Financing

Question 1

used for the purchase of land that the developer intends to subdivide and resell; generally includes a clause that releases each subdivided plot from the loan as it is purchased and a portion of the debt is repaid;

Answer 1

blanket loan

Question 2

it is a kind of debt security issued by a government entity to raise money to finance a construction project;

Answer 2

bond

Question 3

short term loan used to quickly purchase property or to finance a project that must begin immediately while waiting on another lender to approve a long term loan;

Answer 3

bridge loan

Question 4

it is a relatively short-term loan used where there is a distressed financial situation (foreclosure, bankruptcy, or nonpayment of previous loan). The amount of the loan is based on the quick sale value (usually less than the market value) of an asset (property or real estate).

Answer 4

hard money loan

Question 5

often used by developers for large projects. It is a large loan with variable interest rate that increases substantially near the time repayment is due. The loan is secured by using stocks in the developer’s company as collateral in case of default; this loan is based on a gamble that property will produce enough revenue to repay the loan when the interest rates escalate.

Answer 5

mezzanine loan

Question 6

any tax imposed for a specific purpose or by a single-purpose authority. This type of tax requires a majority vote of the people in the district

Answer 6

special sales tax

Question 7

used to finance the acquisition or construction of specific public facilities and to purchase property that does not collect revenue. The principal and interest on such bonds are paid form general tax revenues (Ex: schools, museums, libraries, parks…). It does not encourage private development.

Answer 7

general obligation bonds

Question 8

used to finance revenue producing facilities. The bonds are paid back by the revenue from customers using the services that the bond funding paid for

Answer 8

revenue bonds

Question 9

used to finance facilities for revenue producing public enterprises. The bonds are paid off from revenues generated by the facility through the charges they impose

Answer 9

public enterprise revenue bonds

Question 10

used to purchase land, planning, and public works improvement to encourage private development and it is based on increased taxes due to increased property value. The tax increment acquired from the increased taxes is used to pay the bond issued to originate the development.

Answer 10

tax increment financing

Question 11

costs charged to developers for off-site infrastructure improvements made necessary by new development.

Answer 11

development impact fees

Question 12

it is not used to fund construction, rather they are requirements that developers either dedicate some land for public use or contribute cash for the purchase of land and facilities made necessary by local governments.

Answer 12

subdivision exaction

Question 13

used to finance public space improvements in order to enhance an area’s appeal and, indirectly, its property values (Ex: park, streetscapes…). Owners within the district’s boundaries are required to contribute through assessed taxes, only if a majority of them has agreed to the improvement.

Answer 13

special district assessment