PLACE-BASED STRATEGIES: CITY OF CHICAGO NSP INITIATIVE. Bill Goldsmith, President Mercy Portfolio Services Mortgage Resolution Fund

Transcription

1 PLACE-BASED STRATEGIES: CITY OF CHICAGO NSP INITIATIVE Bill Goldsmith, President Mercy Portfolio Services Mortgage Resolution Fund

2 Mercy Portfolio Services Founded in 2008 as center piece of Mercy Housing s response to foreclosure crisis ( Co-Founded the Mortgage Resolution Fund (MRF) in 2011 with Enterprise, HPN and NCST Three Major Responses to Date 1. Sole sub-grantee of the City of Chicago s $169M Initiative ( 2. Developer Central: web based real estate project management system with an integrated data, document and geospatial mapping platform ( 3. Mortgage Resolution Fund: Funding and Operating Platform to keep families in homes ( )

3 Data Driven Decisions City of Chicago commissioned geospatial studies on current and future foreclosures to begin process of identifying target areas.

4 P-B Example: Chicago Strategy Begin with the End in Mind 1) What is the goal of the strategy? Be as specific as possible Examples: Provide rental housing for returning single-veterans in areas near health care, career training centers, public transportation and jobs (needs based) Stabilize neighborhood by repositioning vacant and abandoned residential units through demolition, purchase rehab, and in-fill» NSP2 Proposal Model» Choice Neighborhoods 2) Place potential neighborhoods in regional context Assets: job centers, schools, public transportation, highways... Barriers: industrial areas, prisons, waste... Relative metrics: jobs, retail, education, crime, foreclosures...

5 Identifying the Right Strategy Building Typology SF, SMF, LMF Income Mix Needs Based vrs. Market Based Tenure Mix Rental, Ownership, SRO Rehab, New Construction Funding Driven HUD, QAPs, TIF Alternative Land Use Strategy Transit Oriented Development Slide 5

6 P-B Example: Chicago Strategy (cont) 3) Zoning in on the Neighborhood(s) Identifying nodes: retail, job center, transportation stop, higher institutions of learning, hospitals, sport complexes The Bones of the Neighborhood Social Bones: CDCs, active community groups, friendly politics Physical Bones: good housing stock, housing typologies that align with goal Market Conditions (do people want to live there): Spend a lot of time with local realtors, appraisers, communityminded for-profit developers Available inventory = Units on market / Sales per month Vacancies = USPS under / over 12 months Price points = how does it align with strategy

7 Picking the Place Public Safety Job Centers Waste Sites Public Transit Housing Stock Retail & Housing Stock Lack of Positives The Right Place Religious & Education Slide 7

8 P-B Example: Chicago Strategy (cont) 4) Sizing Resources with Goals REVISIT End Game How many units needed to have the desired impact Place based strategies require more than just producing units or a project Reminder: What are we seeking to accomplish in this place How much core resources are available for initiative NSP, HOME, CDBG, LIHTC TIF, local-state Trust Funds, tax sales (land bank model) Other resources: police, fire, libraries, churches, parks How much subsidy is needed per unit Post rehab value of property» Price if for sale» Sustainable debt if rental Post Rehab Value cost of rehab acquisition soft = subsidy Not Every Property Needs Subsidy but still should be part of strategy

9 Data Driven Initiatives Table 4: Projected Home Sales in Target Geography (2009 to 2013) Year Total No. Homes Sold in Target Geography Average Annual Home Sales 2006 through 2008 Compound Annual Growth Rate of Annual Home Sales (2006 to 2008) Assumed Annual Growth Rate of Home Sales (stabilizes over time) Estimated Demand for Home Sales (2009 to 2012) Compound Annual Growth Rate for Foreclosure Filings in Target Geography # Foreclosure Filings in Target Geography 2008; Projected # Foreclosure Filings 2009 to 2012 Estimated # Foreclosure Filings to Become REOs (assumes at least 50% will become REOs) , % % 4, % 468 6,062 3, % 374 7,880 3, % % 10,245 5, % ,318 6,659 Total Projected Demand 2009 to ,447 Total Projected Supply 2009 to ,752 - Total # homes sold, average annual homes sales, and estimated # of foreclosed/abandoned units in the target geography are estimates from Policymap.com for all census tracts within target geography. The total # of homes sold in 2008 assumes the fourth quarter sales rate for 2008 is equal to the average quarterly sales rate for 2008 quarters 1 through 3. - CAGR for foreclosure filings 2006 to 2008 is based on Woodstock Institute reports on foreclosure filings for all community areas that include census tracts in the target geography. CAGR for foreclosure filings 2009 to 2013 assumes foreclosure filings will continue to increase, but at a slower rate.

10 Data Driven Initiatives Table 12: HUD Rubric for Calculating Removal of Destabilizing Influences in Target Geography x = y = z = % total units # units to be % total units vacant for acquired & vacant for 12+ months demolished 12+ months #units to be acquired & rehabilitated total # units vacant for 12+ months Score = 1.5(x+y)/z Green % 21 1% Orange % 81 3% Yellow 63 60% 80 30% TOTAL Vacant unit count is based on Poicymap.com data for all census tracts within target geography and includes units in buildlngs which have been vacant for 12+ months. As per direction from HUD via , vacant units located within occupied MF buildings are not included in the rubric calculation. 25% of units which have been vacant for 12+ months are assumed to be located within occupied MF buildings and are therefore not included in the rubric calculation.

11 Initial Chicago NSP Model SF / MF Rental / For Sale + Cost of Acquisition + Cost of Rehab + Soft Costs = Total Dev Cost / Unit * Units to be Developed = Total Dev Funds Needed - Market Value = Subsidy Needed Slide 11

12 Three-Tier Placed Based Approach

13 P-B Example: Chicago Strategy (cont) 5) Where will the capacity come to do the work? Assessment Capacity Finance Capacity Vendor Capacity: Appraisers, specification writers, lawyers, asset managers Developers: Don t forget the for-profit developers Property Management: single-family scattered site New Models for Organizing Capacity MPS, RNLA, NYC Housing Development Corp., Cuyahoga Land Bank Data and Document Management Spreadsheets and data bases just don t cut it anymore Fund management systems need to be driven by real estate tracking systems Department of Housing need to be more than Department of Grants Management Tracking and Evaluation

14 Chicago Production & Capacity Model

15 Ready, Set, Go! Picking the first projects Impactful both in their symbolic and market outcomes Successful in market place: begin with the end in mind, but also begin with the market in mind Sustainable Don t be overly optimistic about the market again data driven decisions Visible impact: corners, gateways, marquee buildings Remember: weak + weak + weak = weaks 3 Slide 15