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Strengthening Destination Districts with Equity, Loan & Financial Training & Advisory Services for All Varieties of Arts-Design-Cultural Districts

ARTS, DESIGN OR CULTURAL DISTRICT MEMBER PROGRAM | PRELIMINARY CHECKLIST OF DOCUMENTS | PERMANENT COMMERCIAL DEVELOPMENTS IN MxD DISTRICTS | SMALL BANK LOANS - CHECKLIST | CONDOMINIUM LENDING - CHECKLIST | CONDOMINIUM CONVERSIONS - CHECKLIST | BRIDGE LOAN - CHECKLIST | UNIQUE FINANCING (FROM OUR ASSOCIATES & CORRESPONDENTS) \ INITIAL FINANCING ANALYSIS

ARTS, DESIGN or CULTURAL DISTRICT MEMBER TRAINING PROGRAM

A Member Service Training Program that recognizes that many district real estate financing transactions are unique and that not all re-development participants have the same knowledge or understanding as to financing requirements. We offer advisories as to available traditional or alternative sourcing services, and are dedicated to training Members to recognize the sustainable growth and success of their destination district as an institution committed to strong fundamentals, acclaimable mixes of public and private art, favourable competitive positions, attractive growth prospects and superior management teams.

We bring our Members consultative expertise, professionalism and responsiveness - the hallmark of a unique training and advisory service to destination districts, no matter the size of the transaction. We train Members to find quality loan and equity programs that are the best long-term financing vehicles available to small and medium-sized destination district developers. And, we advise our Members to locate correspondents that adhere to a value-oriented, risk-adjusted investment and loan approach that emphasizes a disciplined building process.

Our goal is to help our Members make their loan applications work both quickly and efficiently. In that light, our trainers and advisors have written a preliminary approval checklist so the answers Members provide lenders and brokers can be understood and so each Member's needs can be clearly discerned so every Member project can stay on schedule.

Once a Member has submitted all the required information, we will deliver sample replies accompanied by a preliminary proposal letter within one business week, assuming all qualifications can be verified and accepted, along with a list of the remaining data and information Members will need to submit the loan application to the appropriate correspondents for approvals.

Please feel free to contact us directly at drthomas@7artsfoundation.org regarding an advisory about this pre-approval application process for loan programs. Again, thank you for your interest, and we look forward to working with you in an advisory capacity in the near future.

The Recommended Preliminary Checklist of Documents

  • Company Profile & Organizational Chart
  • Names, Occupations of Board Members
  • Number of Employees, current & projected, ranges of salaries, wages, benefits
  • Copy of Articles of Incorporation & Bylaws
  • Business & Strategic or Expansion Plan
  • Authorization to Release Credit Information
  • Destination District Evaluation(s)
  • Personal Financial Statement(s)
  • Personal Income Tax Returns for the Past Three Years [for guarantor(s), if necessary]
  • Corporate Income Tax Returns for the Past Three Years
  • Interim Financial Statement
  • Most recent aging of accounts receivable & payable
  • Product/service and/or department sales & revenue history
  • Proformas over the next 2 years, with assumptions
  • Project Overview
  • Proposed Cost Breakdown, including detailed account of the following: Building Costs, Cut/fill/site preparation, well/water/septic/sewer, building permit(s), parking, sidewalks, paving, landscaping, payment and performance bond, site topographical survey, soil test(s), architectural/engineering fees, assessments (city, county, water district, library district, arts or other destination district, utilities), project's own risk builder's insurance, signage, extraordinary FFE, project's own contingency (do not include general contractor's contingency estimate), project's legal/accounting/professional fees
  • Business Schedule of Debt
  • Personal Resume(s)

_____________________________

FRIENDS, JOIN US, TODAY, SUPPORTING THE WORK OF THE FOUNDATION, BY HONORING THE DEDICATION & ACCOMPLISHMENTS OF YOUR LEADERS WITH A PLACE ON THE NATIONAL HALL OF FAME PAGE & PLACQUE.   Please go to the Friends page, now.   "After all, we are what we believe when we give, and nothing more." Dr. Marshall Thomas '00 Address

7AF: Unique District Programs: Construction; acquisition financing; cash out refinancing; loan guarantor and underwriter services. Meeting the capital requirements for interim construction loans, permanent fixed rate mortgages, floating rate acquisition financing, mezzanine debt and joint venture equity investments.

PERMANENT COMMERCIAL DEVELOPMENTS IN MxD DISTRICTS

Notice: As a financier in the commercial real estate industry, the operating foundation acts as a financial intermediary and consultant for its many clients and capital markets partners. The principle focus: to provide sound, objective advice that can help ensure a client's destination district's success.

Eligible Properties:

  • Office, including box office and theatre space, design studio/office, public space, conservation laboratory
  • Retail, including gallery & instruction, theatrical, music & instruction, dance shop & instruction, book stores & workshop spaces
  • Multifamily
  • Self Storage & specialty cartage facilities, art & architectural conservation spaces
  • Hotel and/or conference space, including destinations attached to theatrical, performance facilities, exhibition space
  • Live-Work Studios
  • Arts, Design & Cultural Buildings situated within a qualified destination district*

Loan Purpose:

  • Building Project
  • Reviatlization, Renovation and/or Repairs
  • Accessibility
  • Land Purchase
  • Initial site or building 

 Loan Term:

  • Any term 5 to 20 years
  • 20 to 30 years amortization

 Loan Amount:

  • $1,000,000 minimum; $150,000,000 maximum

 Transaction Costs:

  • Expenses include the cost of the Appraisal, Phase 1 Environmental and Engineering Reports, the Insurance and Lender Legal Fees, the Destination District Peer Evaluation Document
  • Borrower is required to pay all third party due diligence and closing costs

 Interest Rate:

  • Interest rates are fixed and locked two days before closing
  • Early and extended rate lock options are available

 Minimum DSCR:

  • 1.20x minimum (1.40x for Hotels)

 Loan to Value Ratio:

  • Up to 80% for Multifamily, Anchored Retail, Office & Live-Work

 Fees & Deposits:

  • Processing Fee - $6,500 non-refundable; deposits -  2% of loan balance by commitment or rate lock. A deposit is required with loan application ($10,000 or 1/2 of 1%) and the balance upon acceptance of the commitment

 Loan Commitment:

  • Within 10 business days of receiving an executed application, receipt of related funds, requested borrower data and third party reports

 Recourse:

  • Non-recourse, with the exception of standard carve-outs

 Entity:

  • Mortgagor may be in the form of a corporation, a limited liability company or a limited partnership, a 501(c)3 nonprofit, but must in all cases be organized as a Special Purpose Bankruptcy Remote entity

*   Qualified Destination Districts: Those enjoying the following destination district multiplier minimums: 1% above the cap rate in the increase in the value of district retail properties; or, 2.5% above the cap rate in the increase in the value of district commercial/light manfucature properties; or, 2.75% above the cap rate in the increase in the value of district apartment properties; or, 2.25% above the cap rate in the increase in the value of district family-dwelling properties.

SMALL BALANCE LOANS FOR DISTRICT ENTITIES

Notice: As a financial advisor in the Commercial Real Estate Industry, the operating foundation acts as a financial intermediary and consultant for its many clients and capital markets partners.

Eligible Properties:

  • Office, Retail, Multifamily, Mixed-use, Self-storage, Design/studio space, Theatrical complex
  • Arts, Design & Cultural Buildings situated within a qualified destination district*

Loan Terms:

  • 5, 7, 10, 15 and 20 year fixed-rate loan terms, 15 - 30 year amortization

Loan Purpose:

  • Building Project
  • Revitalization, Renovation and/or Repairs
  • Accessibility
  • Land Purchase
  • Initial site or building
  • Refinancing Existing Debt 

Loan Amounts:

  • $500,000 - $5,000,000
Interest Rate:
  • Interest rates are fixed and locked two days before closing
  • Early rate lock options are available
     
Minimum DSCR:
  • 1.20x for Multifamily, 1.25x for Commercial
  • 1.3x for Self-storage, Conservation spaces
  • 1.275x for Arts spaces
Loan to Value:
  • Refinance: Up to 80% on Multifamily; 75% on Commercial, Self-storage and Conservation space
  • Acquisition: Multifamily -  the lesser of 85% of loan to purchase or 80% of appraised value. Commercial -  the lesser of 80% of loan to purchase price or 75% of appraised value
Escrows:
  • Monthly escrows will be required for real estate taxes and property insurance. For Commercial Projects, a TI/LC reserve will be determined on a case-by-case basis. A replacement reserve escrow will not be required for Commercial properties. Multifamily replacement reserves will be required in an amount equal to or greater of $250 per unit or the engineer's estimate
Recourse:
  • Non-recourse, except standard carve-outs (Environmental, Fraud, Misapplication of Funds, etc.)
Prepayment:
  • Two- year lockout from the time of securitization; Defeasance for the remaining term, with the last six months open to prepayment without penalty; Yield maintenance also is available
Assumability:
  • Fee of 1.5% plus $6,500 for expenses with unlimited transfers at Lender's discretion

Initial Documents Required:

  • Current detailed rent roll
  • Previous three full years of operating statements, as well as current year-to-date statement 
  • Previous three years of historical occupancy
  • Destination District Peer Evaluation Document(s)
  • Site plan and leasing plan showing tenant location (if available for commercial)
  • Property description with unit mix for Multifamily and Work-live
  • Floor plans and elevation drawings
  • Accessibility issues addressed per codes and historic investment tax credits (where applicable)
  • Most recent appraisal and colour photographs (when available)
  • Completed Investment/Grant Decision Model Data Form
  • Sources and Uses Statement

Application Fee/Third Party Report Deposit:
  • The application fee/third party begins at $10,000 for loans less than $3,500,000 and $15,000 for loans greater than $3,500,000 (includes limited scope and third party reports [MAI appraisal, Property Conditions and Environmental] and Lender's legal fees). An additional $750 is required on all arrangements in California for a seismic report.
Closing Cost:
  • Borrower is required to pay all closing costs including , but not limited to, title insurance, survey, escrow, recording fees and lender's counsel

 *   Qualified Destination Districts: Those enjoying the following destination district multiplier minimums: 3.75% above the average increase in district wages and benefits over the last two calendar years; 2.5% above the average increase in district property and franchise taxes generated over the past two calendar years; 3.5% above the average increase in district retail and e-commerce sales over the past two calendar years

ARTS, DESIGN or CULTURAL DISTRICT INITIAL FINANCING ANALYSIS

  • ENTITY: _______
  • LOCALE: _______
  • CONTACT: _______
  • ADDRESS/PHONE/FAX: _______
  • E-MAIL/WEB: _______

1. MAXIMIUM LOAN

Standard loan ratio ($1000/AGU) _______ Progressive loan ratio ($2000/AGU) _______, or, Maximum loan ratio ($2500/AGU) _______ = [ ___________ ]

75% of market value $ ________, or 79% of market value $ _______ = [ ___________]

Nominal debt service (24% of income/revenues) _______, or, Maximum (28% of income/revenue) _______ = [ ___________ ] $ ___________ based upon a ___________ year loan at _______ % interest ( ________ year term).

Letter of recommendation maximum loan for annual debt service of $ _______, based upon a _______ year loan at _______ % interest loan = [ ___________ ]

2. RESOURCES

Cash on Hand = { ___________ }

Pledged donations per month at $ ___________ : Donations during planning ( ________ months x $ _______ per month) = [ ____________ ]

Donations during construction/rehabilitation/relocation/ ___________ ( _______ months x $ ___________ per month) = [ ___________ ]

1 x Gifts dedicated to the District project donated during construction = [ ___________ ]

1 x Gifts dedicated to the District project donated during ___________ (development/mezzanine/other) phase(s) = [ ____________ ]

Other Gifts = [ ___________ ] for Property + [ ___________ ] for Equipment + [ ___________ ] for In-kind Services + [ ___________ ] for Miscellaneous Technical aid/Assistance = TOTAL OTHER GIFTS = [ ___________ ]

TOTAL, ALL 2. RESOURCES = [ ___________ ]

3. RESOURCES FOR NEW/UPGRADE PROGRAM

Total resources available from Section 2 = [ ___________ ]

Existing Loans / Other Obligations = [ - ___________ ]

Resources Available for the New / Upgrade Program = [ ___________ ]

Reference: 7af/ad fn'ncng anls's/mat98   KEY: AGU = Active Giving Unit, by membership, voting status or other acceptable condition found in the by-laws of the applicant organization or business.

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RECOMMENDED GUIDELINES FOR LOANS MADE EXCLUSIVELY TO IMPROVE DISTRICT ACCESSIBILITY

ALL TEXTS ADAPTED FROM THE TEXT, THE ARTS DISTRICT BUILDING MANUAL. ALL RIGHTS RESERVED

  1. The primary or significant focus of the program shall be to improve accessibility to the district applicant's facility, site, or to an area adjacent to the district applicant's facility or site.
  2. The maximum loan to the district applicant shall be no more than 7% of the total pre-prjoect value of the total construction and FFE budget.
  3. The district applicant will have a minimum of 25% of the total program cost in up-front cash prior to the opening of escrow (commercial loan) or other instrument (non-commercial loan).
  4. The district applicant will have conducted a capital fund campaign for the accessibility improvement program; the district applicant agrees to continue having separate pledging and giving to the capital debt retirement budget for so long as the district applicant has a loan balance with a recognized affiliate or associate lender approved by the operating foundation.
  5. The capital fund raising campaign results will demonstrate the ability of the district applicant to financially manage the debt service requirements for the loan without a reduction in the district applicant's current operating and outreach budgets; further, the district applicant will overwhelmingly demonstrate that no services and no funds appropriated to other mission programs will be negatively impacted by developing or maintaining the accessibility improvement program.
  6. Debt service per AGU, corporate giver, foundation giver, NGO and government-sponsored giver shall not exceed $2500 for this program.
  7. The district applicant will maintain a separate campaign account for receipts and disbursements of funds donated and expended for capital purposes. A separate treasurer will be appointed for this capital account; this separate treasurer is never to be the general treasurer for the district applicant.
  8. The loan shall have a term of five years at an interest rate that is one point higher than the base rate for initial unit building programs. Monthly payments shall be based upon a ten year amortization schedule.
  9. Debt service shall not exceed the 16% threshhold for the average giving to the district applicant of the current year plus the past two years of operation.
  10. If the loan exceeds $25,000 to the district applicant, the loan will be secured by a recorded first or second mortgage with the approved lender.
  11. The loan will be recommended by the operating foundation and by any partner(s) or guarnator(s) deemed necessary by the operating foundation. The operating foundation staff will assist the district applicant in preparations of the Destination District Building Proposal (DDBP) and forward the proposal to an affiliated or associated lender as part of the approval work on behalf of the district applicant.

 adi-7af-rcmmnd'd gdlns  loans...mat/the writing center

MEMBERS, QUESTIONS: Direct them to drthomas@7artsfoundation.org

Downtown District Solutions Arts Marketplace Solutions Antiques Design Downtown Entertainment District Historical Open Studios Sciences Art Deco Education Recreation Technology Theatre Warehouse Arts Gateway Arts Overlay Arts Superblock Cultural Historic Arts Museum Giftblox Design Performing Arts Photo Theater Arts District Downtown Solutions

Real Estate Investment & Loan Advisory Services Expressly For Arts & Cultural Corridors, Clusters & Superblocks. Instructions for Working with Capital Provider Clients: Investment Banks; Real Estate Investment Trusts; Mortgage Bankers; Life Insurance Companies; National Banks; Private Equity Groups

WHO WE SERVE: A Select list of governments, corporations, foundations, institutions, universities, studios... more. Updated Weekly. Need Help: 7AF new all points number: 903.831.9219| M-Th 11-4 CST; Sa. 11-12N CST.

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ADVISORY: CONDOMINIUM LENDING PROGRAM - PRELIMINARY CHECKLIST FOR AN MxD PROJECT IN A DISTRICT

In order to work with real estate investment services intermediaries to promptly evaluate your loan and/or investment request, please provide the following information in written form, or if appropriate, please e-mail said information to your advisor. The Membership Association's volunteer site can accept up to 250MB of attachments in any single transmission.

ADVISORY : Brief statement of the prospective mortgage loan request, including the following:

  • Loan amount
  • Loan term
  • Sources & Uses of Funds for the Project
  • Amortization
  • Use of proceeds
  • Existing debt obligations schedule (if any)
  • Destination District Peer Evaluation Document
  • Type & purpose of operation: Commercial; Nonprofit; Public-Private NGO
  • Product/Service/Mission description
  • Target market by demographic/psychographic detail
  • Competitive or Cooperative Advantage; differentiation explained
  • Operational strengths/weaknesses; market environment
  • Date & Place of Incorporation

Advisory: Offer a brief description of improvements including square footage, number and types of buildings/units and any special amenities. Total square footage of retail spaces. Any percent for art program impacting the re-development program?

Then, offer a set of colour photographs (including aerial photographs, when available) of the site.

Then, attach a borrower organizational outline to include respective ownership percentages or membership  structure; resumes of key principal(s) and Property Management Company (or district management), including real estate experience and financial capacity.

Now, offer a Project Construction Plan & Assumptions:

  • Including number of phases to be developed/expanded
  • Break-out of units by unit types (live-work spaces, condominiums, hotel rooms and suites)
  • Square footage by unit type(s)
  • Itemized cost of construction, equipment, working capital, mortgage, leasehold improvements
  • Construction & De-Construction (if any) timeline(s)
  • Monthly schedule of cost & sales and/or donation history assumptions
  • Full set of specs & plans, if available
  • Declaration of Condominiums, CC&Rs, or Master Deed

Then, offer a Statement on investment/equity opportunity and expected return on investment analysis, including statement of sources & uses (If equity is to be provided by third party).

Next, offer a neighborhood map indicating location of subject property(ies) and 3 or 4 competitive or complementary projects (Sales and/or revenue comparables)

Then, provide a copy of the site plan, most current as-built survey or plat, if available

Follow with a copy of existing title insurance policy or preliminary title report showing all documents recorded against the project

Then, offer a schedule of all significant captial expendtitures incurred during the past 2 to 3 years, and budgeted expenditures for the next 12 months; cash flow statements for the past 2 or 3 seasons of operation

Finally, send a list of special considerations, if any, i.e., ground lease(s), rent restrictions, including student or corporate occupancies, Section 8 vouchers or arts tenant concentration, service to low- and/or moderate-income area

CONDOMINIUM CONVERSION FINANCING PROGRAM FOR AN MxD PROJECT IN A DISTRICT

Notice: As a financial advisor in the Commercial Real Estate Industry, the operating foundation acts as a Financial Advisor and Consultant for its Members to help them work through intermediaries and to work successfully with capital markets partners. The following listing represents many of the likely advisory scenarios Members will face over the course of developing destination districts:

Eligible Properties:

  • Multi-family, Office, Hotel, Live-Work & Theatrical, Gallery & Training Institutes
  • Arts, Design & Cultural Buildings situated within a qualified destination district*

Typical Loan Term:

  • 2 years, 2-year extension option availble with 1/2-point extension fee

Typical Loan Amount:

  • $9,000,000 and up; No maximum

Typical Origination Fee:

  • 1.5 - 2.75%

Typical Interest Rate:

  • Spread over one- month LIBOR, actual 360 basis
  • Interest only

Typical Loan to Value/Cost:

  • 75 - 95% of Cost and 50 - 80% of Sellout Value 

Typical Principal Reduction:

  • Advisory Note: The greater of a) 100% of the net sale proceeds of each condominium, including any residential hotel or commercial/retail units or live/work units if applicable (net sale proceeds as gross sale proceeds minus ordinary closing costs not to exceed a set cap), or b) the minimum release price of the released condominium unit 

Typical Recourse:

  • Non-recourse, with the exception of standard carve-outs (environment, fraud, misapplication of funds, etc.)

Typical Escrows:

  • Monthly interest, operating expense shortfall, tax, insurance and conversion reserves will be reserved based on business plan

 *   Advisory Note to Qualified Destination Districts: Typically, those Members enjoying the following destination district multiplier minimums: 2.85% increase above the average district increase threshhold in unrestricted donations to nonprofits over the past two calendar years; 2.25% increase above the average district increase threshhold in the value of nonprofit-held property; 3.0% increase above the average district increase threshhold in the value of all new rentals, leases

Typical Prepayment:

  • No lock - out
Typical Initial Documents Required:
  • Operating Statements: Minimum 2 years with projection Interest only
  • Financial Statement for the Sponsor for the past 3 years
  • Financial Statements - last 3 calendar years and trailing 12 months
  • Rent Roll
  • Destination District Peer Evaluation Document(s)
  • Conversion Cost Study
  • Most recent appraisal and color photographs (when available)
  • Sources and Uses Statement
  • Marketing Plan
  • Sellout Projections
Typical Reports Required:
  • Environmental: Phase 1 (including wetlands, asbestos, PCBs, lead in drinking water and radon)
  • Engineering: Property Condition and Conversion Feasibility Analysis
  • Appraisal: Full narrative FIRREA and USPAP compliant and MAI certified
  • Market Study: Showing competitive supply, demand, pricing and absorption, design review restrictions
Typical Closing Cost:
  • Borrower is required to pay all closing costs including, but not limited to, title insurance, survey, escrow, recording fees and lender's counsel
TYPICAL BRIDGE LOAN PROGRAM FOR MxD DISTRICTS

Notice: As a financial advisor in the Commercial Real Estate Industry, the operating foundation acts as a Financial Advisor and Consultant for its members, Member-chosen intermediaries and capital markets partners.

Typical Eligible Properties:

  • Multi-family, Office, Hotel attached to theatrical spaces, Live-Work & Theatrical, Gallery & Training Institutes, Self-storage & Conservation spaces, Mixed-use
  • Arts, Design & Cultural Buildings situated within a qualified destination district*
Typical Loan Terms:
  • 2 years, 1-year extension option available with 1/2 point extension fee
Typical Interest Rate:
  • Interest rates are fixed and locked two days before closing
  • Interest only
Typical Origination Fee:
  • 1.25% minimum

Typical Minimum DSCR:

  • 1.0x minimum at initial LIBOR setting
  • 1.0x minimum at LIBOR Cap Rate or Sufficient Reserves (Interest rate cap purchase is required)
  • Debt Service Reserve is required for any loan with a DSCR of less than 1.0x based on LIBOR cap rate

Typical Pricing Based on As-Is LTV:

  • 70% or less LTV 195 bps; 75%  LTV 220 bps; 80% LTV 240 bps; 85% LTV 265 bps

Typical Loan to Value:

  • 85% (value plus capital reserves)

Typical General Underwriting Guidelines:

  • Property is expected to stabilize within 18 months
  • Careful of markets which have peaked or which have little depth
  • Escrows for replacement reserves and TI/LCs, capital improvements, etc...
  • Cash management plan will be put into place
  • Strong entity on carve-outs

Typical Recourse:

  • Non-recourse, except standard carve-outs (Environmental, Fraud, Misapplication of Funds, etc.)

Typical Prepayment:

  • 9 - month lockout; 9-18 month prepayment available for .25% fee; open beyond 18 months

Typical Initial Documents Required:

  • Current detailed rent roll
  • Previous three full years' operating statements, as well as current year-to-date statement
  • Previous three years of historical occupancy
  • Destination District Peer Evaluation Document(s)
  • Site plan and leasing plan showing tenant location (if available for commercial)
  • Property description with unit mix for Multifamily, Live-work
  • Most recent appraisal and color photos (when available)
  • Sources & Uses Statement
  • Design restrictions, if any

Typical Application Fee/Third Party Report Deposit:

  • The application fee/third party begins at $15

CRITERIA FOR A TYPICAL LETTER OF RECOMMENDATION FROM AN INTERMEDIARY

Advisory Notice: A typical recommendation to a lender may be made if the following criteria are met by Members and approved by an intermediary:

  1. District applicant needs a Letter of Recommendation (LOR) from the intermeidary, subject to its attainment of loan status, in order to present its financing package to a recognized affiliate or associated lender.
  2. District applicant requests will be sent to a recognized granting or presenting organization via the intermediary when the financing package achieves loan status.
  3. A loan with a non-commercial lender will typically not exceed $3,000 per AGU, $4,000 per corporate giving unit, $7,500 per applicant's giving unit and $1,500 per NGO or government-sponsored giving unit. The annual capital debt service will not exceed 24% of annual giving.
  4. A loan with a commercial lender will typically not exceed $2.750 per AGU, $5,000 per corporate giving unit, $10,000 per applicant's giving unit and $1,750 per NGO or government-sponsored giving unit.. The annual capital debt service will not exceed 28& of annual giving.
  5. Loan-to-value ratio (LTV) will typically not exceed 73% with any non-commercial lender. LTV will not exceed 70% with any commercial lender.
  6. District applicant will have conducted a capital fund raising campaign. The pledges to yearly, quarterly, monthly and weekly giving to the capital campaign will typically represent an increase in total district applicant giving of at least 11% of total district applicant donations, gifts and in-kind contributions. One-time gifts, gifts of non-giving income will typically not be considered into this calculation. The calculation will typically be based upon capital fund pledges to yearly, quarterly, monthly and weekly giving, divided by the number of all types of AGUs multiplied by the average househould income. The initial pledge period will typically span a minimum of 24 consecutive months.
  7. Yearly calculated debt service will typically not exceed 88% of the yearly, quarterly, monthly and weekly pledges to the applicant's capital fund.
  8. The district applicant will typically agree to keep receipts for the capital fund in a separate bank, savings and loan or credit union association account. The district applicant further typically agrees to have a treasurer for this account who is not a treasurer for other accounts held by the district applicant. The capital funds account is then to be used solely for capital improvements, capital debt service, FFE and all necessary soft costs and arts and design projects integral to the funded project. The name and address, phones and e-mail address of the capital account treasurer will be reported to the operating foundation.
  9. A Destination District Building Proposal (DDBP) will be developed with the assistance of the intermediary and submitted with the LOR request for loan status. The LOR request is required even if a small construction loan is requested of the intermeiaries' recognized lenders.
  10. The district applicant's building plans, based on designs and development drawings approved by the intermediary, will be agreed to by the  intermeiaries' lender upon inspection. The intermeidaries' endorsement will be based upon the following criteria: A) The plans will satisfy an identified, acclaimable mission objective and satisfy a program need; B) The plans will reflect outstanding stewardship practices in the use of capital; C) The plans will reflect proven methods applied in arts, design and cultural district construction suited to the region; D) The plans will provide for accessibility for the physically challenged; and, E) Any significant changes between the design/development drawings and the contracted working drawings will require further agreement and endorsement by the intermediary.
  11. The recommended loan will typically be for a first mortgage loan with a  lender and will represent the only capital indebtedness of the district applicant. The district applicant will typically agree not to incur any additional capital indebtedness without the agreement and endorsement of the lender and the intermediary.

This set of criteria reflects the typical loan policies of many intermediaries and some lenders; conditions vary by region. In instances where lenders restrict their loan policy with criteria determined to be more stringent than is presented in this guideline statement, the loan policy of the  lender will apply. This set of criteria will likely undergo periodic review by the intermediary and its recognized lenders.

Finally, should a loan become delinquent, the intermediary will typically provide field consultation assistance with the district applicant on behalf of the affiliated or associated lender.

Ref.: adi/7af-Crtria 4 an ADI LOR_mat/writing center

SAMPLE CONSTRUCTION CHECKLIST - BASIS: THREE ADVANCE SCHEDULE

Sample Form for Property: _____________________________

       First Advance 40%

Date

  • _______ ____ 1. Foundations completed
  • _______ ____ 2. Structure framed, entirely sheathed
  • _______ ____ 3. All roof areas completely covered or shingled
  • _______ ____ 4. All window assembly (except commercial window at ground level, if any) and partition studding in place
  • _______ ____ 5. Chimneys and fireplaces (if any) [except fireplace facings] in place
  • _______ ____ 6. Rough flooring laid
  • _______ ____ 7. Rough plumbing and electric complete
  • _______ ____ 8. Heating risers in walls of ___ floors of structure [negotiated position]

       Second Advance 45%

  • _______ ____ 9. Insulation installed
  • _______ ____ 10. Exterior surface complete, including any prime coat of paint
  • _______ ____ 11. Cellar (if any) bottom cemented
  • _______ ____ 12. Interior staircases installed
  • _______ ____ 13. All exterior ramps and steps, porticos (if any) and entryways in place
  • _______ ____ 14. Plastering complete (if dry wall, taped and spackled) ready for trim [wood paneling (if any) not required at this time; other wall coverings and installations ready for finish]

         A completely finished unit is required with the following exceptions

  • _______ ____ 15. Scarping and finishing floors
  • _______ ____ 16. Leaders and gutters installed
  • _______ ____ 17. Interior decorating (trim painted - two coats)
  • _______ ____ 18. Electric fixtures installed
  • _______ ____ 19. Flooring surfaces installed, including hallways
  • _______ ____ 20. Finish grade, seed and shrub (if any landscaping) or install public art
  • _______ ____ 21. Service walkways, driveways - installed
  • _______ ____ 22. Plumbing fixtures, except bathtubs and shower stalls
  • _______ ____ 23. Ovens and ranges (if any) installed

        Third Advance 15% (Final)

  • _______ ____ A completely finished facility/structure, ready for immediate occupancy. Offsite construction is finished, or proof of proper bonds is furnished
  • _______ ____ If interior decorating and electric fixtures are left to owner's choice, then escrows of one and one quarter times the cost are to be withheld. The same escrow procedure is to be followed if floors or other negotiated FFE items are left unfinished. Escrow: $ _______
  • NOTE: For a 4-Advance schedule, insert the Fourth Advance (15%) at number 15, and deduct 15% from the Second Advance. If other than normal building materials are to be used (i.e., carpeting over sub-floors, cement paint, complete wood paneled walls) or construction procedures are not in accordance with the above list are contemplated, these changes must be approved in the granting of a commitment. Minimum acceptable specifications are those approved by the Secretary of the Interior Standards, local building codes, the state or commonwealth historical commission (if applicable) and the lender.

Questions | Call Us: 7AF new all points number in Washington, DC: 202-2391257 | M-Th 10-4 EST; Sa. 10-12N EST.

UNIQUE FINANCING: The operating foundation recognizes that many downtown financing transactions present unique financing requirements. Upper market & middle market developers, investors and lenders have speical needs that can be met by many types of financial intermediary participants. We pledge the highest level of advisory expertise, professionalism and responsiveness to every Member district transaction irregardless of transaction size or complexity. Our Members' needs and circumstances are met with customized hands-on advisory solutions to help generate the right financing vehicle every time. Construction, acquisition, cash-out financing? Our financial advisors will always help you shape your capital requirement request into appropriate funding vehicles to be handled by intermediaries - an interim construction loan, a permanent fixed rate mortgage, a floating rate acquisition program, a mezzanine debt and joint venture equity investment package. Please contact the Executive Director Emeritus, today: drthomas@7artsfoundation.org

This page underwritten by GM Solutions. "After all, we are what we believe when we give, and nothing more." Dr. Marshall Thomas '00 Address 

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THE DISTRICT CAPITAL ADVISORY SERVICE IS DEDICATED TO OUR MEMBERS SUCCESS & TO THE ULTIMATE CRITICAL MISSION  & BUSINESS SUCCESS OF THEIR DESTINATION DISTRICTS