Glossary

AB 315 Plan - Housing Production Plan required by State Legislature Assembly Bill 315 in 1991 (Section (b)(4) of the CRI) Redevelopment agencies must prepare a Housing Production Plan to identify the means by which the agency would expend Housing Funds to meet the housing production obligations. The requirement is now part of the Implementation Plan required by redevelopment agencies (see (implementation Plan).

Adaptive reuse – The rehabilitation of older properties for a new purpose.

Ad Valorem Taxes – Property taxes bases on assessed value of property.

Affordability Controls – Housing Fund monies must be used to increase, improve and preserve housing available to low- and moderate-income persons at an affordable cost. To accomplish this, an agency must require affordability controls recorded against the property specified in Section 33334.3(e)(l) & (2) in the CRI. General affordability controls shall be for the longest feasible time, but not less than 15 years for rental properties and 10 years for owner-occupied residential units.

Affordability Gap – Equal to the difference between the value of residential project assuming no income and affordability restrictions are imposed, and the value supported by the project after the rent/sales price reduction associated with the applicable income and affordability restrictions.

Appraisal – Estimate of the real market value of property, that is, what the owner could reasonably expect to get upon sale. Estimates are usually made by professional real estate appraisers.

Appreciation – Increase in the value of property.

Article 34 – Article 34 of the State Constitution, adopted by voters in 1950, requires voter approval before any “state public body” develops, constructs, or acquires a “low rent housing project”, defined as a development where 50% or more of the units are restricted to very low-income households. Communities generally will seek approval (defined section 37001) from the votes for a maximum number of units to be built within a specific time frame without identifying specific locations.

Assessed Valuation – Value assigned to a piece of property by the local governmental unit for real estate tax purposes. This is usually less than the market value of the property. The relationship between assessed and market value varies widely depending on location and jurisdiction.

Below Market Interest Rate (BMIR) – Applies to certain governmental mortgage insurance programs where the interest rate on the mortgage is below that charged for conventional financing in order to assist low- and moderate-income families to rent or purchase dwelling units.

Broker – An individual employed on a fee or commission basis as agent to bring parties together and assist in negotiating contacts between them.

Building Code – Local health and safety regulation that pertain to construction of new buildings.

California Community Reinvestment Corporation (CCRC) – A nonprofit consortium of 47 California banks that makes mortgages for affordable rental housing projects.

California Debt Limit Allocation Committee (CDLAC) – A commerce based in Sacramento, California, charged with allocating bond authority. CDLAC has developed a procedures manual and application process to award bond volume.

California Housing Finance Agency (CalHFA) – A California state agency which provides below market interest rate financing for the development of affordable single-family (owner-occupied) and multifamily housing.

California Tax Credit Allocation Committee (CTCAC) – A state committee responsible for allocation the tax credits in the state according a to a Qualified Allocation Plan (QAP) that it develops. Tax credits are allocated to each state from the federal government on the basis of $1.25 per capita, or as established by Congress. The State of California also allocates additional tax credits to eligible projects. Tax credits are used to issue funding for a variety of projects, mostly housing, with tax credits given to investors on qualified projects.

Capitalization – The process determining the value of a property based on an appraisal of net income and percentage of return on investment.

Capitalization Rate – Rate of return on net operating income considered acceptable for an investor and used to determine capitalization value. This rate should provide a return on, as well as a return of capital.

Cash Flow – Money left from a project’s gross income after all expenses, operating and debt service, have been deducted. After tax cash flow is completed by also deducting deprecation and taxes.

Community Housing Development Organization (CHDO) – A nonprofit group established to develop affordable housing projects.

Codes, Covenants & Restrictions (CC&R’s) – Recorded against real property, CC&R’s will appear in title report and will affect the manner in which property may be used, or improved.

Community Development Block Grants (CDBG) – Under Title 1 of the Housing and Community Development Act of 1974, eight former categorical grant and loan programs were replaced by a system of unified block grants under which communities over 50,000 people are entitled to receive direct federal funding (CDBG finding) while other communities may apply for discretionary funding. Its purpose is to encourage more broadly conceived community development projects and expand housing opportunities for low- and moderate-income persons.

Debt Service – A borrower’s periodic payment comprising repayment of principal plus payment of interest on the unpaid balance.

Deferred Loan – A loan where payment is not required until a specific date in time (presumably when a borrower is considered able to afford repayment).

Deficit Reduction Plan – Section 33334.6 (g) of the CRI requires an agency to adopted to adopt a plan to eliminate a deficit in the Housing Fund created as a result of the agency not deposited 20 percent or depositing less than 20 percent of its revenue into the Housing Fund. At the time the CRI was amended to required agencies to contribute funds to the Housing Funds certain actions could be taken by an agency to delay implementation of this requirement, thus creating a deficit to Housing Fund. The deficit constitutes an undebtedness of the agency with respect to the project area until paid in full.

Density Bonus – The ability to develop a property to a greater density than zoning alone would allow. Density bonuses are typically granted when the property will be developed with affordable housing, thus allowing more units to be constructed, Density bonuses may be required to allow more units to help make the housing project meet costs.

Density Zoning – Population controlled land use.

Due Diligence – An investigation or research undertaken prior to completion of final actions required in order to proceed with a project. Oftentimes, if specific issues remain unresolved following a due diligence effort, the decision not to proceed with the transaction or project remains an option.

Economic Development – A general term indicating projects to stabilize and enhance an area’s economy and employment base.

Eminent Domain – The right of governmental bodies, public utilities, and public service corporations to take private property for public use (e.g. schools, roads, etc.) on payment of its fair market value.

Equity Capital – Money invested by owners or others who share in profits; distinguished from debt capital.

Excess Surplus Housing Funds – the Health and Safety Code, Section 33334.12 requires that agencies identify excess surplus in their low- and moderate-income housing fund at the end of each fiscal year. Excess surplus results when an agency accumulates an unexpended and unencumbered balance in the fund exceeding the greater of $1 million dollars or the total tax increment revenue deposited in the fund during the four previous fiscal years.

Fair Market Rent – An amount determined by HUD to be the cost of modest, non-luxury units in a specific market area.

Fair Market Value – The price which property is transferred between a willing buyer and a willing seller, both with good information and under no compulsion to buy or sell.

Feasibility Gap – The difference between the value of a site at its highest and best use and the site’s value assuming residential development, with no income affordability restrictions.

Feasibility Study – A detailed investigation and analysis conducted to determine the financial, economic, technical, or other advisability of a proposed project.

Federal Housing Administration (FHA) – A federal agency designed to encourage private housing financing through the insurance of mortgages.

Federal National Mortgage Association (FNMA) – Also known as Fannie Mae. Federally chartered private corporation providing a secondary market (i.e. resale market for lenders to sell mortgage loans) for residential mortgages.

Federal Home Loan Bank (FHLB) – A central credit facility for an provider of correspondent banking services to member savings institutions, commercial banks, and thrift and loans.

Fee or Fee Simple – Absolute ownership with the right to dispose of the property or pass it on to one’s heirs.

Flexible Payment Mortgage – A mortgage in which payments are tailored to meet changes in a borrower’s financial position. See Graduated payment Mortgage (GPM).

Front Money – Equity capital used for expenses incurred in inititating a development project e.g. land-purchase option, legal fees, administrative costs, etc.

Gap Financing – A loan required by a developer to bridge the gap, i/e. to make up a deficiency between the amount of mortgage loan due on project completion and the expenses incurred during construction.

General Partner – The co-owner(s) of a venture who are liable for all debts and other obligations of that venture as well as for the management and operation of the partnership. The general partner can have control of the business and can take actions, which are binding on the other partners. See Limited Partnership.

Government National Mortgage Association ( GNMA) – Also known as Ginnie Mae. A government chartered corporation that provides a secondary market for housing mortgages and special assistance to housing mortgages financed under special HUD mortgage insurance programs.

Gross Income – Total project income before any expenses are deducted.

Gross Lease – A lease where the lessor is responsible for all costs of maintaining the property. It is from a net lease where the tenant pays all costs.

Gross Lease – A lease where the lessor is responsible for all costs of maintaining the property. It is opposite from a net where the tenant pays these costs.

Ground Lease or Rent – A lease of land alone, as distinguished from a lease of land with improvements on it, usually on a long-term basis.

Guaranteed Loan – Loans in which a private lender is assured repayment by the government of part or all of the principal or interest, or both, in the event of a default by the borrower. Unlike an insured loan, no insurance fund exists and no insurance premiums are paid.

Hazard Insurance – A type of risk insurance that protects the insured against certain damages to the insured property.

Highest-and-Best-Use Study – A comparative analysis of two or more alternative projects already judged economically feasible to identify the most profitable use.

Housing Development Corporation - A private multifamily housing corporation established to serve a specific geographic area (neighborhood, city, state or region). Provides technical assistance, lends seed money, and directly sponsors housing developments. Generally, community residents, local businessmen, and governmental officials have representation on its board of directors.

Housing Element – One of the seven mandatory components or elements of a General Plan of a City or County. The Housing Element will identify the needs and present options for the production of housing opportunities in the community.

Housing Fund (Twenty Percent Housing Set-Aside Fund) – Enacted in 1976 and made part of the California Community Redevelopment Law (Section 33334), all redevelopment agencies must deposit 20 percent of its tax increment revenue to the Housing Fund (aka Low- and Moderate-Income Housing Fund or “set-aside fund”). The fund must be used by the agency to increase, improve, and preserve the supply of affordable housing for persons and families.

Housing Production Plan – Required by Section 33413(b) of the Community Redevelopment Law, a Housing Production Plan is required as part of the Implementation Plan (see implementation plan definition) to identify a course of action toward meeting the agency’s obligations to produce affordable housing either within the project area or community at large.

HOPE Programs – Homeownership and Opportunity for People Everywhere (HOPE) is the name for a series of Federal programs authorized by Title IV of Cranston-Gonzalez Affordable National Affordable Housing Act ( Public Law 101.626) to create homeownership opportunities for low-income families and individuals.

HOME Investment Partnership Program – A program that has several purposes, including: expanding the supply of decent and affordable housing for low- and very low-income households; building the capacity of state and local governments and nonprofit organizations to design and implement strategies for providing affordable housing; and creating partnerships among all levels of government and the private sector, including for-profit and nonprofit organizations, to produce and/or manage affordable housing.

Income Approach to Value – A method of estimating property value by capitalizing net income.

Income Limits – Household income limits established by law for admission into low- and moderate-income housing projects or to qualify for rent supplement assistance. Based on household size and geographic location.

Inclusionary Housing – Within redevelopment project areas, a specified percentage of housing built or rehabilitated is required by law to be available at an affordable housing cost to very low-, low- and/or moderate-income persons. Within cities, a specified percentage of new housing is required to be available at an affordable housing cost to very low-, low- and/or moderate-income persons, pursuant to a City ordinance or policy.

Implementation Plan (AB 1290 Implementation Plan) – A plan required to be adopted by an agency every five years which sets forth for the next five-year period an agency’s goals and objectives for the project area, the specific programs and expenditures proposed and an explanation of how the goals and objectives, programs and expenditures will eliminate blight and implement the housing requirements of the Community Redevelopment law Section 33490 (per 1993 Assembly Bill 1290).

Installment Sale – A method of reporting gain on the sale of real property that has the effect of deferring taxes on such a gain because the seller pays taxes only on a pro rata share of the payments actually received during the taxable year.

Internal Rate of Return – The rate of discount (rate of return offered by comparable investment alternatives) which makes the net present value of the investment equal zero.

Investor Sponsor – Used in connection with the cooperative housing program, it refers to a private, profit-making organization that undertakes development of housing projects for sale at a profit to a nonprofit cooperative corporation.

Joint Venture – A partnership formed for a limited specific purpose by investors in a development project. The joint-venture agreement establishes the partners’ duties in the development process and specifies how the ownership an dprofits are divided.

Junior Mortgage – A mortgage that is subordinated to the claims of a prior lien or mortgage,

Land Contract – An agreement to transfer a title to a property once the conditions of the contract have been fulfilled.

Leasehold – The estate, usually land or land plus buildings, held by a lessee under a lease.

Letter of Credit – A document which approves the credit of an individual or corporation and enables it to borrow or get bank funds.

Level-Payment Mortgage – A mortgage that provides for the payment of equal sums at periodic intervals during its term. Part of the payment is credited to interest, and the rest is used to amortize the principal.

Leveraging (Layering) – A term of financing in which one source of funds is used to “leverage” or obtain other funds to contribute to the financing of a project or development. Layering of financing essentially refers to multiple sources of financing to assemble sufficient financial resources to complete a project or development.

Limited Partnership – A partnership consisting of one or more general partners, with unlimited partnership liability, by whom the business is conducted and one or more limited partners, contributing cash to the capital partnership, and whose partnership liability is limited to their investment. See Partnership.

Loan-To-Value Ratio - The relationship of a mortgage to the appraised value of a security. This ratio is expressed to a potential purchaser of property in terms of the percentage a lending institution is willing to finance.

Longest Feasible Time – See Affordability Covenants.

Low-Income Household – Household household income, adjusted for household size, that is typically 50 to 80% of the median household income established for an area.

Low-Income Housing Tax Credits - This is a program that allows owners of qualified low-income rental housing developments to receive a “tax credit” against their federal income tax liability for a period of ten years.

Low Rent Housing Development – A housing development subsidized to the point where the individual resident pays only a fixed percent of their gross income (generally 25-30%) for housing costs, where the balance of the project costs have been, or are contributed to the developer/owner on a monthly basis, generally from a government source sufficient to cover project costs.

Manufactured Housing – Any number of different categories of factory-built or prefabricated housing, including mobile homes.

Market Analysis – See Market Study.

Market Approach to Value – Using the market place as a yardstick to measure the value of property.

Market Area – The area from which the proposed development will draw its residents. The Market Area should provide a clear picture of the underlying conditions of the area in which the project will be built.

Market Rent – The rent charged to a tenant without any restrictions.

Market Study – A projection of future demand for a specific type of project, usually with a recommendation for volume of space to be sold or rented and sale or rental price.

Market Value – The price at which a property could be sold on the open market, with buyer and seller free from abnormal pressures.

Mixed-Income Housing – A housing project that may have different selling or rental prices and different qualification standards for buyers or tenants for individual units within the project. Generally a portion of the units will be restricted with recorded covenant’s requiring the unit be sold or rented to an individual or family of moderate, low- or very low-income.

Mixed-Use Housing – Housing constructed as part of a larger project, usually including commercial development on the ground floor and residential development above the commercial.

Moderate-Income Household – Household income, adjusted for household size that is typically 80 to 120% of the median household income established for an area.

Mortgage – A formal document executed buy an owner of property, pledging that property as security for payment of a debt or performance of some other obligation; the security instrument.

Mortgage Credit Certificate – Authorized by Section 25 of the IRS Code, permits the issuance of Mortgage Credit Certificates (MCCs) allowing the holder of an MCC to take a credit against his/her federal income tax liability each year. The effect is to directly reduce the monthly housing cost and increase the ability of the homebuyer to qualify for a mortgage loan.

Mortgage Insurance Programs – Generally refers to the insured loan programs carried out by HUD, through the FHA, under the National Housing Act.

Mortgage Note – A promissory note secured by a mortgage on specific real property.

Mortgage Revenue Bond – A pool of money made available to developer or home purchasers secured by revenue received from the mortgages paid for the residential unit. Usually Mortgage Revenue Bonds are issued by a governmental agency at a tax-exempt interest rate, thus the interest rate paid by the home purchaser may be less than available from conventional lenders.

Multifamily Development – development of more than two dwellings as a part of a single development. Generally associated with garden apartments, townhouses, and high-rise apartment complexes.

Negative Amortization – A loan payment schedule in which the outstanding principal balance goes up, rather than down, because payments do not cover the full amount of interest due. The unpaid interest is added to the principal. This is a feature of many graduated-payment mortgages.

Negative Cash Flow – A situation in which expenditures required to maintain an investment exceed income received on the property.

Net Interest Cost – A straight arithmetic method of calculating the interest cost to an issuer of municipal bonds.

Net Lease – Agreement for lessor to receive annual lease payment from lessee is obligated to pay all operational expenses.

Net Net – Net project income after deducting insurance and maintenance expenses, and real estate taxes.

Net Net Net – Net project income after deduction of insurance premiums, maintenance expenses, and real estate taxes.

Net Operational Income – The remainder left after total operating expenses (exclusive of interest payments) of a project are deducted from the gross income of such project (synonymous with net net net).

Net Rate – The rate of interest remitted to an investor by the correspondent after its servicing fee has been deducted from gross rate.

Net Return – The remainder left after total operating expenses and interest payments are deducted from gross income.

Net Present Value – A project’s net contribution to wealth (present value minus initial investment).

NIMBY – (“Not In My Back Yard”) Reference to neighborhood objections to development, usually low-income housing development, being constructed in a neighborhood.

Nonprofit Sponsor or Nonprofit Corporation – A group organized and/or incorporated to undertake a housing project for the public good and for reasons other than making a profit. Units can be rented on a nonprofit basis or the sponsor can create an individual, cooperative, or condominium ownership.

Non-recourse Loan – A type of mortgage loan in which the lender’s remedies in the event of the borrower’s default are limited to foreclosing the mortgage; the borrower is not personally liable.

Operating Subsidies – Payments from a governmental body to subside the cost of housing for individuals or owners of certain projects for low-income families.

Origination Fee – The fee charged by a lender to prepare loan documents, make credit checks, inspect and sometimes appraise a property, usually computed as a percentage of face value of the loan.

Partnership – An association of persons joined by contract to combine their property, labor, and skills, or any or all of these and to provide for sharing of profits and losses in a proportionate manner. The profits and losses are passed through to the partners who report them on their individual income tax returns. The partnership itself pays no taxes.

Permanent Financing – Mortgage loan covering development cost, interim loans, construction loans, financing expenses, marketing, administrative, legal and other costs. This loan differs from the construction loan in that this financing goes into place after the project is constructed and open for occupancy. It is a long-term obligation.

Points – The percentage deduction from the nominal amount of a discounted loan, often charged as a finder’s fee. On a $1,000 loan discounted 2 points, the borrower receives $980 (1 point = 1 percent).

Present Value – The current value of an amount to be receive at a future time.

Price Restricted Units – Residential units that are to be sold or rented at a specific price to individuals that qualify with certain income limits, generally very low-, low- or moderate income.

Principal – The amount of debt, exclusive of accrued interest, remaining on a loan. Before any principal has been repaid, the total loaned amount is the principal.

Pro Forma – Latin words meaning “ according to form”; a projection of anticipated income, expenses, and cash flow from an investment enterprise, indicating the form in which that data should be presented.

Project Area – The area that is designated in the redevelopment plan for redevelopment and revitalization.(See definition of Redevelopment Project Area.)

Project Area Committee (PAC) – Elected Citizens’ committee comprised of project area residents, businesspersons, and representatives of community organizations to consult with and advise the agency.

Project Cost – Total cost of the project including professional compensation, land costs, furnishings and equipment, financing, and other charges, as well as the construction cost.

Proration of Taxes – Proportionate and equal division of taxes relative to time of use.

Public Housing Authority (PHA) – Public agency created by state or local government to finance or operate low-income housing.

Public Housing – Lower-income housing owned and operated by a public housing agency (usually a City or County Housing Authority) and assisted under the United States Housing Act of 1937 (other than Section s 8 or 17).

Rate of Return – Cash flow plus change in value divided by starting value.

Real Estate Investment Trust (REIT) – A trust where at least 75 percent of its income is derived from passive real estate investment and where 95 percent of this income passes to it investors.

Redevelopment Agency – The public body created to designate redevelopment project areas, supervise and coordinate planning for a project area and implement the development program. In most communities in California, the agency is composed of the governing body of the community (city council or board of supervisors.)

Redevelopment Project Area – A specific area of community meeting the requirements for designation as a Redevelopment Project Area consistent with the California Community Redevelopment law (Health & Safety Code Section 33000 et seq.) A redevelopment project area is adopted by the legislative body of the community. A redevelopment agency will focus attention on improvements within a development project area to alleviate conditions of blight that existed at the time the project was adopted.

Refinance – To pay off an existing loan with the proceeds of a new loan.

Rehabilitation – To improve, alter, modernize or modify an existing structure to make it safe, sanitary and decent and/or bring it up to Building Code Standards.

Rental Assistance Payments – Generally refers to the program of rental assistance for low-income families in rural areas under Section 521 (a) (2) (A) of the Housing Act of 1949.

Rental Control – Limitation of annual rent increases by municipal ordinance, state, or federal law.

Rent-Up Period – The amount of time it takes for a building to reach a stable occupancy rate and income stream.

Replacement Cost – The cost to replace a structure with one of equivalent value and function. Replacement costs are calculated by determining current cost of improvements to the land (exclusive of off-site work) and the cost of structures, including builder and architect fees. Also includes financing costs, carrying charges, and legal and organizations expenses. Usually provides a higher value for ascertaining the maximum mortgage than the more conventional and conservative estimated value.

Replacement Housing – Housing constructed to replace housing units destroyed or removed from low or moderate income housing market as part of a redevelopment project.

Request for Proposal (RPF) – A solicitation or ad requesting proposals from qualified individuals, professionals or firms, to provide a specific service. Typically RFP’s are issued to solicit professionals to provide service or undertake a task, or to select developers to pursue development of a property.

Request for Qualifications (RFQ) – A solicitation or ad requesting a summary of their qualifications from individuals, professionals or firms, to provide a specific service. Typically RFQ’s are issued to solicit professionals to provide a service, undertake a task, or used to identify developers that have appropriate skills or experience and would be asked to respond to a specific RFP to pursue development of a property.

Resolution Trust Corporation – A mixed-ownership government corporation established to liquidate insolvent savings and loans and dispose of their assets. Created by the Financial Institutions Reform, Recovery and Enforcement Act of 1989.

Return on Equity – The rate of return for an investor of real property based on the amount of cash or value (i.e. equity) the investor has in the property.

Revolving Loan Fund – Pool of money set up through redevelopment or state grant (or lender consortium) to make loans. The pool is replenished through borrower paybacks.

Sale-Buy-Back – A financing arrangement in which the developer sells a property to an investor and then buys it back on a long-term sales contract; sometimes called an installment-sale contract.

Sale-Leaseback – A financing arrangement in which a developer sells all or part of a project and then leases the portion sold from the buyer.

Savings Associations Mortgage Company (SAMCO) – A mortgage banking organization composed of a consortium of financial institutions that makes permanent mortgages for affordable rental housing projects on a participation basis, thus sharing the risk among several lenders.

Second Mortgage – A mortgage that has rights secondary to the first mortgage, i.e., the proceeds from a foreclosure sale must pay the first mortgage before any funds can go to repay the second mortgage.

Secondary Mortgage Market – A system whereby lenders and investors buy existing mortgages as long-term investments, and in doing so provide created availability of funds for mortgage loans by banks, mortgage bankers, and savings and loan associations. See Federal home Loan Mortgage Corporation (FHLMC) Federal National Mortgage Association (FNMA) , and Government National Mortgage (GNMA).

Seed Money – Advances, loans, or grants to cover preliminary expenses of constructing housing projects, such as cost of planning and obtaining financing.

Set-Aside – See Housing Fund.

Shared Appreciation Mortgage (SAM) – Borrowers receive a below-market interest rate on a mortgage, in return the lender receives a portion of the future increase in the value of property.

Shared Housing – Generally refers to arrangements under which elderly persons and persons with disabilities share the facilities of a dwelling with other in order to meet their housing needs and reduce costs of housing.

Single Room Occupancy Housing – Residential properties in which some or all dwelling units do not contain bathroom or kitchen facilities.

Silent Second – A loan or other financial assistance secured by a deed of trust that remains in a subordinate position to primary financing instrument (e.g. 1st mortgage secured by a deed of trust) that requires no payment of interest or principle until the house is sold or the 1st mortgage is refinanced.

Special Assessment District – A jurisdiction that has the power to tax and improve property within its boundaries.

Special Needs Housing – Housing developed for families or individuals requiring either design modifications (commonly referred to as a handicapped unit) to accommodate the needs of the individual or require assistance in day-to-day living in the units from either a live-in or outside service provider for the individual or family.

Substantial Rehabilitation – Improvements of a property from substandard to safe and sanitary conditions. It can vary from gutting and reconstruction to accumulated deferred maintenance. It may also involve conversion of nonresidential property to residential use.

Syndication – The sale of equity interest (shares) in real estate projects to investors other than the original developers.

Take-Out Commitment – A commitment whereby the permanent lender agrees to buy a construction mortgage from a construction lender or to issue a new permanent mortgage upon completion of construction. Such commitment is usually a prerequisite to the making of a construction loan by a construction lender.

Tax Credit Allocation Committee (TCAC) – See California Tax Credit Allocation Committee.

Tax-Exempt Bond – A bond on which the interest payments are not subject to federal taxation.

Tax Increment – The increase in property taxes within the redevelopment project area that result from increases in the project area assessed value that exceeds the base year assessed value.

Term Mortgage – A mortgage where for a specified period of time (normally five years) only interest is paid, after which the principal is due.

Total Development Costs – The sum of all costs for planning, administration, site acquisition, relocation, demolition, construction and equipment, interest and carrying charges, on-site streets and utilities, non-dwelling facilities, a contingency allowance, insurance premiums, off-site facilities, an initial operating deficit, and all other costs necessary to develop the project.

Twenty percent (20%) Set Aside – See Housing fund.

Underwrite – Analysis of the extent of risk assumed in connection with a loan; the process of preparing the conditions of a mortgage and the subsequent decision to approve or disapprove a loan application.

Vacancy Factor – Percent of a building that is unoccupied.

Valuation – Estimation of value or price through appraisal.

Variable Interest Rate – A means by which a lender is permitted to adjust the interest rate on a loan to reflect changes in the prime rate – usually within a prescribed range with advanced notice.

Very Low-Income Household – Household income, adjusted for household size, that is 50% or below the median household income established for the area.

Wraparound Mortgage – A refinancing technique involving the creation of a subordinate mortgage that includes the balance dueon the existing mortgage(s) plus on a secondary or junior loan.

Yield – Effective return on a mortgage based upon the face rate of interest and the price paid for the mortgage.

Zoning – Prescription by a governmental entity of the purpose to which land or buildings may be put in specific areas, and of the architectural, structural, and/or spatial elements of such land or buildings.