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Posted about 1 year ago

Government Funding for Real Estate Projects

Most people are at least curious about government funding, which makes sense. Any prudent investor would be interested in the different available sources of funding, especially when it’s funding that you don’t have to repay.

Government funding won’t provide you all the money you need to get your project completed, and there’s more that they won’t fund than they will. It won’t pay for everything, but it can certainly supplement the other capital sources you’ve already set up.

The Benefits

Programs exist at all levels of government. For example, there is a Federal Housing Administration 203k loan, which is obviously at the federal level. But we’ll focus primarily at the local level in this article.

At the municipal level, you’ll find programs that can refund some of your costs. You’ll find tax incentives and time savings that comes from expedited processing of permits. You may even find that the government will partner with you and basically take care of a certain aspect of your project.

Making connections with local officials allows you to tap into a network of people that you may not otherwise be privy to, including future investors in your projects or future JV partners you may want to work with. It can also help you to connect with important decision makers; people who can make or break your career. Not only that, but government officials can be a wealth of information. They know the people, the trends, the economics, and the politics that go into getting things done. They know who the best developers, architects, and engineers are… even though they may not be able to directly give you any names, for risk of showing bias. Still, these are people in the know and developing a solid relationship with them can be priceless.

Talking to the Right People

In any city, there will be both civil servants and elected officials. Civil servants are the everyday people working an office job, making your city work from behind the scenes. These are people who can put in an entire career in one community and who know the innerworkings as well as anyone possibly can. Elected officials tend to get more public acknowledgment, but because of the nature of our political system often only stay in one job for a couple of years before someone else comes in.

As a result, you need to consider your objectives when determining who to speak with. You probably don’t need to go directly to the mayor. Instead, get to know the civil servants. Get to know the people who are there for the long haul. As you start to develop relationships with them, they’ll refer you to the elected officials when the time is right. They may even help you get an appointment.

By proving that you’re willing to roll up your sleeves and dive into the weeds, you’ll find yourself walking an easier path.

Getting Started

The first thing you’ll want to do is your homework. Get to know a city before you just show up and start poking around. People are busy and when you show them that you respect their time, they’ll respect yours in return.

Spend some time reading through the city’s website and be sure to read the Master Plan. Every city has a master plan, also known as a comprehensive plan, which describes the objectives and goals for the city for the next several years. This plan is a guidebook for getting things done in that city, and so it’s important that you’re familiar with it. Being familiar with the Master Plan also helps to set you apart from your competition.

Once you’ve done your research and you have some specific questions prepared, you can make an appointment with someone. As you look over the website and review the different departments, it should be clear who you want to meet with. Some of the departments you may start off with include Zoning, Planning, and Development. Different cities and towns may have different names, but again, with a little research it won’t be difficult to determine who you need to speak with.

Now that you’re prepared and know what the city is looking for, you can ask the questions you’ve prepared. You may want to ask about their goals are coming along and how you might be able to help. Ask them what they’re looking for and what their current priorities are. Ask what timeframes and deadlines there are for different programs you may be interested in.

You can also ask what commitments you’ll need to abide by. For instance, if you receive city funds, they may require that you hold a property for a certain number of years.

Also, ask what obstacles they’ve run into in the past that you should look out for. Don’t be too proud to ask for their advice. When you ask someone for advice, you’re showing that you respect their opinion. There’s a good chance they may share something that you would’ve never thought of on your own that could save you time, money, and/or frustration.

You want to think of the city as your partner or your guide. Find ways to incorporate your goals into the city’s goals, so that you’re working collaboratively. Then instead of fighting for your project’s survival, you may actually have an advocate pulling for your success.

One thing you might discover from meeting with city officials are areas and parts of the city poised for growth. This can help you to be in the hot area before it becomes hot. For example, if you knew that the city was about to build a new light rail station at a specific intersection or that they were about to add a new highway off-ramp, you might have an easier time deciding where to locate your next mixed-use retail and multifamily development.

Though you may have a personal preference for one location, it may be to your advantage to take the time to get to know each of your local cities and towns better. Some will inevitably be more eager to work with you than others; and so, if you find resistance in one place, don’t give up. It may take some time, some research, and several appointments before you determine which is the right municipality for you.

Program Examples

If you’re serious about grants, you’ll need to get yourself educated, which is a process in and of itself. You’ll also probably want to take the approach of trying to fit your project into their grant offerings as opposed to forcing their grants to fit into your project. If you’re looking for a place to start, you could try the Learning Center or try searching for grants directly just to get a feel for the types of things that are out there.

Many people are familiar with rebate programs and incentives involving green building and the conservation of energy. Other incentives may have to do with historic building preservation or revitalizing urban blight within an economic development zone. Still others may have to do with the removal of lead, hiring veterans, helping foster children, or preparing for wildfires.

If you see statistics or facts such as 23% of property taxes collected go towards a certain type of housing or that 35% of projects are eligible for a certain incentive that piques your interest, research it further. Find out if you can qualify for these funds.

There are often property tax rebates that you can qualify for if your project meets certain criteria. If you plan to hire people, there may be employment incentives for hiring locally or working with certain groups such as people with disabilities, veterans, or those currently unemployed. The same may be true if you’re providing office/retail/industrial space where you’ll bring jobs into the community. If the information online isn’t clear, bring those questions to your meeting.

Most importantly, be patient. The majority of people don’t have the patience or the time to fully research these programs and so it’s usually those who are willing to put in the time and grunt work that reap the benefits.

Comments (1)

  1. Great article Mark! Thanks for sharing!