Accessing Capital for Community Development

Course Description: This module will examine how for-profit and not-for-profit entities access debt and equity funding for affordable housing development and job creation activities in distressed urban and rural communities. First, the course will assess the rapidly changing world of real estate and economic development finance. The course will then examine the operation of the mortgage-backed securities (MBS) market, and the growth and development of secondary markets. Particular emphasis will be placed on recent efforts to securitize debt linked to the construction and sale of affordable housing, as well as small business lending. Next, the course will review current efforts to attract equity capital for affordable housing and community economic development, including the low-income housing tax credit and new markets tax credit programs, as well as emerging venture capital funds and philanthropic initiatives. Finally, the class will review several case studies of efforts by both private and not-for-profit groups to structure community development initiatives that take full advantage of these newly emerging sources of capital.Pedagogic Objectives: Course lectures and class discussion, along with course readings and case study material will enhance student understanding of capital markets and the operation of both traditional and newly emerging capital market institutions. Students will learn how to assist both for-private and not-for-profit organizations to better access debt and equity funding to promote affordable housing and community development. There are no prerequisites for this course, but familiarity with basic concepts of real estate finance will prove helpful.Class Sessions: Class will meet once a week from 9 am to 12:00 starting on March 13. The first half of each class will consist of a lecture and discussion concerning key concepts raised by the class readings. Following a short break, the class discussion will focus on applying these concepts to specific housing and community development cases. The case material will also serve as the basis for the required written assignments.Time Commitment of Students: Students are expected come to class prepared to discuss course reading and case material. In addition, students will be asked to select two (out of four) sets of case materials and complete a short memo that addresses one or more of the critical issues raised by these cases. The first written assignment will be due in class as follows:April 3: Establishing a secondary market for Hong KongApril 10: Establishing a Revolving Loan Fund for Small BusinessApril 17: Transforming CDFIsApril 24: Establishing a Venture Capital Fund for New Business DevelopmentMay 1: Non-Traditional Approaches to Venture CapitalBasis of Final Grade: 1st Written Assignment 33%2nd Written Assignment 33%Class Participation 34%Total 100%Course Materials:Most class readings are available on line. Two text books and selected other readings will be available at the GSD Loeb Library. In addition, several Harvard Business School case studies as well as selected case material will be distributed in class. The course syllabus is available in the UPD office, Gund 312.