Maryland Community Development Fund

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MarylandCommunity Development Fund

• Assessing the Market

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Maryland Fund Targeted Goals

• Affordable housing for workforce populations,
  closer to jobs
• Mixed-use, mixed-income transit-oriented
  development
• Inclusionary and balanced community policies
• Regeneration of low-mod and urban communities
• Housing
• Job places
• Commercial services

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Address Market Imperfections

• Risk bias in markets
• Geographic areas
• Price points
• Transaction size
• Land use/development types
• High transaction costs for return and volume
• Lack of market knowledge
• Redevelopment
• Brownfields/greyfields
• Tenant/buyer financial sophistication
• Inexperienced, undercapitalized developers

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What Are Investors Financial Goals?

• Rate of return hurdles
• Exit strategy for capital
• Double-bottom line returns
• Sufficient deal flow

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Market Fundamentals

• Economic base and growing industry clusters
• Job generation by location and wage
• Economic shed
• Household formation by income, type tenure
• Commercial buying power
• Development trends performance
• Quality of existing stock

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Market Analysis Framework Start with Region
Employment Land Demand
Jobs
Supportable Households by Type
Buying Power
Commercial Demand
Migration
Housing Demand
Changing Demographics
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Target Area Capture

Regional Demand
Capture
Aggregate Value
Equity Demand
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Maryland Economies

• Baltimore City
• Anne Arundel County
• Baltimore County
• Howard County
• Montgomery County
• Prince Georges County
• Balance of State

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Capture Rate Factors

• Regional growth patterns
• Product segmentation
• Existing share of total demand vs. share of
  recent growth
• Competition their future capacity
• Comparables performance
• Infrastructure, services, and amenities
• Location, location, location

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Opportunities in Low/Mod Markets
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Economics Research Associates
Lower Average Incomes
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Economics Research Associates
But Comparable Middle-Incomes
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Economics Research Associates
Translates Into Sizeable Buying Power
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Low, Mod, Mid Tracts in Baltimore Metro
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Low, Mod, Mid Tract in Marylands DC Metro
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Low, Mod, Mid Tracts in MD
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Market Influences Policy Environment

• Does planning policy direct growth to core areas?
• Are regional transportation plans linking jobs to
  workforce?
• Is government investment supportive?
• Does land use policy support desired development?
• Are communities supportive?

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Market Influences Development Capacity

• Are there capable developers?
• Are there other equity and debt financing sources
  to leverage?
• Is land available and at a feasible cost?
• Is funds cost of capital competitive?

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Tale of Two Markets

• Growth Region
• Job growth
• Strong household formation
• Regional supply shortage
• Growing aggregate buying power
• Public capital for facilities and services

• Stable or Declining Region
• Limited or negative job growth
• Few net new households
• Regional supply surplus
• Stable or declining buying power
• Lack of public capital for facilities and services

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Tale of Two Markets

• Growth Region
• Direct growth
• Serve emerging niches
• Add improve stock
• Re-cycled housing supported
• Demand supports new supply
• absorption and appreciation

• Stable or Declining Region
• Abate dis-investment
• Serve unmet preferences
• Replace improve stock
• Limits to re-cycling housing
• New supply redirects demand
• winners and losers

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Potential Equity Demand