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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 4 SECTION 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 • $14.7 million charitable “debt” repaid and converted to equity • Strong LTV and DCR for refinance !"#!$%&'()*)+,$!-.$&/.01.$&021/&31$4/14$.& 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%) $1,000,000 CDE/NMTC Allocatee Entity $ 1,767,000 BEDI Grant ROE $40,750,000 $17,592,225 Fees CDE / NMTC Allocatee Sponsor 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 Lease Lease $6,445,121 $ 33,256,009 Retail/Residential Parking Brower Center / Office Public Parking Resources for Community David Brower Center City of Berkeley Development Progression of Construction Architects: WRT Solomon E.T.C. Group 13 Risk Mitigation Through DDA and Other Agreements • Transfer of land subject to required financing commitments • 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 RESOURCES www.uli.org www.ci.berkeley.ca.us www.browercenter.org www.rcdev.org www.seifel.com In the middle of difficulty lies opportunity. Albert Einstein 15 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”) 17 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 entities. 45 years for post-1993 project 30 years areas 50+ years for earlier project areas 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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