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South Bend Redevelopment Commission <br />Rescheduled Regular Meeting -March 10, 2006 <br />6. NEW BUSINESS (CONT.) <br />B. South Bend Central Development Area <br />() continued... <br />the eventual owners; i.e., (a) down- <br />payments and mortgages by purchasers of <br />the residential units and (b) down- <br />payments, bank financing, and SBA 504 <br />loans by purchasers of the office space. Is <br />this correct? <br />Written Answer: This will be an <br />important part of the financing. However, <br />depending on the terms of the deal Eco- <br />Urban is able to negotiate with the city, it <br />also plans to invest funds of its own, as <br />well as seek additional investors if <br />necessary, particularly if it seems possible <br />to do Phase II at the same time. <br />Mr. Schefineyer noted that, as a mortgage <br />banker, he is familiar with financing <br />condo projects. Eco-Urban keeps saying <br />it intends to use the down payments as <br />part of the equity. That's not permitted <br />under Indiana law. Payments must be put <br />into escrow until the project is actually <br />completed. You can't use down payments <br />from potential owners to finance <br />construction of the property. That has to <br />be done with equity put in by the <br />development group itself. <br />Mr. Bergeman responded that Mr. <br />Schefineyer is correct. Based on <br />discussions with financial institutions <br />...conceptually that money would go into <br />escrow. <br />c) Have any financial institutions indicated <br />what % of the town homes must be pre- <br />sold before financing will be granted? <br />28 <br />