Writing Sample: Pro Formas & Development

The following two writing sample provides examples of how to condense and filter economic/technical data into readable reports to assist with development choices both in the public and private sector.

The first sample provides a feasibility study for an apartment development from the standpoint of a governmental agency and provides with clear recommendations on how to proceed with the project.

The second sample focuses on analyzing a street facade renovation program and compared two different scenarios under which provided the most advantages solution to the problem

The third sample is done through the perspective of a private developer and provides a technical report on the finances of a potential deal to redevelop a warehouse structure into loft apartments.

TO: Greenfield City Council

FROM: Jose Rodriguez Trujillo, Associate City Planner

DATE: December 11, 20214, 2021

SUBJECT: Barrett Preserve Feasibility Study

Per request, am writing to inform you of my findings and recommendations regarding the feasibility of the Barrett Preserve apartment Complex, to be located in the southeast quadrant of State Street. Under the current proposal by RealAmerica, Barrett Preserve would be composed of 18 one-bedroom, 24 twobedroom, and 18 three-bedroom units. The city can expect to gain 141 new residents and 21 schoolaged children.

Based on the analysis conducted, the potential revenues created by the influx of new residents will be $10,503,702.78. The city will incur $303,100.96 to provide services to the new residents. If we allow the development to proceed, the city can expect an overall net positive fiscal impact of $10,200,601.81 (see chart for a detailed breakdown of costs and revenue). Additionally, if we assume that no children will be added to the community and the city does not obtain the state funding that is associated with them, the city can still expect to acquire $7,432,068.43 in revenues.

Based solely on the economic aspects of the project, as currently presented, I recommend we allow the development to proceed. However, the developer intends to use the state rental housing tax credit program to obtain funding for 100% of its units, therefore potential tenants may have lower incomes and require higher levels of assistance from the city. I recommend we obtain further information on the socio-economic background of the target market from the developer to determine if the city has the sufficient economic ability to support less revenue and increased costs.

TO: David Grohl, Director of Planning

FROM: Jose Rodriguez Trujillo, Associate Planner

DATE: September 18, 2021

SUBJECT: Façade Program Financing Analysis

TO: Christopher Palladino Director of the E. Street Community Development Corporation

FROM: Jose Rodriguez Trujillo, Summer Planning Assoc ate

DATE: October 4 2021

SUBJECT: Warehouse Redevelopment Analysis

Per request, am writing to inform you of my findings and recommendations regarding the bonds/grant options for the city’s downtown façade program. Assuming the city is unable to obtain another grant due to the competitive nature of the grant process all three municipal bond options will provide us more funds and would crucially be a guaranteed source of funding (Chart 1). As such recommend, we proceed with obtaining the funds through the issuance of municipal bonds.

Within the three bond options, options two and three provide the most funds while option one provides the least. However, option one will require significantly less in total interest to be paid back than the other two options. But in terms of annual interest payment, all three are comparable to each other and deviate by a few hundred dollars (chart 1).

Of concern for both options two and three is that the only source of funding for this program will be through CDBG funds and are subject to reassessment by HUD. Due to the potential risk of the funds allotted being decreased by HUD, it may not be advisable that we commit to a 20-year bond. Past option two the loan amount would increase by 16% but require an increase of 45.5% to the interest amount (Chart1). Taking all the factors into account, at this time recommend that we proceed with option two to maximize the most funds for the program while minimizing the potential risks of default and total repayment required.

However, I also recommend that moving forward we conduct a façade study to ascertain the average cost of renovating a commercial façade in our area and determine the current amount of commercial stock that may benefit from this program. Through this, we may be able to determine with more precision whether option two is in line with our current objectives or if the other two bond options should be reconsidered for reassessment

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Per request, am writing to inform you of my findings and recommendations regarding the feasibility of redeveloping the vacant downtown warehouse building into loft apartments. In order to secure a 20-year loan at a 4% interest rate from our current lender we are required to meet the following: a loan to value ratio and oan to project cost not exceeding 75% and meet a minimum debtcoverage ratio of 1.20

To satisfy these requirements under our current assumptions/budget we will need to have equity of $2,950,000 (see chart 1). Under this condition we can expect to have an internal rate o return of 7.99% (see chart 2) However present conditions do not allow us to meet the required 20% internal rate of return to actualize the project But through our partnership with the city, we can obtain a maximum grant of $355,000 for the project If we obtain this grant, we will be in a stronger position to meet the investors required rate of return but we will still need to modify certain aspects of the current proposal to meet the 20% benchmark

Based on my analysis of our current project cost, and assuming we obtain the maximum grant amount from the city we will need to decrease the project hard cost by $5000/unit and operating costs by $500/unit increase the rent by $100/unit and reduce our equity amount to $2,300,000 (see Chart 1) propose we setup a meeting with our bu lder and leasing coordinator in the following weeks to see if we can reduce our construction and operating costs to our new expected goals Additionally, suggest we conduct a study on the current rental rates in our area to determine if the new apartment rates are in line with the current market.

Under these new conditions we should be able to obtain increase internal rate of return from 7.99% to 20.18% while still meeting our obligations to our lender (see chart 2) I believe these changes are small enough and spread throughout different parts of the project that it will not incur a substantial burden on any one area of the project.

Condition 1

Condition

Chart 2

Cordially,

Jose Rodriguez Trujillo

Jose.Rodrigueztrujil@bsu.edu

(317) 123 - 4567

Cordially, Jose Rodriguez Trujillo

Jose.Rodrigueztrujil@bsu.edu