CEcD POSSIBLE ESSAY MATERIAL:
Real, Finance, BRE UPDATED Exam
Questions and CORRECT Answers
Real Estate Development and Reuses Objectives: - Correct Answer- 1. Understanding of the
development process;
2. A familiarity with the policies and programs that state, local, and public private economic
development organizations and agencies can use to encourage and help finance development;
3. An understanding of how to analyze cash flow and income statements, and how to assess
project feasibility;
4. Knowledge of site analysis and land assembly;
5. A familiarity with current environmental rules and regulations;
6. An understanding of regulatory constraints and incentives;
7. An understanding of the process to solicit and select a developer.
When working with a Consultant and Developer an EDO will enroll a selection panel: -
Correct Answer- Often in conducting a search for a consultant or a developer, an EDO will
enroll a selection panel representing various stakeholders to review candidate qualifications,
analyze project proposals, and recommend a preferred consultant.
These selection panels come in all sizes and configurations. Members of the board of the
EDO may perform this function, community leaders may sit on selection panels, or
sometimes there is a panel with a host of diverse perspectives represented. In some cases the
city council or town board becomes the selection panel.
The critical issue in forming the selection panel is avoiding a lopsided panel in favor of the
project and representative of only a narrow and limiting perspective.
Homework needs to be done in providing in-depth education about the project, clear
guidelines about the process, and decision making procedures.
Selection panels need staff - that is, some person who can serve as staff to the panel:
coordinating, arranging, communicating, etc. This requires a great deal of work .
,If the decision is made to hire a consultant, the development agency should c1early identify
the problem and determine what the consultant's end product should be. Before approaching a
consultant, the agency should define the following: - Correct Answer- • Goals and objectives
of the consulting product;
• Process for finding and selecting consultants
• Problems, challenges, and issues that need consulting support;
• Technical, administrative and political constraints;
• Role of the agency in the consulting effort;
• Budget and schedule for consulting services;
• Work tasks to be accomplished;
Consultants are identified: - Correct Answer- Consultants are identified from personal
referrals, professional association directories, trade magazines that feature directories and
advertisements, literature mailed to agencies, and on websites, such as WWW.iedconline.org.
Most valuable is the professional contacts that one makes with other professionals in various
activities. Many times it helps to ask other colleagues who they used and their level of
satisfaction with a certain consultant.
Consultants can provide a number of services and are often retained to complete feasibility
analyses. - Correct Answer- Not only do they bring a further measure of objectivity, but they
can lend additional expertise that gives the analysis further credibility. The type of consultant
chosen should reflect the problem that needs to be addressed. For example, if the EDO
requires detailed architectural consultation or wants to know if a project is market feasible, it
is wise to select architects and market feasibility consultants, respectively, who have strong
private sector experience and are currently serving developers and investors. If on the other
hand an EDO desires more of a policy approach to problem solving, then a consultant that
specializes in economic development policy may be the right choice.
Consultants can be selected through several processes: - Correct Answer- 1. Sole-source
2. Pre-qualified Candidate List
3. Request for Proposal (RFP)
Sole-source: - Correct Answer- For the sole-source scenario, a consultant is selected without
a formal competitive process. Sole sourcing mayor may not be legal, depending on local and
state statutes. Some statutes specify a dollar amount over which the consulting assignment
must be competitively bid. If federal funds are used, there must be a documented selection
,process. The advantage of sole sourcing is that the consultant can be retained quickly. For
legal and political reasons, any agency retaining sole-source consultants should carefully
document their reasons for doing so.
Pre-qualified Candidate List: - Correct Answer- Consultants are sometimes selected from a
list of pre-qualified candidates. Many agencies maintain a list of consultants that are pre-
qualified to perform certain functions. The agency chooses several to submit a statement on
how they would approach the problem, interviews them, and selects the best qualified
candidate.
The request for qualifications (RFQ) is similar to selecting from a pre-qualified list, except
that there is an official announcement and often a more rigorous selection procedure. The
announcement, say in trade publications, would help the agency add to its existing pool of
candidates.
It is useful to have a stable of pre-qualified consultants who can move quickly. Again, time is
money. EDOs should seek to review qualifications annually.
Request for Proposal (RFP): - Correct Answer- The most rigorous selection process is the
RFP. It is recommended that the issuing agency distribute the RFP to as many groups or
entities as possible. The consultant must submit a full proposal to be considered. The RFP
typically is advertised, mailed to a list of possible consultants, and posted on the website.
The RFP clearly explains the project specifications, discussed previously, that the agency
prepares before retaining a consultant.
In addition, there should be a description of the project and services required. The description
of required services is very important because consultants will base their response to the
proposal on that description.
It should be clearly written and consistent with other parts of the RFP. In describing the
proposed tasks, the RFP should provide enough detail, including the number of required
meetings with agency officials, for the consultant to make realistic cost estimates.
The RFP not only conveys information but also acts as a marketing tool. A good RFP should
be well organized and written so that it encourages the consultant to invest time and money
into a thoughtful response. The RFP should include
, instructions for submission. Such instructions should include the time, date, and location of
submission, as well as submission requirements such as a cost proposal, and an outline of
what should be provided in the consultant proposal.
Agencies may wish to include budget information or set a budget. Alternatively, they may ask
the consultant to propose a budget and make the consultant's cost one of the selection criteria.
By excluding the budget, the agency encourages the consultant to price their response
competitively. However, it is difficult to compare responses with wide variations in budget.
Therefore, agencies may wish to provide a budget range or have a target budget
Selection criteria include the consultant's: - Correct Answer- • Understanding of the project;
• Approach to the project;
• Experience with similar assignments;
• Staff qualifications for the project;
• Clarity of proposal;
• References and contacts from prior project engagements.
The RFP should require the following from the consultant: - Correct Answer- • Listing of the
tasks the consultant is assuming;
• Work plan;
• Specific responsibilities of consultant's staff;
• Detailed timeline and list of deliverables;
• Corporate capabilities statement and resume of all personnel working on the project;
• List of similar recent projects, information of persons who can testify to the consultant's
expertise;
• Executive summaries or complete reports from projects that the consultant has recently
completed.
Selecting a Developer: - Correct Answer- • When an EDO wants to develop a piece of
property for the private market, it usually contracts for those services with a private-sector
developer. This process of solicitation and selecting a developer is often initiated through a
request for qualifications (RFQ) or request for proposals (RFP).
• An EDO may first issue an RFQ, followed by a RFP. RFQs are used to do an initial
evaluation to create a smaller pool of potential developers to respond to an RFP.
