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Maryland Regional Workforce Housing Fund
Leadership Forum
June 7, 2006
PRESENTATION AGENDA
MARYLAND REGIONAL WORKFORCE HOUSING FUND
(“MRWH”)
1.
Enterprise: Background and Expertise
2.
MRWH Fund: Opportunity and Need
3.
MRWH Fund: Investment
4.
MRWH Fund: Investment Process
5.
MRWH Fund: Investment Benefits
6.
MRWH Fund: Management Team
7.
Next Steps
8.
Example of an “Award Winning Community”
9.
Contact Information
ENTERPRISE: BACKGROUND AND EXPERIENCE

Chosen by the 9 funders of the Phase I Market Assessment to oversee the
creation and implementation of the Fund

Headquartered in Maryland, with extensive investment, development, and
lending expertise in the local region

Products and services that address all needs related to affordable housing and
community development
 capital and funding
• tax-credit equity
• senior debt
• mezzanine debt
• grants
 programmatic models and expertise

Works closely with local, state and federal elected officials and policymakers
ENTERPRISE: BACKGROUND AND EXPERIENCE

One of the leading advocates for policy in support of affordable and
workforce housing and community development

Will ensure:
 continued community input
 deal outreach/sourcing in Fund’s footprint
 necessary “tools” for challenging deals

Investing in communities at the rate of approximately $1 billion a year

$6 billion invested in communities over the past 23 years, yielding more than
175,000 affordable homes

Catalyst for LIHTC legislation - the public-private model for affordable
housing financing that is responsible for virtually all affordable multifamily
housing being created today

Created/presently developing more than 4,500 homeownership and rental
residences for individuals and families of diverse income, age and culture
FUND OPPORTUNITY AND NEED

2003, Governor Ehrlich created the Governor’s Commission on Housing Policy
to address housing issues
 shortage of workforce housing
 need for initiatives to create sustainable communities

2004, Final report supported the creation of an equity Family of Funds
 workforce housing for people who cannot afford to live in the cities and
counties in which they work
 community revitalization initiatives to address the overwhelming need in
Maryland, Washington, D.C. and Northern Virginia

Low levels of supply and high levels of demand for new housing affordable to
“working families”
 households earning 80% to 120% of the AMI
 high project costs faced by developers
 growing population
 upward pressure on housing prices and rents
 lack of innovative financing sources for developers
FUND OPPORTUNITY AND NEED

Maryland ranks second nationally in commuting times

More than one million new Marylanders are expected in the next 25 years

From 2000 to 2005:
 median home price in Maryland increased 102% to $363,125
 median household income for four person families increased 17% to $77,938

From 1998 to 2005:
 MD average weekly earnings increased 4.1% annually (U.S. average - 3.9%)
 MD average house price increased 23.8% annually (U.S. average - 14.1%)

Maryland needs to increase net supply of housing by at least 27,500 units by 2010
to cover shortage in housing units projected
Statistics cited from: “Why Housing May Replace Healthcare as Our Region’s Leading Affordability Issue,”
Anirban Basu, Sage Policy Group, Inc., March 15, 2006 and the U.S. Census Bureau website,
http://www.census.gov/hhes/income/4person.html
THE INVESTMENT

Developments that achieve double bottom line objectives:
 risk-adjusted market rates-of-return for investors (the first bottom line)
 measurable job and wealth creation, and community revitalization for
community stakeholders (the second bottom line)

Fund Size:
$100 million

Individual Investment:
$2 million to $20 million

Total Development Cost:
$10 million to $50 million

Development Type:
 For-sale and rental housing targeted at working residents
 Household incomes in the 80%-120% range of AMI
• single family homes
• condominiums
• town homes
• live/work lofts
• apartments
 New construction, rehabilitation, and adaptive reuse
THE INVESTMENT

Location:
 Low-moderate and mixed-income communities
 Urban, suburban, and rural areas
 Maryland, Washington D.C. and Northern Virginia

Structure:
 Equity, preferred equity, and mezzanine debt
 Targeted internal rate of return in the mid-teens
 Preferred distributions to Investors
 Significant percentage of the “at risk” capital required in qualifying
developments
 Projected term of 3 to 5 years
INVESTMENT PROCESS

Investment Sourcing:
 Enterprise offices in Baltimore, Columbia and Washington, D.C.
 Substantial Developer Relationships
 Vast Lender Network
 Industry Association Memberships
 Investor Referrals

Rigorous Investment Underwriting:
 Executive Summary
 Economic/Social Impact Analysis
 Development Feasibility/Risk Analysis
 Market and Demographic Analysis
 Key Party Analysis – Credit and Experience
 Consistency with Fund Underwriting Guidelines
 Conclusions/Recommendations
INVESTMENT PROCESS
Investment Approval and Performance Monitoring
Committee comprised of 6 Enterprise senior executives:
 Development Feasibility
 Consistency with Fund Mission
 Minimum Yield Thresholds
 Community Impact
 LMI Investment Area
 Community Support

Exception Approval and Performance Review
Committee comprised of investors holding $10 million or greater:
 Compliance with Overall Fund Parameters
 Compliance with Investment Parameter Targets
 Periodic Reporting and Review
INVESTMENT BENEFITS

Economic Benefits
 Deliver market rates of return in the mid-teens
 Priority return to investors
 Diversified portfolio within a well-capitalized fund
 Partnerships with experienced real estate underwriters and developers

Social Benefits
 Foster vibrant and healthy communities by increasing the jobs/workforce
housing balance
 Effectuate economically viable developments to address the
overwhelming need for workforce housing and bolster community
revitalization and stabilization
 Encourage the integration of mixed-income and mixed-use
neighborhoods

Positive Public Relations
 Public recognition of participation in prominent regional investment
vehicle
 Maximize the use of existing resources and reduce development pressure
on less urbanized areas
 Significant public-private partnerships
 Positive Community Reinvestment Act consideration
ENTERPRISE FUND MANAGEMENT TEAM
 Charlie Werhane, Vice Chairman and Chief Operations Officer
Enterprise Community Investment
Capital Raising, Fund Oversight
 Chickie Grayson, President
Enterprise Homes, Inc.
Capital Raising, Development Expertise
 Joe Wesolowski, Senior Vice President
Enterprise Community Investment
Capital Raising, Asset Management, Operations
 Christine Madigan, Vice President
Enterprise Homes, Inc.
Capital Raising, Fund Strategy, Deal Structuring, Oversight
 Edie Loughlin, Director
Enterprise Community Investment
Deal Sourcing, Deal Structuring, Deal Closing
NEXT STEPS
 Finalize MRWH Fund legal documents
 Finalize MRWH Fund marketing materials
 Develop investment pipeline
 Obtain investor commitments
 First close of MRWH Fund
 Close of initial workforce housing development investments
AWARD WINNING COMMUNITY EXAMPLE
WATERVIEW
 Developed by a partnership between Enterprise
Homes, Inc. and a private, local builder
 Located in Middle River, Baltimore County, MD,
on a 63 acre site that was a former failed FHA
apartment project razed by the County
 New urbanist street plan; 175 detached,
homeownership units; 100,000 sf. community
shopping center, community green space
 $48 million Total Development Cost
 Equity/Mezzanine: $1 million
 Greater than 15% ROE realized to date
The Results:
 Recognized by Baltimore Magazine as one
of the “Best Places To Live” in 2005
 Homebuilders Association of Maryland,
Award of Excellence, Project of the Year
(2003)
 Strong catalyst for redevelopment in the
area
 Homeownership for the County’s
Workforce offering units affordable to those
in the 80% - 150% AMI range, with the
majority in the 80% - 115% range.
THANK YOU
Christine Madigan
Vice President
Enterprise
410-332-7400
[email protected]
Joe Wesolowski
Senior Vice President
Enterprise
410-772-2512
[email protected]