|From:||CHARLES PATRIZIA <CAPATRIZIA@phjw.com>|
|Date:||Mon, 5 Apr 1999 16:41:29 -0700 (PDT)|
|Subject:||RE: investment funds for brownfield reclamation -Reply|
Bruce Klafter of course is right about financings being done. I have done two brownfields in New York, and in each instance, we were able to use a combination of development bonds, some junior debt and equity to make the whole arrangement work. It is true that banks are not generally the first source for such funds, and if they do lend, it will be on a cashflow basis and not based on taking a security interest in the property. What makes a deal doable is what the proposed use is, and how the money is going to be repaid, not what the condition of the property was or whether it needs remediation or only use limitations. Certainly remediation can make the arrangements more costly -- somebody is going to pay for those activities, but ultimately the deal can only carry so much debt and be able to service it. Local communities can help by using industrial development bonds, and industry can help by putting in some equity or junior debt. But if the project won't have cash flow, none it can work. There has to be something which will generate sufficient revenue or the development process will never happen.
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