The 6 Best Federal Funding Options for Commercial Building Conversions

The Biden-Harris Administration has passed a crucial initiative to assist developers in converting emptying commercial buildings into much-needed housing in business and financial districts.?

Cities that have already taken action to undergo this transformation, like Minneapolis and San Francisco, have already reported positive results in the form of revived economies and more available affordable housing.?

The most considerable component of Biden’s initiative is the various funding options made available to help offset some of the costs of these conversions. These funding options can be stacked for optimum savings.?

Let’s dissect which options we think are going to be the most beneficial for your conversion project.?

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Department of Transportation (DOT) Financing Options?

Killing two birds with one stone, the Department of Transportation (DOT) is jumping on the bandwagon to encourage housing closer to public transportation.?

Financial and business districts are notorious for having excellent public transportation in the form of bus stops and subway stations, especially in bustling cities like San Francisco and Boston.?

With $35 billion in funding, the DOT has assembled the following financing incentives.?

Neighborhood Access and Equity Grant (NAE) Program?

Program Type: Grant, Up to 80% costs covered, or 100% for projects in underserved communities?

What’s it for: Funding for projects that improve walkability, safety, and affordable transportation access, especially in disadvantaged communities. The program also supports planning, capacity building, and technical assistance to streamline project delivery and enhance the capability of local governments in delivering surface transportation projects.?

The NAE program can provide funding to support changes in land use through transportation planning and infrastructure.?

How to get it: Lead applicant must be a state, unit of local government, or other public authority with a transportation function.?

Questions and inquiries can be sent to [email protected] ?

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Transportation Infrastructure Finance and Innovation Act (TIFIA)?

Program Type: loan or loan guarantee?

What’s it for: Program provides credit assistance for qualified surface transportation and transit-oriented development.?

In terms of converting commercial buildings to residential homes, TIFIA is available for vertical construction of buildings owned or utilized by the public sector, as well as those open to the public and supporting public services or purposes. This includes projects enhancing residential housing within proximity to fixed guideway transit facilities or intermodal facilities, and TIFIA can also finance economic development.?

The loan can be used for the following costs:?

• Development phase activities, such as planning, feasibility studies, environmental reviews, etc?

• Construction, reconstruction, rehabilitation, and acquisition of property?
• Capitalized interest necessary to meet market requirements?

How to get it:?

TIFIA is open to public or private entities.?

Submit a Letter of Interest to DOT to be considered.?

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Railroad Rehabilitation & Improvement Financing (RRIF)?

Program Type: loan or loan guarantee, up to 75% of total costs can be financed by this program?

What’s it for: provides credit assistance through direct loan and loan guarantees for developing, improving, or acquiring railroad infrastructure or facilities, and economic development, which is where our commercial building conversions come into the picture.?

To qualify, your project must meet the following requirements:?

• Incorporates private investment of at least 20% of the total project cost?
• Project is physically connected to, or is within half a mile from public transit?
• Show proof that contracting for construction begins within 90 days after approval of the loan?
• Show proof that the project will generate sufficient additional revenue for the related public transit system?

How to get it:?

State and local governments and joint ventures are eligible for this program.?

These entities can schedule an initial consultation, submit a Letter of Interest, and submit an application to the Build America Bureau to be considered.?

In the initial consultation, you will be asked to share:?

• Description of the project, and estimated benefits of the project?
• How the project will enhance safety, environment, economic development, etc?
• Description of collateral to be offered as security and its value?

• Audited financial statements of the last five years?
• Projected revenue for the next five years?
• Potential environmental impact of the project?

For more details about the requirements, you can visit the Build America Bureau .?

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Department of Housing and Urban Development (HUD) Financing Options?

The Department of Housing and Urban Development (HUD) is a U.S. government agency dedicated to addressing housing needs and promoting sustainable urban development.?

HUD implements various programs and initiatives to promote access to safe and affordable housing, and that includes office building conversions.?

HUD has passed multiple options for assisting with these types of projects, but there are the two we find to be the most beneficial.?

Learn about the other 3 best financing options and read the rest of the article here.