewalks and other public improvements for a mixed use affordable housing development The TIRZ will entered into a reimbursement at completion of the improvements ( at certificate of occupancy) and will provide increment reimbursements over a period of five years No out of pocket expense incurred by the developer. Construction costs were bridged by the construction lender and the increment is bridged with a five year loan provided by the local housing finance agency.

  4. Texas State Historic Credit ((§171.901, et. Seq)

  5. Texas State Historic Credit ((§171.901, et. Seq)

  6. B-Bonds • What are they? • Secondary (or tertiary) tranche of tax-exempt bonds. Purchasers are private individuals or entities – private equity. • How does it work? • Size A Bond Tranche to a 1.35 DSCR. • B Bond Debt Service is residual receipt, cash flow dependent debt. Any interest not paid currently accrues. • B Bonds are secured by a subordinate mortgage and are nonrecourse to the developer, general partner, and guarantor. • Rates vary but are typically 100-300 basis points higher than agency permanent debt typical on 4% transactions. • Pros • Reduces dependence on public funds • Allows developers to fill gaps in sources & uses with subordinate debt. • Cons • Ability to Raise Funds • Exit Taxes – Limited Partners will have large negative capital accounts at end of Compliance Period.

  7. B-Bonds

  8. B-Bonds

  9. B-Bonds

  10. Tax Exemptions and Other Public Financing • Lever additional permanent financing with full or partial property tax exemption though joint venture partnerships with certain entities • CHDO – Eligible up to a 50% tax exemption applicable in certain counties • Housing Agency or Housing Authority • Loan and grants provided with other federal programs administered by state or local municipalities • Section 8 • HOME • CDBG (eligible for acquisition costs) • Other local funding grants

More Related