1
Q
What is the definition of Abandonment of Property?
A
A property status indicating that the property has been surrendered and is not being maintained, and is not offered for sale or rent with a broker.
Defined by the Mortgage Bankers Association of America.
2
Q
What does Absorption refer to in real estate?
A
The rate at which space is leased or sold.
3
Q
What is Adaptive Reuse?
A
A process of converting a structure constructed for one purpose to a different use.
4
Q
What is Agriculture Zoning?
A
Zoning that protects agricultural land from development by restricting lot size and formulating design criteria.
5
Q
Define Air Rights.
A
The right to ownership of space above and/or below the physical surface of a parcel of land.
6
Q
Who are Anchor Tenants?
A
The largest tenants in a shopping center, office building, or industrial park whose strength affects financing availability.
7
Q
What is an Appraisal?
A
An opinion of the monetary value of a specific property, supported by relevant and factual data.
8
Q
What does Appreciation mean?
A
An increase in value; the opposite of depreciation.
9
Q
What is Assessed Value?
A
The value assigned to real or personal property by the local government for property tax purposes.
10
Q
What is Asset Management?
A
Ongoing, big-picture property management activities such as capital improvements, refinancing, and sale of property.
11
Q
What does Basis refer to in real estate?
A
The dollar amount attributed to an asset by the IRS for tax purposes.
12
Q
What is a Big Box store?
A
A large-format store with a plain, box-like exterior, typically standalone or in power centers.
13
Q
Define Brownfields.
A
Real property whose redevelopment may be complicated by the presence of hazardous substances.
14
Q
What is Build-to-Suit Development?
A
Development in which a business retains a contractor to build a customized structure.
15
Q
What does Building Efficiency measure?
A
The ratio between net square feet and gross square feet.
16
Q
What is Capitalization/Cap Rate?
A
A rate of return used to calculate property value based on income and sale prices of comparable properties.
The Capitalization Rate (or Cap Rate) is a real estate investment metric used to estimate the value of an income-producing property based on its expected annual income.
It represents the rate of return an investor would earn if they bought the property with cash (no debt).
17
Q
What are Category Killers?
A
Stores that offer tremendous selection in a particular merchandise category at low prices.
18
Q
What are Cash Flows?
A
The amount of income remaining after expenses and obligations have been paid.
19
Q
Define Class A Office Space.
A
Most prestigious buildings that compete for premier office users with above-average rents.
20
Q
What is Class B Office Space?
A
Buildings competing for a wide range of users with average rents and fair to good finishes.
21
Q
Describe Class C Office Space.
A
Buildings competing for tenants requiring functional space at below-average rents.
22
Q
What are Closing Costs?
A
Various expenses and fees charged to both the buyer and seller at the time of property transfer.
23
Q
What is Collateral?
A
Real or personal property pledged by a borrower to protect a lender against default.
24
Q
What does Common Area Maintenance (CAM) refer to?
A
Charges that tenants pay to reimburse the landlord for expenses related to common areas.
25
What is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)?
A federal act with objectives to identify hazardous waste sites, finance cleanup, and establish liability.
26
What is a Comprehensive Plan?
A plan describing desirable community development over a 10-to-20-year period.
27
Define Condemnation.
A legal process allowing a city to acquire property for public purpose with just compensation.
28
What is a Construction Loan?
A short-term loan enabling a developer to pay contractor fees and expenses during construction.
29
What does Cost of the Work refer to?
Costs of construction related to the work performed on the construction site.
30
What is a Cost plus contract?
A building contract setting the builder’s profit at a percentage of the actual cost.
31
What is Debt Capital?
Money loaned to be paid back in fixed installments on a fixed schedule.
32
What is a Deed of Trust?
A security instrument transferring title to real estate to a trustee as collateral for a debt.
33
What does Demolition involve?
Clearance or removal of a structure for redevelopment.
34
What is a Density Bonus?
A tool to alter density regulations to encourage certain land uses and project features.
35
Define Depreciation.
The loss of value in real property due to age, deterioration, or obsolescence.
36
What are Development Fees?
Monies charged by the developer for development services.
37
What are Development Standards?
Part of the zoning code dealing with measurable constraints like density and building heights.
38
What is Earned Media?
Publicity about the project from the news media.
39
What is an Easement?
The legal right to use another's land for a specific purpose.
40
What does Effective Rent represent?
The actual dollars collected over the lease term divided by the number of months.
41
What is Eminent Domain?
A municipality’s authority to take private property for public use with fair compensation.
42
What is an Environmental Impact Statement (EIS)?
A report documenting the impacts of a development on the environment.
43
What is an Enterprise Zone?
An area designated to receive tax incentives to stimulate economic growth.
44
Define Equalized Tax Rate.
The local tax rate multiplied by the ratio of assessed value to market value. An equalized tax rate is a property tax rate that has been adjusted using an equalization factor (or multiplier) to ensure uniformity and fairness in property assessments across different jurisdictions.
45
What is Equity Capital?
An ownership investment in a project with no predetermined payback schedule.
46
What are Exactions?
Conditions to development approval, such as land dedications or fees.
47
What does Financial Leverage mean?
Use of debt to decrease equity investment and increase expected return. (Financial leverage is the use of borrowed money to increase the potential return on an investment, while also increasing the risk of loss.)
48
What is a Fixed Price/Lump-sum contract?
A contract stipulating a fixed price that includes contractor fees and overhead.
49
What is Floor Area Ratio (FAR)?
The ratio of permitted gross floor area of a building to the size of the lot.
50
What is Foreclosure?
A legal proceeding to take possession of a property due to loan default.
51
Define Form-based Zoning.
Zoning that restricts development based on design descriptions rather than use.
52
What is a General Contractor?
The individual or firm responsible for overall coordination of the building process.
53
What are General Obligation Bonds?
General obligation (GO) bonds are municipal bonds issued by a city, county, or state that are backed by the full faith and credit of the issuing government.
That means the government promises to repay the debt using its taxing power — usually property taxes — even if it has to raise taxes to do so.
54
What is a General Superintendent?
The individual overseeing multiple projects on the general contractor’s payroll.
55
What are Green Buildings?
Buildings that reduce or eliminate negative environmental impacts in five key areas.
56
Define Greenfield Development.
Development on previously undeveloped land in rural and suburban areas.
57
What does Gross Rent refer to?
Rent potential prior to any deductions for vacancy and operating expenses.
58
What is Gross Square Feet?
The gross area of a building measured from the outside of its exterior walls.
59
What are Ground Leases?
A financing tool where the lessee obtains land use in return for periodic rent payments.
60
What is Guaranteed Maximum Price (GMP)?
A contract where the contractor guarantees that the final cost will not exceed a maximum amount.
61
What are Hard Costs?
Development costs including labor and materials, referred to as 'bricks and mortar' costs.
62
What does Horizontal Development include?
Infrastructure development and site preparation.
63
What is IDB?
An Industrial Development Bond used to finance industrial or commercial facilities.
64
What are Impact Fees?
Financial contributions imposed on developers to pay for community capital improvements.
65
What is Inclusionary Zoning?
Zoning that encourages affordable housing, often through a density bonus.
66
What does Indemnity mean?
Indemnity means protection against financial loss or legal responsibility. It’s an agreement where one party promises to cover the costs, damages, or losses that another party might suffer.
67
What is the Internal Rate of Return?
The true annual rate of earnings on an investment.
68
What does Land Banking refer to?
The public acquisition and reservation of land for future use. Land banks essentially are government-owned inventories of land parcels. By continually gathering smaller pieces of land, a city or county can assemble large parcels of developable land with which it can attract and retain firms.
69
What are Land Write-Downs?
The public sale of land for less than its market value, effectively a subsidy.
70
What is a Lien?
A legal claim on property for security against repayment of a debt.
71
What is a Lifestyle Center?
A retail center located near affluent neighborhoods, catering to lifestyle pursuits.
72
What is Long-term financing?
The major source for project financing, often in the form of a conventional mortgage loan.
73
What is a Master Developer?
Developer managing the overall property development process.
74
What is Mixed Use Development (MXD)?
Three or more different but complementary land uses developed as part of one project.
75
What does Mixed Use Zoning allow?
Use of real estate for more than one purpose.
76
What is a Modification to a legal nonconforming use?
Allowed changes to a nonconforming use that do not impose greater negative impact.
77
What does NEPA stand for?
National Environmental Policy Act of 1969.
78
What is Net Square Feet?
Square feet available for direct lease to tenants after deducting common areas.
79
What is the National Environmental Policy Act (NEPA)?
The act sets provisions for federal actions that have an impact on the environment.
80
Define Net Square Feet.
The square feet available for direct lease to tenants after deducting common areas from gross square feet.
81
What does NPL stand for?
National Priority List.
The National Priorities List (NPL) is the U.S. Environmental Protection Agency’s (EPA’s) official roster of the most serious hazardous waste sites nationwide that are eligible for long-term investigation and cleanup under the federal Superfund program.
82
What is Net Operating Income (NOI)?
The cash remaining in a real estate project after deducting annual operating expenses and expected losses.
83
What is Operating Capital?
Short-term resources needed for predevelopment activities.
84
What is an Origination Fee?
An up-front fee charged by a lender based on points or percentage of the total principal amount of the loan.
85
What is Overlay Zoning?
A zoning incentive/constraint that subjects existing zoning districts to an additional layer of development standards.
86
What is a Parking Ratio?
The ratio of parking spaces to gross building area.
87
What does Planned Unit Development (PUD) do?
Relaxes zoning restrictions for a designated tract of land.
88
What is Portfolio Management?
Overall management of a number of investments or properties.
89
Define Power Center.
A center dominated by several large anchors, including discount department stores.
90
What is the Principal in finance?
The amount of debt, exclusive of interest owed.
91
What are Private Activity Bonds (PABs)?
Bonds issued by the government for a private purpose benefiting individuals or entities.
92
What are Pro Formas?
Projected financial statements for a project or business.
93
What do Project Costs include?
Total cost of the development, including hard and soft costs.
94
How is Property Tax calculated?
By multiplying the assessed value of a property by the tax rate.
95
What are Public Use Bonds?
Bonds used for public purposes such as highways and schools.
96
What are Public Use Revenue Bonds?
Bonds payable solely from the earnings of a particular project.
97
Define Real Estate.
Land and anything permanently affixed to it, including buildings.
98
What does Redevelopment involve?
Converts a previously developed property into a higher, more productive use.
99
What is a Revolving Loan Fund?
A pool of capital where funding is recycled to provide future financing.
100
What is the Rate of Return?
The Rate of Return (RoR) is the percentage of profit or loss an investor earns on an investment, based on the income it produces or the change in its value over time.
It shows how efficient or profitable an investment is relative to its cost.
101
Define Remediation.
The cleanup of environmentally contaminated property.
102
What does the Resource Conservation and Recovery Act (RCRA) regulate?
Generation, transportation, storage, treatment, and disposal of hazardous waste.
103
What is a Right-of-Way?
A type of easement allowing passage or maintenance of a transport route.
104
Define Risk in investment.
The variability of investment return.
105
What are Sale-Leasebacks?
When one party purchases land and leases it back to the seller.
106
What is a Sandwich Lease?
Arrangement where a public agency leases a property and subleases it to a non-credit tenant.
107
What is a Sector Plan/Small Area Plan?
Focuses on a manageable area and considers unique land use and infrastructure needs.
108
Define Smart Growth.
A comprehensive development strategy that promotes efficient land use.
109
What are Soft Costs?
Development costs including professional fees and loan-related fees.
110
What are Special Exceptions?
Uses that require special review by a zoning board.
111
What are Special Improvement Districts?
Limited geographic areas designated to receive enhanced services to improve the business climate.
112
What are Special Uses in zoning?
Uses allowed by zoning subject to a special use permit.
113
Define Speculative Development.
Development that occurs before securing a tenant.
114
What is Stormwater Detention?
A system that delays stormwater runoff in a controlled manner.
115
What is Stormwater Retention?
The amount of precipitation that does not escape as runoff.
116
What is Street Vacation?
When a government closes a street, allowing property owners to expand their property.
117
Define Subdivision.
The process of dividing land into two or more parcels for lease or sale.
118
What is Tax Abatement?
Exemption or reduction of local taxes for a specified period of time.
119
What is Tax Increment Financing?
A mechanism to capture future tax benefits of real estate improvements.
120
What are Tax Credits?
A form of tax incentive that reduces tax obligation.
121
What are Tenant Improvements?
The cost of finishing out the building.
122
What is a Triple Net Lease?
The requirement for the lessee to pay for property taxes, insurance, and operating expenses.
123
Define Urban Entertainment Centers (UECs).
Development offering a combination of entertainment, dining, and retail.
124
What are Variances?
Modifications to development standards in zoning ordinances.
125
What are Voluntary Cleanup Programs (VCPs)?
State programs addressing obstacles in developing brownfields.
126
What is Zoning?
The regulation of use, shape, and bulk restrictions on development.
127
What does ADA stand for?
Americans With Disabilities Act
## Footnote
A civil rights law that prohibits discrimination based on disability.
128
What is the full form of AGC?
Associated General Contractors of America
## Footnote
A national trade association for the construction industry.
129
AIA refers to which organization?
American Institute of Architects
## Footnote
A professional organization for architects in the United States.
130
What does ASTM stand for?
American Society for Testing and Materials
## Footnote
An international standards organization that develops and publishes voluntary consensus technical standards.
131
What is B&I an acronym for?
Business & Industry
## Footnote
Refers to the sectors involved in commercial and industrial activities.
132
BID stands for what?
Business Improvement District
## Footnote
A defined area where businesses pay an additional tax to fund projects within the district.
133
What does CDBG represent?
Community Development Block Grant
## Footnote
A federal program that provides grants to local governments for community development activities.
134
CDC is an abbreviation for?
Community Development Corporation
## Footnote
A nonprofit organization that works to improve the economic and social conditions of a community.
135
What does CEC stand for?
Children’s Entertainment Center
## Footnote
A venue that provides entertainment and recreational activities for children.
136
CERCLA is known as the?
Comprehensive Environmental Response, Compensation, and Liability Act
## Footnote
A federal law governing the cleanup of hazardous waste sites.
137
What does CM stand for in construction?
Construction Management
## Footnote
A project management technique for overseeing the planning, design, and construction of a project.
138
What is CNTS?
Covenant Not To Sue
## Footnote
A legal agreement where one party agrees not to pursue legal action against another party.
139
What does COP represent?
Certificate of Participation
## Footnote
A financing mechanism for public projects where investors receive a share of the revenue.
140
D-B/A-B is an acronym for?
Design-Build/Award-Build
## Footnote
A project delivery method that integrates design and construction.
141
What does E&O stand for?
Error & Omission Insurance
## Footnote
A type of professional liability insurance for companies and individuals.
142
EA refers to which concept?
Economic Adjustment
## Footnote
A process or policy aimed at adjusting the economy to changes or shocks.
143
What is the full form of EDA?
Economic Development Administration
## Footnote
An agency within the U.S. Department of Commerce that provides grants for economic development projects.
144
EDO stands for?
Economic Development Organization
## Footnote
An entity focused on improving the economic well-being of a community.
145
What does EIS mean?
Environmental Impact Statement
## Footnote
A document required by the National Environmental Policy Act for certain actions affecting the environment.
146
EOR is an acronym for?
Entertainment Oriented Retail
## Footnote
Retail businesses that focus on providing entertainment experiences.
147
What does EPA stand for?
(U.S.) Environmental Protection Agency
## Footnote
A federal agency responsible for protecting human health and the environment.
148
EZ/EC represents?
Enterprise Zone/Enterprise Community
## Footnote
Areas designated for economic revitalization and development.
149
What is FEC?
Family Entertainment Center
## Footnote
A venue that provides entertainment for families, often including games and activities.
150
FV stands for?
Future Value
## Footnote
The value of an asset at a specific date in the future.
151
GO refers to what in finance?
General Obligation
## Footnote
Bonds backed by the full faith and credit of the issuing municipality.
152
What is HRTC?
Historic Rehabilitation Tax Credit
## Footnote
A tax incentive for the rehabilitation of historic properties.
153
HSWA stands for?
Hazardous and Solid Waste Amendments
## Footnote
Amendments to the Resource Conservation and Recovery Act addressing waste management.
154
What does HUD represent?
(U.S.) Housing and Urban Development
## Footnote
A federal agency responsible for national policies and programs related to housing.
155
IDB is an acronym for?
Industrial Development Bond
## Footnote
A type of bond issued to finance the construction of industrial facilities.
156
IPO stands for?
Initial Public Offering
## Footnote
The first sale of stock by a company to the public.
157
What does IRC stand for?
Internal Revenue Code
## Footnote
The federal law that governs federal tax administration.
158
IRP refers to?
Intermediary Relending Program
## Footnote
A program that provides loans to intermediaries for relending to small businesses.
159
What does IRR mean?
Internal Rate of Return
## Footnote
A metric used to evaluate the profitability of an investment.
160
LBE is an acronym for?
Location Based Entertainment
## Footnote
Entertainment experiences that are tied to a specific location.
161
LED stands for?
Leisure Entertainment Destination
## Footnote
A location designed for leisure and entertainment activities.
162
What is LIHTC?
Low-Income Housing Tax Credit
## Footnote
A program that incentivizes the development of affordable housing.
163
LLC represents what business structure?
Limited Liability Corporation
## Footnote
A business structure that offers personal liability protection to its owners.
164
What does MOU stand for?
Memorandum Of Understanding
## Footnote
A formal agreement between two or more parties outlining terms and details of an understanding.
165
NEPA stands for?
National Environmental Protection Act
## Footnote
A law that requires federal agencies to assess the environmental effects of their proposed actions.
166
What is NFA?
No Further Action
## Footnote
A term used in environmental remediation indicating that no additional cleanup is necessary.
167
NFRAP stands for?
No Further Remedial Action Planned
## Footnote
Indicates that no further action is planned for a site after a cleanup has been completed.
168
What does NOI mean?
Net Operating Income
## Footnote
A measure of a property's income after operating expenses are deducted.
169
NPL stands for?
National Priorities List
## Footnote
A list of hazardous waste sites in the United States identified for cleanup under the Superfund program.
170
What is NPV?
Net Present Value
## Footnote
The difference between the present value of cash inflows and outflows over time.
171
OSHA is an abbreviation for?
Occupational Safety & Health Administration
## Footnote
A federal agency that ensures safe and healthy working conditions.
172
What does PAB stand for?
Private Activity Bond
## Footnote
A bond issued to finance projects that benefit private entities.
173
PRP refers to?
Potentially Responsible Party
## Footnote
An individual or company that may be held liable for contamination at a Superfund site.
174
PV stands for?
Present Value
## Footnote
The current worth of a future sum of money or stream of cash flows.
175
RBCA is an acronym for?
Risk-Based Corrective Action
## Footnote
An approach to environmental cleanup that considers risk to human health and the environment.
176
What does RBEG stand for?
Rural Business Enterprise Grant
## Footnote
A grant program aimed at supporting rural businesses.
177
RBS represents?
Rural Business-Cooperative Service
## Footnote
A program that provides assistance to rural businesses and cooperatives.
178
What is RCRA?
Resource Conservation and Recovery Act
## Footnote
A federal law that governs the disposal of solid and hazardous waste.
179
RDE stands for?
Retail Dining Entertainment
## Footnote
A concept that combines dining and entertainment in a retail environment.
180
What does REDA stand for?
Real Estate Development Accelerator
## Footnote
A program or initiative designed to expedite real estate development projects.
181
What is REDL?
Rural Economic Development Loan
## Footnote
A loan program aimed at supporting rural economic development initiatives.
182
REIT refers to?
Real Estate Investment Trust
## Footnote
A company that owns, operates, or finances income-producing real estate.
183
What does RFP stand for?
Request For Proposal
## Footnote
A document issued to solicit proposals from potential vendors.
184
RFQ is an acronym for?
Request For Qualifications
## Footnote
A document used to solicit qualifications from potential contractors or service providers.
185
What is RLF?
Revolving Loan Fund
## Footnote
A fund that provides loans to businesses and is replenished as loans are repaid.
186
ROA stands for?
Return On Assets
## Footnote
A financial ratio that indicates the profitability of a company relative to its total assets.
187
What does ROE mean?
Return On Equity
## Footnote
A measure of financial performance calculated by dividing net income by shareholder equity.
188
RUS is an acronym for?
Rural Utilities Service
## Footnote
A federal agency that provides financial assistance to rural utilities.
189
What does SBA stand for?
Small Business Administration
## Footnote
A U.S. government agency that provides support to entrepreneurs and small businesses.
190
SHPO refers to?
State Historic Preservation Office
## Footnote
A state agency responsible for preserving historical sites and resources.
191
What is SID?
Special Improvement District
## Footnote
A designated area where property owners pay for improvements and services.
192
SSA stands for?
Special Service Association
## Footnote
An organization formed to provide specific services in a defined area.
193
TSDF is an acronym for?
(Hazardous Waste) Treatment, Storage, and Disposal Facilities
## Footnote
Facilities that manage hazardous waste in compliance with regulations.
194
What does UBC stand for?
Uniform Building Code
## Footnote
A set of regulations governing building construction and safety standards.
195
UDAG refers to?
Urban Development Action Grant
## Footnote
A federal program that provides funding for urban revitalization projects.
196
What is UEC?
Urban Entertainment Center
## Footnote
A venue that offers entertainment options in an urban setting.
197
UED stands for?
Urban Entertainment Destination
## Footnote
A location designed to attract visitors for entertainment purposes.
198
What does USDA represent?
U.S. Department of Agriculture
## Footnote
A federal agency responsible for overseeing farming, forestry, and food.
199
What is VCP?
Voluntary Cleanup Program
## Footnote
A program that allows property owners to voluntarily clean up contaminated sites.
200
What are the three basic strategic approaches to economic development?
Business-oriented, place-oriented, and resident-oriented
201
Real Estate Development Goals
* Creating and retaining jobs.
* Attracting and creating new or expanding businesses.
* Enhancing the local tax base through new and higher property values.
* Stimulating nearby real estate improvements and investments.
* Improving the appearance of a neighborhood (removal of slums and blight).
202
What are the four primary types of development and redevelopment?
Build-to-suit
Speculative development
Greenfield development
Redevelopment/reuse
203
Real Estate development process 8 phases include:
* Predevelopment;
* Market, financial, and political feasibility;
* Site and engineering analysis;
* Financing;
* Contractor negotiations and public approvals;
* Construction;
* Marketing;
* Building occupancy and management.
204
Operating Pro Forma
Standard format that shows projected revenues, expenses, and cash flows to be generated by a project. It can be single or multi-year.
205
What are special uses in zoning?
Uses allowed by zoning subject to special use permit, such as churches and theaters.
## Footnote
These uses are appropriate for a given zoning classification if limited in number.
206
What are special exceptions in zoning?
Uses that require special review, such as an electric-utility transformer in a residential neighborhood.
## Footnote
Typically reviewed by a zoning board.
207
What are variances in zoning?
Modifications to development standards, such as height limits, setbacks, and seating capacity.
## Footnote
Generally used to address unique situations related to lot size, shape, or topography.
208
What is a modification to a legal nonconforming use?
Changes allowed to a nonconforming use that existed before the zoning ordinance but doesn't conform to it.
## Footnote
Modifications may be permitted if they do not impose greater negative impact.
209
What is the first step in the design process after selecting an architect?
Owner’s Program of Requirements (OPR)
## Footnote
The OPR establishes baseline criteria for facility function, performance, operations, and maintenance.
210
List the phases of the design process in order.
* Owner’s Program of Requirements (OPR)
* Conceptual Design
* Schematic Design (SD)
* Design Development (DD)
* Construction Documents (CD)
## Footnote
Each phase helps ensure the project advances in alignment with market analysis and financial commitments.
211
What does the Basis of Design (BOD) translate?
The owner’s wants and needs into building components
## Footnote
Components include HVAC systems, building envelope, security systems, and building automation systems.
212
What is the purpose of the Conceptual Design phase?
To establish the design intent and explore a building’s form, bulk, scale, mass, and exterior appearance
## Footnote
It addresses 'what' and 'how much' and begins to set the stage for 'how'.
213
What is the main output at the end of the Schematic Design (SD) phase?
Conceptual sketches presented to the owner for approval
## Footnote
These sketches help verify the architect’s interpretation of the client's desired functional relationships.
214
What is developed during the Design Development (DD) phase?
A clear and coordinated description of all aspects of the design
## Footnote
This includes architectural, mechanical, plumbing, electrical, and fire protection systems.
215
What do Construction Documents (CD) include?
Drawings and Specifications
## Footnote
Drawings illustrate the project, while Specifications outline written requirements for materials and construction systems.
216
True or False: The Construction Documents are also referred to as bid documents.
True
## Footnote
They include detailed requirements for the construction of a building project.
217
Fill in the blank: The __________ is developed early in the design stage based on the OPR.
Basis of Design (BOD)
## Footnote
It is the primary document for translating the owner’s needs into building components.
218
What does the Design Development (DD) phase help determine?
Potential cost savings, energy efficiency, and constructability improvements
## Footnote
The constructor typically assists the Owner and architect in this phase.
219
What is the outcome of the Design Development phase?
Drafted to-scale drawings illustrating the project as it would look when constructed
## Footnote
These drawings specify site plans, floor plans, and exterior elevations.
220
What are the 4 P's of Marketing?
Promotion, Price, Product, Place
221
Strengths & weaknesses of revolving loan funds
Strengths of RLFs:
* They offer flexible loan eligibility criteria, assistance, and repayment. Each city or other development agency establishes its own guidelines.
* They can provide capital to businesses in support of local development goals and provide eligibility and lending criteria in concert with other development programs.
* They can offer favorable interest rates and loan terms.
* RLFs reduce the risk of a loan by guaranteeing a specific percentage of that loan.
Weaknesses of RLFs:
* RLFs must sometimes stop lending because they are out of funds.
* A relatively large amount of capital is necessary to establish the fund.
* Sophisticated administrative staff is required.
* There are restrictions if federal funds are used.
222
Types of Tax Credits
Business facility
Provides credits for new jobs and new investments within a specific type of industry.
C H A P T E R 1 2
Capital investment
Provides credits for investment in small businesses in distressed communities.
Community bank
Provides credits for investment in a community bank.
Enterprise zone
Provides credit for developments that will provide new jobs and new investment within the zone.
Historic
Provides credit for the reuse of historic structures (see Chapter 12).
New Market Tax Credits
Spurs revitalization efforts of low-income and impoverished communities.
Opportunity Zones
Opportunity Zones are economically distressed communities, defined by individual census tracts, nominated by America’s governors, and certified by the U.S. Secretary of the Treasury to the Internal Revenue Service. Under certain conditions, new investments in Opportunity Zones may be eligible for preferential tax treatment.
Distressed community
Provides credit for individuals and businesses within a defined “distressed community”.
Low-income or Affordable housing
Provides credits for the development and leasing of units at below-market rents(see Chapter 12).
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Strengths & weaknesses of tax credits
Strengths of tax credits:
* Direct incentive for recruiting new development.
* For business owners, the tax credit may provide the needed cash flow to make the project successful.
* If the building is empty, certain taxes are not being paid so the local government is not giving up existing revenue.
Weaknesses of tax credits:
* As credits continue, property owners begin to capitalize the value of credit into the cost of the property.
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What is Tax Increment Financing (TIF)?
A mechanism to encourage private development by capturing future tax benefits of real estate improvements to pay for present costs.
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How does TIF capture tax revenue?
By freezing property tax assessments at a base year and allocating incremental tax revenue from rising property values to the TIF district.
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What is typically required for an area to qualify as a TIF district?
The area must be designated as blighted.
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What is the primary use of incremental revenue from TIF?
To pay the debt on bonds issued for redevelopment.
228
List some common uses for TIF revenue payments.
* Financing public infrastructure development
* Supporting specific projects
* Reimbursing developers for public infrastructure expenses
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What are the advantages of TIF?
* Funds redevelopment without reducing tax revenue
* Allows increased tax revenue to be reinvested into the district
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What are the risks associated with TIF?
* No guarantee that redevelopment will generate anticipated investment
* Increased demand for municipal services without available funding until the district expires
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In which state did TIF originate?
California in the early 1950s.
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How many states have legislated TIF?
More than 45 states.
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What is the typical duration for TIF districts?
20-25 years.
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What is the first step in forming a TIF district?
An agency proposes a district to be redeveloped using state-established criteria.
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What must be included in the area redevelopment plan?
* Potential projects
* Estimated project costs
* Tax impact
* Termination date of the TIF
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What is the purpose of a public hearing in the TIF formation process?
To secure city council approval for the TIF and redevelopment area.
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What happens after the TIF use is authorized?
The current tax base and revenue streams are appraised to determine the original assessed value.
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What characterizes a TIF district compared to individual project TIFs?
A TIF district supports comprehensive area redevelopment, potentially generating more funds for reinvestment.
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What types of governing bodies can administer TIF?
* City council
* City economic development department
* Redevelopment agency
* TIF commission
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What types of areas can be designated for TIF?
* Blighted areas
* Development districts
* Single sites
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Fill in the blank: TIF can finance _______ improvements.
[public infrastructure]
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What are some eligible development activities under TIF?
* Land assembly
* Demolition
* Site preparation
* Utilities
* Planning and engineering
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True or False: A blight determination is required in all states to establish a TIF district.
False.
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What complicates the designation of TIF district boundaries?
* Existing land use mix
* Desired land use mix
* Inclusion of less blighted property with high development potential
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What must be considered regarding lenders in the TIF process?
Lenders and bond counsel have specific requirements for providing debt to a TIF district.
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Strengths and weaknesses of TIF
Strengths of TIF:
* Property owners pay the normal tax burden, no more.
* The property tax increment is eventually returned to the tax rolls.
* TIF bonds are not typically counted against a jurisdiction’s debt caps.
* Public funds are not required.
* Incremental tax revenues are reinvested back into the targeted redevelopment areas.
* TIF can stimulate private development in redevelopment areas.
* Tax increment areas can also be used as a performance-based benefit if the developer returns the amount of the increment. TIF is a reliable local source of funds as federal and state grants become increasingly sparse.
Weaknesses of TIF:
* In areas where property tax rates are very low, the impact of an increase in an assessment may be marginal, generating little revenue for the redevelopment agency.
* TIF may be complex and costly to administer.
* The project might fail, or surrounding property values might not increase.
* TIF effectively freezes the tax base for agencies required to provide services to the area. This means that tax revenues necessary for meeting increased service demands, such as education, police, public transportation, etc., may not be available until the project has been completed and the indebtedness repaid.
* Political fallout from school districts.
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Strengths and weaknesses of leases
Strengths of leases:
* The developer can more easily avoid large cash outlays.
* There are tax advantages for the developer.
* Public and private sectors can share the risk.
* EDO can maintain more control than in a transfer of title.
Weaknesses of leases:
* The developer may default.
* The expenses incurred by the public sector can be high.
* Some lenders are reluctant to lend on improvements with a ground lease.
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Strengths and weaknesses of abatements
Strengths of tax abatements:
* They provide a very direct incentive for recruiting new development.
* They are easy to implement.
* They are the most direct way to counter urban tax disadvantages relative to suburban communities.
* If the building is empty, certain taxes are not being paid, so the local government is not giving up existing revenue.
Weaknesses of tax abatements:
* There may be a tendency to provide tax abatement to any eligible project, rather than basing decisions on project feasibility and financial necessity.
* Once abatements are given, businesses may depend on them, and thus difficult to phase them out.
* As abatements become more widespread, property owners begin to capitalize the value of abatement into the sales price of the property.
* Tax abatement in many jurisdictions has become controversial.
249
Strengths and weaknesses of special improvement districts
Strengths of SIDs:
* Steady source of money
* Provides organizational structure for the district
Weaknesses of SIDs:
* Can be difficult to establish
* District has to be managed
250
Strengths and weaknesses of land assembly
Strengths of land assembly (with condemnation):
* Land assembly allows for the return of parcels to economic use, supports redevelopment efforts, and helps mitigate blighting forces in the community. It is a valuable tool used in cases when a government deems the acquisition of property vital and necessary to the public interest.
* Land assembly encourages private investment by avoiding wasted time and uncertainty on the part of the developer.
* Condemnation allows an EDO to assemble abandoned lots and buildings, whose ownership extends back a number of generations, making it difficult to establish a clear title. Without a clear and legal title, the property cannot be transferred or redeveloped.
* Land assembly deals with speculative property owners. In many cases, one or two property owners hold up an entire redevelopment project by refusing to sell or demanding a purchase price greatly exceeding market value.
Weaknesses of land assembly (with condemnation):
* Condemnation is politically controversial.
* Because condemnation requires extensive legal expertise, it can be an expensive and time-consuming process.
* Laws may prevent or restrict condemnation that is followed by sale to a for-profit entity.
* The cost of acquiring a site is often significantly higher when condemnation is used. The relocation of existing tenants and legal fees often raise the purchase price above market value. When this is the case, it is often necessary to have a public subsidy to make the project financially feasible.
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Strengths and weaknesses of land banking
Strengths of land banking:
* Land banking can help avoid or mitigate speculative land-price increases in areas slated for redevelopment.
* Land banking can help retain control over future uses and design aspects of the property.
Weaknesses of land banking:
* To the land bank, the acting agency needs to pay the entire land acquisition cost upfront unless they can secure the land through non-payment measures.
* The cost to maintain the property.
* Community concerns over the use of public dollars.
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Strengths and weaknesses of land write-down
Strengths of land write-down:
* There are no direct cash outlays if the public agency already owns the property.
* The public agency that owns the land can maintain some control over development by placing restrictions on reuse at the time of transfer.
Weaknesses of land write-down:
* The public agency that purchases the land may have to pay the market price.
* There is the penalty for added cost and time to manage and potentially sell property owned by public agencies.
* Sometimes write-downs are perceived as unfair and are, in fact, illegal in some states.
253
Strengths and weaknesses of air rights
Strengths of air rights:
* There may be reduced or no direct cash outlays
* Agencies are able to provide land for development while still maintaining some public use.
Weaknesses of air rights:
* When air rights are transferred the community gives up other potential public uses.
* Transfer complicates financing and loan securitization.
254
What is the first step in the brownfield site cleanup process?
Site Assessment and Reuse Options
## Footnote
This step involves evaluating if a property is contaminated and determining reuse options.
255
What types of businesses are commonly associated with brownfield contamination?
* Railroads
* Gas stations
* Dry cleaners
* Oil refineries
* Truck terminals
## Footnote
These businesses are known for leaving behind hazardous substances.
256
What is the purpose of a site assessment?
To determine if a property is contaminated and assess remediation needs.
## Footnote
Site assessments are foundational for cleanup technologies and required by banks for loans.
257
What are the two main phases of environmental assessments?
* Phase I Environmental Assessment
* Phase II Environmental Assessment
## Footnote
These phases help identify potential contamination and assess its extent.
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What does a Phase I Environmental Assessment focus on?
Researching current and former uses of the property to identify potential contamination.
## Footnote
It includes checking government records and examining the site.
259
What databases does the EPA use to track contaminated sites?
* National Priorities List (NPL)
* CERCLIS Sites
* NFRAP sites
* RCRA Treatment, Storage, and Disposal Sites
* Leaking Underground Storage Tanks
* Solid Waste Facilities
* Hazardous Waste Sites
* State Superfund Sites
## Footnote
These databases help assess potential contamination risks.
260
What is the main objective of a Phase II Environmental Site Assessment Report?
To evaluate the presence of hazardous substances in the site's subsurface.
## Footnote
This phase involves more detailed testing and analysis.
261
What types of drilling methods are commonly used in Phase II Environmental Testing?
* Push Probe
* Hollow Stem Auger
* Hand Auger
* Mud Rotary
* CPT Drilling
## Footnote
These methods are used to obtain soil and groundwater samples.
262
What is the Risk-Based Cleanup Approach?
A strategy to evaluate cleanup needs based on future land uses and potential exposure risks.
## Footnote
It focuses on the most effective remediation methods while considering economic factors.
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What can limit a property's eligibility for participation in a Voluntary Cleanup Program (VCP)?
* Property with unclear title
* NPL sites
* State without a State VCP
* State Superfund sites
* Property subject to current enforcement actions
* Property owned by a potentially responsible party (PRP)
* Petroleum contamination only
## Footnote
These factors can restrict participation in state programs aimed at cleanup.
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What is the role of collaboration in the redevelopment of contaminated sites?
Collaboration among buyers, sellers, experts, and agencies is essential for successful redevelopment.
## Footnote
Effective communication enhances project success.
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What should be included in a preliminary feasibility analysis?
* Environmental consultants and tests
* Environmental-related legal costs
* Remediation costs
* Higher loan-to-value ratios
* Environmental monitoring costs
## Footnote
This analysis helps determine the project's feasibility and funding needs.
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What are remediation agreements?
Contractual agreements that outline specific cleanup responsibilities among parties involved.
## Footnote
These agreements help manage liability during the remediation process.
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What types of environmental insurance are available for brownfield redevelopment?
* Professional liability coverage
* Owner/operator liability coverage
* Cleanup cost-cap coverage
* Legal defense coverage
* Re-opener or regulatory action coverage
## Footnote
These insurance types help mitigate risks associated with redevelopment.
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What is a 'covenant not to sue'?
A strong closure document promising no further legal action is needed after approved remediation.
## Footnote
It binds state and local agencies to the remediation plan.
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What does owner/operator liability coverage entail?
Covers firms or agencies working on the site, either doing business or engaged in cleanup operations.
## Footnote
This coverage is essential for entities directly involved in managing contaminated sites.
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What is cleanup cost-cap or stop-loss coverage?
Places an upper limit on the cost of cleanup site redevelopers have to pay.
## Footnote
This helps protect redevelopers from exceeding budgeted cleanup costs.
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What does legal defense coverage protect against?
Lawsuits associated with liability claims made by enforcement agencies or third parties.
## Footnote
This coverage is important for managing legal risks in contaminated property transactions.
272
What is re-opener or regulatory action coverage?
Covers costs associated with future government actions that require further site cleanup, including loss of use of improvements.
## Footnote
This is crucial for long-term risk management in brownfield projects.
273
What are the two options for structuring a deal to purchase contaminated property?
* Acquiring an option to purchase the site
* Entering a contract to purchase the site
## Footnote
These options provide flexibility in negotiating contaminated property transactions.
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What is a key requirement for potential buyers during environmental investigations?
Access to the site to complete environmental investigations.
## Footnote
This is essential for assessing contamination and determining cleanup needs.
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What must parties agree on regarding environmental investigation?
* Permissible forms of environmental investigation
* Rights and access to new environmental data
* Length of time permitted for environmental investigation
* Costs of environmental investigation
## Footnote
These agreements help clarify expectations and responsibilities during the investigation phase.
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What is the most contentious aspect of a brownfields deal?
Future environmental liabilities.
## Footnote
This aspect often involves negotiations to determine responsibility for potential future cleanup costs.
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What does the indemnities clause establish?
What will be paid by whom.
## Footnote
This clause is typically a principal term negotiated in the business deal.
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Why might buyers negotiate future cooperation with the seller?
Especially if the seller is a potentially responsible party.
## Footnote
This cooperation can be crucial for managing ongoing environmental risks.
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What types of financial resources can help close the financing gap for contaminated property transactions?
* Loans
* Grants
* Tax incentives and tax-exempt financing
* Tax-advantaged zones
## Footnote
These resources can provide necessary funding for remediation and redevelopment efforts.
280
What are the major goals for brownfield remediation?
* Minimize costs subject to state approval
* Win market acceptance
* Provide bankers’ comfort
## Footnote
Achieving these goals is essential for successful redevelopment of contaminated sites.
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What should be considered when deciding on a cleanup approach?
The environmental firm’s experience in remediation problems and understanding of regulations.
## Footnote
Selecting the right firm is critical for effective cleanup and compliance.
282
What is important to maintain after project completion regarding CNTS/NFA?
The integrity of any covenant not to sue (CNTS) or no further action (NFA) letter.
## Footnote
This often involves continual monitoring to ensure compliance with state requirements.
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Fill in the blank: The ideal environmental firm should be experienced in the type of _______ found at the site.
[remediation problems]
284
True or False: Cost-effective remediation methods, like incineration, may not raise issues with the surrounding neighborhood.
False
## Footnote
Cost-effective methods can lead to community concerns, which must be addressed.
285
What are the two main ways the EPA Brownfields Program supports cleanup and redevelopment?
1) Technical and financial resources for assessment and cleanup
2) Partnerships to protect human health and the environment
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What types of grants are available under the EPA Brownfields Program?
* Assessment Grants
* Cleanup Revolving Loan Funds
* Cleanup Grants
* Job Training Grants
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What is the maximum amount authorized for Assessment Grants?
$500,000
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What is the purpose of Assessment Coalition Grants?
Designed for one 'lead' entity to partner with two to four entities lacking capacity to apply for and manage their own EPA cooperative agreement
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What is the maximum amount applicants may request for sites contaminated by hazardous substances under Assessment Grants?
$1,500,000
290
Who can apply for Community-wide Assessment Grants?
States, Federally recognized Tribal Nations, and eligible native corporations in Alaska
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What is the maximum funding available for Community-wide Assessment Grants?
$2,000,000
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What is the purpose of Cleanup Revolving Loan Funds (RLF)?
To provide capitalization funds for making new loans for cleanup activities
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What percentage of awarded funds must be used for loans in Cleanup Revolving Loan Funds?
50 percent or more
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What is the funding range for Cleanup Grants?
* Up to $500,000
* Up to $2 million
* Up to $5 million
295
What is the focus of the Job Training Grant initiated in 1998?
Environmental training for residents impacted by brownfield sites
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What must the proposed training in Job Training Grants encompass?
Activities that can be usefully applied to a cleanup employing an alternative or innovative treatment technology
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True or False: The EPA Brownfields Program only provides financial assistance.
False
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Fill in the blank: The EPA Brownfields Program provides partnerships to protect _______.
human health and the environment
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