BRIDGING THE GAP: SCENARIOS AND STRATEGIES FOR DISTRICT WORKFORCE HOUSING

Transcription

1 BRIDGING THE GAP: SCENARIOS AND STRATEGIES FOR DISTRICT WORKFORCE HOUSING CASBO April 15, 2017 Dutra Cerro Graden

2 REAL ESTATE IN THE SOCIAL SECTOR Educational Religious Non-Profit Municipal The social sector has different ends to serve people and communities

3 REAL ESTATE IN THE SOCIAL SECTOR As a publicbenefit corporation: allows public benefit to be a charter purpose in addition to the traditional corporate goal of maximizing profit for shareholders. Leah Denman K-12 Services Jamil Muchell Brokerage Services Landis Graden Co-Founder Angie Williams Real Estate Development Dominic Dutra Co- Founder

4 WHY DOES WORKFORCE HOUSING MATTER? Housing out of reach for middle income professionals. Most affordable housing programs are focused on low and very-low income earners. Workforce wages have not kept up with significant increases in the cost to rent or purchase local housing. In most populous counties, only 17% of homes are affordable on the average teacher salary. Significant impacts on recruiting and retraining new teachers.

5 SO WHAT ARE YOUR OPTIONS? The ideal scenario to address medium and long-term housing issues: Financial assistance programs - housing bonus for targeted employees, downpayment savings plans, mortgage assistance, etc. AND Developing short-term rental units A new teacher in this area is likely facing rent for a 450 sqft studio for $1,405 month on an annual salary of $50,000.

6 DEVELOPMENT OF WORKFORCE HOUSING

7 EXAMPLE SCENARIO OF WORKFORCE HOUSING Typical Project Built for a School District Number of District 48 Units Site Size 3-4 acres Cost of Development $22,000,000 Monthly Rental Rate to Employees Monthly Rental Market Rate Savings on Employee Rent Compared to Market Rate Estimated Time to Build $1,280 $2,200 42% 14 months

8 BUILDING OPTIONS FOR WORKFORCE HOUSING: (Option A) District funds construction through land, surplus property gap funding and Certificates of Participation (tax exempt) Pros District has total control over rents, access, etc. Cons District acquires all funding, bares all risk, occupies entire facility and manages all units Santa Clara Unified Casa de Maestro

9 BUILDING OPTIONS FOR WORKFORCE HOUSING: (Option B) District partners with a market-rate developer to subsidize construction and ultimately secures a percentage of the units as Workforce Housing Pros Typically ground-lease with upfront and/or ongoing revenue Cons Limited number of units available for District employees San Diego Unified School District

10 BUILDING OPTIONS FOR WORKFORCE HOUSING: (Option C) District selects affordable housing developer to build units Pros Long-term ground lease Separate nonprofit Doesn t put General Fund at risk Cons Competes for 4% and 9% Tax Credits Governmental funding often comes with restrictions Mix of qualifying incomes and teacher incomes to meet funding requirements Los Angeles Unified School District

11 HOW WOULD YOU START? Survey employees to evaluate extent of demand Conduct early stakeholder engagement, particularly with employee groups, parent groups, city, board, etc. Confirm that there is political will and commitment prior to consummating the project Designate surplus and/or underutilized property to be studied for suitability Additional Considerations: It s typically open to all employees on a lottery basis for 3-7 years but these parameters are at the District s discretion. Most projects are medium to high density. District is NOT the manager of the housing units third party interacts with tenants.

12 FEASIBILITY ANALYSIS Site planning for parking and unit count Designation of the type and size of proposed units Practicality of development fitting into the neighborhood (in terms of design, size, traffic impacts, etc.) Review of entitlement process Estimate of overall project costs Funding Sources and Financial Analysis, including potential gap or soft funding sources

13 Physical / Financial Only One Works Both Work CONDUCT A PRELIMINARY STUDY A B C D E Community Support

14 TIMELINE OF WORKFORCE HOUSING PROJECT months Feasibility Study 2-4 months Entitlement Process 12 months Permitting and Financing 12 months Construction 12 months Doors open

15 Questions? DCGRealEstate.com Dominic Dutra Leah Denman