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  • 1. Maryland Regional Workforce Housing Fund Leadership Forum June 7, 2006
  • 2. MARYLAND REGIONAL WORKFORCE HOUSING FUND (“MRWH”)
    • Enterprise: Background and Expertise
    • MRWH Fund: Opportunity and Need
    • MRWH Fund: Investment
    • MRWH Fund: Investment Process
    • MRWH Fund: Investment Benefits
    • MRWH Fund: Management Team
    • Next Steps
    • Example of an “Award Winning Community”
    • Contact Information
    PRESENTATION AGENDA
  • 3.
    • Chosen by the 9 funders of the Phase I Market Assessment to oversee the creation and implementation of the Fund
    • Headquartered in Maryland, with extensive investment, development, and lending expertise in the local region
    • Products and services that address all needs related to affordable housing and community development
      • capital and funding
        • tax-credit equity
        • senior debt
        • mezzanine debt
        • grants
      • programmatic models and expertise
    • Works closely with local, state and federal elected officials and policymakers
    ENTERPRISE: BACKGROUND AND EXPERIENCE
  • 4.
    • One of the leading advocates for policy in support of affordable and workforce housing and community development
    • Will ensure:
      • continued community input
      • deal outreach/sourcing in Fund’s footprint
      • necessary “tools” for challenging deals
    • Investing in communities at the rate of approximately $1 billion a year
    • $6 billion invested in communities over the past 23 years, yielding more than 175,000 affordable homes
    • Catalyst for LIHTC legislation - the public-private model for affordable housing financing that is responsible for virtually all affordable multifamily housing being created today
    • Created/presently developing more than 4,500 homeownership and rental residences for individuals and families of diverse income, age and culture
    ENTERPRISE: BACKGROUND AND EXPERIENCE
  • 5.
    • 2003, Governor Ehrlich created the Governor’s Commission on Housing Policy to address housing issues
      • shortage of workforce housing
      • need for initiatives to create sustainable communities
    • 2004, Final report supported the creation of an equity Family of Funds
      • workforce housing for people who cannot afford to live in the cities and counties in which they work
      • community revitalization initiatives to address the overwhelming need in Maryland, Washington, D.C. and Northern Virginia
    • Low levels of supply and high levels of demand for new housing affordable to “working families”
      • households earning 80% to 120% of the AMI
      • high project costs faced by developers
      • growing population
      • upward pressure on housing prices and rents
      • lack of innovative financing sources for developers
    FUND OPPORTUNITY AND NEED
  • 6.
    • Maryland ranks second nationally in commuting times
    • More than one million new Marylanders are expected in the next 25 years
    • From 2000 to 2005:
      • median home price in Maryland increased 102% to $363,125
      • median household income for four person families increased 17% to $77,938
    • From 1998 to 2005:
      • MD average weekly earnings increased 4.1% annually (U.S. average - 3.9%)
      • MD average house price increased 23.8% annually (U.S. average - 14.1%)
    • Maryland needs to increase net supply of housing by at least 27,500 units by 2010 to cover shortage in housing units projected
    • Statistics cited from: “Why Housing May Replace Healthcare as Our Region’s Leading Affordability Issue,” Anirban Basu, Sage Policy Group, Inc., March 15, 2006 and the U.S. Census Bureau website, http://www.census.gov/hhes/income/4person.html
    FUND OPPORTUNITY AND NEED
  • 7.
    • Developments that achieve double bottom line objectives:
      • risk-adjusted market rates-of-return for investors (the first bottom line)
      • measurable job and wealth creation, and community revitalization for community stakeholders (the second bottom line)
    • Fund Size: $100 million
    • Individual Investment : $2 million to $20 million
    • Total Development Cost: $10 million to $50 million
    • Development Type:
      • For-sale and rental housing targeted at working residents
      • Household incomes in the 80%-120% range of AMI
        • single family homes
        • condominiums
        • town homes
        • live/work lofts
        • apartments
      • New construction, rehabilitation, and adaptive reuse
    THE INVESTMENT
  • 8.
    • Location:
      • Low-moderate and mixed-income communities
      • Urban, suburban, and rural areas
      • Maryland, Washington D.C. and Northern Virginia
    • Structure:
      • Equity, preferred equity, and mezzanine debt
      • Targeted internal rate of return in the mid-teens
      • Preferred distributions to Investors
      • Significant percentage of the “at risk” capital required in qualifying developments
      • Projected term of 3 to 5 years
    THE INVESTMENT
  • 9.
    • Investment Sourcing:
      • Enterprise offices in Baltimore, Columbia and Washington, D.C.
      • Substantial Developer Relationships
      • Vast Lender Network
      • Industry Association Memberships
      • Investor Referrals
    • Rigorous Investment Underwriting:
      • Executive Summary
      • Economic/Social Impact Analysis
      • Development Feasibility/Risk Analysis
      • Market and Demographic Analysis
      • Key Party Analysis – Credit and Experience
      • Consistency with Fund Underwriting Guidelines
      • Conclusions/Recommendations
    INVESTMENT PROCESS
  • 10.
    • Investment Approval and Performance Monitoring
    • Committee comprised of 6 Enterprise senior executives:
      • Development Feasibility
      • Consistency with Fund Mission
      • Minimum Yield Thresholds
      • Community Impact
      • LMI Investment Area
      • Community Support
    • Exception Approval and Performance Review
    • Committee comprised of investors holding $10 million or greater:
      • Compliance with Overall Fund Parameters
      • Compliance with Investment Parameter Targets
      • Periodic Reporting and Review
    INVESTMENT PROCESS
  • 11.
    • Economic Benefits
      • Deliver market rates of return in the mid-teens
      • Priority return to investors
      • Diversified portfolio within a well-capitalized fund
      • Partnerships with experienced real estate underwriters and developers
    • Social Benefits
      • Foster vibrant and healthy communities by increasing the jobs/workforce housing balance
      • Effectuate economically viable developments to address the overwhelming need for workforce housing and bolster community revitalization and stabilization
      • Encourage the integration of mixed-income and mixed-use neighborhoods
    • Positive Public Relations
      • Public recognition of participation in prominent regional investment vehicle
      • Maximize the use of existing resources and reduce development pressure on less urbanized areas
      • Significant public-private partnerships
      • Positive Community Reinvestment Act consideration
    INVESTMENT BENEFITS
  • 12.
    • Charlie Werhane, Vice Chairman and Chief Operations Officer
    • Enterprise Community Investment
    • Capital Raising, Fund Oversight
    • Chickie Grayson, President
    • Enterprise Homes, Inc.
    • Capital Raising, Development Expertise
    • Joe Wesolowski, Senior Vice President
    • Enterprise Community Investment
    • Capital Raising, Asset Management, Operations
    • Christine Madigan, Vice President
    • Enterprise Homes, Inc.
    • Capital Raising, Fund Strategy, Deal Structuring, Oversight
    • Edie Loughlin, Director
    • Enterprise Community Investment
    • Deal Sourcing, Deal Structuring, Deal Closing
    ENTERPRISE FUND MANAGEMENT TEAM
  • 13.
    • Finalize MRWH Fund legal documents
    • Finalize MRWH Fund marketing materials
    • Develop investment pipeline
    • Obtain investor commitments
    • First close of MRWH Fund
    • Close of initial workforce housing development investments
    NEXT STEPS
  • 14. WATERVIEW
    • Developed by a partnership between Enterprise Homes, Inc. and a private, local builder
    • Located in Middle River, Baltimore County, MD, on a 63 acre site that was a former failed FHA apartment project razed by the County
    • New urbanist street plan; 175 detached, homeownership units; 100,000 sf. community shopping center, community green space
    • $48 million Total Development Cost
    • Equity/Mezzanine: $1 million
    • Greater than 15% ROE realized to date
    • The Results:
      • Recognized by Baltimore Magazine as one of the “Best Places To Live” in 2005
      • Homebuilders Association of Maryland, Award of Excellence, Project of the Year (2003)
      • Strong catalyst for redevelopment in the area
      • Homeownership for the County’s Workforce offering units affordable to those in the 80% - 150% AMI range, with the majority in the 80% - 115% range.
    AWARD WINNING COMMUNITY EXAMPLE
  • 15. THANK YOU
    • Christine Madigan
    • Vice President
    • Enterprise
    • 410-332-7400
    • [email_address]
    • Joe Wesolowski
    • Senior Vice President
    • Enterprise
    • 410-772-2512
    • [email_address]