Week 1 (January 10): Introduction to the CourseJanuary 17 – no class, Martin Luther King DayWeek 2 (January 24): Developers, the Development Process & RiskReadingsWeek 3 (January 31): Real Estate Market AnalysisWeek 4 (February 7): Development BudgetsWeek 5 (February 14): Underwriting & FeasibilityWeek 6 (February 21): Mortgage MechanicsWeek 7 (February 28): Discounted Cash Flow AnalysisWeek 8 (March 7): Lab Session (meet in Computer Lab SEL 2249 @ 6:30PM)Week 9 (March 14): Mid-Term ExamMarch 21 – no class, Spring BreakWeek 10 (March 28): Gap FinancingWeek 11 (April 4): Equity FinancingWeek 12 (April 11): New Developments in Inner-City InvestmentWeek 13 (April 18): Guest Speaker - TBAWeek 14 (April 25): Work SessionUPP 533 Development Finance Analysis Urban Planning and Policy ProgramSpring 2011 University of Illinois at ChicagoPage 1UPP 533 Development Finance Analysis Urban Planning and Policy ProgramSpring 2011 University of Illinois at ChicagoMonday 6:00-9:00pmLincoln Hall 10420281Instructor: Phil AshtonOffice: 231 CUPPA HallOffice hours: Tuesdays 3-5pmPhone: 312-413-7599E-mail: [email protected] 2UPP 533 Development Finance Analysis Urban Planning and Policy ProgramSpring 2011 University of Illinois at ChicagoCourse Description & ObjectivesThis course will acquaint students with the key financial principles of real estate development, particularly those related to the feasibility and financing of affordable housing and neighborhood retail/commercial development projects. After introducing important financing concepts and tools (e.g. mortgage mechanics, netpresent value), students will learn how to develop, read, use, and troubleshoot development budgets and operating pro forma. The course will then examine different sources of financing, paying particular attention tothe use of Low-Income Housing Tax Credits, Tax Increment Financing and other gap funding sources for community economic development. Through readings, discussion, case studies and projects, you will familiarize yourself with the changing landscape of development finance and learn how to make informed judgments about issues that will make or break real estate projects.By the end of the semester, students in this course should have accomplished the following: Developed a grounding in the rationale and structure of the real estate development process, particularly as it applies to affordable housing and community economic development; Extended those concepts by introducing and practicing the basic techniques of financial analysis as applied to urban real estate; Broadened those competencies through practice and group work that explores current strategies in development finance from both a financial-analytic and problem-solving perspective.RequirementsASSIGNMENT SHORT DESCRIPTION Grade DUE 1. TAKE-HOME EXERCISES These short homework assignments will help students to hone their research and analytical skills. Exercises will be collected at the beginning of the class period in which they are due.30% (10% and 20%)2/73/282. MID-TERM EXAM An in-class exam that will test student abilities on basic financial concepts and techniques.30% 3/143. FINAL PROJECT Students will work in small teams and be provided with information and materials regarding particular community development projects in Chicago.Each team will conduct a financial analysis of the project and at the end of the semester, will hand in a redevelopment plan, market analysis, development and operating pro forma. The group will be responsible for producing a feasibility report for the project, and the entire team will present its final report to the class in a mock public hearing.40% 5/2Required MaterialsIt is essential that all reading be completed in advance of each class. All readings may found online at the course Blackboard site.Students should purchase a Hewlett Packard 12-C financial calculator, which is the best widely-available calculator for real estate financial analysis. It is available at a variety of consumer electronic stores, and you can easily find used versions though on-line at secondary markets such as Ebay. The calculator needs to be purchased by the end of January. Other models are also available; students purchasing alternative models should be sure to buy one that can calculate amortization, constant mortgage payments, net present values and internal rates of return. Students should bring their calculators to all class meetings.Page 3UPP 533 Development Finance Analysis Urban Planning and Policy ProgramSpring 2011 University of Illinois at Chicago* IMPORTANT * Students are expected to be proficient Excel users as class time will not be spent on the basics (e.g., inserting simple addition/subtraction/multiplication formulae in cells, labeling columns and rows). Students without significant Excel experience should consider registering for a free workshop through ACCC; there are a variety of in-person Excel workshops offered in February and March (http://www.uic.edu/depts/accc/workshops/bytitle.html) or online through the Lynda system (http://www.uic.edu/depts/accc/training.html/). Course Outline– Part One: The Development Process –Week 1 (January 10): Introduction to the CourseJanuary 17 – no class, Martin Luther King DayWeek 2 (January 24): Developers, the Development Process & RiskReadings Miles, Mike E., Haney, Richard L., and Gayle Berens. 1995. Real Estate Development: Principlesand Practice. Washington, DC: Urban Land Institute. Chapter 2, "Developers and their partners", pp. 15-30. Miles, Mike E., Haney, Richard L., and Gayle Berens. 1995. Real Estate Development: Principlesand Practice. Washington, DC: Urban Land Institute. Chapter 4, "Real estate and the financial markets", pp. 53-64. Beitel, Karl. 2008. The subprime debacle. Monthly Review 60 (1): 27-44.Week 3 (January 31): Real Estate Market AnalysisReadings Lefenfeld, Bob. 2001. Market analysis basics: Elements of a good study. Multifamily Trends (Summer): 21-23, 50-51. Brueggeman, William. 2002. Single-family housing: Demographics, "bubbles", and changing demand. Real Estate Finance 19 (2): 5-12. Bruegmann, William, Fisher, Jeffrey and Stone. 1988. Real Estate Finance. New York, NY: McGraw Hill. Chapter 14, "Valuation of income properties", pp. 397-410. Miller, William, Jaeger, John, Lissner, Gail, and Eugene Stunard. 2000. Chicago’s Residential Resurgence Urban Land (September): 1-8. Appraisal Research