CEcD POSSIBLE ESSAY MATERIAL: Real, Finance, BRE 2023 with complete solution
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CEcD
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CEcD
CEcD POSSIBLE ESSAY MATERIAL: Real, Finance, BRE 2023 with complete solution
Real Estate Development and Reuses Objectives:
1. Understanding of the development process;
2. A familiarity with the policies and programs that state, local, and public private economic development organizations and ...
CEcD POSSIBLE ESSAY MATERIAL: Real, Finance,
BRE 2023 with complete solution
Real Estate Development and Reuses Objectives:
1. Understanding of the development process;
2. A familiarity with the policies and programs that state, local, and public private
economic development organizations and agencies can use to encourage and help
finance development;
3. An understanding of how to analyze cash flow and income statements, and how to
assess project feasibility;
4. Knowledge of site analysis and land assembly;
5. A familiarity with current environmental rules and regulations;
6. An understanding of regulatory constraints and incentives;
7. An understanding of the process to solicit and select a developer.
When working with a Consultant and Developer an EDO will enroll a selection
panel:
Often in conducting a search for a consultant or a developer, an EDO will enroll a
selection panel representing various stakeholders to review candidate qualifications,
analyze project proposals, and recommend a preferred consultant.
These selection panels come in all sizes and configurations. Members of the board of
the EDO may perform this function, community leaders may sit on selection panels, or
sometimes there is a panel with a host of diverse perspectives represented. In some
cases the city council or town board becomes the selection panel.
The critical issue in forming the selection panel is avoiding a lopsided panel in favor of
the project and representative of only a narrow and limiting perspective.
Homework needs to be done in providing in-depth education about the project, clear
guidelines about the process, and decision making procedures.
Selection panels need staff - that is, some person who can serve as staff to the panel:
coordinating, arranging, communicating, etc. This requires a great deal of work .
If the decision is made to hire a consultant, the development agency should
c1early identify the problem and determine what the consultant's end product
should be. Before approaching a consultant, the agency should define the
following:
• Goals and objectives of the consulting product;
• Process for finding and selecting consultants
• Problems, challenges, and issues that need consulting support;
• Technical, administrative and political constraints;
• Role of the agency in the consulting effort;
• Budget and schedule for consulting services;
• Work tasks to be accomplished;
Consultants are identified:
,Consultants are identified from personal referrals, professional association directories,
trade magazines that feature directories and advertisements, literature mailed to
agencies, and on websites, such as WWW.iedconline.org. Most valuable is the
professional contacts that one makes with other professionals in various activities. Many
times it helps to ask other colleagues who they used and their level of satisfaction with a
certain consultant.
Consultants can provide a number of services and are often retained to complete
feasibility analyses.
Not only do they bring a further measure of objectivity, but they can lend additional
expertise that gives the analysis further credibility. The type of consultant chosen should
reflect the problem that needs to be addressed. For example, if the EDO requires
detailed architectural consultation or wants to know if a project is market feasible, it is
wise to select architects and market feasibility consultants, respectively, who have
strong private sector experience and are currently serving developers and investors. If
on the other hand an EDO desires more of a policy approach to problem solving, then a
consultant that specializes in economic development policy may be the right choice.
Consultants can be selected through several processes:
1. Sole-source
2. Pre-qualified Candidate List
3. Request for Proposal (RFP)
Sole-source:
For the sole-source scenario, a consultant is selected without a formal competitive
process. Sole sourcing mayor may not be legal, depending on local and state statutes.
Some statutes specify a dollar amount over which the consulting assignment must be
competitively bid. If federal funds are used, there must be a documented selection
process. The advantage of sole sourcing is that the consultant can be retained quickly.
For legal and political reasons, any agency retaining sole-source consultants should
carefully document their reasons for doing so.
Pre-qualified Candidate List:
Consultants are sometimes selected from a list of pre-qualified candidates. Many
agencies maintain a list of consultants that are pre-qualified to perform certain functions.
The agency chooses several to submit a statement on how they would approach the
problem, interviews them, and selects the best qualified candidate.
The request for qualifications (RFQ) is similar to selecting from a pre-qualified list,
except that there is an official announcement and often a more rigorous selection
procedure. The announcement, say in trade publications, would help the agency add to
its existing pool of candidates.
It is useful to have a stable of pre-qualified consultants who can move quickly. Again,
time is money. EDOs should seek to review qualifications annually.
Request for Proposal (RFP):
The most rigorous selection process is the RFP. It is recommended that the issuing
agency distribute the RFP to as many groups or entities as possible. The consultant
must submit a full proposal to be considered. The RFP typically is advertised, mailed to
a list of possible consultants, and posted on the website.
,The RFP clearly explains the project specifications, discussed previously, that the
agency prepares before retaining a consultant.
In addition, there should be a description of the project and services required. The
description of required services is very important because consultants will base their
response to the proposal on that description.
It should be clearly written and consistent with other parts of the RFP. In describing the
proposed tasks, the RFP should provide enough detail, including the number of required
meetings with agency officials, for the consultant to make realistic cost estimates.
The RFP not only conveys information but also acts as a marketing tool. A good RFP
should be well organized and written so that it encourages the consultant to invest time
and money into a thoughtful response. The RFP should include
instructions for submission. Such instructions should include the time, date, and location
of submission, as well as submission requirements such as a cost proposal, and an
outline of what should be provided in the consultant proposal.
Agencies may wish to include budget information or set a budget. Alternatively, they
may ask the consultant to propose a budget and make the consultant's cost one of the
selection criteria. By excluding the budget, the agency encourages the consultant to
price their response competitively. However, it is difficult to compare responses with
wide variations in budget. Therefore, agencies may wish to provide a budget range or
have a target budget in mind.
Selection criteria include the consultant's:
• Understanding of the project;
• Approach to the project;
• Experience with similar assignments;
• Staff qualifications for the project;
• Clarity of proposal;
• References and contacts from prior project engagements.
The RFP should require the following from the consultant:
• Listing of the tasks the consultant is assuming;
• Work plan;
• Specific responsibilities of consultant's staff;
• Detailed timeline and list of deliverables;
• Corporate capabilities statement and resume of all personnel working on the project;
• List of similar recent projects, information of persons who can testify to the consultant's
expertise;
• Executive summaries or complete reports from projects that the consultant has
recently completed.
Selecting a Developer:
• When an EDO wants to develop a piece of property for the private market, it usually
contracts for those services with a private-sector developer. This process of solicitation
and selecting a developer is often initiated through a request for qualifications (RFQ) or
request for proposals (RFP).
, • An EDO may first issue an RFQ, followed by a RFP. RFQs are used to do an initial
evaluation to create a smaller pool of potential developers to respond to an RFP.
• Submission requirements are usually limited to a letter stating developer's expression
of interests, corporate qualifications, examples of past projects, references, and
resumes.
• After developer make it past the first cut, the short-list developers are more likely to
provide a serious response to the more costly, time-consuming RFP.
• The RFP requires the developer to submit a detailed response on how they will
finance, develop and operate the project, and the roles and responsibilities of the public
and private sector parties.
• In some cases, an EDO may sole-source (no bidding) development.
• Often, RFPs are issued for publicly owned property. However, in some cases, an RFP
is created for privately owned property. The EDO may request development proposals
without having ownership of all of the necessary parcels. In these situations, if
accepted, issues related to property acquisition should be addressed prior to issuing the
RFP. Sometimes an RFP is issued for unspecified properties. Here, the agency
specifies the subsidy and desired development, opening competition to multiple sites
within a target area.
• Developer RFPs are a means of introducing competition in a development project.
Ideally, competition ensures that the developer who is eventually chosen has the skills
and expertise necessary to bring a project to fruition. Competition also allows a
municipality to maintain some control over the project while leveraging public
investment.
• An agency should never issue an RFP without first gaining community consensus on
the project's broad concept and objectives. The creation of the RFP solicitation
document often helps clarify issues and build consensus.
• An agency should also be aware of state-competitive bidding laws. Laws may require
that certain aspects of the RFP process, such as land conveyance, be competitively bid.
The RFP may be structured to satisfy the bid requirements. Alternatively, the agency
could set legitimate conditions upon which the selected developer wins the competitive
bid.
• An RFP is a marketing tool and should be prepared as such. It introduces the site
concept and opens the opportunity to the development community. It should clearly
describe the development opportunity, define development parameters, and describe
the development agency's objectives.
RFPs: Steps to Finding a Developer:
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