guiding metropolitan growth through development economics
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Guiding Metropolitan Growth through Development Economics November 2009 Dialogue Primer Session Bruce W. Landis, P.E., AICP Vice President Sprinkle Consulting, Inc. Guiding Metropolitan Growth through Development Economics. Development Decision Economics - PowerPoint PPT PresentationTRANSCRIPT
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Capital Region Transportation Planning Agency
Regional Mobility Plan
Capital Region Transportation Planning Agency
Regional Mobility Plan
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Guiding Metropolitan Growth through Development Economics
November 2009 Dialogue Primer Session
Bruce W. Landis, P.E., AICPVice President
Sprinkle Consulting, Inc.
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Guiding Metropolitan Growth Guiding Metropolitan Growth throughthrough Development EconomicsDevelopment Economics
• Development Decision Economics
• Influence through transportation system
policy and community investment
• Shape (internally) Development
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Regional Economic / Development “Engines”
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Regional Development “Engines”
50,000 students & employees50,000 students & employees
50,000 50,000 ++ employees employees
15,000 students & employees15,000 students & employees
15,000 students & 15,000 students & employeesemployees
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Land Development Growth “Pioneers”
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Land Development Growth “Roof-top Followers”
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Key to Directing Growth…
InfluenceInfluence the Development Economics
Graphic from K2 Urban Corp
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You can affect Development Location Decisions…
Graphic from K2 Urban Corp
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To Direct Market Forces…
• Understand Their Basis
• Offer Effective Incentives…
• Educate the Market’s Agents
Supply
DemandPric
e
Quantity
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Land Development ProForma (50 SFDU)
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,000 (20%)
(Off-site infrastructure)
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(Off-site infrastructure)
Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,000 (20%)
Here is what you can influence…
17%
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,000 (20%)
Reduce Interest Carry…
(Off-site infrastructure)
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (44yrs) $ 900,000
Subtotal $ 9,000,000
Potential Margin / ROI $ 2,250,000 (25%)
Reduce Interest Carry…
Build There!!!
(Off-site infrastructure)
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,000 (20%)
Here is what you can influence….
(Off-site infrastructure)
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 40,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 8,940,000
Potential Margin / ROI $ 2,310,000 (26%)
Build There!!!
Here is what you’ve helped….
(Off-site infrastructure)
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 40,000Interest Carry (4yrs) $ 900,000
Subtotal $ 8,640,000
Potential Margin / ROI $ 2,610,000 (30%)
Direct Incentives…
Build There!!!
(Off-site infrastructure)
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To Direct Market Forces…
Supply
DemandPric
e
Quantity
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Supply
Demand
Pric
e
Quantity
Raw Land Market…
New Raw Land Price
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 40,000Interest Carry (4yrs) $ 900,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,00 (20%)
No Net Incentive
(Off-site infrastructure)
$2,460,000
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“Business-as-usual”
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“Compact Development”
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Land Consumption
SCENARIO 1 SCENARIO 3
Acres Consumed Acres Consumed
Single Family 28.85 14.99
Multi-Family 19.33 13.21
Commercial 63.72 49.74
TOTAL DEVELOPMENT 111.90 77.94
Land Use
(111.9 – 77.94) / 111.9 = 30%
“Business-as-usual” “Compact Development”
Georgia Coastal Comprehensive Plan
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 2,460,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 40,000Interest Carry (4yrs) $ 900,000
Subtotal $ 8,640,000
Potential Margin / ROI $ 2,610,000 (30%)
Build There!!!
(Off-site infrastructure)
$1,800,000
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Parcel Assemblage v. Simple Purchase
I know there is a marketneed for my product,where should I buy
the land?
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Parcel Assemblage v. Simple Purchase
Lemme see, should Itry to deal with 12 sellers
and their attorneys, orjust Farmer Brown?
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Long-term Maintenance Commitment
Education…………………..Public Safety..…………….Roads……………………….Wastewater………………..
Fire/Rescue; Water; Parks; Solid Waste..........
40% 8%30%11%
11%
Public Service Percent of Avg. Annual Cost
Source: Duncan and Associates. The Search for Efficient Urban Growth Patterns: A Study of Fiscal Impacts of Florida Development. Governor’s Task Force on Urban Growth Patterns and DCA. Tallahassee FL, 1989.
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Long-term Maintenance Commitment
Education…………………..Public Safety..…………….Roads……………………….Wastewater………………..
Fire/Rescue; Water; Parks; Solid Waste..........
40% 8%30%11%
11%
Public Service Percent of Avg. Annual Cost
Source: Duncan and Associates. The Search for Efficient Urban Growth Patterns: A Study of Fiscal Impacts of Florida Development. Governor’s Task Force on Urban Growth Patterns and DCA. Tallahassee FL, 1989.
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Impacts on Traffic Activity
Form / Location
Compact / Infill
Contiguous / USA fringe
Scattered / Linear
Avg. Traffic Trip Length
Duncan’89 FDOT (335.067, F.S.) Weighted Avg.
6.8 mi 4.9mi 5.4mi
6.4mi 9.6mi 8.8mi
8.3mi 12.1mi 11.2mi
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100 lot subdivision
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Traffic Generation
Data Source: Institute of Transportation Engineers Trip Generation, 7th Edition.
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Vehicle Miles Traveled (VMT)
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Streets & Roadways Maintenance
Data Sources: City of Tallahassee Annual Budget, Leon County Annual Budget, Leon County CIP, FDOT Historical Work Program, and FDOT Countywide VMT Estimate
* Excluding I-10 Costs and Traffic
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Costs of Development Locations
(P/A, 3%, 35)
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Land Development ProForma
Revenue (Sales) $11,250,000CostsLand Acquisition $ 1,800,000Site Infrastructure $ 900,000Product Cost (COGS) $ 5,000,000Transportation $ 400,000Interest Carry (5yrs) $ 1,200,000
Subtotal $ 9,300,000
Potential Margin / ROI $ 1,950,000 (20%)
(Off-site infrastructure)
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Proforma Category Influence / Action
Revenue (Sales)…….
Costs
Land Acquisition……
Site Infrastructure……
Product Cost (COGS)
Transportation……
Interest Carry……….
Guiding Growth through Development Economics
Public Investment - Community Fabric; Public Transit; Active Transportation; Streetscapes; Public Education; etc.
Density / Property Yield
n/a
n/a
Incentives/Disincentives
Streamline Permitting
Regional Growth Influence Areas
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Source: TruliaTM Real Estate Search