Guiding Metropolitan Growth through Development Economics

Capital Region Transportation Planning Agency

Regional Mobility Plan

Capital Region Transportation Planning Agency

Regional Mobility Plan

Guiding Metropolitan Growth through Development Economics

November 2009 Dialogue Primer Session

Bruce W. Landis, P.E., AICPVice President

Sprinkle Consulting, Inc.

Guiding Metropolitan Growth Guiding Metropolitan Growth throughthrough Development EconomicsDevelopment Economics

• Development Decision Economics

• Influence through transportation system

policy and community investment

• Shape (internally) Development

Regional Economic / Development “Engines”

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

Land Development Growth “Pioneers”

Land Development Growth “Roof-top Followers”

Key to Directing Growth…

InfluenceInfluence the Development Economics

Graphic from K2 Urban Corp

You can affect Development Location Decisions…

Graphic from K2 Urban Corp

To Direct Market Forces…

• Understand Their Basis

• Offer Effective Incentives…

• Educate the Market’s Agents

Supply

DemandPric

e

Quantity

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)

(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%

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)

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)

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)

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)

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)

To Direct Market Forces…

Supply

DemandPric

e

Quantity

Supply

Demand

Pric

e

Quantity

Raw Land Market…

New Raw Land Price

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

“Business-as-usual”

“Compact Development”

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

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

Parcel Assemblage v. Simple Purchase

I know there is a marketneed for my product,where should I buy

the land?

Parcel Assemblage v. Simple Purchase

Lemme see, should Itry to deal with 12 sellers

and their attorneys, orjust Farmer Brown?

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.

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.

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

100 lot subdivision

Traffic Generation

Data Source: Institute of Transportation Engineers Trip Generation, 7th Edition.

Vehicle Miles Traveled (VMT)

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

Costs of Development Locations

(P/A, 3%, 35)

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)

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

Source: TruliaTM Real Estate Search