Financial Feasibility Analysis
FINDINGS
ASSOCIATES INC
evelopments target middle income households
(60% AMI to 90% AMI) created unrealistic return expectations.
5
Downtown area market fundamentals are through use of certain incentives... if the City
different than other growth areas. returns to adhering to existing regulations.
Financial Feasibility Analysis ASSOCIATES NC
AFFORDABILITY
Maximum Affordable Rents (Utilities Included)
OTT am ANZ el =) 40% AMI ley NIE 60% AMI Lob ANE 70% AMI 10 ONE 100% AMI | 110% AMI | 120% AMI | 140% AMI ie
Efficiency $711 $889 $1,067 $1,156 $1,245 $1,422 $1,778 $1,956 $2,134 $2,489 $1,779
41BR $829 $1,036 $1,243 $1,347 $1,450 $1,658 $2,072 $2,279 $2,486 $2,901 $1,860
2BR $998 $1,248 $1,498 $1,622 $1,747 $1,997 $2,496 $2,746 $2,995 $3,494 $2,316
3BR $1,154 $1,443 $1,732 $1,876 $2,020 $2,309 $2,886 $3,175 $3,463 $4,040 $2,688
Financial Feasibility Analysis
AFFORDABILITY
ASSOCIATES INC
FY 2020 Income Limits Summary - Nashua, NH
Household Size
a... ee
WHAT IS AFFORDABILITY? ~~ [a-rerson | 2-Person | 3-Person | a-Person | 5-Person | 6-Person |
30% of AMI $23,050 $26,350 $29,650 $32,900 $35,550 $38,200
¢ Housing affordability is a term of relativity,
not absolute 40% of AMI $30,720 $35,080 $39,480 $43,840 $47,360 $50,880
¢ HUD defines affordability as spending 30%
Financial Feasibility Analysis
ANALYSIS
GO / NO GO DECISIONS
¢ Internal rate of return
¢ Measure of investment efficiency
¢ The annual rate of investment value escalation
¢ Similar to a savings account interest rate
¢ How does it work?
* Measure against other investment types
¢ Reflects opportunity cost for risk-reward analysis
¢ What can I “live with?”
¢ “Typical” Market
¢ Rental Housing = 12% IRR
* For Sale Housing = 20% IRR
¢ Nashua Market (Reported)
* Rental Housing= 20%+ IRR
Financial Feasibility Analysis
ANALYSIS
INPUTS
Any real estate financial model relies upon three
key elements: [1] revenues, [2] expenditures, and
[3] financials
Revenues consist of income derived by the real
estate investment
¢ Rental income/house sales
¢ Parking fees
* Property reversion (for rental projects)
Expenditures
¢ Land acquisition
¢ Construction (i.e., bricks)
¢ Rental properties
* Operation (i.e., maintenance)
¢ Property taxes
Financial Feasibility Analysis
ANALYSIS
SCENARIOS
¢ The financial feasibility analysis
was performed for several
scenarios to ensure a
recommended IZ policy
accounted for:
¢ Housing tenure (ownership and
rental)
* Location
* Scale of development
¢ The results of the various
scenarios will lead to specific
recommendations on how the city
should approach a new IZ policy
Scenario
2a
2b
4a
4b
5a
5b
Ownership
Rental
Rental
Financial Feasibility Analysis
PROCESS
UNDERSTANDING THE APPROACH
¢ Regulatory policies control development process
devoid of market and financial feasibility
¢ Policies can go
¢ “Too far” meaning their requirements will make
projects non-competitive, effectively eliminating
development
« “Not far enough” meaning they do not deliver the
intended purpose due to lax requirements
¢ “Just right” balance intended benefits with
market/financial opportunity cost
Financial Feasibility Analysis
PROCESS
FINANCIAL FEASIBILITY PROCESS
Financial Feasibility Analysis
PREVIOUS FINDINGS
UPDATE INCLUSIONARY ZONING REGULATIONS
Issues/Opportunities Addressed: C)
Timeframe for Action: Short Term
Financial Feasibility Analysis
PREVIOUS FINDINGS
ISSUE or OPPORTUNITY AREA
