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Development Finance APA Conference September 29, 2011 Bret Weiss – WSB Mark Ruff - Ehlers
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Development Finance
APA Conference
September 29, 2011
Bret Weiss – WSB
Mark Ruff - Ehlers
2
Late 80’s development similar to now Use what we learned during the
boom years Is slower, smaller development bad?
That Was Then, This is Then
3
How Interested Are You?
Decide what you are willing to do Review policies to see if they still fit Don’t be afraid of “What if’s” Clean up obstacles
4
Vision + Can Do = Success
Inventory what you have to offer Understand what it takes Stop waiting for others to do it for
you Don’t let the past cloud the future
5
Time to Partner
Talk to the businesses & investors in your city
P3 can be small projects too How can you encourage
investment? Find a way
6
“Can Do” versus “Can’t Do”
G.O Bonds for infrastructure WAC/SAC calculations Finance fees Park dedication costs Transportation trunk fees Grants
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Financial Tool Kit
Deferred assessments/agreements – Monticello interchange
City funded studies – Monticello Walgreen’s
Transportation trunk fees – Rogers Development subsidies – Inver
Grove Heights & Rogers
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How?
How can I change the world if I can’t even change my …….(pick one: mother, brother, partner, son, dog)
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Why?
Lending is still tight
Financing
EquityFirst MortgageSecond MortgageDeferred Fees
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Appraisal Gap
Cost Appraised Value0
20
40
60
80
100
120
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Tough to Generate a Policy
Every project differs Risk is inherent The most important actions
Knowing the Risk Mitigating risk
Requires you to know your Council/Board
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Risk of Lawsuit
Document why you want to help this person and not the next
Adopt clear findings Describe public purpose
Follow procedures carefully Involve your city or development
attorney early
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Public Trust
You are doing what with my taxes? More information is better than less Last minute rush is still common
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Rating Changes
Rating agencies like to see growth in market value
Four Factors: Economy, Finances, Debt and Management
Debt is the least important factor for Moody’s
Management is the one factor most in your control
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Case Studies
125 Unit Apartment Project City offering $1M up front Developer is “old school”
Minimum market value Subordination Completion of building
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Case Studies
Manufacturing expansion City sold land at a discount Repaying itself Minimum market value included Enough land to expand
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Case Studies
Rental Housing and Commercial Design dominates Amount of public assistance is secondary as
long as there is minimal risk Problems today is clearly identified
Existing circulation poor Project failed already once
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Final Words
Secure a network of good references for data
Reward developers who are good partners and know their banks
Select a team of experienced advisors
Trying to do it all yourself is difficult for anyone
