Transit-Oriented Development in the United States: Experiences, Challenges, and Prospects (2004)

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APPENDIX C LENDER INTERVIEW PROTOCOL

C-3 NATIONAL STUDY OF TRANSIT ORIENTED DEVELOPMENT AND JOINT DEVELOPMENT Telephone Survey of Lenders A. INTRODUCTION Hello, my name is _____________, and I’m calling today for a study being sponsored by the Transportation Research Board through the Transit Cooperative Research Program. We’re surveying firms involved in financing real estate projects to help us understand issues and opportunities related to transit-oriented and joint development. We’d appreciate a few minutes of your time to help us answer some key questions. (If not, when could I call back that you would have time?) Thank you for agreeing to help. First, I’d like to confirm some basic information about your firm. 1. Firm__________________________________________________________________ 2. Person Providing Information: Name _____________________________________________________________ Title ______________________________________________________________ Address ___________________________________________________________ Phone_____________________________________________________________ E-Mail ____________________________________________________________ Allow me to define what we mean by transit-oriented and joint development. A general definition of TOD is development concentrated around and oriented to transit stations in a manner that promotes transit riding. Rather than a single real-estate project, it represents a collection (usually mix-use) of projects at a neighborhood scale that are oriented to a transit node. Transit joint development is distinguished from TOD mainly by being tied to a specific real-estate project, venture, or brokered deal and involving the direct participation of a public entity, often a transit agency, in revenue streams and sometimes ownership. Joint development often occurs on a transit agency’s property or in its air rights; however, it can also occur on nearby private land if an improvement is physically or functionally integrated with a transit facility.

B. EXPERIENCE Now I’d like to ask some questions about your firm’s experience with transit-oriented and joint development. 3. What types of projects does your firm provide loans for? I’ll list a number of types; please answer YES or NO to each. Roughly what percentage of your TOD loans go for each type? Percentage Retail
1 YES
0 NO __________ Shopping centers
1 YES
0 NO __________ Office buildings
1 YES
0 NO __________ Industrial
1 YES
0 NO __________ Single family residential
1 YES
0 NO __________ Condos / townhouses
1 YES
0 NO __________ Multifamily residential (market-rate)
1 YES
0 NO __________ Multifamily residential (below market-rate)
1 YES
0 NO __________ Mixed-use development (defined as combination of residential and at least one commercial use)
1 YES
0 NO __________ Institutional uses
1 YES
0 NO __________ Other (please specify):
1 YES
0 NO __________ ____________________________________________________________________ 4. What percentage of your firm’s activity is in the Central Business District (CBD)?
1 CBD
2 Outside CBD 5. Project Loan Experience A. Have you been involved in providing loans for TOD or joint development projects?
1 YES
0 NO B. If NO, then have you been involved in providing loans for infill or mixed-use developments?
1 YES
0 NO If your answer was NO to both of the above, please answer the following questions in terms of how you think you might approach future lending to these types of projects. C-4

6. What projects has your firm developed that are similar to what I’ve described as transit-oriented or joint development? We’d like to know about project type and size, setting, and when it occurred. If it is easier, please mail or e-mail this information to us. Type Size CBD / Outside CBD When? ____________________ __________
1 CBD
2 Outside CBD __________ ____________________ __________
1 CBD
2 Outside CBD __________ ____________________ __________
1 CBD
2 Outside CBD __________ __________
1 CBD
2 Outside CBD __________ 7. Besides traditional debt sources, indicate whether any of the following sources have been used to fund transit joint development in your area. Check all that apply.
1 Pension funds
2 Union funds
3 REIT funds
4 Individual investor funds
5 Nonprofit / foundation funds
0 Other_____________________________________________________________ C. UNDERWRITING CRITERIA AND ISSUES Next, I’d like to ask about how your firm’s approach to underwriting relates to transit- oriented and joint development. 8. What characteristics of TOD or joint development contribute positively to a project’s appraised value? A. __________________________________________________________________ B. __________________________________________________________________ C. __________________________________________________________________ D. __________________________________________________________________ 9. What characteristics of TOD or joint development contribute negatively to a project’s appraised value? A. __________________________________________________________________ B. __________________________________________________________________ C. __________________________________________________________________ D. __________________________________________________________________ C-5

10. How do each of the following underwriting standards change for transit- oriented and joint development projects versus more “standard” (e.g., auto- oriented or traditional suburban) types of real estate development? Please be as specific as possible. LENDERS: Pre-leasing requirement _________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Interest rate___________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Points (for securing loans) _______________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Loan-to-value requirements______________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Debt coverage requirements _____________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ INVESTORS: Capitalization rate _____________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Leverage_____________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ C-6

11. Please indicate whether or not each of the following factors significantly affects your firm’s willingness to lend or invest in a given project, and if it does, its importance to your final decision: IMPORTANCE TO DECISION Significant? Low Moderate High Adjacent to Transit Station
1 YES 1 2 3 4 5 6 7
0 NO Mixed Use Development
1 YES 1 2 3 4 5 6 7
0 NO Unsubordinated Ground Lease
1 YES 1 2 3 4 5 6 7 with Public Agency
0 NO Below Local Parking Standards
1 YES 1 2 3 4 5 6 7
0 NO Availability of Tax Incentives
1 YES 1 2 3 4 5 6 7
0 NO Limited Developer Experience
1 YES 1 2 3 4 5 6 7 with Proposed Project Type
0 NO Majority of Local /
1 YES 1 2 3 4 5 6 7 Non-Credit Tenants
0 NO Emerging Market
1 YES 1 2 3 4 5 6 7
0 NO Public Sector Participation
1 YES 1 2 3 4 5 6 7
0 NO Extent of Real Estate Investment
1 YES 1 2 3 4 5 6 7 Activity in Area or Near Site
0 NO Brownfield Issues
1 YES 1 2 3 4 5 6 7
0 NO Potential Rent Premium for
1 YES 1 2 3 4 5 6 7 Superior Location / Access
0 NO Supportive Land Use
1 YES 1 2 3 4 5 6 7 Designations
0NO Other (specify):
1 YES 1 2 3 4 5 6 7 _________________________
0 NO C-7

12. (LENDERS ONLY) For projects located in areas eligible for CRA credit, how does the location affect your firm’s consideration of the above factors? _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ 13. Have there been any successful TOD or joint development projects that have influenced your decision(s) to grant loans?
1 YES
0 NO Identify the successful project(s) that have influenced you: A. __________________________________________________________________ B. __________________________________________________________________ C. __________________________________________________________________ D. __________________________________________________________________ 14. Based on your experiences, how would you rate the financial track record of TOD and joint development projects to date? (Please rate on a scale of 1 to 7.) Poor Medium Good 1 2 3 4 5 6 7 C-8

C-9 D. RECOMMENDATIONS 15. Finally, we’d appreciate any suggestions (including public policies) regarding what factors would increase your firm’s interest in lending for projects that promote urban or suburban infill, mixed use, or transit-oriented or joint development: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ THANK YOU FOR YOUR TIME AND ASSISTANCE