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Financing Construction Projects

As part of its long term investment strategy, the Trustee has allocated $5 million to assist in the financing of Tasmanian construction industry projects. In this way, the Trustee is meeting one of its principle objectives of creating job opportunities for its members.

Developers should not view TasBuild as a principle financier. The Trustee's role will be to consider projects that have undergone the scrutiny of the normal commercial sector and are unable to get off the ground due to insufficient equity in the project.

While the Trustee may consider taking an equity position in a project, as a general rule, any finance will be provided on a loan basis. Funding should be considered as short term construction finance, with the developer being required to repay the loan within a defined timeframe not exceeding two years.

Project funding proposals should include documentation to enable the Trustee to assess the viability of the development. This should include reasons for the inability to obtain sufficient finance through the commercial finance market. In addition, the developer will need to be able to satisfy the Trustee that the loan can be repaid within the agreed period.

Prior to the finalisation of any loan approval it will be necessary for the developer to show that all building approvals have been obtained and that there are no impediments to the completion of the project.

Any costs, including legal expenses, incurred by the Trustee are to be met by the applicants and the interest rate payable on the loan will be dependent on the level of risk.

As the Trustee will not be the principal financier, security of the loan will usually be by second mortgage. However, the Trustee will generally seek additional security to the second mortgage.

In evaluating projects the Trustee may engage external consultants as advisors.

Projects will be considered in terms of their employment capability. It will be a mandatory requirement for the developer/builder to comply with all statutory requirements including employee entitlements, and with the Tasmanian Government's policy for Government building and construction projects as it relates to the employment of apprentices and trainees. Compliance will be monitored during a project's construction phase, and increased interest rates will apply when non-compliance is evident.

Funding proposals, in writing, should be sent to the:

Chief Executive Officer
TasBuild Limited
PO Box 526
Moonah   Tas   7009

Further information can be obtained by contacting TasBuild on (03) 6233 7670 or via email to secretary@tasbuild.com.au