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12700 Plantside Drive

Louisville, KY 40299

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TEL: 502.499.7000

harshawtrane.com

HOW IT WORKS

FINANCING MECHANICS

 

Property owners can voluntarily opt into the EPAD program and enter into an assessment contract. The owner is required to a pay a fixed annual assessment for the contract term. The amount is based on the cost of the proposed improvements, the term of the improvements and a proposed interest rate which compensates the third-party financer. The EPAD assessment appears on the owner’s annual property tax bill and is specifically labeled.

CHARACTERISTICS
  • Transfer – EPAD financing is based on the property value, so there is no acceleration of the  assessment principal amount upon sale of the property. Unlike traditional mortgage or corporate finance, there is no pre-approval of the property buyer.  The EPAD bond holder looks solely to the property value and not the credit of the owner.

 

  • Liability - Property taxes do not become a legal liability of the property until January of each year when they are placed on the property tax roll, which also applies to the EPAD assessment.  For this reason, future property taxes are not placed on the property owner’s balance sheet until the year in which they are levied and placed on the tax rolls.

 

  • ForeclosureSince the EPAD assessment only becomes a legal liability of the property when it is placed on the annual property tax rolls, in default instances (non-payment of property taxes), the EPAD finance holder can bid only the unpaid EPAD assessment (plus penalty interest and fees) in the default year.  The EPAD financier does not have the option of accelerating the entire unpaid principal, plus penalty interest and fees like a mortgage debt holder.  In foreclosure cases the EPAD finance holder can only bid that year’s assessment amount plus penalty interest and fees.

 

  • Title Report - Future property tax assessments are not disclosed on the property title report as a lien against the property. In the case of EPAD, the total “principal” amount of the assessment is not included on the title report as a lien against the property.  Only the property taxes and EPAD assessment that are placed on the property tax rolls are recorded as a lien against the property.  (That year’s EPAD assessment.)

WHAT DOES IT COST THE MUNICIPALITY?
  • There is no cost to the municipality

  • No additional staff

  • No charge to establish the district

  • Any associated costs are incorporated into the financing packages of each transaction

 

If left to traditional financing methods, most businesses, due to lack of capital, would prolong making significant improvements to their infrastructure.