06/01/1992 Park Board Packet - Laserfiche WebLink

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HOW IS A GOLF MURSE to make such bonding unnecessary, or to loans would be made at a higher loan-to-cost reduce the amount to be bonded. ratio,but in addition to the interest rate,the ❑ Conventional Loan: There are major lender would participate in the profits after debt service of the projects.There may also corporations and financial institutions and be differences in the basic interest rates resort developers that,at various times,are interested in making loans on golf courses. charged between the two types of loans,the (This is true for both municipalities and interest rate for the participating loans usually private investors.) Such loans might be for being lower. a portion of the course or for the entire The lending institution would determine the project. size of the loan it could make on the project ❑ Typical conventional loan patterns might based on the concept, your anticipated revenue,local conditions,legitimate market be grouped into three phases. First, would studies,supporting material and the financial be the construction loan for perhaps 1 to 3 and personal record of the private investor. years.This lending institution would likely `Phis will vary market by market.It may be require atake-out guarantee of that lower rate construction loan at the end of that time. useful to have your Business Plan availableif the lending institution asks about it. It is The take-out loan might be from another also important to highlight any expertise lender, or even from the same institution, that you or a member of your team has in and will probably be at a higher rate(perhaps golf course development and operations. 2%) for 5 years. The third phase of a conventional loan pattern would then be the ❑ Limited Partnership: It might be possible long-term loan for the overall going project that the community has a small group of from a bank or insurance company. It is also businessmen who are active in golf and possible that the long-term lending institution would like to become involved. In such a might ask for some equity in the project. case,a presentation to that group, centered around the proforma and the Business Plan, /f You Area Daily-Fee Developer: could help establish the required financial A developer might elect to create a public daily-fee support. course on land already owned or under option, or on ❑ Corporate Support: A major company city land acquired by lease. In any case, there are might consider providing land forgolf course several routes to acquisition of capital: construction in exchange for a course that gives employees a significant break on golf. ❑ Conventional and Participating Loans: Such land could be the basis of an outside If your project is involved with a real estate conventional construction loan, or the development, a certified appraisal of the corporation itself might make that loan to increased value of the project once a golf the course developer. course is added may be a sound basis for a ❑ Friendly Lease: There are situations in loan from an insurance company or bank. which an individual or estate might want to An insurance company would more likely protect property from development,but are prefer a long-term note. A bank loan might amenable to recreational facilities that be for a shorter term, but if the bank has a maintain open land.In such cases the property vested interest in the community, that loan might be leased to a private interest,or to a may be obtained at a more favorable rate. municipality with a minimum up-front Conventional loans would typically be made payment...or the property might be leased at a low loan to-cost-ratio. Participating with no up-front payment and delayed payments for one reason or another. Guidelines for Planning and Developing a Public Golf Course 29