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RV 2015: Financing Equitable TOD Shouldn't Make You Nervous by Amy Rowland

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Does ETOD financing keep you awake at night? Transit orientation, appropriate parking ratios, structured parking and community desires for higher-quality products and public spaces around rail stations all add to the costs of completion and, in turn, can make financing more difficult to obtain. Adding affordable housing to the mix makes things even more difficult. But in an era of increasing income disparity, the importance of providing equitable housing near our transit systems looms large. Hear from developers about the financial tools they have used to ensure a wide range of financial accessibility to their transit-oriented projects. Seeing how the financial puzzle can be solved with insights and examples from people who have made it work. Then, get some sleep.

Moderator: Eric Rothman, President, HR&A Advisors, Inc., New York, New York
Ryan Tobin, Director of Real Estate Development, Denver Housing Authority, Denver, Colorado
Dan Lofgren, Principal, Cowboy Partners, Salt Lake City, Utah
Amy Rowland, Field Director, National Development Council, Salt Lake City, Utah
Sherman Roberts, President and Chief Executive Officer, City Wide Community Development Corporation, Dallas, Texas

Published in: Economy & Finance
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RV 2015: Financing Equitable TOD Shouldn't Make You Nervous by Amy Rowland

  1. 1. Amy Rowland Field Director – Salt Lake City, UT
  2. 2. Improving  Communi-es     Enhancing  Lives  NDC  is  the  na-on’s  oldest   non-­‐profit  provider  of   community  and  economic   development,  technical   assistance  and  training.
  3. 3. Training Financial Products Development Services Technical Assistance NDC’s  Services 3 National Development Council
  4. 4. The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again.
  5. 5. •  In  Utah  Only  –  GSLDC  Loan  Fund Financial  Products 5 National Development Council •  NDC  Corporate  Equity   Fund,  L.P.  (CEF)  –  Low   Income  Housing  Tax   Credit  Equity •  Grow  America  Fund   (GAF)  –  Small   Business  Loans •  HEDC  New  Markets,   Inc.  (HEDC-­‐NM)  –   New  Market  Tax   Credit  Investment
  6. 6. GSLDC  Loan  Fund  Ini-al  Capitaliza-on  of  $10MM    4  Ini-al  Lending  Par-cipants  –  Morgan  Stanley,  GE  Capital,   Synchrony  and  Zions  Bank  Primary  Loan  Types ü  SBA  Guaranteed  for  Small  Businesses-­‐  can  be  up  to  25  years ü  Non  SBA-­‐eligible  real  estate  loans  –  3  to  5  year  term ü  Land  Acquisi-on  or  bridge  loans  for  mixed  use  projects  Loan  Loss  Reserves  (6%) National Development Council 6
  7. 7. What  Keeps   Lenders  Up  at   Night? RISK!  Parking  ra-os  not  typical  Unproven  demand     Homeownership   Market  rate  housing  Higher  Density  Add’l  Design  or  Use  Criteria  Environmental  Issues  Limited  Comparables
  8. 8. Wide  Market  Differences       NYC  or  Chicago Community  Norms  for  TOD •  Paying  to  park  is  standard •  Higher  rents  for  easy  access  to   transit •  Mix  of  uses  near  residen-al •  Transit  stops  in  areas  where  dense   development  is  already  typical
  9. 9. Salt  Lake  (or  Denver   or  Dallas) •  Car-­‐centric   •  Varying  degrees  of   density  phobia •  Lack  of  experience/ comfort  with  mix  of   uses •  Akemp-ng  to  shape   future  growth  through   rail-­‐based  transit
  10. 10. ETOD  Assump-ons Mature  Market Young  Market Land  costs  near  stops  are  higher Yes Maybe Demand  near  stops  is  higher Yes Maybe Reduced  need  for  parking Yes Maybe Affordable  housing  more  difficult  to  finance Maybe No
  11. 11. Loan  Pool  Advantages Shared  risk  among  mul-ple  lenders Provides  underwri-ng  exper-se  in  specific   financing  tools   LIHTC   NMTC   Public  Sources Loan  Loss  Reserves  or  Top  Loss  Lender  provides   addi-onal  security   Primarily  nonprofit,  founda-on  and  public  sector   sources  
  12. 12. Utah  ETOD  Fund •  $30MM  Pool  with  same  lenders  as  GSLDC •  Managed  by  exis-ng  nonprofit  –  Utah  Center  for   Neighborhood  Stabiliza-on •  Predevelopment,  acquisi-on  and  construc-on  loans  for   affordable  housing  located  within  ½  mile  of  rail  transit   or  frequent  bus  service
  13. 13. Remaining  Gap  for  ETOD  Financing  Fixed  Rate,  Permanent  Financing  (25+  year  term  and   amor-za-on)  Some  Availability  for  Affordable  Housing   HUD  221  (d)4,  Fannie/Freddie,  T.E.  Bonds   Some  Conven-onal  Lenders  (especially  with  LIHTC  Equity)   Small  project/loans  are  more  difficult  Mixed  Use  Especially  Tricky

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