This document discusses how an understanding of development economics is important for planners. It explains that plans need to be financially feasible and consider the marketplace in order to be implemented. It also outlines various types of market and financial feasibility studies that planners can use to ensure plans will work from an economic perspective. Key concepts covered include return on investment for developers, factors that impact feasibility, and how the role of planners is shifting to be more market-savvy and focus on transformational planning.

1. Development Economics for Planners How the Marketplace Affects Planning Outcomes APA-CA 2008 Conference September 23, 2008

10. Hypothetical Project Alternatives Analyzing Density for New Transit-Oriented Development

11. Financial Feasibility: Current Market Conditions Target: $40-$50/ land sq. ft. Target: $90-$100/ land sq. ft.

12. Financial Feasibility: Break-Even Conditions No adjustment required Increased $42k to achieve feas.

13. Fee Breakdown

14. Return on Investment (ROI) Time Risk Capital Req. Risk/Reward/Timing of Investment in the Development Cycle

15. Return on Investment (ROI) continued Risk/Reward/Timing of Investment in the Development Cycle

17. Return on Investment (ROI) continued Estimated ROI Requirements in Stable Market Expectation for Return and Risk Tolerance Varies for Each Source of Capital Item Priority Risk Debt 8-10% 8-10% 8-10% 1 Guaranteed Pmt Mezzanine N/A 10-12% 10-12% 2 Guaranteed Pmt Equity 25-40% 20-30% 15-20% 3 At Risk Payment General Plan Ent. Tentative Map Building Permit

19. Return on Investment (ROI) continued Expectation for return and risk tolerance varies for each source of capital Estimated ROI Requirements in Stable Market Banks, Insurance Companies SECURED DEBT 1 st POSITION Debt 8-10% 10% 10% Mezz. N/A 10-12% 10-12% Pension Funds, Institutional And Specialized Investors MINIMUM and PREFERRED RATE OF RETURN + PROFIT SHARE RATES SUBJECT TO CAPITAL MARKETPLACE Other Opportunities for Comparable Risk and Return Item Priority Risk Debt 8-10% 8-10% 8-10% 1 Guaranteed Pmt Mezzanine N/A 10-12% 10-12% 2 Guaranteed Pmt Equity 25-40% 20-30% 15-20% 3 At Risk Payment General Plan Ent. Tentative Map Building Permit

20. Return on Investment (ROI) continued Expectation for return and risk tolerance varies for each source of capital Estimated ROI Requirements in Stable Market Equity 25-40% 20-30% 15-20% At Risk

25. Contact Information Joel Ellinwood, AICP 916.789.9932 [email_address] Tim Youmans 916.649.8010 [email_address] www.epsys.com A copy of this presentation and a list of additional reference materials are available on the web at http://www.lawyer-planner.com and http://www.epssac.com