2009 NH&RA Annual Meeting Measuring Community Benefit of NMTC - - PowerPoint PPT Presentation

2009 NH&RA Annual Meeting

Measuring Community Benefit of NMTC Transactions

Joe Wesolowski March 11, 2009

2

Transaction Selection Process

NMTC Screening Application Discussion with Enterprise “Impact Market” leader Project Ranking Worksheet “Demonstration Project” Internal Pipeline Review Community Impact Assessment Completed

3

Transaction Selection

• Is it a Qualified Low Income Community Business?
• Does it meet the requirements of applicable Allocation Agreements?
• Does it meet the investment guidelines for investors?
• Financially Viable Structure
• Strength of the Development Team
• Importance to the city
• “But for” test

4

Transaction Selection

• Deal “Readiness”
• Consistency with Network Advisory Board Feedback
• Timing of closing relative to CDFI Performance rules
• Size of the transaction vs. Cost to close
• Geographic Concentration
• COMMUNITY IMPACT

5

Impacts

Individual

• Jobs
• Living Wages
• Employee Benefits
• Wealth Creation
• Home Ownership
• Training Programs
• Access to Goods and Services

Community

• Reduced Crime
• Increased Revenue for State and

Local Governments

• Increase in Social Programs
• Alleviation of Poverty
• Closing the Affordability Gap
• Women and Minority Ownership
• Decrease number of individuals
• n Public Assistance
• “Catalytic” Impacts

6

Impacts

Environmental

• Green Building (LEED)
• Brownfields Cleanup
• Saving Greenfields
• Reduced CO2 Emissions
• Individual Health Benefits (Water & Air Quality)
• Renewable Energy

7

8

Rosa Parks School

Project was Key Element in Community Revitalization Attached Boys and Girls Club Jobs Small Amount of City Revenue Walking Distance to School Community Use of Library and Computers LEED Silver Rating 2007 Richard Riley Award

9

North North Portland Portland New Columbia -- New Columbia -- Before Before

10

New Columbia today New Columbia today New Columbia today New Columbia today

11

Columbus Housing Partnership - Columbus, OH

Project type: For-Sale Housing

• TDC $90,000,000
• QEI $9,500,000
• Phased Construction/Rehab ~ 700 affordable single family homes over 7 yrs
• Affordable to families earning less than 80% AMI
• QEI recycles > 9 times
• Catalytic project; leverages city’s Home Again Program
• 100 construction jobs
• Sponsored by Columbus Housing Partnership

12

East Baltimore Development, Inc.

• Project is immediately adjacent to

East Baltimore campus of Johns Hopkins: Nation’s top-ranked hospital Highly-regarded schools of medicine, public health, and nursing Country’s largest recipient of NIH research funding City and State’s largest private employer Over 4,300 graduate students, post-docs, and research fellows

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• Massive disinvestment and property

abandonment in community marked by an over 70% vacancy rate

• Less than $4.0 million market valuation

for 31-acres of real estate located in Phase I of project area

• Crime rates, poverty levels, and lead

poisoning rates significantly above the city and regional averages

• Household income levels and

educational attainment rates significantly below the city and regional averages

• Long and complex “town/gown”

relationship between the community and Johns Hopkins

East Baltimore in 2002

14

• Over 2,200 new residential

housing units targeted to a mix

• f incomes and households
• Nearly 2 million square feet of

new life science and other workplace space

• Upwards of 8,000 new

employment opportunities

• Neighborhood retail stores and

services

• Community school campus
• Intermodal transit station at

Gay near Broadway

• New parks integrated into

neighborhood in support of schools, recreational trails and

• ther amenities.

Scope of Development Activities

15

Community Development:

• Master Planning
• “Clean and Safe” Activities
• Transit-Oriented Development

Human Development:

• Household Relocation
• Family Services
• Educational Initiatives
• Family Resources Center
• Shared Equity Housing Fund

Economic Development:

• Workforce Development
• Economic Inclusion
• Business Incubation

Real Estate Development:

• Property Acquisition
• Demolition
• Infrastructure
• Construction
• Project Management

Programmatic Activities

Demonstrating Results:

Defining, Measuring and Reporting Post‐Development Community Impact

Virchow, Krause & Co., LLP + The Valued Advisor Fund

HOW IT WORKS

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

• Define what is to be measured
• Project size, scope and land use
• Access to capital
• Serving LIC residents and Businesses
• Economic Impact to the LIC
• Develop a method to measure
• Area of impact and area of comparison
• CDE/community assumptions
• Required data
• Constraints
• Benchmarks
• Report results
• Audience
• Format
• Updates
• Understand why and how the CDE invested in the project, in the LIC
• Community context
• CDE expectations and criteria for investment
• CDE community impact requirements

INDICATORS OF IMPACT

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Depending upon size, scope and land use of the completed project, CDEs require evaluations of impact typically within three categories:

Access to Capital

INDICATORS OF IMPACT

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Depending upon size, scope and land use of the completed project, CDEs evaluate impact in three categories:

Serving LIC Residents and Businesses Access to Capital

INDICATORS OF IMPACT

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Depending upon size, scope and land use of the completed project, CDEs evaluate impact in three categories:

Economic Impact To the LIC Serving LIC Residents and Businesses Access to Capital

CASE STUDY: SECOND LINE STUDIOS

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Second Line Stages Studios, New Orleans, LA

• The Valued Advisor Fund and other investors and partners provided an $8

million dollar NMTC allocation in December 2008.

• This was an example of the leveraging of public and private resources for

economic development in a highly distressed LIC

• The QALICB produces short and full length feature films and television

productions

• This project is unique in that it involves the restoration of the historic Toye

Cab Company building into a LEED certified structure and provides the first fully “Green” film studio in the United States utilizing full recycling of production materials and materials utilized on sets and in the various areas of the site.

• Second Line has also linked with the Kingsley house to provide

apprenticeships to local youth in the film industry helping to inspire hope and bring new opportunity into this LIC corridor.

• Understand why and how the CDE invested in the project, in the LIC
• Define what is to be measured

HOW IT WORKS : SECOND LINE STAGES

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Access to Capital Serving LIC Residents and Businesses Economic Impact To the LIC

HOW IT WORKS : SECOND LINE STAGES

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

• Develop a method to measure
• Area of impact
• Comparison neighborhood or comparison over time
• Constraints
• Benchmarks

Access to Capital: Leveraging Other Public and Private Investment Serving LIC Residents and Businesses: Creating Environmentally Sustainable Outcomes Economic Impact to the LIC: Commitment to Training and Hiring LIC Residents

REPORTING RESULTS

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

• Report results
• What factors created impact?
• Who was served?
• How do we know?
• Was the project successful? What is success?

Constraints must be addressed:

• Causality
• Timing
• Data
• Benchmarks

Measuring post-project impact is important:

• Stakeholders need to know
• Funders need to know
• CDEs need to know
• Informs future development plans

• Thank you for your continued interest in supporting our nation’s low-

income communities.

• For additional information or discussion please feel free to contact me

at:

• Terri Preston-Koenig

The Valued Advisor Fund (312) 307-9550 tpreston-koenig@valuedadvisorfund.com

POST‐DEVELOPMENT COMMUNITY IMPACT ASSESSMENT

Metrics in Community Metrics in Community I mpact Analysis I mpact Analysis

RealProperty RealPropertyResearch ResearchGroup Group

Washington / Baltimore Washington / Baltimore •

• Atlanta

Atlanta

NH&RA’s 2009 Winter NMTC Symposium March 11, 2009

Measuring the Community Benefit of NMTC Transactions

James Riggs

RealPropertyResearchGroup

Telling the Story Telling the Story… …

Over $12.6 billion QEI s made into CDEs Nearly $9 billion QLI CI s made through FY 2007 $5.9 billion invested in LIC Real Estate Projects

• over 46 million square feet constructed or rehabilitated
• 210,000 construction jobs

$3.0 billion invested in LIC operating businesses

• over 45,000 full time equivalent jobs created or retained

Source: http://www.cdfifund.gov/docs/nmtc/2009/2009%20NMTC%20Workshop%20Materials.ppt

RealPropertyResearchGroup

Community I mpact Community I mpact

Since inception, community impact has been

the centerpiece of the NMTC program

The presentation of historic and projected

community impact with relevant and

relevant and quantifiable data quantifiable data is a necessary

component of a successful NMTC application

The importance of community impact will

• nly increase

RealPropertyResearchGroup

I ncreased Transparency I ncreased Transparency

The Obama administration’s “change of tone in Washington”

includes an increase in accountability and transparency

accountability and transparency

Stimulus Bill + Record Deficit Spending =

A heightened awareness of how A heightened awareness of how taxpayer dollars are spent taxpayer dollars are spent

See www.recovery.gov

RealPropertyResearchGroup

2009 NMTC Application 2009 NMTC Application I mpact Goals I mpact Goals

Create or maintain jobs for LI persons or residents of LICs Increase wages of LI persons or residents of LICs Finance or assist businesses owned by or serving residents of LICs Finance or assist minority, women or LI person-owned businesses Finance or assist organizations that provide childcare, healthcare,

educational or other benefits

Facilitate wealth creation or asset accumulation Provides goods and services to LI persons or residents of LICs Create environmentally sustainable outcomes Finance real estate projects which provide rent reductions or flexible

lease provisions to businesses

RealPropertyResearchGroup

The NMTC program supports The NMTC program supports

Real estate development projects

• Shopping centers, office buildings & residential

Community facility projects

• Charter schools, community & cultural centers

Operating businesses

• Manufacturers, retail stores & restaurants

Projects in cities, suburbs, small towns and rural

communities throughout the country

Different types of projects generate Different types of projects generate different types of impacts different types of impacts in different types of communities in different types of communities

RealPropertyResearchGroup

Spectrum of I mpacts Spectrum of I mpacts

Economic

• Measured by change in economic output, employment

and income

Fiscal

• Measured by change in local government revenue and

expenditures

Social

• Measured by change in service delivery capacity

Green

• Measured by the extent to which a project meets

industry standard benchmarks for Green building (ie, LEEDS)

RealPropertyResearchGroup

Understanding Context Understanding Context

I nsight of local context is the key to a I nsight of local context is the key to a project project’ ’s impact on its community s impact on its community

Project and Site Analysis Neighborhood and Demographic

Characteristics

Local and Regional Economic Conditions

Analysis of local context is an Analysis of local context is an “ “on the

• n the

ground ground” ” exercise exercise

RealPropertyResearchGroup

Economic I mpacts Economic I mpacts

Measured by change in economic Measured by change in economic

• utput, employment and income
• utput, employment and income

The NMTC program is a jobs program

• Impacts from past performance and projected

impacts are scored in part on the jobs created or maintained, specifically for low income persons

Impacts during construction and operations

are measured separately

• Temporary vs permanent impacts

RealPropertyResearchGroup

Regional Multipliers Regional Multipliers

Regional multipliers form the

basis for most economic impact analysis

Multipliers describe the

relationship between different sectors in an economy

An increase in output in one

sector (direct impact) increases demand for output in other sectors (indirect impact)

40¢ 16¢ 6¢ 60¢ 24¢ 10¢ 4¢ 1¢ 3¢ $1 2¢

I nitial 1 2 3 4 5

Leakage Local Spending

Initial Impact: Indirect Impact: Total Impact: $1.00 .40 .16 .06 .03 .01 $1.66

The I ndirect I mpact I nitial Change – the Direct I mpact

RealPropertyResearchGroup

$1M I ncrease in $1M I ncrease in Construction Spending Construction Spending

Multipliers are used to measure change in output,

income and employment

Impact of $1,000,000 Increase in Construction Spending Sector Output Income Employment (jobs) Resource Extraction $13,900 $1,500 Construction $1,004,700 $200,500 4 Manufacturing $51,400 $6,500 Transporation/Trade $154,800 $33,800 1 Services $435,900 $88,500 2 TOTAL $1,660,700 $330,800 8 Regional Multipler 1.6607 0.3312 8.0945

Source: US Dept of Commerce, Bureau of Economic Analysis; RIMS II I-O Model, Suburban Maryland, 2006.

RealPropertyResearchGroup

I MPLAN I MPLAN vs vs RI MS I I RI MS I I

Two standard Input-Output models are used to

estimate job creation

• RIMS II or IMPLAN

RIMS II provides only multipliers

• Analyst is responsible for input of all data
• Requires thorough understanding of the regional

economy

IMPLAN provides a “blackbox”

• Analyst inputs only project variables
• Allows for estimating impact without understanding

underlying data

• Offers more detailed industry and geographic

disaggregation

RealPropertyResearchGroup

Fiscal I mpacts Fiscal I mpacts

Measured by the estimated change to Measured by the estimated change to local local gov gov’ ’t t expenditures and revenue expenditures and revenue

Temporary impacts include permit and utility

connection fees as revenue

Long-term impacts include new taxes directly

resulting from the project (property, income, sales, occupancy, etc) net of development incentives

RealPropertyResearchGroup

Fiscal I mpacts Fiscal I mpacts

Direct and indirect employment and income Direct and indirect employment and income impacts also generate fiscal impact impacts also generate fiscal impact

Indirect fiscal impacts are measured on a per unit or

per capita basis (jobs and population)

This analysis takes into account general fund revenue

and expenditures

• Revenue from traffic tickets, user fees, business taxes, etc.
• Expenditures for general gov’t, police, fire, courts, etc.

Analysts should also address fiscal impact on schools

for projects with a residential component

RealPropertyResearchGroup

Social I mpacts Social I mpacts

Measured by change in capacity for Measured by change in capacity for social services social services

Analyst should understand community context

and document need for additional capacity

• Charter school project > Document poor performance

at area schools

• Job training center > Document high unemployment,

underemployment or ongoing structure changes in the local economy

• Community center > Document a special needs

population and/or lack of facilities

RealPropertyResearchGroup

Social I mpacts Social I mpacts

Social impacts of similar projects are not Social impacts of similar projects are not likely to be comparable likely to be comparable

Studies have shown that some job training programs

provide graduates with increased employment

• pportunities and higher incomes
• Job training programs in a different context or offering

different programs are not likely to produce comparable results

Charter schools can help stabilize neighborhoods by

retaining middle income households, increasing property values and lowering crime

• Not all charter schools have similar success and are unlikely

to impact neighborhoods uniformly

RealPropertyResearchGroup

Green I mpact Green I mpact

Measured by the extent to which a Measured by the extent to which a project meets Green building industry project meets Green building industry benchmarks benchmarks

Site Selection and Site Design Water Efficiency Energy Efficiency Reuse and Recycling of Materials Indoor Air Quality Innovative Design

• r other similar guidelines

RealPropertyResearchGroup

Green I mpact Green I mpact

Site design can have a significant impact on Site design can have a significant impact on surrounding low income neighborhoods surrounding low income neighborhoods

Development density and community connectivity Brownfield redevelopment Support for alternate modes of transportation Open space preservation Storm water management Heat-island effect mitigation Reduced light pollution

RealPropertyResearchGroup

Telling the story... Telling the story...

I mpact studies have multiple uses beyond that of I mpact studies have multiple uses beyond that of required backup for a NMTC application required backup for a NMTC application

A pre-transaction analysis will set the framework for future

analysis of post-transaction impacts

Help CDEs evaluate their portfolio Impact studies can help generate local support for a project Lenders can utilize impact studies to document CRA

requirements

Community impact analysis tells the Community impact analysis tells the whole story whole story

RealPropertyResearchGroup

RealProperty RealProperty RealProperty RealPropertyResearch Research Research ResearchGroup Group Group Group

Washington / Baltimore Washington / Baltimore Washington / Baltimore Washington / Baltimore •

• Atlanta

Atlanta Atlanta Atlanta