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Maryland Regional Workforce Housing Fund
Leadership ForumJune 7, 2006
MARYLAND REGIONAL WORKFORCE HOUSING FUND (“MRWH”)
1. Enterprise: Background and Expertise
2. MRWH Fund: Opportunity and Need
3. MRWH Fund: Investment
4. MRWH Fund: Investment Process
5. MRWH Fund: Investment Benefits
6. MRWH Fund: Management Team
7. Next Steps
8. Example of an “Award Winning Community”
9. Contact Information
PRESENTATION AGENDA
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
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
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
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
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
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
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
Investment Approval and Performance MonitoringCommittee 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 ReviewCommittee comprised of investors holding $10 million or greater: Compliance with Overall Fund Parameters Compliance with Investment Parameter Targets Periodic Reporting and Review
INVESTMENT PROCESS
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
Charlie Werhane, Vice Chairman and Chief Operations OfficerEnterprise Community InvestmentCapital Raising, Fund Oversight
Chickie Grayson, PresidentEnterprise Homes, Inc.Capital Raising, Development Expertise
Joe Wesolowski, Senior Vice PresidentEnterprise Community InvestmentCapital Raising, Asset Management, Operations
Christine Madigan, Vice PresidentEnterprise Homes, Inc.Capital Raising, Fund Strategy, Deal Structuring, Oversight
Edie Loughlin, DirectorEnterprise Community InvestmentDeal Sourcing, Deal Structuring, Deal Closing
ENTERPRISE FUND MANAGEMENT TEAM
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
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
THANK YOU
Christine MadiganVice [email protected]
Joe WesolowskiSenior Vice PresidentEnterprise410-772-2512jwesolowski@enterprisecommunity.com