More About Grants

The Vastu Development Fund (VDF) will loan money to a developer when these types of grants have been awarded:

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Tax Increment Financing (TIF)

Tax increment Financing is the backbone of land development financing. The state government can authorize a city or county to "rebate" a portion of the property taxes paid on newly created property value. There are many ways to structure a TIF agreement between a city and a developer. In the case of the North Campus Village, TIF agreements were made that will return a total of 4.1 million dollars. The agreements state that the homes must be sold for under a specific price (a price that would normally cause the developer to sell at a loss), so the TIF dollars are essential to complete the project. The challenge for the developer is to find a way to complete the project (including roads, sewer and water mains, etc.) before the TIF grant funds are paid out. Once a TIF agreement is signed with the government agency, the property taxes for the project area are sequestered by the State of Iowa, and the VDF will loan the developer up to the amount awarded in the TIF agreement. The developer pays the loan back to the VDF as the TIF funds are paid out.

        Note: Some cities will borrow the funds for the developer so that the developer has the funds upfront. Cities can sell "municipal bonds" to investors, raising funds for the developer, and then pay the investors back with property tax revenue in a TIF arrangement. That's a luxury that most small cities can't afford because they are often near their state-mandated borrowing limit. When Vastu Partners made a TIF agreement with the City of Fairfield for the North Campus Village, there were no municipal bonds in the agreement. Vastu Partners borrowed money from investors to cover the delay in receiving TIF grant funds.

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Workforce Housing Tax Incentive Program (WHTIP)

WHTIP grants contributed 2.3 million dollars to the North Campus Village project.  The grant is designed to help builders with the construction cost of homes affordable to the region's workforce. The award is a percentage of the building costs, but it is only paid after the building construction is complete. In order to take advantage of the WHTIP grant funds, that is, in order to use the grant money to cover a percentage of the costs, the developer needs to borrow the amount of the award from investors, and then pay back the investors when the award is received. News Update August 28, 2023: Vastu Partners North Campus Ridge project received a Workforce Housing grant of $632,000

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Brownfield Grant Program

The Brownfield Grant Program provides up to 1.5 million dollars for demolishing abandoned or underutilized buildings that make an area undesirable to developers. This grant is vital to making the Reiff Grain & Feed property work for Vastu Partners' next development. The giant grain silos, machinery, truck scales, etc., along Highway 1 must be removed for the North Campus Ridge project, and this grant would pay for the demolition and removal. Like the other grants, the award funds are not released until the developer is finished with the project. The developer needs to borrow from investors to complete the demolition, clean-up, and construction because the award is only released after the new construction is completed. News Update October 20, 2023: Vastu Partners North Campus Ridge project received a Brownfield grant of $1.5 million dollars

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