Speakers
Matt Branagh, Branagh Development
Rick Dishnica, The Dishnica Company, LLC
Steven Falk, Lafayette City Manager

The panelists will discuss how the growth in Lafayette’s multifamily housing market is an important component of sustainable development in the region, how these pending projects support the City’s goals, and the challenges inherent in seeking higher density residential development in affluent areas such as Lafayette.

Free, for ULI members only

Where: Come join 50 fellow YLG members for ULIsf’s Young Leaders Group mobile workshop to Napa and Sonoma. A chartered bus will depart from the San Francisco Ferry Building at 9:00am sharp.

What: Participants will get unprecedented access and insights into several of the Napa Valley’s most exciting destination. We will start the day at Honig Winery in heart of Napa Valley, where we will taste their estate wines and get an “eco-tour,” which will focus on Honig’s sustainable agricultural and wine-making practices. After Honig, we will proceed to Copia, a 70,000-square-foot former wine country museum that currently sits vacant. We will first have lunch at Copia and then tour the property with Keith Rogal of Rogal + Associates, who recently partnered with Copia building owner ACA Financial Guaranty Corp. to reposition the property. After the tour, we will devise potential future uses of the property alongside Keith Rogal. Finishing the day, we will head to the recently-opened Ram’s Gate Winery. Our time at Ram’s Gate will first start with a tour the property, which was designed by Howard Backen (architect of Meadowood Country Club) and Orlando Diaz-Azcuy (interior designer for the Peninsula Hotel Hong Kong). The tour will finish with a hosted happy hour in the winery’s large tasting hall, where our group will taste Ram’s Gate wines paired with food prepared by executive chef Jason Rose (of Locanda, Delfina, and Wayfare Tavern fame).

When: Sunday, March 25, 2012; 8:30 am – 8:15 pm

Itinerary for the Day
8:30 – 9:00am: Breakfast and Registration, San Francisco Ferry Building
9:00am: Bus Departs to Honig Winery in Napa
11:00am – 12:00pm: Tour & Tasting at Honig Winery
12:00 – 12:45pm: Travel to Copia, Napa
12:45 – 2:00pm: Lunch at Copia
2:00 – 2:30pm: Tour of Copia, Napa
2:30 – 4:15pm: Interactive session in which YLG members and the developer, Keith Rogal, will come up with potential future uses for Copia
4:15 – 5:30pm: Travel to Ram’s Gate Winery
5:30 – 6:00pm: Tour of the recently-opened Ram’s Gate winery, focusing on the unique interior design and architectural elements of the property
6:00 – 7:00pm: VIP wine tasting and food pairing in Ram’s Gate Tasting Hall. (The winery closes to the general public at 6pm, so we will have the winery to ourselves.)
7:00pm: Bus Departs for San Francisco
8:15pm: Arrive at San Francisco Ferry Building

How: Seating is limited seating to the first 50 registrants, and is capped to attendants on the bus. This event is open to ULI Young Leaders Group members only.  Registration Fee is $80 for members, $95 for non-members. Registrations will be taken on a first-come, first-serve basis, so sign up early! Deadline to register is March 15th.

Please check back soon for more information and to register.

Sign up for free at: www.sanfranciscobusinesstimes.com/structures.

Apply Now

YLG’s panel on development in the post-RDA world packed in a full house. 109 people came to hear Kim Havens of Wilson, Meany Sullivan, Michael Yarne of SF OEWD, Chris Lynch of Jones Hall and Parker Colvin of Stone & Youngberg tell about other redevelopment tools for life without Redevelopment Agencies.

There are over 400 RDAs in the state of California, and recent legislation dissolved all of them as of February 1, 2012. Since 1945, these agencies have been spurring redevelopment in blighted areas creating jobs and housing (market rate and affordable) using tax increment financing. The San Francisco Redevelopment Agency has completed massive redevelopment of project areas such as Yerba Buena, Bayview Hunters Point, Western Addition, South of Market, Visitation Valley, Mission Bay and more.

This leaves everyone asking the question, how will we do these types of projects again?

Well, Wilson Meany Sullivan will show us with their Bay Meadows and Treasure Island large development projects. Kim Havens presented WMS’s Bay Meadows which turns 83 acres of a former racetrack into 1,171 units of housing as well as retail, office, parks, infrastructure and affordable housing. Stone and Youngberg was able to place the project’s first bond at 6% showing there is a market for non-rated bonds for the right investors and the right deal. Other deals Parker noted were getting 8% and the volume of CFDs making it to market has been very slim in the past few years. Wilson Meany Sullivan and City of San Mateo created a Community Facilities District to finance the project with 3 different tax rates for the different property owners with an overall effective tax rate of 1.7%. The panel explained the pros and cons of CFDs as financing tool. The bond is secured by a special tax and not the land, and requires a vote of 2/3rd approval if there are 12 or more owners in the CFD area. Michael Yarne added his experience developing the Mint Mall Plaza with a CFD and Business Improvement District to fund ongoing maintenance of the plaza area. A strong take-away for the CFD process is to create the CFD when you only have one or two landowners to move through the voting process relatively smoothly. Michael Yarne is also spearheading a BID (or Community Benefits District as they are called in San Francisco) in Rincon Hill area, which will comprise of over 10 owners to fund operations and maintenance of new green space in the area.

Lastly, the panel outlined the use of Infrastructure Finance Districts in such cases as Park Merced and Treasure Island. The IFD is similar to Redevelopment in that it uses tax increment but is narrower in eligible uses of the bond funds and the tax increment period is shorter. It’s mainly for public uses such as sewers, roads, parks and libraries but in wake of Redevelopment fallout there is legislation proposed to broaden the eligible uses and add a 20% housing set-aside, among other proposals. Park Merced is utilizing IFD financing and re-routing the SF Muni light rail M line. Yarne noted that IFDs do something RDAs did not, since creating an IFD can be in a post blight area, you are able to reinvest in an area if you can find a value for it. The IFDs are newer to the bond market, Parker noted, and some investors might be wary of tax increment since they learned from RDA bonds.

Overall, the panelist conveyed that with Redevelopment gone developers will be getting creative and moving into new municipal bond markets to see big scale projects move forward.

For more info go to: http://www.ulisf.org/events/ylg-presents-redevelopment-and-beyond-municipal-tools-to-help-fund-urban-renewal-and-growth/

And keep coming to ULI YLG events!!

Authored by: Faith Kirkpatrick, Senior Project Manager, Bernal Heights Neighborhood Center.

The building tour will highlight several innovative features such as:

• Building design and performance elements such as shading devices on building façade, daylight harvesting and high-performance curtain wall;
• The “Living Machine,” a gray- and black-water reclamation system;
• Building-integrated wind turbines for onsite power,
• Photovoltaics and other site-generated energy strategies; and
• Innovative frame making it one of the most quake-resistant in San Francisco

Tour leaders:
Shelby Campbell, Project Director-525 Golden Gate, San Francisco Public Utilities Commission
David Hobstetter, Principal of KMD Architects
Brook Mebrahtu, Project Manager, San Francisco Department of Public Works

NOTE: Tour limited to 30 participants.

$25 Members / $65 non-members
$10 Public Members / $45 Public non-members
$20 YLG Members / $55 YLG non-members
$10 Student Members / $20 Student non-members

$15 unemployed member
$10 unemployed YLG

Most seats in the meeting room at the Ferry Building venue were filled.

First, an overview described “Redevelopment: why we loved it”, including last year’s dissolution under AB26.  Powers lost by local agencies were outlined. The complicated dissolution process was described.

Then each panel member, in turn, described the remaining policy tools available for financing improvements and accomplishing some of the goals formerly accomplished by Redevelopment Agencies.  The panelists used case studies to illustrate how these tools have been used.

Kim Havens described how the Bay Meadows project used Community Facilities District (CFD) financing to raise $92 million in 2011, the first large-scale, new-development CFD since the bank crash in 2008.  This is a large, single-owner project.

Michael Yarne described how Mint Plaza used CFD and Business Improvement District (BID) financing for a 20,000 square foot, multiple-owner urban plaza adjacent to the Old Mint.  An important component was the formation of an independent not-for-profit legal entity under ABAG’s auspices. The CFD bond issue raised $3.3 million.

Parker Colvin described the investor view of land secured financings. Prior to the crash, there was a reasonably deep capacity among a subset of municipal bond investors. Since the crash, there is limited capacity, restricted to projects characterized as urban infill with multiple uses and a diversity of taxpayers in high net worth demographics near employment centers.  Only this type of project can access the market prior to vertical development. Location and development status are more important than just value-to-lien ratio.

Chris Lynch described Infrastructure Financing District (IFD) statutes and formation, including the special case of San Francisco’s own IFD’s used, for example, in the America’s Cup projects.  Mike Yarne described how the Rincon Hill projects used a combination of IFD, CFD and BID financing to capture incremental value for payment of impact fees and construction of public improvements.   Mike also described how the Parkmerced project is using a Development Agreement and IFD financing for very large — $500 million — improvements including a transit line extension.

Kim Havens described recent changes in the Treasure Island improvements financing, which combines CFD and IFD.  The switch to IFD from redevelopment tax increment actually simplifies some of the project, in part by reducing the affordable housing requirement.

Parker Colvin discussed the market for IFD bonds, which has yet to emerge.  Investors feel burned by experience with some redevelopment Tax Allocation Bonds issued under aggressive assumptions prior to 2005.

Michael Yarne discussed the potential for innovation using Tradable Development Rights, used in certain historic-preservation projects.  These TDR’s make a commodity out of Floor Area Ratio development rights.  Another tool to consider is Transfer Fees, a private covenant recorded in deeds that collect a small fee into a fund at every subsequent real property sale.  BART used this tool in its Dublin station TOD project.

The panel concluded by taking questions and engaging with attendees over wine and cheese.  Many attendees made the observation that all of these “post-RDA” tools were implemented on projects already in the pre-crash pipeline, on high-value projects in high-income demographics, by very sophisticated public sector staff working closely with sophisticated and well-capitalized private developers in situations not requiring the missing powers of redevelopment such as eminent domain, area planning, parcel assembly and long-term bond repayment schedules.

Authored by: Steve Lawton, Main Street Property Services, Inc.

Drew Hudacek, Chief Investment Officer at Sares Regis Northern California, spoke first. Besides words of welcome, he updated the audience as to the current 2012 South Bay program. In addition to the February 14^th sneak peak of the One Marina development located in Redwood City, March 28^th brings an event destined to sell out quickly once it goes live – a behind the scenes tour of Facebook’s new headquarters in Menlo Park. Michael Polentz, a Partner at Manatt, Phelps & Phillips, LLP, followed with pitch for the benefit of a group operating under the umbrella of the ULI, but with a distinctly Silicon Valley identity which is gaining momentum.

Following the opening remarks, three other active members gave brief accounts as to the benefits they have gained due to ULI involvement. According to Elliot Stein, a Principal at Stein Consulting, one factor setting the ULI apart is it attracts a diverse member base. Architects, planners, lawyers, developers and non-profit employees all contribute, resulting in exposure to diverse perspectives which enhance one’s overall industry knowledge. Stein also stated his ULI contacts have resulted in lasting friendships in addition to professional enhancement.

Luce Forward Partner Tim Tosta then spent a moment discussing his opinion of the opportunities to which ULI members are privy. He encouraged members to listen to the frank advice regularly dispensed by seasoned veterans who are readily accessibly after joining the ULI network. However, he cautioned that active engagement with the group will yield the strongest results. “If you come in with a fair degree of curiosity,” Tosta said, “you will be rewarded.” Afterward, breakout group tables highlighted the individual committee functions, including Young Leaders Group, Urban Plan and Membership.

The ultimate goal of establishing a South Bay subgroup is to provide members with a forum to discuss issues particular to the vibrant and rapidly growing Silicon Valley. But besides a distinct market focus, Hudacek summed up his conviction the group will succeed by staying true to the ULI’s overall mission, which is providing members with access to honest information you just can’t get anywhere else.

Authored by: Kara Anderson, YLG member.

On February 1st ULI SF presented “Commercial Real Estate Equity Investing: An Examination of the Current State of the Market” hosted at SPUR’s Urban Center.  Bryan Thornton of Pacific Coast Capital Partners moderated the panel discussion that featured Mark Carlson of Stockbridge Capital, Bob Gray of Rockwood Capital, and Marc Perrin of Starwood Capital.

Bryan Thornton led the event off with a question about the current state of global capital flows in the real estate asset category.  Marc Perrin said he “is seeing overseas money pursuing opportunistic plays and filling the void from US pension pullback.  Other capital sources include high net worth individuals, sovereign funds, Middle Eastern, Chinese, Korean, and Latin American money.  As a result of all the attention on American distressed assets, Starwood Capital has turned their focus to the pursuit of distressed investments overseas.”

Mark Carlson added, “Foreign money trusts the “safety” of US markets with Canadian and Australian investors interested in U.S. growth opportunities.”

Bob Gray said, “Lots of investors are making capital preservation plays to ‘not lose money’ in their native market.  This is especially true of some of the besieged EU members like Greece, Italy, Spain, and Portugal.”  This implies the safety of the U.S. markets despite their role in the global financial crisis.

Picking up on Perrin’s remarks, the moderator asked about the presence of Chinese investors specifically.  Marc Perrin replied, “Chinese Investment Corporation (CIC) is investing through Blackstone primarily.  There are co-investing opportunities with these investors as the weakness of the US dollar is attracting greater amounts of foreign capital.”

Bryan Thornton next asked about the presence of money flowing into non-traded REIT structures.  Every panelist viewed this trend negatively with Mark Carlson replying, “These are cash flow or yield plays but they are also a house of cards due to their illiquidity.”  Bob Gray offered his view by saying that “these vehicles are attractive right now because of the low interest rate climate.” However, he posed the question, “How long will non-traded REITS will last once rates increase given that there has not been any interest rate stress testing done on them?”  Marc Perrin added to the dim outlook and said, “These vehicles are expensive to register and maintain their overhead and have really poor liquidity events.”

The panel discussion turned its attention to the evolution of the private equity business within the real estate finance sector.  Bob Gray said, “This financing mechanism has evolved due to the landscape and needs of investors.  The risk spectrum has crept back upwards in addition to 7.5% – 8% return yields being modeled by pension funds (CALPERS) to accommodate their liabilities.”  However, he cautioned that “opportunities do not exist in perpetuity” implying that business models have to adjust accordingly.  He offered, “It is hard to look only at core investments currently because today’s core is tomorrow’s value add.”

Marc Perrin explained, “The presence of abundant leverage drove the formation and evolution of private equity.  Funds grew bigger and bigger from millions to billions and they now resemble slow moving ships.  As a result, Starwood has had to diversify their business across asset classes due to the less nimble nature of large funds.”  He emphasized, “Essentially, the job is to price risk.”

Addressing the trend for institutional capital flows toward core assets, Bryan Thornton asked, “How will yields settle for non-core suburban assets?”  Bob Gray replied, “The markets have been cleaved into a have’s versus have-not’s landscape and construction loans are brutal right now with equity guarantee requirements.  Rockwood acquired Trammel Crow Residential and re-branded it Mill Creek Residential Trust because of the ongoing construction loan stare-down with lenders.”  He added that, “his firm (Rockwood Capital) does not want to take on those guarantees because they are not developers, so they bought a firm who is in that business and that is how they are handling that scenario.”

Mark Carlson pointed out, “If you can get similar debt on suburban assets as you would on core, then you can make a good play as markets like Pleasanton do not behave like those in Silicon Valley and you just got cheaper capital for the risk classification.”

The moderator next directed the discussion to the targeted play of larger financial players directing capital to the single-family residential home rental market.  Both Mark Carlson and Bob Gray had a less than positive outlook on this strategy but Marc Perrin has been personally studying this play and championed the contrarian angle.

Perrin said, “Starwood has been buying SFR lots for a while.  We have acquired 18,000 lots and have sold 3,000 already.  With prices averaging $11K per lot with $40K of improvements already baked in at purchase, we see this as a good play.”  He added, “We are starting a new homebuilding company to take advantage of these market conditions and feel comfortable with this decision based on Starwood’s history of bringing companies to the public market.”  He stated “there is a big market for rental homes right now because of government involvement.”  He is seeing yields in the 7% – 11% range and purchase financing is very cheap.  He explained that there is additional opportunity for private equity investors in this market because of lending banks’ uncertainty about the foreclosure liability they will face from State attorney generals.

As the panel discussion drew to a close, Bryan Thornton asked the panelists about their views on the commercial refinancing overhang.  Bob Gray characterized the ongoing climate as “a slow balloon leak and reset of asset values.”  Marc Perrin added, “The absence of liquidity, combined with low interest rates, is staving off larger blood loss of participants.”

Mark Carlson concluded by saying, “The CMBS market needs to come back to really effect meaningful healing in the refi sector.  So far it has only been a trickle.”  He added that “hedge funds that own special servicers want to keep the fees that are flowing from the assets they are servicing and thus the market is relatively illiquid.”

By Robert DeWaters, Verde Partners.

The tour will begin in ZyngaVille’s Café space with a hosted breakfast.  A tour of the ZyngaVille / 650 Townsend Street building will begin promptly at 8am and will finish with a Q&A session.  Hear from representatives of Zynga and TMG Partners on the details of the deal and how they closed one of the largest new office leases in San Francisco in the past 5 years.

Speakers:
David Cropper, Managing Director, TMG Partners
Jim Morgensen, Vice President of Workplace, Zynga Inc.

This event is sponsored by the Young Leaders Group, but is open to all members.

$30 Members / $55 Non-Members
$10 Public Members / $35 Public Non-Members
$20 YLG Members / $45 YLG Non-Members
$10 Student Members / $20 Student Non-Members