Ch - Risks of ADC Lending to the lender No operating income...

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Risks of ADC Lending to the lenderNo operating income and few tax benefitsoInterest CarryRisks to the LenderPhysical suitabilityLegal factors, such as zoning and other entitlementsoEven if you have your zoning and other entitlements, you might still encounter resistancefrom neighboring property ownersCharetteNimbyEnvironmental issuesoCERCLA – Comprehensive Environmental Response, Compensation and Liability ActPhase I Environmental AuditoWetlandsoEndangered speciesAccommodation by SellerLand Purchase OptionCost based on term of optionDevelopmentSteps Include:oLand Development loanoZoning, engineering and surveying, subdividing, and physical workoSubdivision control ordinancesoImpact fees – cost recovery fees, exaction, inclusionary zoning, etc.oTax Increment FinancingConstruction LoanShort-term over construction period plus a reasonable time for initial lease-upInterest rate is variable and usually over prime

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