downtown berkeley development feasibility study technical... · downtown berkeley development...
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Downtown Berkeley Development Feasibility StudyCity of Berkeley City Council MeetingOctober 11, 2011
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Contents
Purpose
Methodology
Assumptions
Findings
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Contents
Purpose
Methodology
Assumptions
Findings
![Page 4: Downtown Berkeley Development Feasibility Study Technical... · Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting Static Pro-Forma Analysis •](https://reader035.vdocuments.us/reader035/viewer/2022070806/5f0506e57e708231d410e541/html5/thumbnails/4.jpg)
Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Purpose of Study
• To inform policy debate on the extent to which new development can contribute financial resources to support a range of public benefit programs, while remaining financially viable.
• Policy makers have expressed interest in establishing impact fees for: – Affordable housing– Street and open space improvements– Transportation demand management– Parking
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Contents
Purpose
Methodology
Assumptions
Findings
![Page 6: Downtown Berkeley Development Feasibility Study Technical... · Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting Static Pro-Forma Analysis •](https://reader035.vdocuments.us/reader035/viewer/2022070806/5f0506e57e708231d410e541/html5/thumbnails/6.jpg)
Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Prototypes Tested
Development Type
Location Lot Size Building Height
Condo
Rental Housing
Office
Mid-Block
Corner
13,000 sft
20,000 sft
60’
180’
120’
1 2 3 4
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
32 Scenarios
Office
Mid-Block
Corner
60’
120’
180’
13k 20k 13k 20k 13k 20k
60’
120’
180’
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Static Pro-Forma Analysis
• Feasibility analysis performed using static pro-formas
• A static pro-forma analysis estimates future cash flows based on stabilized point in time
• Results in net residual value of parcel
• Net residual value = Amount available to contribute to public benefits
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Sample Development Scenario
20,000 SF Mid-Block Parcel
180 Feet Height 60 Feet Height
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Sample Site Configuration13,000 SF Development
20,000 SF Development
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Contents
Purpose
Methodology
Assumptions
Findings
![Page 12: Downtown Berkeley Development Feasibility Study Technical... · Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting Static Pro-Forma Analysis •](https://reader035.vdocuments.us/reader035/viewer/2022070806/5f0506e57e708231d410e541/html5/thumbnails/12.jpg)
Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Key Development Assumptions
Developer Land Cost and Return
• Land cost = $100/SF
• Developer profit = 8% of total cost before leverage provided by financing
• Market rents and sales prices as of Q1 2011
Inclusionary Housing
• 20% of condo units
• $20,000 per rental unit
Parking Requirements• Rental residential = 0.33 space /
unit• Condo = 0.8 space / unit• Office = 1 space / 1,000 SF• Retail = 1 space / 1,000 SF
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Land Cost
• Land cost = $100/SF
• A nominal, baseline value
• Land values vary dramatically by site across Downtown Berkeley, and contingent on:
• Economic use
• Site configuration
• Zoning / Regulations
• Historic transactions have been higher, but include existing structures on-site
• In 2008, Strategic Economics found land prices to be from $80 to $200/SF in Downtown Berkeley
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Revenue Assumptions• Rental Housing
• Average rent per square foot is approximately $3.35 per square foot of living area.
• Condominiums
• $550 / Square Foot
• 5% View Premium on units located at heights between 60’ and 120’
• 10% View Premium on units located at heights between 120’ and 180’
• Office
• $3.00 / Sq. Ft. / Full Service
• Retail
• $2.35 / Sq. Ft. Triple Net (NNN)
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Public Benefit Fee Assumptions
Adopted
• 20% inclusionary housing or in-lieu fee for condominium projects
• $4/SF affordable housing mitigation fee for commercial space
• $1/SF child care fee for commercial space
Not Adopted (as of Oct 2011)
• Affordable housing mitigation fee for rental housing (proposed at $20,000/unit)
• Parking in-lieu fee (proposed at $35,000/space)
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Contents
Purpose
Methodology
Assumptions
Findings
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Public Benefit Estimate for Rental Housing Development in Downtown Berkeley(Per Unit Estimate)
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Public Benefit Estimate for Condo Development in Downtown Berkeley(Per Unit Estimate)
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Public Benefit Estimate for Office Development in Downtown Berkeley(Per SF Estimate)
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
Total of 8 Feasible Scenarios
-$66k
Office
Mid-Block
Corner
60’
120’
180’
-$41k
-$72k -$7k
-$51k -$13k
-$45k -$21k
-$43k -$2k
-$41k -$5k
$26k
-$15k $32k
-$12k $19k
-$3k $27k
$4k $10k
-$5k $33k
-$151 -$248
-$506 -$694
$13 -$281
-$583
13k 20k 13k 20k 13k 20k
60’
120’
180’
-$592
* Public Benefit/unit * Public Benefit/unit * Public Benefit/sft
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Findings
• Land Use
• Only rental housing shows financial feasibility
• Site Configuration
• Corner parcels more profitable than mid-block parcels
• Heights
• Mixed results – greater heights generally result in higher profitability
• Size
• 20,000 SF parcel significantly more profitable than 13,000 SF parcel
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Land Costs
What happens when land costs increase from $100/SF to $200/SF?
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
From 8 Feasible Scenarios
-$66k
Office
Mid-Block
Corner
60’
120’
180’
-$41k
-$72k -$7k
-$51k -$13k
-$45k -$21k
-$43k -$2k
-$41k -$5k
$26k
-$15k $32k
-$12k $19k
-$3k $27k
$4k $10k
-$5k $33k
-$151 -$248
-$506 -$694
$13 -$281
-$583
13k 20k 13k 20k 13k 20k
60’
120’
180’
-$592
* Public Benefit/unit * Public Benefit/unit * Public Benefit/sft
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
To 5 Feasible Scenarios (all large site rental housing)
-$110k
Office
Mid-Block
Corner
60’
120’
180’
-$72k
-$91k -$20k
-$62k -$22k
-$88k -$21k
-$60k -$2k
-$52k -$5k
-$.5k
-$32k $22k
-$22k $12k
-$39k $27k
-$10k $10k
-$15k $33k
-$258 -$356
-$614 -$802
-$95 -$281
-$691
13k 20k 13k 20k 13k 20k
60’
120’
180’
-$592
* Public Benefit/unit * Public Benefit/unit * Public Benefit/sft
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Setting Public Benefit Fee Levels
• Setting public benefit fees at appropriate level is critical to facilitating more development, which in turn would generate more public benefit revenue potential
• What happens when the rental affordable housing mitigation fee is set to $10,000 instead of $20,000?
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
From 8 Feasible Scenarios
-$66k
Office
Mid-Block
Corner
60’
120’
180’
-$41k
-$72k -$7k
-$51k -$13k
-$45k -$21k
-$43k -$2k
-$41k -$5k
$26k
-$15k $32k
-$12k $19k
-$3k $27k
$4k $10k
-$5k $33k
-$151 -$248
-$506 -$694
$13 -$281
-$583
13k 20k 13k 20k 13k 20k
60’
120’
180’
-$592
* Public Benefit/unit * Public Benefit/unit * Public Benefit/sft
![Page 27: Downtown Berkeley Development Feasibility Study Technical... · Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting Static Pro-Forma Analysis •](https://reader035.vdocuments.us/reader035/viewer/2022070806/5f0506e57e708231d410e541/html5/thumbnails/27.jpg)
Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Rental HousingCondos
-$66k
Office
Mid-Block
Corner
60’
120’
180’
-$41k
-$72k -$7k
-$51k -$13k
-$45k -$21k
-$43k -$2k
-$41k -$5k
$39k
-$3k $45k
$.2k $32k
$9k $40k
$16k $23k
$7k $45k
-$151 -$248
-$506 -$694
$13 -$281
-$583
13k 20k 13k 20k 13k 20k
60’
120’
180’
-$592
* Public Benefit/unit * Public Benefit/unit * Public Benefit/sft
To 11 Feasible Scenarios
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Downtown Berkeley Development Feasibility Study City of Berkeley City Council Meeting
Thank you! Q + A / Discussion