The assessment that funded the build now rides your tax bill senior to every mortgage — and that is why the takeout keeps dying: agency buyers will not stand behind it and conventional lenders haircut around it. The land under the property is the cheaper pool that retires it in full at closing: mid 6s, non-amortizing, not a lien, sized off your whole income instead of eligible costs.
| Assessment financing | Ground lease | |
|---|---|---|
| Cost profile | High single to low double-digit constant, amortizing from day one | Mid 6s, non-amortizing — no principal drag |
| Position | Super-priority tax lien ahead of every lender | Not a lien at all; the fee simply has a new owner and a 99-year lease |
| Effect on refinancing | Agency takeouts blocked or restricted; conventional proceeds haircut | Leasehold financing is standard; the lease is drafted for the next lender |
| How much capital | Capped at eligible improvement costs | The whole land layer: typically 30–40% of property value |
| At our closing | The assessment is retired — paid off in full from proceeds. We never close over one and we never layer the two structures on one property. The stack comes out clean: leasehold above, land below, nothing riding the tax bill. | |
The sizing works because the pools differ: the assessment was capped at eligible costs; the land is priced off the property’s whole income. Proceeds routinely cover the payoff with room left for reserves or other expensive layers. Full comparison: ground lease vs. C-PACE.
Because it rides the tax bill senior to every mortgage. Agency buyers will not purchase loans behind a super-priority assessment on standard terms, and conventional lenders haircut proceeds to cover the exposure. The assessment that funded construction becomes the reason the takeout will not size.
Yes — that is the standard structure: our land purchase retires the assessment in full at closing. We never close over an existing assessment and never combine the two structures on one property. The property emerges with a clean leasehold above and the land below.
Compare constants: assessment financing typically runs a 9-11% all-in constant because it amortizes; land capital runs mid-6s and never amortizes. On most deals the swap cuts the carry materially and unblocks the refinancing at the same time.
Many do — it goes into the payoff math like any other cost, and the swap usually still clears because the land pool is so much larger than the assessment. Send the payoff letter and the income; the answer is arithmetic.
The assessment payoff, the income, and the address — the swap math comes back fast: what the land produces, what it retires, and what the stack looks like after.
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