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UC Berkeley Infilling California


									             Infilling California
Creative Financial Tools and Techniques for Infill

               UC Berkeley
                 April 28, 2011
    City of Berkeley Case Study
David Brower Center & Oxford Plaza
1.14 acre city-owned
surface parking

A block from the
Downtown BART station

Across the street from
the UC campus
Downtown   U. C.
Berkeley   Berkeley
         Key Public Goals

•  Preserve public parking
   on the site with revenues
   going to City
•  Provide at least 90 units of housing
   (at least 50% affordable at 60% AMI)
•  Provide space for Environmental Center
•  Achieve Green Building LEED certification


          Residential   Office   Parking   Conference
 Typical Infill Development Costs
•  Infrastructure
    !    Offsites/Onsites
    !    Parking
•  Land
•  Hard Construction
•  Soft Costs
    !    Design/engineering/other consultants
    !    Construction financing
    !    City fees
           Oxford Plaza Funding Sources
City of Berkeley Housing Trust Fund                           $ 4.3 M
Berkeley Redevelopment Agency                                 $ 1.9 M
HCD Multifamily Housing Program!                              $ 6.6 M
MHSA and HOPWA - Alameda County                               $ 900 K
Wells Fargo Bank                                              $ 6.2 M
Affordable Housing Program/Federal Home Loan Bank and
Far East National Bank                                        $ 582 K
Deferred Developer Fee                                        $   91 K

Capital Contributions
!!! General Partner                                           $ 1.3 M
!!! Foundation Grants                                         $ 450 K
!!! Limited Partners (Enterprise Green Communities)           $ 18.1 M
                                                        Total $ 40.6 M
          Brower Center Funding Sources
Housing Capital Contribution Toward Land Cost                   $ 2.2 M
Charitable Contributions                                        $ 11.4 M
Program Related Investment Loans!                               $ 4.0 M
Bank Financing (RSF)                                            $ 3.2 M
HUD Section 108 Funds                                           $ 4.0 M
HUD BEDI Funds                                                  $ 1.8 M
Interest Income During Construction                                200K

New Markets Tax Credit Equity and Related Contributions
!!! NMTC Equity                                                 $ 13.2 M
!!! LCD Clearinghouse Loan (related to NMTC commitment)         $ 1.0 M
                                                          Total $ 40.9 M
     Oxford/Brower NMTC Benefits
•  Interest Rate: 0.9% construction; 1.9% perm
•  Loan to value: 200%+
•  $13.1 million debt convertible to equity
•  $14.7 million charitable “debt” repaid and
   converted to equity
•  Strong LTV and DCR for refinance
                                                                                                        NMTC Tax Equity Investor
    First Position Loans                                                                                       (99.99%)
Rudolph Steiner Foundations            $7,200,00                                                            US Bank CDC
        ($3.2 Million)
     Section 108 Loan
         ($4 Million)
                                                                                                     NMTC              $15,892,500

                                                                                                                   General Partner / Managing
                                                                  Brower NMTC Investor LLC                      Member of Investment Partnership /
   LCD/Clearinghouse Loans                                                                                                  LLC (.01%)
                                                                                                                 CDE/NMTC Allocatee Entity

                                         $          1,767,000

           BEDI Grant
                                                                   ROE               $40,750,000

                                      $17,592,225                                                      Fees
                                                                                                                      CDE / NMTC Allocatee
Brower Loan D                                                       CDE / NMTC Allocatees
Charitable Contributions                                                                               Services
PRI Loans
Housing Air Rights Purchase
                                                                US Bank, Lenders for Community
                                                                Development, Clearinghouse CDFI
                                                                                      Debt Service

      Housing Air Rights Purchase
     Included in Owner Investment                                 Master Development / Owner
                 Above                                            Oxford Development LLC

                                                                                                      Transfer Upon Completion
                                                                                 $      33,256,009

     Retail/Residential Parking                                    Brower Center / Office                      Public Parking
     Resources for Community                                       David Brower Center                         City of Berkeley
Progression of Construction
WRT Solomon E.T.C. Group
            Risk Mitigation Through
           DDA and Other Agreements
•  Transfer of land subject to required financing
•  Development Schedule with 24 Action Steps
•  Completion Guaranty and Regulatory Agreements
•  Scope of development and construction was
   reviewed, agreed upon and closely monitored
•  Ongoing obligations and maintenance of the
   property by the Developer.                     14

                           In the middle of difficulty
                                   lies opportunity.
                                      Albert Einstein
 Local Government Financing Sources
•    General Obligation Bonds (GOs)
•    Redevelopment Projects (TABs)
•    Special Assessment Districts
•    Mello-Roos Community Facilities Districts (CFDs)
•    Infrastructure Financing Districts (IFDs)
•    Improvement Districts (BIDs, PBIDs etc.)
•    Landscaping and Lighting Districts
                                   What is a Mello-Roos CFD?
       !  Method of financing infrastructure and facilities
       !  “Special Taxes,” above the basic 1% property tax rate, are levied
          against real property within a defined area (District)
                 "    Finance infrastructure for new development
                 "    Flexible vote-approved financing vehicle
                 "    Funding source to pay for municipal services (police, fire, park maintenance) in
                      areas with new development or infill development
       !  Upon approval by a two-thirds vote of the registered voters or
          property owners if 12 or less registered voters, the district may
          issue bonds secured by the levy of special taxes
       !  Governed by Mello-Roos Community Facilities Act of 1982 (the
          “Mello-Roos Act”)

Public Financial Management Inc.
Comparison of Redevelopment to IFDs
 Redevelopment                   IFDs
Incremental AV over base AV     Incremental AV over base AV, but
but subject to statutorily      restricted to the sponsoring city
mandated pass throughs and/or   and/or county's share of property
contractual pass through        taxes unless additional amount
payments.                       agreed upon by other taxing
45 years for post-1993 project  30 years
50+ years for earlier project
Focused set of activities on a   Public capital facilities of
project area related to economic communitywide significance,
development, affordable housing including highways, roads, utility
and infrastructure.              improvements, parking, parks etc.

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