Planning 776. Development Finance. Syllabus. Spring 2016 Tuesdays and Thursdays, 2:00-3:15 Graham Memorial 35

Transcription

1 Planning 776 Development Finance Syllabus Spring 2016 Tuesdays and Thursdays, 2:00-3:15 Graham Memorial 35 Robin A. Howarth, PhD New East 309 Office Hours: By Appointment or Tuesdays and Thursdays 3:30-4:30 Department of City and Regional Planning University of North Carolina Chapel Hill, NC PLAN 776 Development Finance Robin A. Howarth

2 Course Description Course Objective: Students should come away from the course with a thorough understanding of development finance and best practice application of program tools, policies and models in an economic development framework. Specifically, students will: 1) acquire and practice through numerous exercises and case studies, the basic analytical skills necessary to finance: a) firms in various stages of the life-cycle, b) commercial real estate projects, and c) certain related community amenities and public infrastructure; 2) gain familiarity with various programs and policies, past and present, whose purpose is to expand capital availability for economic development activities primarily through the private sector (includes a basic understanding of capital markets); 3) learn about the wide range of institutional models for delivery of development finance, including venture capital, community development financial institutions, revolving loan funds, and the like; 4) be exposed to the wide array of federal and municipal finance programs and tools available to achieve local and regional economic development goals, including government grants and guarantees, tax abatements and credits, technical assistance programs, special districts, and taxexempt bonds; and 5) study the management of development finance entities program planning and design, lending and investment practices, and raising and managing capital. The course also includes several special topics outside of those provided by the course text, including the valuation of firms and real estate projects, real estate market analysis in lowincome communities, tax-credit mechanisms New Markets, Historic and Low Income Housing, and the financing of brownfields. Additionally, three class sessions will be devoted to guest lecturers practitioners of development finance in various fields. Finally, we will devote a few minutes of class time, every other week or so, to discussing the aftermath of the financial crisis including financial reforms and innovations, and the effects of these events on the development finance industry. Student Responsibilities The course requires assigned reading, practical exercises and case studies with some in-class presentation of cases assigned to student teams. There will also be an in-term exam covering Parts I, II, and III of the syllabus. Students are expected to complete assigned readings, exercises 2

3 and case studies before class and come prepared to participate actively in discussion sessions. Exercises while required, will not be turned in for grading and can be informally prepared by students individually hand written calculations or notes as appropriate for discussion in class. Assignments are case studies that will be written up by student teams of three or four individuals and turned in for grading. Write-ups should generally be two to three pages, singlespaced, excluding exhibits. Students will be assigned to a case study team and are expected to stay with that team for all assignments, barring unusual circumstances. In addition to completing the write-ups for four of the first five assignments (your team's choice) and the last assignment, each team will be responsible for presenting one case. The presentation takes place on the case due date and includes: 1) one team member presenting a "sidebar" finance topic related to the case, for instance "what is a letter of credit" or "food deserts and federal finance programs" (5 to 10 minutes) and 2) the remaining team members presenting the results for the assigned case to the class with Q&A to follow (15 to 20 minutes). By the second week of the semester, teams will be formed and presentation cases and dates will be assigned to assure availability. For both the write-ups and presentations, review of the facts of the case should be very brief - analysis and conclusions are what counts. The instructor will provide several example case write-ups from past semesters as guidance. Grading 1) Cases - presentation and write-ups (55%) 2) In-term examination (30%) 3) Class participation/attendance (15%) Course Texts and Seidman, Economic Development Finance, Sage Publications Inc (available at Student Stores, Undergraduate Library Reserves, UNC Libraries: Hard Copy and Electronic (can download chapters) All other publications/materials on reserve at the Undergraduate Library, posted to Sakai under "Resources", or distributed in class. Additional Reference Materials The Community Development Departments of the Federal Reserve District Banks provide timely and free publications and training on community and economic development finance - the instructor will pass on relevant links as appropriate throughout the semester. Other "current events materials and links will also be provided that may aid in the choice of future research projects and/or internship/job opportunities. Students are encouraged to join the following community development banking listserv by visiting the following website and following the instructions: (job postings, conferences, discussion of current issues relevant to development finance). 3

4 Session Schedule and Topics T, January 12 Course Overview Part I: Tools for Practitioners of Business and Real Estate Finance Th, January 14 Understanding the Role of Debt and Equity in Finance T, January 19 Introduction to Financial Statements Th, January 21 Analysis of Financial Statements: Ratio analysis T, January 26 Comparing financial statements of for-profits, not-for-profits and real estate firms Th, January 28 Special Topics - Business & Real Estate Valuation T, February 2 Valuation, cont. Tools for Financial Projections Part II: Specialized financing issues for Firms Th, February 4 Working Capital Finance T, February 9 Fixed Asset Finance Th, February 11 Real Estate Finance T, February 16 Real Estate Finance, cont. Th, February 18 Special Topic - Market Analysis in Low Income Neighborhoods T, February 23 Guest Speaker Part III: Policies and Institutional Responses to Perfect Private Capital Markets Th, February 25 Identifying Financing Gaps - Return, Risk and/or Management T, March 1 Loan Guarantees Th, March 3 Commercial Banks and the CRA T, March 8 Angel Finance and Venture Capital Th, March 10 Revolving Loan Funds and Community Development Financial Inst.'s T, March 15 No Class, Spring Break Th, March 17 No Class, Spring Break T, March 22 Guest Speaker Th, March 24 In-term Exam Part IV: Federal and Municipal Government Finance Tools T, March 29 Special Topic Brownfield Finance Th, March 31 Federal Programs SBA, HUD, CDFI Fund T, April 5 Special Topic Tax Credit Mechanisms New Markets, Historic, Lowincome Housing Th, April 7 Municipal Finance IDB s, Tax-Increment, Special Districts T, April 12 Municipal Finance, cont. Th, April 14 Students Choice Topic TBD Part V: Managing Development Finance Institutions T, April 19 Best Practices for Lending and Investing Th, April 21 Raising and Managing Capital T, April 26 Guest Speaker and Course Evaluation 4

5 CLASS READINGS, EXERCISES AND ASSIGNMENTS January 12 Course Overview, Special Topics, Instructor & Student Responsibilities, Introductions Part I: Tools for Practitioners of Business and Real Estate Finance January 14 Understanding the Role of Debt and Equity Readings for Seidman, Economic Development Finance (EDF), Part I & II, Chapter 2 this class: pp. 3-40) Readings/Video to start: (current events discussion date tbd) January 19 Carr, Community, Capital and Markets (Reserve and Sakai Resources ) NYT articles - origins of "credit crisis" (Sakai) "The Flaw" - Documentary on the financial crisis (UNC Library Streaming or Media Room) Introduction to Financial Statements Seidman, EDF, Chapter 3, pp Anthony, Essentials of Accounting, Part 3, pp , (Reserve and Sakai) Exercise due for this class: Freeson s Gift Gallery (Sakai) January 21 Analysis of Financial Statements: Ratio analysis Seidman, EDF, Chapter 4, pp January 26 Exercise: January 28 Exercise: Review of Financial Statement Exercise and Comparing Financial Statements of For-profits, Not-for-profits and Real Estate Developers Universal Chemical Company Exhibits (Skim - Reserve and Sakai) Examples of financial statements of real estate developers (Sakai) and nonprofits (Sakai) ABC Ratio Analysis (Sakai) Special Topic - Business & Real Estate Valuation Use the Best Business Valuation Formula for Your Business, BizFilings Business Owner s Toolkit (Sakai) Goddard and Marcum, Real Estate Investment, Chapter 4, pp , skim the rest if interested (Sakai) Duncan Case (Sakai) 5

6 February 2 Valuation (continued). Tools for creating financial projections. Seidman, EDF, pp The Federal Reserve Bank of New York, The Credit Process (skim, Reserve and Sakai) US SBA, Budgeting for the Small Business, (skim, Sakai) Exercise: Financial Reality Test (Reserve and Sakai) Part II: Specialized Financing Issues for Firms February 4 Working Capital Finance Seidman, EDF, Chapter 5, pp February 9 Fixed Asset Finance Seidman, EDF, Chapter 6, pp Assignment: Crystal Clear Window Company, Seidman, EDF, pp February 11 Real Estate Finance Seidman, EDF, Chapter 7, pp February 16 Real Estate Finance (cont.) Assignment: Phoenix Forge, Seidman, EDF, pp Exercise: February 18 February 23 Breaking Ground (DCRP Reserve and Sakai) White et al., Financing Economic Development in the 21 st Century, Chapter 13, Financing Public Investment in Retail Development, pp (Reserve and Sakai) Case Study: City Plaza, Seidman, EDF, pp Special Topic - Market Analysis in Low Income Neighborhoods Carn, Neil, et. al., Real Estate Market Analysis: Techniques and Applications, Chap. 10, pp (Reserve and Sakai) Weissbourd and Berry, The Market Potential of Inner City Neighborhoods (Sakai) Guest Speaker TBA 6

7 Part III: Policies and Institutional Responses to Perfect Private Capital Markets February 25 March 1 March 3 Identifying Financing Gaps - Return, Risk and/or Management Meeker, Doing the Undoable Deal (Reserve and Sakai) Loan Guarantees Seidman,, EDF, Chapter 8, pp Commercial Banks and the CRA Seidman, EDF, Chapter 9, pp Zimmerman, Banking for Non Bankers (Reserve and Sakai) Berger, The Economics of Small Business Finance, Chapter IV, start at Financial Institution Debt pp (Reserve and Sakai) Assignment: Seidman, EDF, Case Study Massachusetts Emerging Technology Fund, pp March 8 Angel Finance and Venture Capital Seidman, EDF,Chapter 11, pp White et al., Financing Economic Development in the 21 st Century, Ch 16, Business Angels, pp (skim - Sakai) Rubin, Developmental Venture Capital (skim Part II pp , skip the rest - Sakai) Exercises: March 10 Emerald City Case Study and Trouble in Paradise Case Study (Sakai) Revolving Loan Funds and Community Development Financial Institutions Seidman, EDF, Chapter 10, pp (skim), Chapter 12, pp Exercise: Seidman, EDF, Case Study: Lawrence Working Capital, pp March 22 March 24 Guest Speaker TBA In-term Exam Part IV: Federal and Municipal Government Finance Tools March 29 Special Topic Brownfield Finance White et al., Financing Economic Development in the 21 st Century, Ch 12, Redevelopment of Brownfields, pp (Reserve and Sakai) Bartsch and Wells, Financing Strategies for Brownfield Cleanup and Redevelopment (Sakai) 7

8 March 31 Federal Programs SBA, HUD, CDFI Fund Seidman, EDF, Chapter 14, pp April 5 Assignment: April 7 Special Topic Tax Credit Mechanisms New Markets, Historic, Lowincome Housing New Market Tax Credit Coalition, New Markets Tax Credits, A Progress Report (Sakai) National Park Service, Historic Preservation Tax Incentives (skim, Sakai) Danter Company, About the Low Income Housing Tax Credit Program (skim, Sakai) Seidman, EDF, Case Study: Financing an Inner-City Supermarket, pp Municipal Finance IDB s, Tax-Increment, Special Districts Seidman, EDF, Chapter 15, pp Hoyt and Gopal-Agge., The Business Improvement District Model: A Balanced Review of Contemporary Debates (skim - Sakai) April 12 Municipal Finance (cont.) April 14 Students Choice, Topics and Readings, TBD Assignment: Seidman, EDF, Case Study: Downtown Orlando TIF District, pp Part V: Managing Development Finance Institutions April 19 Best Practices for Lending and Investing Seidman, EDF, Chapter 16 (skim) and Chapter 17 ( pp ) April 21 Raising and Managing Capital Seidman, EDF, Chapter 18, pp Exercise: Bring questions on draft spreadsheets of Assignment due on 4/28, discussion led by assigned team who will present preliminary results April 26 April 29 Last Class - Guest Lecture and Course Evaluation By noon - turn in final assignment to my box Final Assignment: Seidman, EDF, Case Study: Raising New Capital for the Manufacturer s Fund, pp