RAINMAKER MARKETING CORPORATION 281.537.1200

Home
Syndications Consulting
Capital Funding Plans
Money Hunts
Due Diligence Services
Senior Housing Consulting
Market Studies
New Construction Forecasts
Financial Feasibility Studies
Search Engine Optimization
Projects & Clients
 

 

Payment In Lieu Of Taxes - "PILOT" Financing...

A "Payment In Lieu Of Taxes" (commonly called a "PILOT") capital funding approach provides the commercial real estate payment in lieu of taxes, PILOT, PAB, construction, financing, fundings, investments development project with a funding program alternative that can be made to work for the benefit of the developer, project and regulators.  Traditionally, the main use of the Payment In Lieu Of Taxes program has been to abate a portion of the real property taxes (and other taxes) the developing project would otherwise have to pay over a defined period (usually a 10-year deal).  The emerging commercial real estate project would have a lower fixed expense costs as a result of the PILOT.  This condition would tend to boost the near-term EBITDA stream resulting in the proposed project being able (theoretically) to increase the amount of long-term debt the project could support.

But, to the savvy commercial real estate development investor and/or developer the PILOT program can reach way beyond the confines of enhanced permanent mortgage support and create an opportunity for a capital funding plan component that may be brought to bear during the pre-construction phase or construction phase.  These are the most critical areas where working capital dollars are the easiest to spend, hardest to justify and nearly impossible for the developer to raise from a third party because the third party ends up taking 50% to 75% of the total transaction's equity security ownership.

PILOT reaches beyond that and provides a rebate that averages 25% of the total property taxes in most states (check with RMC to find out what the entitlement program requirements are for your pending project).  In larger scale projects, this can amount to a very significant sum - so much in fact, that it can become part of the capital funding plan.

This discussion continues on the following page...

Do You Know The Secret?

When it comes to commercial real estate development finance, it doesn't matter whether you need to raise $5 million or $50 million, the out-of-pocket costs, advance fees and project due diligence costs will always require the same relative investment dollars the promoters have to fund.  Do you know what that amount is?  Do you know the Secret?

Rainmaker Marketing Corporation can trace its history back all the way to 1989.  Incorporated in 1993, Rainmaker Marketing Corporation has evolved over time into a full-service business to business consulting firm.  Rainmaker Marketing Corporation’s initial specialization was in issues and documentation needs corresponding to the capital funding cycle for commercial real estate development projects with a primary focus on senior housing and health care related properties.  Today, Rainmaker Marketing Corporation serves all types of commercial income-producing property development program financing requests with a combination of feasibility studies, due diligence services, structured finance consulting and a focus on commercial real estate syndication services.  Rainmaker Marketing Corporation’s service area includes all of the continental United States, Canada, Mexico and the Caribbean Basin.

281.537.1200

Email: consultants@rainmakermarketing.com

Commercial Real Estate Development Finance, Due Diligence Documentation, Syndication & Project Management Consulting

15519 Dawnbrook Drive, Houston, Texas 77068.

©Copyright 2011, Rainmaker Marketing Corporation, Inc.  All rights reserved.