Financing New Urbanism Projects

A report on real estate finance reform, originally written in 2000 for The Congress for the New Urbanism has been published on the Web by the Fannie Mae Foundation. The report is recommended reading for people who want to know where the finance industry stands on New Urbanism."A survey of 23 industry practitioners from the development and finance fields yieldsa number of important conclusions regarding the financing of New Urbanism proj-ects.First, these projects are perceived as generally riskier than typical real estateprojects; their multiple-use nature is the basis of that perception. For urban infillprojects, the perceived risk is low, while for suburban projects, the perceived risk ishigh.The relatively high perceived risk for most New Urbanism projects imposes relative-lyhigh required rates of return, which in turn require these projects to generate cashflow quickly to be financially attractive to investors. In addition, the development ofmultiple uses—or multiple product types—in a single project is viewed as inherentlymore difficult to evaluate and implement. Financiers consequently favor larger, moreexperienced developers for multiple-use projects in general and New Urbanism projects in particular." Please note, the link to this file is an Adobe Portable Document (PDF) file.

Thanks to Steven Bodzin