All development projects are complex undertakings that require a strong foundation to stand and ultimately have built. The three-legged stool of development—comprising of capital, land, and capacity—forms the framework of any development project. Each leg plays a crucial role, and their interdependence ensures the viability and success of the project. If any of the legs of the stool are missing for a project, it’s not going to stand up.

Project Components – the three-legs of the stool that make a project.

Capacity:   

 

Capacity refers to the collective ability of the project team and the client or housing provider to see the project through from conception to completion. It encompasses both internal knowledge within the organization and external support from consultants and experts. Building capacity involves pooling existing expertise and leveraging external resources to meet project deliverables. Capacity involves harnessing the knowledge and skills of the project team and housing provider to navigate challenges and achieve goals. Oftentimes housing providers or clients may lack the necessary internal expertise to fully execute the project. In such cases, collaboration between clients and experts becomes essential to pinpoint weaknesses and facilitate the project’s progression.

The roles and responsibilities in a project. Image taken from page 30 of the Affordable Housing Development Overview January 17, 2023 presentation.

An organization considering development should determine which roles and responsibilities they have the capacity and desire to take on. They can then begin identifying project partners and consultants that can help fill out the remaining roles. External capacity is built through consultants and partners that are brought on to a project due to their individual expertise or assets. These can include regulators, funders, support services, property managers, and the project team.

Often in a project team the architectural firm assumes the role of a primary project consultant and depending on a project will take on subconsultants to do specific work for the projects such as a structural engineer for determine the structural integrity of a building. The image below is an example of a how a project team can be structured and some of the main consultants as well as sub-consultants that may be part of a project.

Project team charter. Image taken from page 31 of the Affordable Housing Development Overview January 17, 2023 presentation.

Capital:

Capital refers to the financial resources needed to fund the undertaking. This includes various forms of funding, financing, and equity. Funding often refers to grants or other non-repayable loans from various levels of government or philanthropic organizations. Financing refers to any loans required for the project. This can include bridge loans that help with short term cash flow, construction loans, and the long-term mortgage. Financing is intrinsically linked to a project’s operating budget, the stronger your operations, the greater the mortgage the project can support. Equity is any asset that the project proponent puts into the capital stack for the development. This can include cash reserves, land, and fundraised dollars. Leveraging existing assets can also support project financing and reduce financial burdens.

Capital is the fuel that drives development projects forward. Securing adequate funding and financing is essential for initiating and sustaining progress. Organizations across Canada can apply for funding and financing from the Canada Mortgage and Housing Corporation (CMHC), Federation of Canadian Municipalities (FCM) and Community Housing Transformation Centre (CHTC). There are numerous funding sources beyond these three, such as provincial and municipal options. However, it’s crucial to assess your organization’s capacity to contribute equity, which could involve assets like land or other capital.

Land:

Land is the physical space where the development project will take shape. It is a critical component that directly impacts the project’s feasibility. Zoning considerations play a significant role in determining land use and understanding zoning regulations is vital for project planning. For non-profit organizations, acquiring land can present unique challenges that require creative solutions. Often, organization without existing land can be assisted by consultants like a development consultant or real estate agent to locate and purchase land on their behalf.

The three-legged stool of development is not simply a conceptual tool but a practical framework for ensuring project viability. Each ‘leg’ relies on the others to function effectively. If one pillar is missing or weak, the stability of project becomes compromised. A comprehensive approach that takes into account capacity, capital, and land is necessary for a successful development venture.

A strong project team, adequate funding, and appropriate land are vital components that must work in tandem. By recognizing and addressing the significance of each leg, organizations can lay a solid foundation for project viability. A holistic approach that considers all three elements will lead to more sound and sustainable development projects. As we move forward, it is important to consider, the three-legged stool, and its role in building more equitable and vibrant cities.

 

The Toolbox+ Blueprints Program Is Open For Registration

Due to high demand, our Blueprints program is preparing two cohorts simultaneously! The program will supply all the tools for organizations still in the early development stage interested in learning about critical development activities.