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59 Cards in this Set
- Front
- Back
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What is a Zone Variance?
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what is Zoning Code?
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Parcel specific Must be consistent with the general plan Divides city into districts/zones Discusses uses and development standards |
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Where does a developer get his money? |
a commercial bank.
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Who can regulate the development of (private) property?
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Cities, counties, and other local governments |
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What happens in each of the 8 stages of development?
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1. inception of an Idea 2. refinement of the idea 3. feasibility 4. contract negotiation 5.formal commitment 6.construction 7.completion and formal opening 8.property, asset, and portfolio management |
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What does a developer look at for selecting a property to develop on?
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physical feasibility; talks with prospective tenants, owners, lenders, partners, professionals; settles on a tentative design; options the land if the idea looks good. Know elements of a Proforma and know various parts like what are hard cost, soft cost, financing costs & points, etc. * What it is going to cost to build. |
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How many loans does a developer need?
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two loans construction loan to build the project and no payments during construction until 6-8 months after construction. At the time it falls due he pays what he borrowed and the interest. permanent loan The total development cost is summing up the hard cost, soft cost and finance cost. |
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What a city can do to ask something more expensive than the development can support?
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Entitlement Actions
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What is the role of the public sector in development process?
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Regulator of private development Provider of needed facilities and services |
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What is a relative high rate of return?
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Real Estate - 18-20% Stock Market - 12-15% |
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What are Exactions? And what they are used for?
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things of value a city will require a developer to include as a condition of development approval. Dedicate sites for public or common facilities Make payments to defray the cost of land, facilities, vehicles and equipment in connection with public or private offsite facilities. Provide other specifically agreed public amenities |
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Common law dedication
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Recording a subdivision map with defined areas labeled as public squares or parks Determined to be offers that will take effect upon acceptance by the public. |
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How lenders decide which loans to put out? |
look at project’s prospective return and the associated risk * prefer a simple project designed and built by highly skilled individuals with whom they have experience |
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Urban designer
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develop design plans for development and redevelopment projects seek to coordinate the individual buildings with public spaces, spaces in between the buildings, the larger neighborhood, the city, and the regional culture. create master plans, strategic plans, detailed site plans, or visions |
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Pension funds
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An institution that holds assets to be used for the payment of pensions to corporate or government employees, union members, and other groups
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Entitlement
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A right to develop land, as long as the developer meets the conditions. in which the local government would grant the entitlement goal of the developer in dealing with City May be ministerial; usually discretionary |
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What is a conditional use permit? |
required for certain land uses which may need special conditions to ensure compatibility with surrounding land uses
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Personality traits of a developer
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Developer doesn't want to use any of his/her money * higher the risk the higher the return |
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Ministerial and discretionary actions
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Ministerial action - one in which if you meet all requirements the local government must give you an approval. Discretionary action- may meet all requirements but they still have discretion to deny you. |
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Feasibility studies and what they look at
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determine likelihood of realizing goals. determine what objectives of the project will be met, if any. identify course of action to improve success identify strengths identify positive or negative constraints and is there anything one can do about it |
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feasibility studies:
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Appraisal cost/benefit economic base economic impact highest and best use land use financial (how does my performa look) legal *market study |
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Tract map and parcel map is
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tract map- is one of the processes used to subdivide real property into smaller lots. Typically, the tract map is used to create five (5) or more residential lots: Parcels-Condominiums-Community apartment projects- (becomes a easy way to discriminate. elderly is the exception) |
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(book) development team
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they're leaders who coordinate people never work in isolation. To design, finance, build, lease or sell, and manage their dream, developers must engage the services of many other experts—public and private developers motivate players with incentives other than money—with pride in the project, with the hope of future work, and with fear of the consequences of nonperformance. |
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(book) public sector
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Private sector real estate developers have a public sector partner in every deal Real estate development is a highly regulated process. Property law, public infrastructure, financial market rules, zoning, building permits, and impact fees are all part of the public sector’s realm. In some cases, the public sector may participate directly in the development process as a private developer’s equity partner working toward the achievement of a public goal, such as downtown redevelopment. |
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(book) capital markets
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have 4 quadrants: private debt, public debt, private equity, and public equity. (The most common sources of private debt are banks and life insurance companies) Private Debt- commercial banks, S&Ls, and mutual savings banks REIT unsecured debt and pension funds commercial real estate market. Life insurances Public Debt-As the federal government rationalized failed S&Ls, loans acquired from these thrift institutions required a new means of disposing of non performing and underperforming loans. Some of these loans were sold as mortgage pools to Wall Street investors and groups of investors, thus creating the public debt market. |
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(book) debt (debt ratio, no calculation but understand the concept) |
The debt service coverage ratio is the single most important measure for determining the acceptability of a loan application. To calculate the DSCR, divide the project’s net operating income by the project’s annual debt service
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stage 1
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inception of an idea: background brainstorming initial information for a back of the envelope pro forma |
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stage 2
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refinement of the idea: specific input for refining the rough idea
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stage 3
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feasibility: input for rigorous market analysis to convince all participants in the process that the development is a feasible project for them personally
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stage 4
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contract negotiation: supporting information needed for hard negotiations between the different participants in the process |
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stage 5
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support material for legal documentation |
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stage 6
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construction: the basis for planning marketing tactics and adapting to changing market conditions during construction. marketing feedback loop is critical. |
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stage 7
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completion and formal opening: current market data for implementing the operating plan and ongoing marketing effort |
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stage 8
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property, assets, and portfolio management: input for all capital expenditure decisions, leasing and re-leasing, and eventually repositioning the project |
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what is the goal of a developer with dealing with a city/county?
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obtain an entitlement
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entitlement approval
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shows the developer was compliant with the law |
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assessment roll
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assesses a value to a property/land/bldg |
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subdivision
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of any unit(s) of improved build land or unimproved vacant or any portion shown on the latest assessment roll as a unit or as a contiguous unit |
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ceqa
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only concern is significantly impacts on environment. |
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steps in ceqa
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2. if it is exempt: statutory or categorical 3. complete initial study checklist 4. negative declaration if no significant impact |
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development performa
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clear statement of what the costs to build will be |
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operating performa
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7 years of revenues and expenses |
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market analysis
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who, what , where, etc are the possible customers
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site selection
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is this area developable, what are the needs, what is the community, environment. |
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site selection negotiations
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developer- option to buy
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want exclusive control and will pay for it but on a strict time limit |
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basic economic marketing
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low supply/high demand=high price |
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basic marketing concept
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determine the needs and wants of target customers & satisfy |
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marketing strategy
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who? objectives? how much your going to spend? what is the product? what is the price range? |
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parts of a Performa
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soft costs: permits assessments, insurance etc. financing costs: construction loan points, construction period interests, permit loan points |
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reasonable rate of return
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depends on type of investment someone makes |
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what are the 2 sources of money for a developer?
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equity: ownership ( LLC, ownership, individual ownership, corporation) |
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individual ownership (equity)
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full control, fully liable, full tax benefits |
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partnership (equity)
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general & limited general: everyone has equal say, shared liability, shared costs, shared tax benefits limited: most partners are limited except 1,limted people have less control but higher risk bc they provide most money |
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LLC (equity)
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tax benefit, corporate liability protection, profits go to individual not corporation, hybrid of partnership/individual |
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corporation
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corporation is liable, reduced tax liability, increased financing options, lack of control, highly regualted
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s corporation ( stock)
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small, few stockholders, shielded from liability, easier to administer, get benefits from corporation.
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c corporation ( stock)
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private no public sale of stock |
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how much money comes from bank for a development?
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30% various investors |
