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Getting the Big Picture Right:A series of conversations on Housing + Transit, 2016 - 2017
Mixed Income Development and TODMarch 7, 2017Wilder Conference Center
Mixed Income Communities
Housing optionsJobs / Services
EducationAmenities
Market rate
financing
Public / Tax credit financing
Mixed Income
Development
Strong markets / Soft markets
Small Group Discussion Questions:
• What key strategies should be emphasized to strengthen and sustain mixed income development and communities?
• What additional partners should be included in the conversation?
• What does success look like?
Presenters:
• Robin Snyderman, Brick Partners, LLC
• Nieeta Presley, Aurora Saint Anthony Neighborhood Development Corp.
• Tara Beard, Metropolitan Council
• Marie Franchett, City of Saint Paul, Dept. of Planning and Economic Development
• Ryan Cronk, Flaherty Collins
Getting the Big Picture Right:Mixed-Income Housing and TOD
Robin Snyderman, PrincipalBRicK PartnersMarch 7, 2017
Presentation Outline• Local Leadership is the heart of the matter: (The difference
between being at home and “being housed” is self-determination.)
• Nontraditional Stakeholders are critical to building successful mixed-income housing communities.
• Lessons from The Brookings Institution on the Changing Geography of Poverty
• Regional Mobility and Mixed-Income T.O.D. Housing
• Unique to the Twin Cities
BRicK Partners
• Focused on:– Regional Housing and Community Development
Strategies– Building Capacity, Collaboration and Community
• Current Work:– Consulting and Technical Assistance, Project
Management, and “Collaborative Management”– Local and national clients in the public and private sector
www.brickllc.com
Building Successful Mixed-Income Communities
Lessons learned from the Plan for Transformation?
Developer Roundtables, Working Groups, and Public Forums: 2000-2008
Community building in and around the site
Employer engagement
Building Successful Mixed-Income Communities
• “The logic is that concentrated poverty is a massive problem and we have to do something different. We can’t keep warehousing the poor in dense, isolated developments. But that logic breaks down when you say the opposite, that integrating housing developments must be an improvement…It takes more than just building new homes. What we learned is that by the time the development partners get to the phase of community building, they’re just burned out”
Mark Joseph, Author, “Integrating the Inner City: The Promise and Perils of Mixed-Income Public Housing Transformation”
Building Successful Mixed-Income Communities
• “Hopefully in 20 years, this time will be an inflection point where you began to see people be so much smarter about how they did this. We figured out how to build them, but building is not enough. Maybe in 20 years, mixed income will have gone to scale, with mixed income neighborhoods, not just developments, and mixed income will no longer be delineated by race and income so clearly. I still think there’s room among well-meaning policy and practitioners to do this more effectively. ”
Mark Joseph, Author, “Integrating the Inner City: The Promise and Perils of Mixed-Income Public Housing Transformation”
1 The geography of poverty and opportunity has changed
Current policies are not aligned with this new geography2
3 We need a new agenda for metropolitan opportunity
Confronting Suburban Poverty in Metropolitan Minneapolis-St. Paul
Confronting Suburban Poverty in Metropolitan Minneapolis-St. Paul
0
50,000
100,000
150,000
200,000
250,000
1970 1980 1990 2000 2014
Poor
peo
ple
Minneapolis & St. Paul Suburbs
This trend has played out in the Twin Cities region
Source: Brookings analysis of U.S. Census Bureau data9
Brookings’ Ingredients for Success• Achieve Scale
– Improve systems and networks– Promote high performing
organizations– Support smart consolidation
• Collaborate and Integrate– Identify and reduce barriers– Reward collaborative approaches– Catalyze regional capacity
• Fund Efficiently– Commit to flexible, enterprise-
level funding– Promote tools that leverage public
and private resources– Develop and maintain consistent,
comparable data sources
10
Structure of a Supply-Side Regional Mobility Strategy• Regional collaboration among Public
Housing Authorities deploying Project Based Vouchers to increase and diversify housing options in priority areas.
• Particularly relevant for families with children, given latest research and fair housing priorities.
• Key partners would include Metropolitan Planning Organization, Housing Finance Agency, and regional mayors.
11
Unique to the Twin Cities
• Breadth and Depth of Regional Vision, Housing and Workforce Expertise
• Action-Oriented Collaboration
• Realizing Strategies for the Range of Opportunity Areas
MIXED-INCOME HOUSINGCity of Saint Paul
Policy on Affordability Mix
• 30% of new rental production units must be at or below 60% of median income.
• At least 10% must be at or below 30% of median income.
• At least 10% must be at or below 50% of median income.
West Side Flats Apartments
West Side Flats III
• Market rate building with 182 units
• Mixed-income building with 78% affordable and 22% market rate units
• Mixed-income building will be constructed to Passive House standards using cutting edge energy efficient design techniques.
West Side Flats Phase III Building A
West Side Flats Phase III Building B
2700 University
• Mixed-Income 80% Market Rate, 20% Affordable
Project Analysis
www.2700university.com
Why do we pursue a mixed income project?
• City Requirement• In-House Team to execute a mixed-income deal
• Brings are market rate & affordable groups together• We see this as a growing trend in other markets
• As major markets rents continue to rise, mixed income projects will become more important.
• Great Real Estate • IN between St. Paul & Minneapolis• TOD (Green Line)• Edge of Campus• High Visibility
www.2700university.com
• GAP Analysis w/ City of Saint Paul
• Financing
Obstacles in Completing the Project
• Identify a Lender
• Identify an Investor
• Identify Other Soft Sources
• Appraisal (Light Rail Not Open)• Financial Structure
• Condo – (The way the project was done)
• One ownership – 80% / 20%
Ryan Cronk,Vice President of Development
Flaherty & Collins Properties
www.2700university.com
• Light Rail Opening
• City Clawbacks
• Condo Structure
• LISC – Mezz. Debt
• National Equity Fund (NEF)
Overcoming Project Obstacles/Hurdles
Ryan Cronk,Vice President of Development
Flaherty & Collins Properties
www.2700university.com
198 U n i ts
Ma rket Rate Cap i ta l S tac k
• BMO Co n struct ion / Mi n i - Perm Lo an
• L I S C – Mez zanine Lo an ( w / p art i c ipat ion
• Metro pol i tan Co u nc i l TOD G rant
• Ow n er Eq u ity
• D efe rred Fe e s
Side-By-Side Deals, Integrated198 Units
Market Rate Capital Stack
198 U n i t s
Market Rate Cap i ta l S tac k
• BMO Co n struct ion / Pe rm “A” Bo n d Lo an ( th ro ugh Co m p l iance Pe r i od)
• Mo n et ized T IF “B” Bo n d
• S a i nt Paul H RA H o m e fu n d s Lo an
• G e n era l Partn e r Lo an
• L IH TC Eq u ity
• D efe rred Fe e s
50 Units
Affordable Capital Stack
John SternAttorney, Real Estate Development
Winthrop & Weinstine
www.2700university.com
Project Feasibility
WHAT DOES IT TAKE TO MAKE A PROJECT LIKE THIS HAPPEN?
www.2700university.com
LOTS OF Project Partners
www.2700university.com
• Mixed-Income: 20% / 80% - 50% AMI
• Transit-Oriented Development (TOD) on Green Line
• “Main & Main” – but not “Main & Main”
• LEED®
• Project Labor Agreement & Economic Inclusion Goals
• Parking – Less than 1 per unit
• Project Financing Team
Uniqueness of the Project
Ryan Cronk,Vice President of Development
Flaherty & Collins Properties
www.2700university.com
• 1 s t F l o o r B a r / C o f fe e S h o p• H i g h - S p e e d W i - F i T h ro u g h o u t• 1 , 4 0 0 s q . f t . F i t n e s s C e n te r w /
M a t r i x ® E q u i p m e n t & Yo ga S t u d i o
• M a t r i x M y R i d e ® + G ro u p C yc l i n g
• R e s o r t - S t y l e S a l t w a te r P o o l w / We t D e c k
• 2 0 , 0 0 0 s q . f t . C o u r t ya rd• “ O u t d o o r L i v i n g R o o m ” w / F i r e
P i t s , C o m m e rc i a l G ra d e G r i l l s & O u t d o o r F u r n i t u r e
• 1 , 6 0 0 s q . f t . B a r k Pa r k w / D o g Pa r k E x p r e s s C o u rs e ( Wa te r & Wa s te S t a t i o n s )
• U n d e rg ro u n d Pa r k i n g
Features & Amenities• B i ke S t o ra g e w / R e p a i r To o l s• G r e e n L i n e L i g h t R a i l A c c e s s• L E D L i g h t i n g• O v e rs i z e d F l a t S l a b K i tc h e n
C a b i n e t s w / C u s t o m H a rd w a r e• O v e rs i z e d E n e rg y Ef f i c i e n t
W i n d o w s• F ro n t L o a d F u l l - S i z e E n e rg y
S t a r Wa s h e rs & D r y e rs• N e s t ® T h e r m o s t a t s• Q u a r t z T h e r m o s t a t s• F ra m e l e s s S h o w e r D o o rs• R e c e s s e d & D e c o ra t i v e Pa t i o s
a n d /o r B a l c o n i e s• S e l e c t Wa l k - u p / 2 - L e v e l U n i t
To w n h o m e s w / U r b a n D e s i g n s
Ryan Cronk,Vice President of Development
Flaherty & Collins Properties
Sources & Use of Funds
USES OF FUNDS Total Affordable Market Rate
To Purchase Land $3,500,000 $770,000 $2,730,000Total Construction Budget $37,279,423 $9,121,871 $28,157,552Architectural & Engineering 1,550,000 280,000 1,270,000Construction Period Costs
Real Estate Attorney 606,000 59,000 547,000Title, Recording & Lender Inspections 180,805 41,685 139,120Construction Interest - A 1,041,744 - 1,041,744Construction Interest - B 217,524 217,524 -TIF Interest & LISC Interest 2,016,928 956,928 1,060,000Bond Cost 450,475 450,475 -Finance Fee 408,648 54,000 354,648Furnishings and Equipment 400,000 - 400,000
Other Period / Costs 2,430,869 1,087,650 1,343,219Development Contingency 1,236,223 456,094 780,130
Total Development Cost $51,318,638 $13,495,227 $37,823,412Developer Overhead $3,633,346 $1,742,175 $1,891,171
TOTAL USES $54,951,984 $15,237,402 $39,714,582
SOURCES OF FUNDS Total Affordable MarketTax Exempt Bonds 12.16% $6,679,628 $6,679,628 $0Construction Loan / Market 50.95% $28,000,000 $0 $28,000,000Construction / Perm Affordable 2.98% $1,640,000 $1,640,000 $0Interim Income 0.00% $0 $0 $0Tax Credit Equity 8.46% $4,646,252 $4,646,252 $0LISC 11.39% $6,260,000 $0 $6,260,000HOME Funds 1.82% $1,000,000 $1,000,000 $0TOD Grant 3.54% $1,944,774 $0 $1,944,774General Partner Loan 1.73% $951,878 $951,878 $0
Developer Cash Contribution 2.73% $1,500,000 $0 $1,500,000
Deferred Fees 4.24% $2,329,452 $319,644 $2,009,808
TOTAL SOURCES $54,951,984 $15,237,402 $39,714,582
www.2700university.com
www.2700university.com
www.2700university.com
www.2700university.com
www.2700university.com
www.2700university.com
• 9% Tax Credits vs. 4% Credits
• Publically Owned Land that can be contributed
• City provide Credit Enhancement to make TIF Bond less Expensive
• Finance without condominium structure
• It ’s Early…
What Could Make Future Projects Better & Easier
• We will have more information on this in the future!
www.2700university.com
www.2700university.com