Predevelopment Recoverable Grants

Predevelopment Recoverable Grants is sponsored by LISC (Local Initiatives Support Corporation). LISC provides recoverable grants (0% interest, non-recourse obligations) to community developers to cover predevelopment expenses after they've obtained control of a development site.

Making Space Matter in Your State or Jurisdiction The Potential Role of Recoverable Grants in Predevelopment Funding | www. lisc. org The Potential Role of Recoverable Grants in Predevelopment Funding Child care facility projects are notoriously costly and time consuming.

Access to both government and phil-anthropic dollars to support or augment these project costs are too few and far between, but when those opportunities do arise they typically need to be spent quickly, and thus gravitate largely toward projects that These types of planning dollars are typically referred to as “predevelopment dollars”. These dollars flow into projects in varying stages that align to the timeline shown below.

The Potential Role of Recoverable Grants in Predevelopment Funding For the very first stage of early conceptual planning and feasibility what is needed is true grant pools that take the planning cost risks off of providers who are already cash strapped and seldom can afford to take a financial risk at this very early stage of the process.

Grants as small as $5,000 - $15,000 in size enable basic architectural schematics, simple legal searches, minor environmental or engineering work to help pro-viders assess if a particular project in a particular place would even be feasible before moving to the next stage. Because none of these dollars are used for actual construction there are far fewer restrictions to the source of dollars that can be tapped to support these costs.

For example, in Rhode Island the state has dedicated a small amount of its Federal Preschool Development Grant dollars to this allowable planning activity. Because of the relatively small dollar amount it is also a great opportunity to engage local philan-thropy in tangible ways to support the sector. The next phase of more complex predevelopment activities can be supported through the creation of a Re-coverable Grant Pool.

Recoverable grants are essentially zero interest loans, and can typically be used for pre-development and other non-construction costs. Having access to this early, low-cost capital can be ab-solutely essential to project success. Recoverable grant pools requiring a one time source of resource to be set aside to essentially “capitalize” the initial investment.

These zero -interest, low risk loans are then paid back at successful project completion, the repayment being built into the overall project budget. Only pro-jects that fall apart, due to no fault of the provider, are forgiven. Recycled dollars can then go out to the next group for use for a new project.

With this system, a one-time investment can stretch far across many years into the future. Capitalizing this type of funding pool can be a great public:private partnership activity. In local markets government, philanthropy and even business can come together to creatively develop these types of impactful funding vehicles.

These funds can be effectively managed by entities in your market such as CDFIs, discussed in other parts of the toolkit.

Recoverable Grants as a Tool for Impact Innovative Finance Focus: Doing More With Less Through Recoverable Grants > •Schematic understanding of program and project needs > •Initial site assessments for suitablity and cost implications > •Initial review of regulatory, zoning and other barriers and opportunities # Early Planning and Feasibility > •Full architectural drawings, including engineering studies as needed > •Full environmental studies if required > •Full baked financial plans and projections > •Permitting and approvals # Predevelopment •Selection of contractor(s) through competitive bidding > •Management and oversight of construction process > •Post-construction reguatory and related reviews