Developing Commercial Real Estate Properties

• Security Regulation Considerations: Real estate is an attractive investment, that people sometimes jointly purchase.  In general, the purchase by multiple people of an investment property will be viewed by the Security and Exchange Commission (SEC) as a security.  There are at least three instances where marketing a resort condominium property will be viewed by the SEC as a Security.  Under most situations, a security  must registered with the SEC and sold by a person licenses by the SEC. 
• In case hazardous materials are found on any property purchased after November 1, 2006,  to receive any governmental help in cleanup (Brownfield Remediation) an All Appropriate Inquiry or Phase I Environmental Assessments must be performed before closing.  

• Notes on Development
• Definitions
  • Developer's Definitions
  • Financial Definitions
  • Shopping Center Definitions
• American Institute of Architect's Principles for Livable Communities 

Where's the Money

• Commercial Mortgage Backed Securities & Conduit Loans
• Conduit Loans
• Government Financing / Economic Development
  • Tax Incremental Financing Districts
  • Community Development Block Grants
• Overview of Fannie Mae, Freddie Mac, and Ginnie Mae

Multi-Family

Housing and Urban Development

• Economic Development Initiatives may also apply for some projects.  
• Community Development Block Grant (CDBG) - activities are determined locally, under some circumstances, can be lent to private companies. Grants are issued to "Entitlement Communities" (larger cities or counties) or to states as a proxy for smaller communities.  Activities include:
  • site acquisition
  • site assessment, planning for redevelopment or revitalization
  • site clearance, demolition and removal of buildings
  • rehabilitation of buildings, removal of contamination
  • construction of real estate improvements
  Two of the more popular community development programs are:
  • Section 108 Loan Guarantee Program - the loan guarantee portion of CDBG which allows local governments to transform a small portion of their CDBG funds into federally guaranteed loans large enough to pursue physical and economic revitalization projects that can renew entire neighborhoods.  
  • Empowerment Zone and Enterprise Communities

Senior Housing 

Federal Tax Incentives

• Low - Income Housing Tax Credits - States get a population- based allocation for distribution to communities and non-profits
• Rehabilitation Tax Credits - Taken the year renovated buildings are put into service
  • 20% Tax credit for historic structures
  • 10% Tax credit for non-historic buildings constructed before 1936
• Empowerment Zone and Enterprise Communities

City Incentives

• Tax Incremental Financing (TIF) District

Issues Regarding Land Transactions

The classic real estate axiom is that a property is worth what someone is willing to pay to acquire.  When discussing property with potential contamination, the value issue becomes a bit more complicated in that property will have a value as a "clean" property, and another value as a property with potential contamination.  The reduced value of the property may be because of stigma surrounding the property or because of potential costs that might be involved in cleaning up the contamination.  

The purchase agreement should address the following:

• Site Characterization
• Potential Acceptable property use
• Limitations and institutional controls that are part of previous remediation.
• Insurance -