EHLERS TEAM LEAD: Stacie Kvilvang and Jason Aarsvold
TIME FRAME: Annual Project
CLIENT CONTACT:

Transit Oriented Development Funding Recommendations

CASE STUDY: Hennepin County, Minnesota

The Goal

Hennepin County established a funding program to advance transit-oriented development (TOD) projects that demonstrated a financial gap and an ability to proceed with funding support. 

The Solution

Hennepin County selected Ehlers to analyze and underwrite funding applications to best allocate scarce public resources. Ehlers is highly experienced with analyzing due diligence, market trends, project costs financing options, and underwriting for housing and commercial projects throughout the region. This knowledge takes the mystery out of reviewing the funding requests. Our financial advisors conduct detailed pro forma reviews to determine if a gap exists, the size of the gap, and to what extent a TOD funding award may move a project forward to construction. Working collaboratively with County staff, we identify which projects have the greatest ability to move forward while meeting program goals. 

The Results

During the 2017 and 2018 funding cycles alone, Ehlers financial advisors reviewed more than 50 projects and financial pro formas that included over 6,000 apartments, 617,000 square feet of commercial space, and $1.7 billion in total development costs. Those projects requested nearly $30,000,000 in TOD funding, far exceeding the $4,500,000 of available funding in those funding cycles. In collaboration with the County, we prepared evaluation criteria to consistently determine those projects that had the greatest ability to minimize gaps, leverage other sources, and achieve financial feasibility. 

Of note: This transaction marked the first time that a Minnesota issuer combined G.O. – supported housing revenue bonds with 4% tax credit available to issuers of private activity bonds for qualifying purposes. This allowed the CDA to combine the low interest cost of G.O. Bonds with the equity generated through the sale of tax credits to provide seniors with the lowest possible rents.