Presentation Transcript

1. A Comparison of Residential and Commercial Real Estate

   Barry Gross Developers Research May 30, 2013
2. Introduction Development Issues Identifying appropriate products alternatives can be complex Municipalities should understand the economics of development Municipalities must understand the impact of impact fees and development regulations Developers will not build unless it is profitable for them
3. Introduction Regulatory influences on development are within the control of city planners and government Cities should: Cooperate with developers to achieve its objectives Ensure land within a city reaches its fullest potential Maximize municipal revenue opportunities Meet the land-use goals for your city Mitigate existing city infrastructure deficiencies
4. Finding the Right Product Mix …becomes a profitable project if an appropriate product is identified. What may have been a financial failure under its original land plan…
5. Construction Costs and Fees per SF South Orange County Development impact fees can inadvertently affect the product mix that developers choose to construct.
6. Impact Fees Payable per Acre South Orange County When designing impact fee programs, planners often overlook unintentional effects that may incentivize particular products. As a result, programs that assess fees on a per-unit basis rather than a per-square foot or valuation basis often discourage density and smaller units, despite a municipality’s best wishes.
7. Assumptions Used in Calculations
8. Comparison of Municipal Cash Inflows
9. 10 Year Comparison of Municipal Cash Inflows $1,419,495 $1,307,917 $1,218,684 $1,144,942 $1,082,389 $1,028,215 NPV of Res. Cash Flow = = = = = = -- -- -- -- -- --
10. 30 Year Comparison of Municipal Cash Inflows $2,058,002 $1,544,514 $1,317,356 $1,190,373 $1,105,054 $1,040,273 NPV of Res. Cash Flow = = = = = = -- -- -- -- -- --

11. A Comparison of Residential and Commercial Real Estate

    Barry Gross Developers Research May 30, 2013