E - O

Phytoremediation At Chestnut Street

Easement

The portion of the property for which access or use is allowed by a person or agency other than the owner.

EIL

"Environmental Impairment Liability" is a type of insurance policy specifically covering claims made during a policy year for releases of pollutants.

Eminent Domain

The government's right to condemn private land for public use, such as the routing of a public highway.

Equity

The capital gain from investments in property. Equity financing is equally important as debt financing due to the existence of income taxes structures that affect the overall profitability of a development project.

Floor-to-Area Ratio

FAR is a measure expressed as a ratio of building square footage to square footage of the land. FAR is used to determine the maximum buildable project area and is dependent on the zoning regulations of the site.

Foreclosure

A legal proceeding or action commenced by a lender or mortgagor to take collateral pledged to secure the loan, and extinguish any rights or interests of the borrower in the collateral.

For-Profit Developer

A land developer who develops land with the purpose of gaining capital on her/his investment.

General Plan

A legal document, in the form of a map and accompanying text adopted by the local legislative body, which is a collection of its policies regarding the long-term development of land within its jurisdiction. It is sometimes called a city plan, comprehensive plan, or master plan.

Hard Costs

In a development project, a term used for the amount that include total land cost, site clearance, grading, construction costs (including parking), and landscaping. The amount and types of hard costs are included in a pro forma.

Highest and Best Use

The use of property that will bring to its owners the greatest profit. In theory, the economics of the real estate market establish a maximum value for each parcel of land at any given time.

HUD

A closing statement or settlement sheet that outlines all closing costs on a real estate transaction or refinancing.

Indemnity

A written agreement in which a party agrees to reimburse another party for any loss, expenses, or damage.

Infill Development

The development of new housing or other buildings on scattered vacant sites in a built-up area.

LDR

Land Disposition Restrictions

Land Use

The purpose for which land can be used as set by zoning ordinances, such as residential, commercial, industrial, open space, transportation, institutional, vacant, or mixed use. They take into account population density, and the distribution of land uses within the city or county.

Leaseback

Typically a financing arrangement involving the sale of property to an investor, with the seller agreeing to lease the property from the investor.

Lein

The legal claim or interest in property used as security for a debt.

Loan-to-Value-Ratio

An expression of the safety of the principal of the loan based on the value of its collateral. Typically, it is the amount yielded by dividing the loan amount by the project value. A borrower would typically want a high LTV. The lower the LTV, the lower the risk to the lender, for in the case of default, there would exist a greater gap between the outstanding loan balance and the project value. The LTV will normally decline over the life of the loan as principal payments reduce the loan amount and inflation enhances the property’s value.

LIRI

Local Industrial Retention Initiative. A DPD supported program to retain local community and industrial development groups to carry out industrial retention activities.

Market Value

The price that a piece of property sells for at a particular point in time.

Meters & Bounds

A time-honored land surveying method of describing land in terms of shape and boundary dimensions.

Mortgage

An instrument by which a borrower conveys an interest in property to the lender to secure the borrower’s obligations to repay a loan or perform other obligations.

Net Operating Income (NOI)

The amount generated from owning property rights in land and improvements or capital assets. The NOI is the income with which an owner(s) can operate a project (e.g., the profit made from rents to the amount paid for maintenance labor and utilities). Therefore, the NOI available to meet the total cost of financing is limited by the market place (supply and demand). For instance, an investor cannot increase their rate of return by arbitrarily increasing rents or reducing operating expenses without competing with the surrounding market.

Net Present Worth

The amount of money necessary to secure the promise of future payment, or series of payments, at an assumed interest rate.

Non-Profit Developer

A land developer who does and may not develop land for the purpose of building capital from the development process.