Tourism Planning, Development, and Social Considerations - Tourism: Principles, Practices, Philosophies - page 367

Figure 16.4

``Better
approach'' planning principles of
``buffering and minimizing
building site space to open
scenic views.''
Source: Grand Traverse Bay Region
Development Guidelines.

Financing

Possible procedures for financing construction include a mortgage guarantee plan and direct loans
from a variety of sources.

Mortgage Guarantee Plan

Under a mortgage guarantee plan, the government would guarantee mortgage loans up to 80 percent
of the approved and appraised value of the land, building, furnishings, and equipment when the resort
is completed. The approved mortgage would carry interest at prevailing mortgage rates and would
require a schedule of amortization for the full retirement of the loan in not more than approximately
30 years.
A guarantee fund would be established that at all times would be maintained at 20 percent of
the total outstanding principal amount of mortgages guaranteed under this plan. The guarantee
fund would be managed by trustees who would make any payments of interest and principal
certi ed to them by the agency in charge of the mortgage loan plan. This agency would supervise
the status of all approved loans and would investigate the facts and situations whenever it might
become necessary to rely on the guarantee fund to make the required interest and amortization
payments.Insuchcases,anassignmentofassetsandincomewouldbetakenfromtheresortin
default, which would have to be made up from subsequent earnings before any other use could be
made of it.
Under this plan, the investor in the resort project would secure a mortgage loan from a lending
institution or issue bonds or mortgage certi cates to one or more sources of the borrowed capital.
With the guarantee of payments of interest and principal and the existence of the guarantee fund for
that purpose, mortgage loans under this plan should be attractive to lending institutions and other
sources of borrowed capital.
With an approved resort development project and a guaranteed mortgage loan equivalent to
80 percent of the total financing required for land, building, furniture, and equipment, 20 percent of
the cost could be invested as equity risk capital. The ability to finance on this basis would provide
incentive to those directly interested in the business, as well as other investors, to participate in new
resort development projects.