CT Main Street Center Downtown Revitalization Institute Got - PowerPoint PPT Presentation

Kevin฀F.฀Gremse National฀Development฀Council 277฀Fairfield฀Ave Bridgeport฀CT฀06604 212.682.1106฀(NY฀office) 203.367.7740฀(CT฀office) kgremse@nationaldevelopmentcouncil.org CT Main Street Center Downtown Revitalization Institute Got Funding?

2 Andrea฀Pareira • Parag Mehta • Connecticut฀Community฀Investment฀Corporation • Mark฀Cousineau • Local฀Initiatives฀Support฀Corporation • • Afternoon฀Panel:฀Financing฀ Connecticut฀Housing฀Finance฀Authority • Nancy฀O’Brien • National฀Development฀Council • Kevin฀Gremse • Downtown฀Development PM฀Architecture

3 National฀Development฀Council฀(NDC) • Nation’s฀oldest฀not-for-profit฀organization฀ specializing฀in฀economic฀and฀housing฀ development฀finance • Mission • Provides฀technical฀assistance฀and฀financial฀ resources฀to฀over฀80฀municipalities฀and฀local฀ development฀organizations฀around฀country – Increase flow of capital to underserved communities

4 o Be฀wary฀of฀developers฀and฀businesses฀who฀obsess฀on฀ • Articulate฀incentives฀in฀RFPs • No฀“Unduly฀Enrichment” of฀developers o Minimize฀Financial฀Risk฀to฀Public Net฀Financial฀Benefit฀to฀Public Financial฀Incentives o “But฀For” Test o Guidelines • Promote฀Incentives฀and฀Be฀Willing฀to฀Use • grants฀and฀incentives฀and฀are฀short฀on฀details

5 Incentive฀Incentives/Approaches • Reduce฀Development฀Cost • Reduce฀Cost฀of฀Capital • Make฀capital฀more฀readily฀available฀ • Decrease฀operating฀costs • Use฀Tax฀Credits฀to฀attract฀equity • Capitalize฀the฀tax฀increment฀to฀fund฀ infrastructure

6 Reduce Development Costs • Discounted sale of land and building • Offset infrastructure costs – Parking, utilities • Reduce/waive DOB and Permit Fees • Accelerate Review and Approval Process – Time is money! – Land use approval process can be better coordinated and streamlined – Efficient, consistent, and predictable – City departments work together for fostering investment friendly environment

7 Reduce฀Cost฀of฀Capital • Long-term,฀lower฀rate฀ – stretches฀borrowing฀capacity • Senior฀and฀subordinated฀debt฀instruments฀from฀ government฀agencies – DECD,฀CDA,฀CHFA

8 Make฀Capital฀More฀Readily฀Available • Additional฀credit฀leverages฀private฀investment฀by฀ lowering฀equity฀requirements – 75/25 – 50/40/10 • Know฀all฀lending฀sources – Community฀Development฀Financial฀ Institutions฀(CDFI) – CT฀Community฀Investment฀Corp – Community฀Economic฀Development฀Fund

9 Decrease฀operating฀expenses • Tax฀Options – PILOT – Phase-in฀programs฀allowed฀under฀state฀statute • Utility฀rebates • Green฀design – Higher฀capital฀costs฀offset฀by฀lower฀operating฀ expenses

10 Raise฀Equity฀through฀Tax฀Credits • Outside฀investors฀invest฀in฀exchange฀for฀tax฀ credits • Dollar฀for฀dollar฀credit฀against฀federal฀taxes฀ realized฀by฀passive฀investors฀ • 4฀types฀of฀credits – Low฀Income฀Housing฀Tax฀Credits฀(LIHTC) – Rehabilitation฀Tax฀Credit฀(RTC) – New฀Markets฀Tax฀Credits฀(NMTC) – Film฀Tax฀Credit฀

11 LIHTC • Administered฀by฀CHFA • Eligibility฀Criteria – Income/Occupancy • At฀least฀40%฀of฀the฀units฀occupied฀by฀households฀ earning฀<฀60%฀AMI • At฀least฀20%฀of฀the฀units฀occupied฀by฀households฀ earning฀<80%฀AMI – Rent – State฀approval • Powerful฀resources฀despite฀recent฀market฀impact • Good฀for฀mixed-income฀and฀mixed-use฀deals • Specialized฀development฀niche

12 New฀Cassel:฀Gateway฀Site

National฀Development฀ Council 13 New฀Cassel:฀Gateway • 57฀Residential฀Units • All฀priced฀between฀30฀to฀100฀percent฀of฀ area฀median฀income • 20,000฀square฀feet฀of฀commercial฀space฀-- grocery฀store,฀café,฀coffee฀shop • 120฀underground฀parking฀spaces

14 1,900 TOTAL฀SOURCES 500 Deferred฀Developer฀Fee 1,600 Developer฀Equity 4,200 State฀Tax฀Credit฀Equity 2,900 LIHTC฀Equity 1,000 County฀HOME 1,700 State฀ Commercial฀Mortgage Gateway฀Sources฀and฀Uses $6,200 Tax-Exempt฀Bond $20,000 TOTAL฀USES 1,900 Developer฀Fee 3,600 Soft฀Costs 14,000 Construction $500 Land฀Acquisition $20,000 SOURCES USES

How฀Equity฀is฀Raised฀from฀LIHTC 15 ����� ����������� ������ ���� ������������� �������� ����� �� ������������� ���������� ������� ���� ������������ ��� ������

16 Specialized฀Development฀ • use) – Limited฀in฀dollar฀amount฀and฀type฀of฀project฀(need฀residential฀ – Nice฀supplement฀to฀federal฀historic฀credit State฀of฀CT฀Historic฀Tax฀Credit • – 3-step฀review฀process – secretary฀of฀Interior฀Standards฀ – Need฀experienced฀team • Historic฀RTCs – $1฀million฀rehab฀will฀generate฀about฀$150K฀in฀investment Pricing฀yields฀equity฀raise฀@฀15%฀of฀basis • Credit฀raise฀equity฀to฀offset฀rehab฀costs • For฀historically฀significant฀buildings • One฀time฀20%฀federal฀tax฀credit • Stamford฀Old฀Town฀Hall

17

Old฀Town฀Hall:฀Equity฀Raise 18 ����� �� �������� ��!��������" �" ��!�������� � �#������ ������� ���� �������$���� � ��%�����

Old฀Town฀Hall:฀Sources฀and฀Uses 19 & �'�()�* �+ ���),� ��%�������� ,)-$��,�).�.-+ & , ���������,�����.���� �����#����� $��������� � ��%����� (/0��������� � �������� �)��( ��%��������

20 New฀Markets฀Tax฀Credits • Commercial฀tax฀credit฀ • Geographic-specific฀credit฀ – low฀income฀communities • 39%฀over฀7฀years฀to฀investor • Credits฀awarded฀to฀entities฀(CDEs),฀not฀projects • CDEs find฀investors฀and฀projects

• 2฀Models • Reduced฀cost฀of฀capital฀@฀400฀basis฀points • $10฀million฀project฀*฀39%฀=฀$3.9฀million฀NMTC • Raise฀@฀$2.7million฀(Less฀fees)฀in฀exchange฀for฀ $3.9฀million • Investor฀pays฀@฀.70/$฀for฀NMTC • Develop฀relationships฀w฀CDE฀that฀have฀allocation 21 – Debt subsidy – Leverage equity

22 Bijou฀Square฀- Bridgeport

23 Bijou฀Square:฀Financial฀Challenge฀฀ $4,300,000 Conventional฀Debt $2,300,000 Equity฀for฀Market฀Return $700,000 $3,000,000 GAP ($1,300,000) USES OF FUNDS SOURCES OF FUNDS

24 2฀Types฀of฀Tax฀Credits฀ Bijou฀Square • Rehabilitation฀Tax฀Credit฀(RTC) – Historic฀Tax฀Credits – For฀historically฀significant฀buildings – 20%฀one-time฀credit฀for฀investor – Used฀for฀Bijou฀Square฀and฀3฀other฀development฀in฀CBD • New฀Markets฀Tax฀Credits฀(NMTC) – Commercial฀tax฀credit฀designed฀to฀attract฀private฀investment฀in฀ low฀and฀moderate฀income฀areas – 39%฀credit฀over฀seven฀years – NMTC฀used฀as฀valuable฀resource฀in฀Bridgeport • 4฀transactions฀in฀CBD

25 RTC฀Impact฀on฀Bijou฀Square RTC฀Basis฀ $2,400,000 RTC฀Credit฀% 20% RTC฀ $480,000 Price/$ 86% Equity฀Raised $410,400

26 $2,300,000 Citi฀Investment฀as฀a฀%฀of฀NMTC $1,248,000 NMTC $900,000 Citi฀Equity฀Investment $3,200,000 Total฀Citi฀Investment Citi฀Loan NMTC฀Impact฀on฀Bijou $900,000 Citi฀Equity฀Investment $1,248,000 NMTC฀ 39% NMTC฀Value $3,200,000 Citi฀Investment 72%

Stepping฀Stones฀Musuem 27

Stepping฀Stones 28 Project฀Cost $17,000,000 SOURCES฀OF฀FUNDS Steppijng฀Stones฀Fundraising $14,000,000 NMTC฀Investm ent $3,000,000 $17,000,000

29 Tax฀Increment฀Financing • Tax฀Increment฀Financing – Very฀powerful฀but฀under-utilized฀tool฀in฀CT – Particularly฀important฀for฀large-scale฀mixed- use฀developments฀that฀have฀huge฀ infrastructure฀needs • Project’s฀economics฀can’t฀support฀all฀infrastructure • Only฀so฀much฀state฀grant฀money฀available – Bridgeport฀and฀Stamford฀

30 How฀TIF฀Works • Chapter฀132,฀Municipal฀Development฀Projects • Incremental฀real฀property฀taxes฀can฀be฀used฀to฀pay฀debt฀ service฀on฀tax-exempt฀special฀obligation฀revenue฀bonds • Bonds฀used฀to฀pay฀qualified฀public฀improvements – Remediation,฀utilities,฀parking,฀roadways