business model development - london, ontario€¦ · –findings to date, current need, why an hdc...
TRANSCRIPT
![Page 1: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/1.jpg)
A HOUSING DEVELOPMENT CORPORATION FOR THE CITY OF LONDON
COUNCIL HOUSING LEADERSHIP COMMITTEE NOVEMBER 18, 2013
BUSINESS MODEL DEVELOPMENT
![Page 2: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/2.jpg)
TODAY’S PRESENTATION
TOPIC
Purpose and Objectives of Today’s Presentation
Part 1: Brief Overview and Context
Part 2: Best Practices, Available Tools, and Incentives
Part 3: Business Model
Part 4: Preliminary Governance Considerations
Next Steps
![Page 3: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/3.jpg)
PURPOSE OF TODAY’S
PRESENTATION
• Present key outcomes of our Interim Report
• Continue our dialogue with the CHLC on the
creation of a housing development corporation
![Page 4: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/4.jpg)
PART 1 BRIEF OVERVIEW AND CONTEXT
![Page 5: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/5.jpg)
BACKGROUND
• London’s CHLC recommended that staff engage a consultant to explore the options and implementation plans associated with the potential creation of a local housing development corporation (HDC)
• Consulting Team of SHS Consulting, in association with Purpose Capital, MaRS and Robins Appleby & Taub, was hired
• Overall purpose of project – conduct background research in best practices
– document local environment and establish business case
– develop an implementation plan for new HDC
![Page 6: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/6.jpg)
PURPOSE OF THE INTERIM REPORT
• To outline a proposed business model
– Findings to date, current need, why an HDC proposed
– A “minimum viable product” (MVP) for the HDC
– A prototype framework of how the HDC will add value for
itself and its customers
– Suggests a proposed mandate, customers, key activities,
key collaborations, and key revenue streams and cost
drivers
• The MVP allows the Consulting Team to outline a
proposed business model and get feedback before
developing the detailed business plan
![Page 7: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/7.jpg)
PROJECT APPROACH
PHASE 1: Establish HDC MVP 1
PHASE 2: Validate HDC MVP 1
: Develop HDC MVP 2
PHASE 4: Implement the Final HDC
![Page 8: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/8.jpg)
THE PROBLEM
• There is an identified need for affordable housing in
the City of London
• Developing and/or acquiring affordable housing
units is costly and complex
• There are limited financial resources available to
sustainably finance affordable housing (the
“affordability gap”)
• There is a gap in the local marketplace for focused
or coordinated financial and technical expertise
and capacity in developing affordable housing
REFER TO PAGES 3-4 OF THE INTERIM REPORT
![Page 9: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/9.jpg)
MARKET OPPORTUNITY
• There is an available supply of housing and land in
London
• There are various tools and resources available
• There is interest, expertise, and existing involvement
among stakeholders
• There is a potential supply of new capital in the City
of London and beyond that could be directed
towards sustainable housing
• Housing development has economic and social
benefits for the City of London
REFER TO PAGE 4-6 OF THE INTERIM REPORT
![Page 10: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/10.jpg)
PART 2 BEST PRACTICES, AVAILABLE TOOLS,
AND INCENTIVES
![Page 11: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/11.jpg)
BEST PRACTICES
HDC MANDATES IN OTHER JURISDICTIONS
• Range in scope: narrow to broad
11
Narrow
Mandates
Broad
Mandates
Role of HDC is restricted to 1-2 very specific policy objectives
Role of HDC expanded to encompass multiple policy objectives
REFER TO APPENDIX 3 OF THE INTERIM REPORT
![Page 12: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/12.jpg)
AVAILABLE TOOLS
• Planning Act
– Community Improvement Plans/Areas
• Municipal Act
– Tax Financing
– Municipal Capital Facilities
• relief from property taxes
• relief from development charges
• guaranteeing debt
• leasing or selling land.
• Housing Services Act
– Sets out rules for sale and/or redevelopment of LHC and
social housing units
REFER TO APPENDIX 4 OF THE INTERIM REPORT
![Page 13: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/13.jpg)
AVAILABLE INCENTIVES
• Development Charge Rebate
• Downtown Rehabilitation and Redevelopment
Grant Program
• Bonusing
• Innovative Design and Servicing Standards
• Façade Improvement Loan Program
• Upgrade to Building Code Loan Program
• Priority in Approval Processes
• Brownfield Incentives Program
• Surplus Municipal Lands
REFER TO APPENDIX 4 OF THE INTERIM REPORT
![Page 14: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/14.jpg)
PART 3 BUSINESS MODEL
![Page 15: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/15.jpg)
VALUE PROPOSITION
REFER TO PAGES 7-9 OF THE INTERIM REPORT
The HDC is the most optimal vehicle to
directly achieve the City’s affordable housing goals and increase the City’s
capacity to develop affordable housing.
![Page 16: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/16.jpg)
VALUE PROPOSITION
ACHIEVING AFFORDABLE HOUSING TARGETS
• Bridging the “affordability gap” through a
combination of financing methods
– Federal and Provincial funding
– Municipal grants and incentives
– HDC’s profit-generating activities
– New investment vehicles and funds
REFER TO PAGES 7-9 OF THE INTERIM REPORT
![Page 17: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/17.jpg)
VALUE PROPOSITION
INCREASING CAPABILITIES OF THE CITY TO DEVELOP AFFORDABLE HOUSING • Planning and development
– Foster developments outside of market interests but within community needs
• Financial – Take on debt
– Create an investment conduit for investors seeking social and financial returns
– Develop mechanisms for revenue generation and value/benefit capture
• Land – Work with prospective developers earlier in the land acquisition process
– Begin strategic investigation of potential acquisition of bluefields
• Organizational – Build a clearer image and identity so its considered expert
– Attract experienced professionals willing to sit on the HDC Board
– Change direction or increase the scale of implementation quickly
REFER TO PAGES 7-9 OF THE INTERIM REPORT
![Page 18: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/18.jpg)
PROPOSED MANDATE
CORE MANDATE OF THE HDC
• The HDC stimulates the development and
sustainability of affordable housing throughout the
City of London
SUPPORTIVE MANDATES OF THE HDC
– The HDC supports our community’s need for revitalized and
strengthened neighbourhoods, and diverse and inclusive
communities
– The HDC collaborates with all three sectors (private, non-profit, and public) to create and sustain affordable housing
and stimulate economic growth
18
REFER TO PAGES 9-10 OF THE INTERIM REPORT
![Page 19: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/19.jpg)
CUSTOMERS
• City of London
• Property owners
• Private developers
• Non-profit community organizations
• Investors
• Residents of the City of London
REFER TO PAGE 11 OF THE INTERIM REPORT
![Page 20: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/20.jpg)
KEY ACTIVITIES
THE HDC’S THREE PILLARS
- Land or real estate acquisition
or disposition
- Building relationships with
landowners and developers
- Providing technical assistance
- Rezoning, subdividing, and
preparing land for development
- Development or redevelopment of residential and mixed-use
properties
Land
Financing
HDC
Tools & Incentives
REFER TO PAGES 12-13 OF THE INTERIM REPORT
![Page 21: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/21.jpg)
KEY ACTIVITIES
THE HDC’S THREE PILLARS
- Provide or broker financial
products
- Build relationships and broker
partnerships with organizations
that may contribute equity to a
development
Land
Financing
HDC
Tools & Incentives
REFER TO PAGES 12-13 OF THE INTERIM REPORT
![Page 22: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/22.jpg)
KEY ACTIVITIES
THE HDC’S THREE PILLARS
- Provide grants or assist in
obtaining incentives for
affordable housing
development, including:
- Density bonusing
- Reduced property taxes
- Community Improvement Plans
(CIPs)
- Façade Improvement Loans
- Brownfields Incentives Program
- Innovative design and servicing
standards
Land
Financing
HDC
Tools & Incentives
REFER TO PAGES 12-13 OF THE INTERIM REPORT
![Page 23: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/23.jpg)
OTHER KEY ACTIVITIES
• Community Advisor or Broker
– Community convenor: Convene community stakeholders to advance collaboration on housing challenges, new
mixed use or focused affordable housing projects, or policy
matters
– Technical advisor: Directly advising mainstream developers
on mixed housing projects, or affordable housing
developers on financing/development
– Knowledge broker: acting as a knowledge portal for
market data, and available grants, loans and
development supports for housing projects
![Page 24: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/24.jpg)
KEY COLLABORATORS
• Private realtors, developers, builders, and others
involved in the development industry
• Non-profit developers and property managers
• Financial institutions and credit unions
• Government
• Employment and training providers
• Other community players and thought leaders
REFER TO PAGES 13-14 OF THE INTERIM REPORT
![Page 25: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/25.jpg)
REVENUE STREAMS AND COST DRIVERS
KEY REVENUE STREAMS
• Federal and Provincial funding
• Municipal grants and incentives
• The HDC itself, from profit-generating activities
• New investment vehicles/funds
COST DRIVERS
• Cost of capital
• Land and real estate acquisition / development costs
• Administrative costs
• Property management costs
REFER TO PAGES 14-17 OF THE INTERIM REPORT
![Page 26: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/26.jpg)
PART 4 PRELIMINARY GOVERNANCE
CONSIDERATIONS
![Page 27: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/27.jpg)
A BALANCED GOVERNANCE STRUCTURE
INVESTOR AND REALTY
COMMUNITY
MUNICIPAL COUNCIL
NEEDS
• Attract quality board members with
development and finance/investment
experience
• Ability to attract money, land and partnerships
• Ability to retain earnings
• Capable of decision making on development
and financial industry timelines
• Able to partner and contract with confidence
(can withstand some political turbulence)
• Accountability, transparency, and
value for Money
• Isolate development risk from City
• Be responsive to other City
development goals
REFER TO PAGE 18 OF THE INTERIM REPORT
![Page 28: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/28.jpg)
WRAP UP QUESTION & ANSWER PERIOD
![Page 29: BUSINESS MODEL DEVELOPMENT - London, Ontario€¦ · –Findings to date, current need, why an HDC proposed –A “minimum viable product” (MVP) for the HDC –A prototype framework](https://reader034.vdocument.in/reader034/viewer/2022042312/5edac097434f4178104f9222/html5/thumbnails/29.jpg)
GOVERNANCE OBJECTIVES
• Have the expertise necessary to govern a sophisticated development and financial organization
• Able to attract money, land, people, and credibility
• Able to retain earnings as “development equity” to seed projects
• Capable of decision making on development and financial industry timelines
• Able to partner and contract with confidence (can withstand some political turbulence)
• Isolate development risk from the City
• Balance of accountability, transparency, and value for money
• Be responsive to other City development goals