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Development Finance APA Conference September 29, 2011 Bret Weiss – WSB Mark Ruff - Ehlers
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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
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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
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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
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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
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“Can Do” versus “Can’t Do” G.O Bonds for infrastructure WAC/SAC calculations Finance fees Park dedication costs Transportation trunk fees Grants 6
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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 7
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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) 8
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Why? Lending is still tight 9
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Appraisal Gap 10
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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 11
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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 12
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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 13
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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 14
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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 15
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Case Studies Manufacturing expansion City sold land at a discount Repaying itself Minimum market value included Enough land to expand 16
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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 17
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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 18
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19 Mark Ruff (651) 697-8505 mruff@ehlers-inc.com Questions? Bret Weiss (763) 287-7190 bweiss@wsbeng.com
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