1
CLEVELAND STATE UNIVERSITY
LEVIN COLLEGE OF URBAN AFFAIRS
DEPARTMENT OF URBAN STUDIES
SPRING SEMESTER 2014
Revised December 20, 2013
Syllabus
UST/PDD/PAD 623 Urban Development Finance
Meeting Time
Place
Instructor
Office
Phone
Office Hours
Email
Special guest lecturer
Graduate Assistant
:Tuesday 6:00-9:50 p.m.
: Urban Building UR 107(ground floor, near Business school)
: Dr. Robert A. Simons
: Urban Building #UR 223
: 216 687-5258, 216 401-1700
: Tuesday 5:00-6:00 p.m. and by appointment
: r.simons@csuohio.edu
:Rob Namy tel 216 310 9980, rnamy@teamweston.com
: Eunkyu Lee, tel xx xxxxxxx, eunkyulee@gmail.com, cubicle UR xxx-x
Required Reading Materials:
(B) Real Estate Finance, 14th Edition, by William Brueggeman and Jeffrey Fisher, 2011
(W) Materials on CLOSED CLASS BLACKBOARD LEARN SYSTEM. Selected lectures,
reading materials, including selected book chapters and articles, on LCUA network at Urban
Affairs N drive at N:/simons/ust 623 spr 2014***/lectures/L#*.ppt Or
ftp://urban.csuohio.edu/utility. This gets you to the N drive. Then go to Simons/ust 623 spring
2014***/lectures/L#*.ppt and download what you need.
Course Description
This 4 credit graduate course is intended for graduate students with a general introduction
to urban development finance and market analysis. The goals of the courses are fourfold: 1)
familiarize the student with the issues which make the public sector a partner in urban real estate
development in the public interest; 2) train the student in the financial analysis of urban
development projects, and 3) evaluate the cost of subsidy to the public sector. The fourth
objective (met in the second part of the course) is to prepare a comprehensive urban development
case study, to include site, market, financial and public subsidy analyses. The students will select
their own real estate project. Throughout the course, issues related to public interest in real estate
development will receive special emphasis.
The first meeting in the course (one session) will address the rationale for public sector
involvement in urban real estate and highlight the financial value of items that the public sector
brings to the real estate development process. We also review market analysis briefly. The
second session of the course will address discounted cash flow analysis and introduction to
spreadsheet modeling of mortgages. The bulk of the course (6 sessions) period will cover
development finance topics including generating revenues and expenditures on a spreadsheet,
and capital markets and instruments. We will also study debt financing from public and private
sources, valuation, tax issues, development costs and deal structuring. Two sessions later in the
course will be devoted to financing of single family housing and social equity in lending. The
2
session proximate to the exam will be devoted to deal structuring and class presentations of a
case study on an urban development finance project. In general, each session will be split into
two parts: lecture (L) and discussion (D). The latter includes discussion of the real estate
development case studies, homework or a guest speaker.
The second half of the course will be an applied real estate case study, to include scoping the
project, market analysis, financial analysis, and evaluation of public subsidy. Students will
prepare a report and present their results to the class. There is also a real estate case study
homework assignment.
Course Requirements
The first half of the course will have a comprehensive final examination given in the
tenth week. Several computerized homework projects will also be assigned. Students will select
a real estate case study to analyze, and will prepare a paper and present the results to the class.
While attendance will not be taken regularly, most of the examination questions will be drawn
from lectures and class discussions.
Grading procedures
Grading for the course will be:
Homework
Course Exam
Final Paper
Final Presentation
Participation
TOTAL
40 %
20 %
25 %
10 %
5%
-------100 %
The numerical values for the letter grades are:
A=93-100, A-=90-92, B+=88-89, B=83-87, B-=80-82, C=70-79, F=69 or less. Ph.D. students
will be given an additional assignment equivalent to a short course paper. Students should refer
to the CSU Graduate Bulletin for administrative procedures related to drop-add, withdrawal, and
incompletes.
Students with special needs
“Educational access is the provision of classroom accommodations, auxiliary aids and services to
ensure equal educational opportunities for all students regardless of their disability. Any student
who feels he or she may need an accommodation based on the impact of a disability should call
the Office of Disability Services at (216) 687-2015. The office was located in MC 147.
Accommodations need to be requested in advance and will not be granted retroactively.”
Students should notify the instructor as soon as possible if they have been granted an
accommodation through the Office of Disability Services.
3
Course Outline
Session Number
1
Date
1/14
Topic
Assignment
L-Course overview,
(B) skim book
rationale for
public interest,
back of the envelope revisited
L-Refresher: Market Analysis (if needed),
supply and demand
1/21
L-Discounted cash flow analysis
(B) 3-5, 8, 12
mortgage mechanics
D-computer lab
8-9:50 pm computer lab session bring laptops
Review assignment #1
1/28
L-real estate terminology
(B)1, 2, 9
mortgages & retail revenues
D-homework assignment.
Guest speaker 830: Mitchell Schneider/ David O’Neill,
(OM) conf.
***Assignment 1 due***
RS
2
RS
3
RS
Ostendorf Morris
4
2/4
L-Capital Markets, debt
(B) 13, 18-22
and equity instruments,
risk, leverage
D-assignment #1 Mike Dostal, First Merit Bank, conf.
2/11
L-Valuation,
(B) 10,11
taxation,
D-Guest Speaker- 8pm Jeff Sherman, Appraiser conf.
2/18
L-Development costs
RS
5
RS
6
RS
(B) 16,17
(W) Simons
D- Guest speaker Glenn Mueller, U Denver conf. 8pm.
***Assignment 2 due***
EXTRA CREDIT CSU RE EVENT ALL DAY 2/19/13 (3 bonus points)
7
2/25
RS
L-deal structuring
chapter 18
Simons & Sharkey chptr.
(read in advance) resource
files\hpd_simons_sharkey article.pdf
D-Homework-value “Jump Starting Urban Housing
4
Markets”, Housing Policy Debate
1997 8 1:143-172 (N drive)
8-9:50pm computer lab session bring laptops
of public subsidies
Session Number
8
Date
3/4
Topic
Assignment
Guest speaker Rob Namy Weston Company
Company, Industrial assignment Conf.
D- RN Intro assignment 4 due on 3 April
***Assignment 3 due***
SPRING BREAK no class March 11th
9
3/18
L-Financing of Single Family
(B) 6-8
Housing, Equity in Lending
L- SF Housing Lots case: sub-ex-urban Project
Ken Lurie, conf. Orlean Company, invited /w Jeff
Green? Seth Mendelsohn INv8:30pm
10
11
3/25
RS at ARES 4/1
** 4th
COURSE EXAM
L--Introduction to case study and student projects
XX exam, Speaker: Adam Fishman and Ryan Sommers,
Fairmount Properties,
Discuss midterm exam.
Rob Namy Guest Lecturer
Review industrial assignment
Guest speaker Pep Llinas, Bandera, conf
Seth Mendelsohn Inv
industrial oriented assignment due **
***Assign mentors***
12
4/8
13 RS PASSOVER
4/15
Complex public-private real estate deals
Mitchell Schneider.
Guest Host David O’Neill
Guest speakers: AJ Magner conf. 8pm
D- Housing Market Trends
14 RS PASSOVER 4/22
(last day, possible come late)
(B) skim
9,11,13 for
industrial
5
Storage Wars! –deal structuring –Simons
Debora Lasch, conf. – loan workouts
4/27
Session Number
15
RS
Date
4/29
5pm.
(Sunday)
Papers Due
Topic
Assignment
STUDENT Presentations
inside Jury, RS, EL, HG
Meet 5pm at Fairmount Properties 1138 W 9th, 2nd floor, conf
5/2
RE Tournament finalist Student presentations (Friday)
OUTSIDE JURY show up at 3:30pm, start at 4:00m, over
by 5:30pm, prize money about 6:00pm.
Potential Mentors: David O’Neill, Maria Hydell, Arne Goldman, AJ Magner, Ken Lurie,
Pep Llinas, Rob Namy, Andrew Batson, Diana Golob, Bryce Sylvester, Ryan Sommers,
Andrew Gottleib, Mike Dostal, Adam Sauerwein, Howard Goldberg, Maura David
Maresh, Mentoring starts about April 1st
Potential Judges: ULI reps Maura David Maresh and Paul Goldberg, Adam Fishman, Ken
Lurie, David O’Neill conf, Rob Namy conf, Mike Dostal, conf. , Arne Goldman.
N:/Simons/ust 623 spring 2014/real estate finance syllabus spring 2014.doc
6
CLEVELAND STATE UNIVERSITY
LEVIN COLLEGE OF URBAN AFFAIRS
DEPARTMENT OF URBAN STUDIES
SPRING SEMESTER 2014
UST 623 Urban Development Finance
SURVEY OF CLASS PARTICIPANTS
1.
Name____________________________________________________
2.
Address_________________________________________________
3.
Telephone Number (h)_______________ (w)_________________
4.
email address __________________________________________
5.
CSU ID ___________, or KSU ID if not CSU student__________________
6.
Enrollment status at CSU________________________________
7.
Full time student or part time student__________________
8.
Real Estate Development Experience__________________________
9.
Your current job_________________________________________
10.
Your objectives in this course____________________________
__________________________________________________________
11.
Experience with computerized spreadsheets_________________
__________________________________________________________
12. Any prior economics, math, architecture, real estate or
finance courses??
___________________________________________________________
13. Are you in the Certificate in Urban Real Estate Development
and Finance program? ________
7
CASE STUDY FORMAT (for UST 623)
revised 1/1/14
EXECUTIVE SUMMARY-3-5 pages covering all important points, including tables.
The Project: Description of site, past uses, brownfield issues, current zoning and land use,
access and visibility, utilities, traffic counts, highest and best use. Map 1:Project location and
Map 2: Site layout.
The Stakeholders and Issues presented by the Project, neighbors, other nearby property
owners, contextual issues, political issues, market demand for intended use.
The Development Team Developer, development objectives, consultants, and government
partner.
Planning for Project Redevelopment How consultants interact and plan for project. Key
implementation strategies and timing before project was initiated. Figure 1: Key project
planning activities, milestones and dates.
Site control and Preparation. Site assembly, property options, city role, demolition,
brownfields, VAP, BUSTR, processes, remediation, rezoning, project ownership discussion.
appendix..
Highest and Best Use Analysis. Matrix of potential uses and site attributes, ordinal ranking of
best uses for the site. Table 1. Highest and Best Use Analysis
Market Analysis. Market area definition, competitive supply, current and future demand,
market niche analysis, revenue, absorption and vacancy assumptions, tenant or marketing
recommendations. Table 2. Market Niche Analysis
Developing the Project. Site acquisition, environmental remediation, utilities, hard and soft
costs, construction lending, developer and/or builder profit, and total development costs. Table
3. Project Development: Sources and Uses of Funds
Financing the project. Revenues, expenses, Net Operating Income, appraised value, Loan to
value ratio, equity, debt, leverage, debt service, debt service coverage, before and after tax cash
flow, Investment (present value) decision analysis, estimated rate of return, deal structure. Table
4. Project Cash Flow and Investment Analysis: Pro Forma Income and Expenses
Justification of Public Investment, justification of market failure, "gap" financing, and amount
of public subsidy. Table 5: Present Value of Public Subsidy and Cost/Benefit Analysis.
Assessment of Project Viability. Is the project a "go?" Which parts work and which do not?
Market, rate of return, private financing, public/private partnerships, community support, etc.
What would have to be done to make the project feasible?
8
Spring Semester 2014
Important Dates
Priority Registration Begins
Open Enrollment Begins
Term Begins (Saturday)
First Weekday Class
Last Day to Join a Course Waitlist
Last Day to Drop with Full Refund
Last Day to Add (CampusNet Registration)
Last Day to Drop
Course Withdrawal Period Begins - 'W' Grade Assigned
Last Day to Withdraw from Courses
Midterm Grades
Last Day of Classes
Final Exams
Commencement (Saturday)
Spring Incomplete Deadline
Martin Luther King Day (University Holiday)
President's Day (University Holiday)
Spring Recess
Classes Resume
March 25, 2013
September 23, 2013
January 11, 2014
January 13, 2014
January 17, 2014
January 17, 2014
January 19, 2014
January 24, 2014
January 25, 2014
March 28, 2014
March 3-9, 2014
May 2, 2014
May 3-9, 2014
May 10, 2014
September 5, 2014
January 20, 2014
February 17, 2014
March 9-16, 2014
March 17, 2014
Academic Calendar dates are subject to change. Please check CampusNet for the most up to date
information about specific course dates. Courses scheduled outside of the traditional semester
schedule are indicated in CampusNet as ALT(alternative) session courses. Add/drop/withdrawal
deadlines for ALT courses are adjusted according to the length of the session.
The University is closed on University Holidays unless otherwise noted above. The only time
Saturday classes are not held in observance of a holiday is for the Thanksgiving Recess, unless
the actual holiday falls on a Saturday.
Spring 2014 Final Exam Schedule
Class Meeting Time
8:30a-9:35a MWF
8:00a-9:50a TTh
9:45a-10:50a MWF
10:00a-11:50a TTh
11:00a-12:05p MWF
Final Exam Day
M, May 5
T, May 6
W, May 7
Th, May 8
F, May 9
Time
8:30a-10:30a
8:30a-10:30a
8:30a-10:30a
8:30a-10:30a
8:30a-10:30a
9
12:15p-1:20p MWF
1:00p-2:50p TTh
1:30p-2:35p MWF
2:30p-3:45p TTh
2:45p-3:50p MWF
4:00p-5:50p MW
4:00p-5:50p TTh
6:00p-7:50p MW
6:00p-7:50p TTh
8:00p-9:50p MW
8:00p-9:50p TTh
8:00a-noon Sat
noon-5:00p Sat
M, May 5
T, May 6
W, May 7
Th, May 8
F, May 9
M, May 5
T, May 6
W, May 7
Th, May 8
M, May 5
T, May 6
S, May 3
S, May 3
1:00p-3:00p
1:00p-3:00p
1:00p-3:00p
1:00p-3:00p
1:00p-3:00p
4:00p-6:00p
4:00p-6:00p
6:00p-8:00p
6:00p-8:00p
8:00p-10:00p
8:00p-10:00p
8:00a-Noon
1:00p-5:00p
Exams for classes that meet one day a week will be held the same day and time the class
normally meets during the week of final exams.
In case of an emergency closing of the University during a final examination period, the
following regulations will apply: The regular examination schedule will be observed for the
day(s) remaining when the University reopens. The first missed examination day will be
scheduled on the next weekday following the normal examination period, the second missed on
the following weekday, etc. A missed Saturday examination will be scheduled on the following
Saturday.