2009 NH&RA Annual Meeting - Home - NH&RA...Massive disinvestment and property abandonment in community marked by an over 70% vacancy rate Less than $4.0 million market valuation for

2009 NH&RA Annual Meeting

Measuring Community Benefit of NMTC Transactions

Joe WesolowskiMarch 11, 2009

2

Transaction Selection Process

NMTC Screening ApplicationDiscussion 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

IndividualJobs

Living Wages

Employee Benefits

Wealth Creation

Home Ownership

Training Programs

Access to Goods and Services

CommunityReduced 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 on 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 Portland

New Columbia -- Before

10

New Columbia today New Columbia today

11

Columbus Housing Partnership - Columbus, OH

Project type: For-Sale HousingTDC $90,000,000QEI $9,500,000Phased Construction/Rehab ~ 700 affordable single family homes over 7 yrsAffordable to families earning less than 80% AMIQEI recycles > 9 timesCatalytic project; leverages city’s Home Again Program100 construction jobs Sponsored by Columbus Housing Partnership

http://www.chpcolumbus.org/index.htm

12

East Baltimore Development, Inc.

Project is immediately adjacent to East Baltimore campus of Johns Hopkins:

Nation’s top-ranked hospitalHighly-regarded schools of medicine, public health, and nursingCountry’s largest recipient of NIH research fundingCity and State’s largest private employerOver 4,300 graduate students, post-docs, and research fellows

13

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 of 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 other amenities.

Scope of Development Activities

15

Community Development:

Master Planning“Clean and Safe” ActivitiesTransit-Oriented Development

Human Development:

Household Relocation Family ServicesEducational InitiativesFamily Resources CenterShared Equity Housing Fund

Economic Development:

Workforce DevelopmentEconomic InclusionBusiness Incubation

Real Estate Development:Property AcquisitionDemolitionInfrastructureConstructionProject Management

Programmatic Activities

Demonstrating Results:

Defining, Measuring and Reporting Post‐Development Community Impact

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

HOW IT W

ORKS

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

INDICA

TORS O

F IMPA

CT 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

INDICA

TORS O

F IMPA


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

INDICA

TORS O

F IMPA


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

Economic Impact

To the LIC


and Businesses

Access to Capital

CASE STU

DY: SECO

ND LIN

E STUDIOS


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 W

ORKS : SECO

ND LIN

E STAGES


Access to Capital


and Businesses

Economic Impact

To the LIC

HOW IT W

ORKS : SECO

ND LIN

E STAGES


•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

REPORTIN

G RESU

LTS 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 impactis 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

[email protected]


Metrics in Community Metrics in Community Impact AnalysisImpact Analysis

RealPropertyRealPropertyResearchResearchGroupGroupWashington / Baltimore Washington / Baltimore ••

AtlantaAtlanta

NH&RA’s 2009 Winter NMTC SymposiumMarch 11, 2009

Measuring the Community Benefit of NMTC Transactions

James Riggs

RealPropertyResearchGroup

Telling the StoryTelling the Story……Over $12.6 billion QEIs made into CDEs

Nearly $9 billion QLICIs 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


Community ImpactCommunity Impact

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 dataquantifiable data is a necessary component of a successful NMTC application

The importance of community impact will only increase


Increased TransparencyIncreased TransparencyThe Obama administration’s “change of tone in Washington”includes an increase in accountability and transparencyaccountability and transparency

Stimulus Bill + Record Deficit Spending =

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

See www.recovery.gov


2009 NMTC Application 2009 NMTC Application Impact GoalsImpact 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


The NMTC program supportsThe NMTC program supportsReal 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 generateDifferent types of projects generatedifferent types of impacts different types of impacts

in different types of communitiesin different types of communities


Spectrum of ImpactsSpectrum of Impacts

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)


Understanding ContextUnderstanding Context

Insight of local context is the key to a Insight of local context is the key to a projectproject’’s impact on its communitys 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 on the groundground”” exercise exercise


Economic ImpactsEconomic Impacts

Measured by change in economic Measured by change in economic output, employment and incomeoutput, 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


Regional MultipliersRegional MultipliersRegional 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¢

Initial 1 2 3 4 5

Leakage

Local Spending

Initial Impact:

Indirect Impact:

Total Impact:

$1.00

.40

.16

.06

.03

.01$1.66The Indirect

Impact

Initial Change – the Direct Impact


$1M Increase in $1M Increase in Construction SpendingConstruction Spending

Multipliers are used to measure change in output, income and employment

Impact of $1,000,000 Increase in Construction Spending

Sector Output IncomeEmployment

(jobs)Resource Extraction $13,900 $1,500 0Construction $1,004,700 $200,500 4Manufacturing $51,400 $6,500 0Transporation/Trade $154,800 $33,800 1Services $435,900 $88,500 2TOTAL $1,660,700 $330,800 8

Regional Multipler 1.6607 0.3312 8.0945Source: US Dept of Commerce, Bureau of Economic Analysis; RIMS II I-O Model, Suburban Maryland, 2006.


IMPLAN IMPLAN vsvs RIMS IIRIMS IITwo 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


Fiscal ImpactsFiscal Impacts

Measured by the estimated change to Measured by the estimated change to local local govgov’’tt expenditures and revenueexpenditures 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


Fiscal ImpactsFiscal Impacts

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


Social ImpactsSocial Impacts

Measured by change in capacity for Measured by change in capacity for social servicessocial 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


Social ImpactsSocial ImpactsSocial impacts of similar projects are not Social impacts of similar projects are not

likely to be comparablelikely to be comparableStudies have shown that some job training programs provide graduates with increased employment opportunities 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


Green ImpactGreen ImpactMeasured by the extent to which a Measured by the extent to which a

project meets Green building industry project meets Green building industry benchmarksbenchmarks

Site Selection and Site Design

Water Efficiency

Energy Efficiency

Reuse and Recycling of Materials

Indoor Air Quality

Innovative Design

or other similar guidelines


Green ImpactGreen ImpactSite design can have a significant impact on Site design can have a significant impact on

surrounding low income neighborhoodssurrounding low income neighborhoodsDevelopment 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


Telling the story...Telling the story...Impact studies have multiple uses beyond that of Impact studies have multiple uses beyond that of

required backup for a NMTC applicationrequired backup for a NMTC applicationA 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


RealPropertyRealPropertyResearchResearchGroupGroupWashington / Baltimore Washington / Baltimore ••

AtlantaAtlanta

Documents

2009 NH&RA Annual Meeting - Home - NH&RA...Massive disinvestment and property abandonment in community marked by an over 70% vacancy rate Less than $4.0 million market valuation for