What is a limited or special purpose property under 504?

In this answer, CDC means Certified Development Company.

A limited or special purpose property is one with a narrow market. SOP 50 10 8.1 defines it as a limited-market property (App. 3, p. 297). The property has a unique physical design, special construction materials, or a layout that restricts its use.

Properties SBA lists

The SOP gives these examples and says the list is not all-inclusive (Sec. C, Ch. 1, Para. E.1.e):

• Lodging and recreation: hotels, motels, amusement parks, bowling alleys, golf courses, marinas, sports arenas, swimming pools, tennis clubs, theaters and auditoriums.
• Health and care: hospitals, surgery centers, urgent care centers, other medical facilities, nursing homes and assisted living.
• Vehicles: gas stations, car washes, and service centers with pits and in-ground lifts.
• Land-based: farms, mines, oil wells, quarries, gravel pits, sanitary landfills, wineries and cemeteries.
• Other: cold storage with more than 50% of its square footage refrigerated, dormitories, funeral homes with crematoriums, and railroads.

What changes

• The usual structure is 50% third party lender, 35% CDC debenture, 15% borrower.
• If the project also involves a new business, it is 50% third party lender, 30% CDC debenture, 20% borrower.
• Third party loans must total at least 50% of project cost (13 CFR § 120.920).
• The appraiser must have experience in the particular industry (Para. E.2.b).

The Certified Development Company (CDC) must state its conclusion on this point in the credit memorandum.