Economic Development Finance

Karl F Seidman - Massachusetts Institute of Technology, USA

June 2004 | 520 pages | SAGE Publications, Inc

"Incredible. What a major contribution, just to pull together the diverse array of information out there about development finance into one volume. I consider this book an 'education' for the lay reader, and a fabulous resource for the practitioner of development finance." –Dr. Rhonda Phillips, AICP, CED, University of Florida

"This is the most comprehensive and best-written economic development text in the market. This would be a good text for a graduate level course and would work well with a one-semester teaching plan. . . The main strength of the book is the author's ability to summarize concepts, programs, and institutions and then draw from them issues, lessons, and challenges." –John S. Strong, School of Business, College of William and Mary

Economic Development Finance is a comprehensive and in-depth presentation of private, public, and community financial institutions, policies and methods for financing local and regional economic development projects. The treatment of policies and program models emphasizes their applications and impact, key design and management issues, and best practices. A separate section addresses critical management issues for development finance programs: program and product design, the lending and investment process, and capital management. Case studies are included throughout the book to help readers develop their skills and apply policies and tools to real practice issues. A glossary of finance terms is also included.

Economic Development Finance provides a foundation for students and professionals in the technical aspects of business and real estate finance and surveys the full range of policies, program models, and financing tools used in economic development practice within the United States.

Learn more economic development strategies on Karl F. Seidman's Web site at www.kfsconsulting.com

Available Formats

ISBN: 9780761927099	Hardcover	Suggested Retail Price: $240.00	Bookstore Price: $192.00
ISBN: 9781506315935	Electronic Version	Suggested Retail Price: $145.00	Bookstore Price: $116.00

See what’s new to this edition by selecting the Features tab on this page. Should you need additional information or have questions regarding the HEOA information provided for this title, including what is new to this edition, please email sageheoa@sagepub.com. Please include your name, contact information, and the name of the title for which you would like more information. For information on the HEOA, please go to http://ed.gov/policy/highered/leg/hea08/index.html.

For assistance with your order: Please email us at textsales@sagepub.com or connect with your SAGE representative.

SAGE
2455 Teller Road
Thousand Oaks, CA 91320
www.sagepub.com

Part One Introduction

Chapter One Capital Availability and Economic Development

The Growing Field of Economic Development Finance

The Purpose and Design of This Book

The Role of Finance in the Economic Development Process

Capital Availability and Capital Market Imperfections

CAPITAL MARKET OPERATIONS, MARKET IMPERFECTIONS AND CAPITAL SUPPLY GAPS

Capital Market Imperfections and Their Implications for Economic Development Finance

A Framework for Expanding Capital Availability

Part Two The Basics of Business Finance

Chapter Two Financing Business Enterprises: The Role of Equity and Debt

Defining Debt and Equity

COMPARING EQUITY AND DEBT CAPITAL / KEY TERMS AND ISSUES IN EQUITY AND DEBT FINANCING / HYBRID FINANCING

Financing and the Stages of Firm Development

DATA ON SMALL BUSINESS CAPITAL SOURCES

The Use of Equity and Debt in Hypothetical Firms

Chapter Three An Introduction to Business Financial Statements

Accounting Concepts and Accrual Accounting

Financial Statements: The Balance Sheet

WHAT DO WE LEARN FROM THE BALANCE SHEET?

Financial Statements: The Income Statement

WHAT DO WE LEARN FROM THE INCOME STATEMENT?

Connecting the Balance Sheet and Income Statement

Chapter Four Analyzing Business Financial Statements

A Framework For Firm Evaluation

ASSESSING ECONOMIC DEVELOPMENT BENEFITS / BUSINESS PLAN EVALUATION / ANALYZING FINANCIAL CONDITION AND PERFORMANCE / FINANCIAL PROJECTIONS

Cash Flow Analysis

CONSTRUCTING A CASH FLOW STATEMENT / CASH FLOW ANALYSIS FOR CRYSTAL CLEAR WINDOW COMPANY / DETERMINING DEBT SERVICE COVERAGE

Ratio Analysis

PROFITABILITY AND OPERATING RESULTS / SHORT TERM LIQUIDITY AND CASH NEEDS / CAPITAL STRUCTURE AND DEBT CAPACITY /

Beyond Ratio Analysis

The Final Test: Preparing and Evaluating Financial Projections

Chapter Five Working Capital Finance

The Importance of Working Capital Finance

THREE MEANINGS OF WORKING CAPITAL / BUSINESS USES OF
WORKING CAPITAL / PERMANENT AND CYCLICAL WORKING CAPITAL

Forms of Working Capital Financing

LINE OF CREDIT / ACCOUNTS RECEIVABLE FINANCING / FACTORING / INVENTORY FINANCING / TERM LOAN

Sources of Working Capital for Small Businesses

Underwriting Issues in Working Capital Financing

Underwriting Issues in Working Capital Financing
Case Study: Crystal Clear Window Company
Underwriting Issues in Working Capital Financing
Case Study: Crystal Clear Window Company
Case Study: Crystal Clear Window Company

Chapter Six Fixed Asset Financing

Fixed Assets and Business Operations

Differences Between Fixed Asset and Working Capital Finance

IMPLICATIONS FOR FIRMS / IMPLICATIONS FOR LENDERS

Fixed Asset Debt Instruments

TERM LOANS / MORTGAGE LOANS / LEASEHOLD IMPROVEMENT LOANS / LEASING /

Sources of Fixed Asset Financing

FIXED ASSET FINANCING GAPS

Case Study: Phoenix Forge

Chapter Seven Real Estate Finance

The Real Estate Development and Finance Process

PREDEVELOPMENT PHASE / CONSTRUCTION AND DEVELOPMENT PHASE / OCCUPANCY AND MANAGEMENT PHASE / FINANCING PROCESS

Real Estate Financial Statements

DEVELOPMENT BUDGET / OPERATING PRO-FORMA / DETERMINING SUPPORTABLE DEBT AND EQUITY

Real Estate Debt Instruments

PRE-DEVELOPMENT FINANCING / CONSTRUCTION LOANS / PERMANENT MORTGAGE LOANS / MINI-PERM LOANS / BRIDGE LOANS / UNDERWRITING REAL ESTATE DEBT

Sources of Real Estate Financing and Capital Availability
Problems
Sources of Real Estate Financing and Capital Availability
Problems
v

FINANCING GAPS FOR DEVELOPMENT PROJECTS

Case Study: City Plaza

Part Three Policies To Perfect Private Capital Markets

Chapter Eight Loan Guarantee Programs

Loan Guarantees and Capital Availability

THE MYRIAD FORMS OF GUARANTEES / ADVANTAGES AND DISADVANTAGES OF GUARANTEES /

Small Business Administration 7(a) Program

State Loan Guarantee Programs

Capital Access Programs

Issues in the Design and Management of Guarantee Programs

GUARANTEE PROGRAM POLICY LEVERS / PROGRAM CHALLENGES AND BEST PRACTICES

Case Study: Massachusetts Emerging Technology Fund

Chapter Nine Bank Regulations And Development Banks

The Critical Role of Banks in Economic Development Finance

The Community Reinvestment Act

HISTORY AND OVERVIEW OF THE COMMUNITY REINVESTMENT ACT / USING CRA TO EXPAND CAPITAL AVAILABILITY / CRA'S IMPACT ON BANK LENDING / NEW CHALLENGES FOR THE COMMUNITY REINVESTMENT ACT / COMMUNITY REINVESMENT AND THE INSURANCE INDUSTRY

Bank Community Development Corporations

BANK CDC REGULATIONS / BANK CDC EXPERIENCE

Commercial Banks as Development Finance Institutions

CHALLENGES TO CREATING AND OPERATING A COMMERCIAL BANK / SPECIAL OPERATING REQUIREMENTS /

Case Study: Wilmington CRA Campaign

Part Four Institutional Models for Economic Development Finance

Chapter Ten Revolving Loans Funds

The Revolving Loan Fund Model

Revolving Loan Funds Characteristics and Performance

RLF CHARACTERISTICS / RLF PERFORMANCE

Design Issues for Revolving Loan Funds

TARGETING POLICY / FINANCIAL POLICIES / CAPITAL POLICIES / UNDERWRITING CRITERIA / DEVELOPMENT SERVICES / RELATIONSHIP BUILDING POLICIES

Management Challenges and Best Practices

BEST PRACTICES IN RLF MANAGEMENT

Chapter Eleven Venture Capital and Equity Investment Funds

The Private Venture Capital Industry

FUNDRAISING / INVESTING / EXITING INVESTMENTS / IMPLICATIONS FOR DEVELOPMENT FINANCE

The SBIC and SSBIC Programs

State Government Venture Capital Policy

Community Development Venture Capital

INDUSTY PROFILE / INDUSTRY TRENDS AND CHALLENGES

Addressing Venture Capital Challenges

STRATEGY CHALLENGES / OPERATING CHALLENGES / CAPITALIZATION CHALLENGES

Chapter Twelve Community-Based Financial Institutions

Community Development Loan Funds

CDLF CHARACTERISTICS / CDLF FINANCING ROLES / CDLF OPERATING CHALLENGES AND NEEDS /

Community Development Credit Unions

CDCU CHARACTERISTICS / CDCU LENDING AND DEVELOPMENT ROLES / CDCU OPERATING CHALLENGES AND NEEDS

Chapter Thirteen Microenterprise Finance

Three Models of Microenterprise Finance

PEER GROUP LENDING / INDIVIDUAL LENDING MODEL / TRAINING-LED MODEL

An Overview of the US Industry and Its Performance

PROGRAM PERFORMANCE / PROGRAM OUTCOMES / THE ECONOMIC DEVELOPMENT ROLE OF MICROENTEPRISE DEVELOPMENT

Design Issues and Management Challenges

Best Practices in Microenterprise Finance Development

MARKETING / TRAINING / TECHNICAL ASSISTANCE SERVICES

Case Study: Lawrence Working Capital

Part Five Federal and Municipal Government Finance Tools

Chapter Fourteen Federal Economic Development Programs

The Uses of Federal Economic Development Programs

Small Business Development Administration

PROGRAMS DELIVERED BY BANKS AND FINANCIAL INSTITUTIONS / PROGRAMS DELIVERED THROUGH SBA-APPROVED INTERMEDIARIES /

Department of Housing and Urban Development

COMMUNITY DEVELOPMENT BLOCK GRANTS / SECTION 108 PROGRAM / ECONOMIC DEVELOPMENT INITIATIVE

Community Development Financial Institution (CDFI) Fund

CDFI CERTIFICATION / CORE/INTEMEDIARY PROGRAM / SMALL AND EMERGING CDFI ASSISTANCE (SECA) PROGRAM / NATIVE AMERICAN CDFI TECHNICAL ASSISTANCE PROGRAM / NEW MARKET TAX CREDIT PROGRAM.

Economic Development Administration

PLANNING GRANTS / LOCAL TECHNICAL ASSISTANCE GRANTS / PUBLIC WORKS AND ECONOMIC DEVELOPMENT PROGRAM / ECONOMIC ADJUSTMENT ASSISTANCE PROGRAM / FUNDING PROCESS

Health and Human Services

Case Study: Financing an Inner-City Supermarket

Chapter Fifteen Municipal Finance Tools

An Overview of Municipal Debt

Economic Development Uses of Municipal Debt

Industrial Development Bonds

IDB CASE STUDY: NEW BOSTON SEAFOOD CENTER

Tax-Increment Financing

THE TAX INCREMENT FINANCING PROCESS / ECONOMIC DEVELOPMENT USES OF TIF / ISSUES IN TIF DEBT FINANCING /

Assessment District Financing and Business Improvement Districts

BUSINESS IMPROVEMENT DISTRICTS

Case Study: Downtown Orlando TIF District

Part Six Managing Development Finance Institutions

Chapter Sixteen Program Planning and Design

Defining Development Goals and Targeting Strategy

GROWTH FUND EXAMPLE

Assessing Demand

GROWTH FUND EXAMPLE

Analyzing Capital Market Supply and Identifying Financing Gaps

GROWTH FUND SUPPLY ANALYSIS

Implementation Needs and Resources

IMPLEMENTATION NEEDS FOR THE GROWTH FUND

Finalizing Program Strategy and Design

Case Study: Expanding an Urban Microloan Program

pter Seventeen Managing The Lending And Investment Process

The Investment Process and Key Management Principles

PRINCIPLES FOR SOUND INVESTMENT MANAGEMENT

Marketing and Project Identification

MARKETING APPROACHES AND AUDIENCES / EFFECTIVE MARKETING PRACTICES

Project Screening

BEST PRACTICES FOR INVESTMENT SCREENING

The Underwriting and Commitment Process

BEST PRACTICES IN INVESTMENT-DECISION MAKING

Investment Servicing and Monitoring

SERVICING AND MONITORING OPTIONS / BEST PRACTICES FOR SERVICING AND MONITORING

Case Study: Portland Development Commission Industrial Site Loan Fund

Chapter Eighteen Raising And Managing Capital

Capital Management and Development Finance

Pricing Loans and Investments

Managing and Funding Losses

Raising New Capital

GRANTS AND EQUITY CAPITAL / DEBT SOURCES / MANAGING CAPITAL / ASSET SALES AND SECURITIZATION

Financial Modeling of Development Finance Institutions

COMPONENTS OF THE FINANCIAL MODEL / CREATING THE MODEL

Case Study: Raising New Capital for the Manufacturer's Fund

Part Seven Conclusions
Part Seven Conclusions
Part Seven Conclusions

Chapter Nineteen Economic Development Finance Practice and Its Future

Glossary

References

Key features

Presents a comprehensive treatment of the field include an introduction to the technical aspects of business and real estate finance.
A strong focus on both developing financial analysis skills and an understanding of policy, program design and management issues.
Case study assignments included for twelve chapters, based on actual programs and projects.
Six chapters on policies and program models summarize industry data, and the academic and practitioner literature that provide an overview of industry characteristics, impact and practices.
A glossary of finance terms is included.