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Figure 3. Real EstEke Market Conditions and TOD Investmerd Needs <br /> 37% <br /> MINH, <br /> Project 2evonues <br /> ° <br /> Z s srMM//ar <br /> C <br /> O arwrgtLrnb <br /> y ` <br /> Nod* <br /> a 4 Ca** <br /> MSS <br /> z <br /> Emerging T07 Strong T07 <br /> Market Areas MarketAreas <br /> The stronger the real estate market, and the more profit a project can generate above this <br /> threshold, the more money a developer will be able to contribute back to community benefits, <br /> including basic infrastructure. But, in a big region with a wide variety of neighborhoods like <br /> the Bay Area, there are only a few neighborhoods where sales prices can exceed standard <br /> developer profit expectations. In most cases, the local jurisdiction contributes some type of <br /> subsidy to assist the developers. Without this subsidy to "prime the pump," it can be very <br /> difficult to move markets along the continuum of market strength. <br /> In both strong and emerging markets, there are often infrastructure needs, such as stormwater, <br /> utility, or street upgrades that impact the feasibility of individual projects. Financing for these <br /> needs are hard for developers to secure in a typical market, and may prove beyond the <br /> capabilities of local jurisdictions. <br /> The differences between strong and emerging markets can also impact the effectiveness <br /> of different funding structures. In strong markets, there is more potential for funding for <br /> infrastructure or other purposes to be structured as a loan to be paid back over time while <br /> reducing up front costs to a developer. In emerging markets, funding in the form of grants <br /> may be more appropriate, since there is more uncertainty about the long -term return. <br /> There is also a common situation where a local market may be strong for lower density <br /> development (e.g. single - family or townhomes), while higher density development is seen <br /> as too risky by the development community. In these situations, despite the hot market for <br /> some uses, some subsidy may be necessary to address this perceived risk. In these cases, <br /> it may be possible to structure funding as a loan in order to share in the potential benefits of <br /> these projects. <br /> Barriers to 100 and Regional Funding Needs 15 <br />