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

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 3

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 4

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 5

“Can Do” versus “Can’t Do”  G.O Bonds for infrastructure  WAC/SAC calculations  Finance fees  Park dedication costs  Transportation trunk fees  Grants 6

Financial Tool Kit  Deferred assessments/agreements – Monticello interchange  City funded studies – Monticello Walgreen’s  Transportation trunk fees – Rogers  Development subsidies – Inver Grove Heights & Rogers 7

How?  How can I change the world if I can’t even change my …….(pick one: mother, brother, partner, son, dog) 8

Why?  Lending is still tight 9

Appraisal Gap 10

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 11

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 12

Public Trust  You are doing what with my taxes?  More information is better than less  Last minute rush is still common 13

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 14

Case Studies  125 Unit Apartment Project  City offering $1M up front  Developer is “old school”  Minimum market value  Subordination  Completion of building 15

Case Studies  Manufacturing expansion  City sold land at a discount  Repaying itself  Minimum market value included  Enough land to expand 16

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 17

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 18

19 Mark Ruff (651) Questions? Bret Weiss (763)