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Home My WebLink AboutAgenda - 01-27-2015 - 1ORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: January 27, 2015 Action Agenda Item No. 1 SUBJECT: Update on the Ephesus Church Road /Fordham Boulevard Public Improvements and Request for County Investment in the Project DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y /N) No Services ATTACHMENT(S): A. Bond Counsel Memorandum on Tax Increment Financing B. County Financial Analysis 1. Scenario 1 2. Scenario 2 C. Planning Analysis & Comments D. November 11, 2014 County Staff Presentation E. Town of Chapel Hill Presentation F. Town of Chapel Hill Memo on County Participation INFORMATION CONTACT: Bonnie Hammersley, 919 - 245 -2306 Paul Laughton, 919 - 245 -2152 Craig Benedict, 919 - 245 -2592 Steve Brantley, 919 - 245 -2326 1 PURPOSE: To receive a County overview and financial additional analysis of the County's potential involvement/investment in the Ephesus Church /Fordham Boulevard (Ephesus Fordham) Public Improvement Plan. BACKGROUND: The Town of Chapel Hill, at the March 21, 2014 Joint Meeting with the Board of County Commissioners, presented an improvement project for the Ephesus Church — Fordham Boulevard of the Town of Chapel Hill. In order to support the renewal of the Ephesus Fordham area, the Town of Chapel Hill must make investments in much needed traffic and stormwater capital improvements. The project would be financed with the use of Tax Increment Financing or Project Development Financing. Under this method the financing of economic development projects occurs by pledging the anticipated growth in tax base as a source of repayment. The theory is that the project being financed is enabling the tax growth and therefore the project is and will be self- financing because, if not for the project, the tax growth would not have occurred. The Town of Chapel Hill would like the County to participate in the Ephesus Fordham Renewal Project by pledging the lesser of 50% of the actual increment property tax revenues received or 50% of the actual annual debt service cost. The Town of Chapel Hill (Town) is suggesting that the County consider an approach to investing in the project using mutually agreed upon criteria, which will be tied to the Ephesus - Fordham project performance. The Town would provide an annual Ephesus Fordham project performance report during the County's budget deliberations that would include the following: additions to the tax base, status of public improvements, status of private improvements, including progress toward meeting affordable housing, energy efficiency and transportation goals, and economic impact analysis. The Planning Department has provided its comments in Attachment C about the project; specifically in regards to traffic analysis, stormwater /flood control and school impact fee scenarios depending on student generation. Traffic analysis and programmed projects note how some Ephesus - Fordham intersection improvements could be funded in part by Durham - Chapel Hill Metropolitan Planning Organization funds. Planning recommendations also note how a future transit study and Orange County Bus and Rail Investment Plan (OCBRIP) funds could be used /assigned to `cross -town' routes to augment shopping opportunities between the downtown area /campus and this new retail node. Chapel Hill Transit (CHT) is presently studying bus routes to support future Bus Rapid Transit (BRT) and Light Rail Transit (LRT). Stormwater /flood control comments relate to how the County could participate in public sponsored improvements that have multiple benefits of flood control, water quality and environmental enhancement. Chapel Hill has recently (last fall) addressed a more comprehensive stormwater approach than anticipated early last year. School impact fee potential receipts were analyzed related to the existing impact fee schedule (Scenario A) vs. what new student generation rates (from a draft study completed late October 2014) may hypothetically generate from a student number perspective and an adjusted, yet unadopted fee schedule change (Scenarios B and C). A PowerPoint planning overview will be given at the meeting. Additionally, if a new high school and /or major additions have to be made to one of the existing Chapel Hill Carrboro City Schools (CHCCS) high schools to accommodate the projected increase in students, the additional debt service would reduce the net amount of property taxes received as result of the planned project improvements. The first Ephesus Fordham performance report would be submitted during the first budget cycle in which an actual tax increment from the project was expected in the next fiscal year. The County could potentially benefit from participating with the Town of Chapel Hill from increased property and sales tax revenues. Based on information provided, the County would potentially receive incremental property tax revenues over three phases of the Project of approximately $14 million. County expenditures, based on current County financial policies and guidelines, would total $23 million prior to the requested debt contribution. After paying the requested debt contribution of $400,840 over 20 years, Attachment B -1 reflects Scenario 1 where the County would net a deficit of incremental tax revenues of $10.4 million. This scenario includes the cost impact of providing County services affected by the project, as well as the 48.1% target impact of General Fund revenues provided to Education, and the costs to fund the additional students in each phase of the project at the current per pupil amount of $3,571 per pupil. After paying the requested debt contribution of $400,840 over 20 years, Attachment B -2 reflects Scenario 2 where the County would net a deficit of incremental tax revenues of $6.9 million. K This scenario only includes the 48.1% target to Education and the costs of the additional students in each phase of the project. In order for the County to participate in the project without incurring a deficit, the County would have to modify its financial policies in the areas of earmarking revenues for a particular purpose or project, and modify its funding target for education. FINANCIAL IMPACT: There is no financial impact with receiving this information. The financial impact will occur if the Board of County Commissioners participates in the project. RECOMMENDATION(S): The Manager recommends that the Board receive the information and provide feedback to staff. M SanfordHolshouser www.Sanfordholshouserlaw.com - Memorandum- To: Ken Pennoyer Date: November 4, 2014 Re: Ephesus - Fordham — County- Municipal Agreements To Share Tax Increment Attachment A When the Town of Chapel Hill made a presentation last spring to the Orange County Board of Commissioners on the Ephesus - Fordham project, one Commissioner asked for examples in which a county and a municipality agreed to share the benefit of a tax increment for the purpose of paying off a loan. We quickly found two illustrations. Woodfin — Buncombe County Buncombe County in 2008 issued approximately $13 million in formal tax increment financing bonds to pay for improvements in Woodfin, a town within the County. As part of the financing arrangements, the County and Town each pledged (to each other and to the bondholders) that the incremental tax revenues generated from taxable improvements in the financing district would be paid to a central fund and used for debt service on the bonds. This is a binding, long -term agreement between the two entities that covers 100% of each party's incremental revenues. Fayetteville — Cumberland County Fayetteville and the County, along with the City's Public Works Commission, entered into a 2010 agreement to finance and develop a parking garage in the City's downtown. The City and County each agreed that 100% of the incremental tax revenues in a defined municipal service district would be used to make payments on the City's financing for the parking deck. This arrangement is in support of an installment financing and not a formal tax increment financing, and so is closer to the arrangement proposed for Ephesus - Fordham improvements. ********* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * ** We would be happy to look for additional examples at the Town's or the County's request. Please let us know if you have any questions about this material or if we can otherwise be of any help. -- Bob Jessup -- Adam Parker - Fordham Financial Analysis (Scenario 1) i Phases ication ind Management -vices and environment rices i recreation e (deficit) Years in phases increase (deficit) Fy14 -15 Percentage of Budget FY14 -15 Budget $ 17,550,772 8.99% 9,451, 951 4.84% 7,548,601 3.87% 32,242,706 16.51% 22,382,107 11.46% 2,696,035 1.38% 76,847,414 39.36% 26,529,306 13.59% $ 195,248,892 100.00% deficit of project over life of project Attachment B -1 Percentage of County Services Allocated to Project 8.99% 0.00% 0.00% 16.51% 0.00% 0.00% 0.00% 0.00% 0.00% 284.00 175.00 19.00 90.00 Phase 1 Phase 2 Phase 3 Revenues Revenues Revenues $ 1,424,704.00 $ 154,721.00 $ 726,694.00 128,066.00 13,908.00 65,322.00 235,271.00 25,550.00 120,004.00 1,310,208.00 142,270.00 670,930.00 1,673,545.00 (248,841.00) 400,840.00 181, 728.00 (27,007.00) 400, 840.00 856,256.00 (129,562.00) 400,840.00 $ (649,681) $ (427,847) $ (530,402) 4 years 6 years 10 years $ (2,598,724.00) $ (2,567,082.00) $ (5,304,020.00) A B C Total of A +B +C $ (10,469,826.00) based on 48.1% Target of General Fund Revenues being provided to Education, as well as the growth in students in each phase of the project. - Fordham Financial Analysis (Scenario 2) i Phases ication and Management vices F and environment /ices J recreation e (deficit) Years in phases increase (deficit) Fy14 -15 Percentage of Budget FY14 -15 Budget $ 17,550,772 8.99% 9,451,951 4.84% 7,548,601 3.87% 32,242,706 16.51% 22,382,107 11.46% 2,696,035 1.38% 76,847,414 39.36% 26,529,306 13.59% $ 195,248,892 100.00% deficit of project over life of project Attachment B -2 Percentage of County Services Allocated to Project 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 284.00 175.00 19.00 90.00 Phase 1 Phase 2 Phase 3 Revenues Revenues Revenues $ 1,424,704.00 $ 154,721.00 $ 726,694.00 1,310,208.00 142,270.00 670,930.00 1,310,208.00 142,270.00 670,930.00 114,496.00 12,451.00 55,764.00 400,840.00 400,840.00 400,840.00 $ (286,344) $ (388,389) $ (345,076) 4 years 6 years 10 years $ (1,145,376.00) $ (2,330,334.00) $ (3,450,760.00) A B C Total of A +B +C $ (6,926,470.00) s based on 48.1% Target of General Fund Revenues being provided to Education, as well as the growth in students in each phase of the project. January 21, 2015 Attachment C Ephesus Church Road /Fordham Boulevard Project Small Area Planning Traffic Analysis Stormwater /Flood Control and School Impact Outline of Comments A. Purpose B. Study Area Overview C. Objectives D. Context D -1 Surrounding Context D -2 Project Area Existing Land Use E. Public Transit F. Road Improvements G. Stormwater /Flood Control & Map H. School Impact H -1 Abstract H -2 Scenarios; Table Form Overview and Orange County Comments 7 A. Purpose: To review the Ephesus Church Road /Fordham Boulevard Small Area Planning document and synthetic Tax Increment Financing (TIF) proposal as it relates to Traffic Analysis Stormwater /Flood Control, and school impact. Identify elements within the Plan or supporting studies or comments to augment the Plan that would serve the area and Orange County's goals. Elements could include environmental aspects such as stormwater, water quality and flooding, multi - modal transportation, and regional economic development opportunities, and school impacts. B. Study Area Overview • Between Downtown near Chapel Hill and Durham, in close proximity to the I- 40 interchange which connects Chapel Hill to Raleigh. • One of the major commercial districts of Chapel Hill and Orange County. • Most properties have reached their peak performance and there is a tremendous potential for redevelopment. C. Primary Plan Objectives • Increasing the economic potential of the area • Improving the transportation conditions • Area is known for its history of transportation problems • A "super street" was constructed north of the study area to solve some of the issues, but the area is still facing major transportation and traffic, pedestrian and bicycle circulation challenges. 1 January 21, 2015 Attachment C 8 D.1. Surrounding Context • NE of downtown Chapel Hill and UNC main campus • Along Hwy 15/501- a gateway corridor and a high investment corridor • Transportation issues within the area • Less than 3 miles away from downtown • US 15/501 connects area to the City of Durham to the northeast • US 15/501 is the main connection to Pittsboro to the south D.2. Existing Land Uses • Commercial — 74% 0 3 aging strip retail centers — Ram's Plaza, Eastgate Mall and Village Plaza o Majority of properties of Eastgate Mall are in the floodplain o A few office buildings o 5 hotels • High Density Residential — 13% - along Ephesus Church Road • Low - Density Residential — 2 %, along Fordham Boulevard • Parks and Open Spaces — 0.4% E. Public Transit Element of the Plan • Existing Transit Service Serving the Study Area • On weekdays, CHT routes D, CL and F serve the study area. These routes have approximately ten, five, and eleven stops within the study area, respectively. Route DXP is an express route through the study area via Franklin Street. • On Saturdays, CHT routes DM and FG have six and thirteen stops within the study area, respectively. o TTA serves the area with routes 402/403 and 412/413. These are express routes that run through the study area via Franklin Street. • The Tarheel Express is a shuttle system that operates from the University Mall Park & Ride facility for basketball and football games. • Duke University offers the Robertson Scholars Bus Route which runs along US 15 -501 between Duke University and the UNC campus, with boardings occurring at Morehead Planetarium. • Key transportation elements in the Ephesus Church Road / Fordham Boulevard Small Area Plan framework include improved access and connectivity within the area for vehicles, pedestrians, and bicyclists. • Orange County Planning Comment —Additional Transit Service o A bus element network is needed to bring people to the study area, and to enhance connectivity throughout the larger area and region via other transit service providers via a transit hub: ■ A circulator shuttle that would provide service to: Downtown Chapel Hill The UNC Campus dorms Carolina North • An adjusted OPT 420 bus route the would provide service to: Rural Orange County Hillsborough January 21, 2015 Attachment C g o Dedicated BRT lanes - the area has been identified as a candidate for high -order Bus Rapid Transit (BRT). Walkability • The study area is not independently walkable, i.e., there are not people living within walking distance. • There is not a lot of new housing development in the area to bring shoppers. Multi -modal Aspects o Transportation needs to the Study Area relate to existing and proposed traffic associated with the development concepts for the project, including multi -modal aspects (bike and pedestrian). F. Planned Roadway Improvements and General Comments in the Study Area Positive The Fordham Blvd (US 15 -501) corridor is congested with volume to capacity ratios indicative of the need for investment and this project proposes improvements. Positive Improvements are typically funded through the Durham - Chapel Hill MPO and some of these improvements are programmed. Positive The MPO has recently (Wednesday, November 12, 2014) approved an amendment to the transportation CIP to include a $2.17 million Ephesus - Fordham intersection improvement which will permit eventual reimbursement for earlier improvements. This would reduce the $8.8 million road improvement program to a $6.63 million loan amount after a few years (2018? reimbursement) and decrease debt service. The overall road project may still be $8.8 million but from other sources besides the loan. The Ephesus - Fordham $10 million project ($8.8 million road, $1.2 million stormwater) graphs do not reflect this change at this time. Negative Funding for roads is not a county function, however, participation in the prioritization of MPO projects that matriculate into the State TIP is. Orange County can also participate during the development of a project as discussions with NCDOT evolve so we can help with multi - county comprehensive transportation priorities and agreements. Positive If this mixed use project is a focal point for both residential and retail, a reasonable amount of internal trip capture will decrease typical external trip generation. Negative Could the Ephesus - Fordham project include stronger bus transit attributes (such as future bus transit hubs) to assist in downtown /college area integration (i.e. cross town shopping). K January 21, 2015 Attachment C 10 • 2040 MTP: U.S. 15 -501 from Ephesus Church Road to Columbia Street: Capacity improvements and possible interchange at Manning Drive with sidewalks, wide outside lanes and transit accommodations. • 2012 -2018 DCHC MPO TIP Projects: U -5304 — US 15 -501, NC 86 (South Columbia Street) to SR 1742 (Ephesus Church Road): Sidewalks, wide outside lanes and transit accommodations, but no intersection improvements. Programmed for construction in FY 2019 (TIP developmental program) at a cost of $5,150,000. This project is subject to reprioritization. • SPOT 3.0 Reprioritization: • U.S. 15 -501 from Ephesus Church Road to Columbia Street: Capacity improvements and possible interchange at Manning Drive with sidewalks, wide outside lanes and transit accommodations. A feasibility study is currently underway that should better define the project and lower the cost estimate. The project scores well in the Statewide Mobility funding category. The MPO did not assign local input points to the project and recommended waiting to see if the project gets funded from the Statewide Mobility category for the next TIP development iteration while the feasibility study is underway. The current project cost estimate is $95,330,000. The project received a Statewide Mobility score of 44.55, which is just below the estimated funding cut -off of 45 minimum points. The STIP Statewide Mobility Category will score better if feasibility study shows the estimated cost to be less than the $95,330,000. • U.S. 15 -501 at Ephesus Church Road: Intersection improvements. Cost of $2,170,000. Scored well in Statewide Mobility funding tier and looks to be funded with approval by the MPO. The proposed schedule for the project is right -of -way in FY 2023 and construction in FY 2024. There has been some discussion of Chapel Hill accelerating the project and looking at the possibility of being reimbursed when the project is programmed in the STIP. Note: This acceleration has been recommended by the DCHC MPO board in mid - November 2014. Orange County Summary of Recommendations for a Study to Examine Building a Transit Infrastructure for Economic Development in Orange County • Fund a study to review whether the recommended circulator shuttle for the Study Area, and the extension of the OPT of the extension of the OPT 420 bus route would further the primary plan objectives, and develop estimated costs. • BRIP amendment to include a circulator shuttle connecting the Study Area with downtown Chapel Hill, UNC Campus dorms, Carolina North. • BRIP amendment to include extension of the OPT 420 bus route connecting the Study Area with rural Orange County and Hillsborough via the circulator shuttle. • BRIP amendment to include installation of one or two BRT routes to accommodate the circulator shuttle. M January 21, 2015 Attachment C 11 G. Stormwater / Flood Control Elements of the Plan 1. Background The Ephesus - Fordham Small Area Plan (SAP) was supported by a Kimley- Horn and Associates analysis in 2011 for both traffic and stormwater improvements. Approximately 1/3 of the site is encumbered by 100 year floodplain as shown in Attachment 1. This is part of a larger Booker Creek drainage shed. A second map shows the floodplain south of the Ephesus - Fordham project area which experienced extensive flooding within the past year. 2. Specific Original Work Alternative drainage improvements have been functionally engineered to provide different flood reduction benefits; i.e. less depth of flooding depending on storm event and /or reduction in FEMA flood mapping area. Culverts were analyzed at Franklin, Eastgate, Elliott and Fordham roads with varying results and costs. 3. Original Cost Estimates The "Implementation and Maintenance Cost" program for stormwater improvements was originally estimated as $1.2 million. This included $210,000 for design, $910,000 for construction and $80,000 for contingency. Annual maintenance was estimated at $35,000 a year. This program was intended for both the Eastgate and Willow area. 4. Stormwater Master Planning Orange County has been in contact with the Chapel Hill Engineer in early January to discuss some of the parameters of their improvements. Chapel Hill reports that there has been some new direction since project inception and more recently since last spring to investigate solutions at both the micro and macro scale with most stormwater flooding amelioration occurring upstream of the project. Nutrient reductions would be onsite as redevelopment protocol /BMP's occurs to a high standard. 5. New Direction The overall greater project area could be considered to be categorized into 3 areas; upstream (with 2 sub - basins); project area and downstream. The upstream basins (and more micro -level stormwater flow attenuation BMP's at the subdivision level) may be the focus of the new flood mitigation techniques, as well as, the project area culvert sizes. A localized stormwater municipal service district (MSD) has been created but not implemented awaiting improvements at the project area redevelopment level. The MSD once implemented would create an ongoing revenue stream for maintenance which is critical. January 21, 2015 Attachment C 12 6. Orange County Participation Although many of the Best Management Practices (BMP's) to mitigate flood conditions and as an added benefit reduce nutrient runoff may be relegated to smaller scale case by case upstream retrofits, Orange County can understand the benefits of flood control and water quality as it affects a larger regional or sub - regional context. The social, health and emergency service impact of flooding can impart a burden on the larger community. Larger scale, publically sponsored flood /stormwater BMP's on public land or easements that can ameliorate flood events is a potential joint participation project. These projects often have environmental benefits also by enhancing wetlands or recreating natural floodplains. • Whereas certain development impacts have regional implications other than human service, such as implementing the goals of nutrient reductions in Jordan Lake or flood controls and burdens when residents are impacted by flooding, Orange County respectfully makes the following suggestions for project inclusion- 1 . Chapel Hill is encouraged to consider inclusion of state of the art peak flow attenuation and best management practices ensuring post - redevelopment reductions in both stormwater impacts and nutrients (nitrogen and phosphorus), in addition to the normal State required controls on suspended solids. 2. Consideration should be given to some stream restoration through the property, re- establishing or creating floodplain benches to mitigate flooding potential within the property, as well as providing benefits upstream and downstream. At the very least, low- value, non - structural improvements on these areas should be considered, such as use as overflow parking. Perhaps some novel uses of permeable paving technologies could be employed in such areas, with accommodation for closure during anticipated periods of high stream flows. 3. Examine the location of stormwater and flood control BMP's whether on public or private property and whether on -site, upstream or downstream. Consider initial capital and ongoing regulated maintenance. 4. We are confident Chapel Hill will require minimum freeboard to occupied floor space in those areas subject to flooding from the 100 -year storm. Orange County encourages a minimum of 2 feet be considered, if not already Chapel Hill's policy. 5. Flood storage at Eastwood Lake with telemetric flood control weirs. January 21, 2015 Attachment C H. School Impact H -1. Abstract of School Impact Scenarios The school fiscal impact of the Ephesus - Fordham project was variable based on a wide range of student generation assumptions in April of this year. The range was from 105 to 450 students not knowing what product type was being considered and using relatively old student generation rates. A new study had been commissioned and was in progress over the summer and early fall to analyze Student Generation Rates (SGR) with a higher degree of specificity using housing type and bedroom count which was not used in earlier studies. This was completed on October 28, 2014. On November 6, 2014 the Schools Adequate Public Facilities Ordinance Technical Advisory Committee (SAPFOTAC) met to discuss the technical aspects of the report before the committee would comment on the changes in the rates, the impacts, the schedule for elected official review, applicability and implications for further study, existing school impacts fee and the implementation of these findings if adopted. Although the proposed SGR's are not adopted, some scenarios can be developed to compare existing rates (Scenario A) and two other scenarios B and C to review the school impact of Ephesus - Fordham based on a few assumptions of housing type and bedroom count. Scenario B assumes all units to be multi- family and 0 -2 bedrooms using proposed SGR's. Scenario C assumes multi- family units to be a mix of 77.5% 0 -2 bedrooms and 22.5% 3+ bedrooms. Accordingly, these scenarios provide a more in depth review of the potential impacts when reviewing a specific scenario. However, it is very important to remember these rates are unadopted and only reflect SGR's over the last ten years and a formal study of how these recent rates would affect the necessary overall basis of school impact fee rates is yet to be determined. As a related note, adopted school impact fees were developed and amended from time to time since their inception in the late 90's and invariably, the fee did not pay for the 100% impact of the student generation that came from a housing type [i.e. maximum supportable impact fee (MSIF)]. The fee in most cases only escalated to account for about 60% of the MSIF. The higher cost of new schools after the development of an impact fee structure further reduces the `actual' percentage recovery. Each scenario was developed in four parts: 1. Impact Fee Assessment, 2. Student Generation Rate Calculation, 3. Cost Recovery, 4. Capital / Operating Review. 7 13 January 21, 2015 Attachment C 14 Again, scenarios are, in most part, hypothetical with Scenario A based on existing impact fees and student generation. Scenario C may be the most realistic based on new trends in the higher SGR found in multi - family and closely comports to the number of students estimated by Chapel Hill for the Ephesus - Fordham project (284 by Chapel Hill staff and 299 by Orange County Planning staff, Scenario C). These scenarios only represent SGR and impact fee estimates and do not reflect residential tax value from county or Chapel Hill /Carrboro district tax which is a calculation that needs to be evaluated by Finance and the Tax Assessor as it relates to possible housing value and use of tax revenues for specific purposes. Although these scenarios are hypothetical, a generalization could be made that impact fees may cover only about 43% of the capital needs generated by multi- family housing type. Depending on which scenario the multi -year through impact fee deficit would range approximately $2.5 million (Scenario A), $4.7 million (Scenario B) to $7.3 million (Scenario C). (See shaded area comparisons on following pages) January 21, 2015 Attachment C 15 H -2 School Impact Scenarios (Tabular) SCENARIO A (Existing Program) School Impact Fees (Present Schedule Adopted 2008 includes Student Generation Rate from approximate year 2000) Impact Fee Assessment (Potential Revenues) 1495 DUS 1495 Dwelling Units (DUS) $1,286 (CH /C Schools; Multi - Family irrespective of bedroom count) 2. Student Generation Rate Calculation 1495 DUS .070 All Grades (Student Generation rates from 2000) 105 Students Note: In other words, 14.29 multi - family units generate one student 3. Cost Recovery of Unit Type $1,286 Per Multi - Family Unit assumes a 60% recovery cost of the school capital demand generated by a multi - family unit (not per multi - family student) $2,143 Is the hypothetical 100% cost recovery per multi - family unit (aka maximum supportable impact fee) 4. Capital Review (Potential Expenditures) 4.1 Capital Scenario If all students were elementary aged (Actual estimate; 57 elementary age, 22 middle school age and 26 high school age) then 105 _ 585 Students per Elementary School 18% of a school (cost $25m ±) ($42,750 ± per elementary student) (costs per student are usually higher for middle and high school) 4.2 Ongoing Annual Operating 105 Students x $375,000 = $3,571 (FY2014 -15) operating expense per student per year NOTE: Finance is analyzing district tax revenue in a separate document. 9 January 21, 2015 Attachment C 16 SCENARIO B (All Multi - Family 0 -2 Bedrooms) School Impact Fees (If revised and informed by a new Impact Fee Study using new Student Generation Rate data which illustrates varying student generation by bedroom count) Impact Fee Assessment (Potential Revenues) 1495 DUS 1495 Dwelling Units (DUS) $2,388* (CH /C Schools; Multi - Family 0 -2 bedroom count) 2. Student Generation Rate Calculation 1495 DUS All Grades (Student Generation rates from 2014) .13 Multi- family 0 -2 Bedrooms— unadopted 194 Students Note: In other words, 7.7 multi - family units generate one student 3. Cost Recovery of Unit Type *A new school impact fee study would have to be commissioned Assumes School Impact Fees would be increased to reflect increase in Student Generation Rates by 185.7% (i.e. from .070 multi - family to .13 multi - family for 0 -2 bedrooms) $2,388* ($1,286 — Adopted Rate) Per Multi - Family Unit assumes a 60% recovery cost of the school capital demand generated by a multi - family unit (not per multi - family student) $3,980* ($2,143 — (aka maximum supportable impact fee) (Is the hypothetical 100% cost recovery per multi - family unit) 4. Capital Review (Potential Expenditures) 4.1 Capital Scenario If all students were elementary aged (Actual estimate; 105 elementary age, 30 middle school age and 59 high school age) then 194 _ 585 Students per Elementary School 33% of a school (cost $25m ±) ($42,750 ± per elementary student) (costs per student are usually higher for middle and high school) 4.2 Ongoing Annual Operating 194 Students x $693,000 = $3,571 (FY2014 -15) operating expense per student per year *Assumes School Impact Fee is modified NOTE: Finance is analyzing district tax revenue in a separate document. 10 January 21, 2015 Attachment C 17 SCENARIO C (Mix of Multi - Family 0 -2 and 3+ Bedrooms) School Impact Fees (If revised and informed by a new Impact Fee Study using new Student Generation Rate data which illustrates varying student generation by bedroom count) Impact Fee Assessment (Potential Revenues) 1495 DUS 1495 Dwelling Units (DUS) $3,674* (CH /C Schools Mix; Multi - Family 0 -2 and 3+ bedroom count) 2. Student Generation Rate Calculation 1495 DUS All Grades (Student Generation rates from 2014) With a mix of 77.5% Multi - Family 0 -2 bedroom and 22.5% .20 Multi - Family 3+ bedrooms (unadopted) 299 Students Note: In other words, 5 multi - family units generate one student 3. Cost Recovery of Unit Type $3,674* ($1,286 — Adopted Rate) Per Multi - Family Unit assumes a 60% recovery cost of the school capital demand generated by a multi - family unit (not per multi - family student) $6,122* ($2,143 — (aka maximum supportable impact fee) (Is the hypothetical 100% cost recovery per multi - family unit) 4. Capital Review (Potential Expenditures) 4.1 Capital Scenario If all students were elementary aged (Actual estimate; 164 elementary age, 60 middle school age and 75 high school age) then 299 _ 585 Students per Elementary School $12 ,,830,000 51 % of a school (cost $25m ±) ($42,750 ± per elementary student) (costs per student are usually higher for middle and high school) 4.2 Ongoing Annual Operating 299 Students x $1,067,729 = $3,571 (FY2014 -15) operating expense per student per year *Assumes School Impact Fee is modified NOTE: Finance is analyzing district tax revenue in a separate document 11 Attachment1 I - ° C VAR ~ / `S _ iRF{ lilt L ( 1 - t - g � ` ✓r �� j C '4� 1. �• H PI I. HII / 1 � I �f� I wren ,.,, -�Y. +', —. -� 'z� "•.' 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ZONE X 216 ZONE X-- I ow o c 70 x ONE X -Z.NE NKL % A (ZONE AE ZONE X ZONE X ZONE X�72 ZONE X ZONE X X)t4E FIRM PANEL 9799 Attachment D 20 Ephesus Fordham Renewal Potential Economic Development for Orange County The proposed redevelopment of Chapel Hill's Ephesus Church — Fordham Boulevard district offers several realistic economic development benefits: • Significantly greater property tax valuation is created, per acre, due to the higher density allowed by the proposed redevelopment. • Retail sales tax potential will reduce our local sales tax leakage, and help retain wealth currently flowing out of Orange County and into our neighboring counties. Although Orange County ranks #1 in N.C. for highest per capita income, we rank 811t among all 100 N.C. counties in retail sales tax collected per capita. • The inventory of available commercial office locations will grow, thereby making Orange County & Chapel Hill more competitive to recruit new and expanding corporate headquarters site search projects. Currently, larger office headquarters projects are able to find suitable commercial space in Durham County& Wake County that is not available in Orange County. 21 Ephesus Fordham Renewal Potential Economic Development for Orange County • Promotes anew and exciting destination for tourism. • Generates opportunity to attract more affordable housing options. • Creates more shopping, dining & employment opportunities here at home, which reduces transportation & out - migration to adjacent counties. • Identifies and improves critical infrastructure needs such as road improvements, mass transit and storm water systems. • Synthetic Tax Increment Financing (TIF) is a commonly used & successful financial tool that regularly assists other North Carolina communities promote local economic development and land use goals. • Economic development offices with the Town and County should collaborate on the recruitment of active investment clients and prospects. 22 Ephesus Fordham Renewal Potential Economic Development for Orange County • The Ephesus Fordham Renewal Planning incorporates consultant recommendations made in 2013 by Urban3, LLC which created a 3 -D visualization map showing property tax revenue per acre throughout Orange County. The report's visualization tool showed where the County's property tax revenues are derived, where property values are highest, the link between higher density development and increased property tax generation, and the positive economic potential of redevelopment of mixed use projects. Higher density generally yields higher real estate market values and property taxes. • Urban3 LLC's study was jointly funded in a partnership between the Town of Chapel Hill, Orange County (Economic Development), the Chapel Hill /Carrboro Chamber of Commerce, area developers (East West Partners) and local real estate firms. 50000 30000 20000 10000 Per Capita Income in North Carolina Orange County &Adjacent Counties - 2012 #1 $51,702 °�a 4 cs° p�F ` o� J m� s $37,910 average for all 100 N.C. counties ;;L :�SU,b9/ Rb :>44,t5Z$y 23 Durham Couni #11 $40,963 c r c c ° ° z , .� c y ° ° c c $�D 3 ay° �° �° me a'�c �c r`DF m m me %o � `, ,o el, ('1°' ° U.S. Department of Commerce Bureau of Economic Analysis (2012) $200.00 $180.00 $160.00 $140.00 $120.00 $100.00 $80.00 Annual Retail Sales Tax Per Capita Orange County &Adjacent Counties - 2012 $106.65 Orange Alamance $188.65 $126.88 24 $123.81 Chatham Durham Wake N. C. Department of Revenue (2012) 90 80 i Per C U Perca Rank 81st � Retail Sales Taxes Per Capita Orange County vs. Durham County - 2012 70 60 50 40 30 20 10 0 apita Income Rank pital Retail Sales 9th 0th 1st N. C. Department of Revenue (2012) 25 Durham Retail Sales Tax Leakage - 2012 Orange County vs. Alamance & Chatham Counties ($250.0) ($200.0) ($150.0) ($100.0) ($50.0) $0.0 $50.0 $100.0 $150.0 26 Chatham Alamance Orange 27 Synthetic Tax Increment Financing (TIF) Program City of Charlotte & Mecklenburg County ADDENDUM - Verbal Presentation to the Orange County BOCC /Town of Chapel Hill Annual Meeting by Steve Brantley, Director, Orange County Economic Development Nov. 11, 2014 Comments by A.C. Shull — City of Charlotte Economic Developer • Charlotte & Mecklenburg County have only done 13 active synthetic TIFFs over the past 15 years, averaging one (1) project per year. • City & County elected officials cautiously approve moving forward with synthetic TIFF financing for major projects having significant land use issues, on a case -by -case basis. • The process is not open to most developers' proposed development projects requesting public /private participation, when no significant "public purpose" exists. • Charlotte & Mecklenburg County define "public purpose" as major land use projects which allow the County & City to partner and address needed infrastructure improvements in the community, such as transportation improvements, signalization, road coordination with NCDOT, water run -off, anticipated population growth, economic development potential and related planning matters. • The most recent example of an approved synthetic TIFF is in response to Simon Property Group and Tanger Factory Outlet Center constructing a new 400,000 sq. ft. "Charlotte Premium Outlets" indoor shopping facility, with 90 retail stores on 80 acres. The development will create up to 800 full -time and part -time retail sales jobs, and 300 -500 initial construction jobs. The County & City decided to participate in this project because this region of Mecklenburg County (near Steele Creek Road & Interstate 485) is designated to become a new "edge city" for Charlotte with significant growth potential. • According to Mr. Shull, few other regions in North Carolina have ventured into synthetic TIFF financing, probably because of many communities' lack of familiarity with the financial tool's process and administration. He said adjacent Cabarrus County and the City of Concord is currently exploring one synthetic TIFF option to support a segment along the interstate with good retail and hotel growth potential. RW • The City of Durham has used a synthetic TIFF to finance the public parking deck that supports the adjacent Durham Bulls Athletic Park, the now renovated (and very successful) American Tobacco campus, and the newly constructed Durham Performing Arts Center (DPAC). • Mr. Shull is not aware of any "regular" TIFFs being used anywhere in North Carolina. They usually involve bonds being issued by the community that plans to take in an entire planning district and census tracts, which often include residential and other privately owned land. Therefore, the "synthetic" TIFF financing option is preferred and occasionally utilized by municipalities due to its focus on a smaller area & different financing structure. http:/ /www.charmeck.org /city/ charlotte /nbs /ed/Pa es /TIFPro ram.as x# Synthetic Tax Increment Financing (TIF) Program —The City uses Synthetic TIF as a public /private partnership tool to advance Economic Development and land use planning goals. Synthetic TIF does not require the establishment of a TIF district, as required by Self Financing Bonds, to utilize locally approved financing, which is repaid by 90% or 45% of the incremental property tax growth generated by the development. The three City funds supported by property tax (General Fund, Debt Service and Pay As You Go) each contribute its pro -rata share to the project. Financing Categories: • Infrastructure Investment - New public infrastructure such as roads, streetscapes, and parking decks that entice development that would not otherwise occur. • Public Asset Purchase - Building or paying for new public buildings or features that becomes a specific asset to the City. Economic Development Grants - Gap funding for projects in business corridors and strategic plan geography that add value and generate growth that would not otherwise occur. Financing Parameters: • Must be on a reimbursement basis (City /County payments not made until property taxes are paid by private sector.) • Private sector guarantees are pledged in the form of Development Agreements. • A "But for" test shall be applied to determine the financing gap. • Financial participation allows the City to influence the type and form of the project in partnership with the private developer. • City priorities and policy goals must be satisfied. • Capacity Policy: Synthetic TIF assistance to all projects is limited to 3% of annual property tax levy in any given year. For more information about the Synthetic TIF Program, contact: A.C. Shull, Neighborhood & Business Services /Economic Development 600 East Trade Street- Suite 300 Charlotte, NC 28202 ashull @charlottenc.gov Office Tel # (704) 336 -2439 Attachment E 29 phesus Fordham Renewal Financing Plan Kenneth C. Pennoyer Town of Chapel Hill Business Management Department November 2014 { I Y i+ + F ' P* 0. - r * + f. � � r • r b� + r r t � + ti 2' f 1 M� � r ir 'g-ectevelopment will enaDle setf-financii of public improvements by using a a __r "'S'ynthetk-" Tax Increment Financinq, IEI El l I'D Q4 ft7 ro ON QN Olt 0-14 ro ro I� 111111: F-14 Town of Chapel Hill 1405 Martin Luther King Jr. Blvd. I www.townofchapelhill.org IF a The Town is planning an installment financing to pay for $10 million of Ephesus Fordham public improvements by combining financing with the Town Hall Renovation Project 32 Synthetic Tax Increment Financing Funds for repayment of the debt will come from the additional (incremental) taxes generated from the redeveloped properties Total Annual Payments would be about $800,000 (20 years) 2,500,000 2,000,000 0 0 1,5001000 U- a� c 1,000,000 500,000 T Expected Development 2..2. Million Sq. rt. & $200 Million Value Years 0 -4 Years 4 -10 Years 10 -20 ■ Retai 33 ❑ Commercia ❑ Residential 20 Year Cost Benefit Comparison 34 Cumulative Debt Service &Town. Property Tax $20,000,000 Increment $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 M W � M 0 D r-I N M Ill LD OQ Q1 d ri N M rl rl r-I rl rl N N N N N N N N N N M M m M M Fiscal Year Major Revenues Schools & County35 County Property Tax (87.8) $ 11424,704 $ 154,721 $ 726,694 $ 2,306,120 School Impact Fees (1 Time) $ 1,286,000 $ 192,900 $ 443,670 $ 1,922,570 Schools Property Tax (20.84) 338,164 37,095 1741229 549,488 Note. Tax projections based on full phase build -out using current tax rates 0. Proposed County Participation Lesser of 50 °0 of the actual tax increment or 50 °0 of the actual Debt Service on the $10 million of public Improvements Subject to annual appropriation based on Town progress report on project performance Maximum Annual Payment would be about $4000000 37 Annual Reporting • The Town will provide the County with an annual project performance report during the budget cycle that will include: — Additions to Tax Base — Public improvement status — Private improvement status — Economic impact analysis $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 E Projected County Tax Increment 3e Ln U- w n w M o N M �n n oa rn o N M ❑ Net Increment ❑ DS Contribution 20 Year Cost Benefit Comparison 39 Cumulative Debt Service &Town. Property Tax $20,000,000 Increment plus County Contribution. $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 E $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Debt Service Cost Town Property Tax Increment Plus County Contribution Town Property Tax Increment M W � M 0 D r-I N M Ill LD OQ Q1 d ri N M rl r-I r-I r-I r-I N N N N N N N N N N M M M M M Fiscal Year MX School Generation Numbers • Difference Between Town and County Student Growth numbers: — Based on available (2007) Student Generation factors for CHCCS for multi - family Housing units Town calculated 105 new students for 1,495 units — County estimated 450 new students based on over -all student generation rates (all housing types) 2007 Student Generation Numbers 09] all Rig I K We 105 100 0 u 2007 Multi- Family 2007 All Types 41 County Estimate 450 Town Estimate 105 42 2014 Student Generation Numbers* • New Student Generation Rates — Broken out by Sub -Areas (Chapel Hill & ETJ) — Separate factors for number of bedrooms • Multifamily: 0 -2 bedrooms, 3+ Bedrooms &Average) — Based on market demand we believe that student generation for Ephesus Fordham Development will be mostly 1 -2 bedroom multi - family units * Note: Based on preliminary un- adopted student generation rates 4 2014 Student Generation Numbers *3 rA '191110J MI] M I N UIX, WO]r] WIN x (Chapel Hill and ETJ) 553 2014 Multi -F (1- 2014 Multi -F 2014 All Types 2 B) (Avg B) Likely range based on 2014 Student Generation Factors * Note: Based on preliminary un- adopted student generation rates MI, Village Plaza Apartments • 15t Ephesus Fordham Development Application — 266 Multi - Family Housing Units (1 -2 bedrooms) — 15,600 Square Feet of new retail — Population Estimate: 505 new residents Multi - Family Housing 7 Reta i I Square Footag 1. 111 15,600 Total F 321,600 Village Plaza Apartments jevenu%" Property Tax Sales Tax Impact Fees (one -time) Preliminary Revenues Estimates Town Ad $ 354,900 31,100 It MM$ 594,675 75,381 0 45 Schools_� $ 141,200 I 342,076 .n. 100 90 80 70 60 50 40 1I 30 J 20 10 0 Village Plaza Apartments* Student Generation Numbers (2014) 32 Multi - Family (1 -2 Bedroom) Based on 266 one and two bedroom multi - family units * Note: Based on preliminary un- adopted student generation rates 47 Tkoolo yolAO00e ! questions? �o'NJ N TO: FROM: SUBJECT: DATE: TOWN OF CHAPEL HILL NORTH CAROLINA Attachment F MEMORANDUM Roger L. Stancil, Town Manager Kenneth C. Pennoyer, Business Management Director Ephesus Fordham Renewal Information concerning County Participation April 2, 2014 The following information is provided in support of the Town's request for the County to participate in the Ephesus Fordham Renewal Project by pledging a portion of their expected property tax increment to pay debt service costs for the project's public improvements. Summary We are requesting that the County participate in the Ephesus Fordham Renewal Project by pledging the lesser of 50% of the actual increment or 50% of the actual annual debt service cost. Partnering with the County on this landmark economic development project improves the potential for all three jurisdictions (Town, County and Schools) to reap the benefits of this renewal effort. The Ephesus Fordham Renewal Project Overview Renewal of the Ephesus Church / Fordham Boulevard area has been a long -term vision for the community. Interest in reviving this area prompted the work that began in 2010 to develop a Small Area Plan for the area. The adoption of the Chapel Hill 2020 Comprehensive Plan reiterated the implementation steps from the Ephesus Church - Fordham Small Area Plan. The approach to this renewal effort has been both systemic, attempting to consider the consequences of actions on one another in a larger area and the tradeoffs involved, and also collaborative, involving staff from multiple departments in developing proposals. As we have been discussing with the Council, the area offers opportunity for improvements in a variety of categories including transportation, stormwater, and tax base. The effort to renew the area will address these items while improving existing conditions and creating new destinations. Efforts include: • Furthering the vision of the adopted plan to improve the area/create a sense of place • Improving stormwater conditions • Improving traffic patterns and connectivity, district -wide • Creating conditions to promote the increased use of public transit services • Improving pedestrian and bicycle conditions and connectivity for the area • Supporting the Town's Economic Development Strategy while growing the tax base WO • Establishing zoning that will allow development to occur in a more predictable manner • Addressing Affordable Housing needs, district -wide As depicted in the diagram below, the Council has set into motion a complex collection of actions linked to the objective to renew the Ephesus Church Road /Fordham Boulevard area. New Residential, District Retail, & Office Character Opportunities Streetscape Improvements Stormwater Improvements / New Pedestrian / Infrastructure Aesthetic Ephesus Church/Fordham Improvements I Renewal Affordable / Housing / Predictable Land New Green Development Spaces Growth of Tax Base Public Improvements Traffic /Transit Improvements New Bicycle Infrastructure The Town is planning on completing approximately $10.0 million of public improvements, described below, to support the renewal project and facilitate higher density development. • Traffic Improvements: The Town seeks to facilitate the redevelopment of the project area by making road improvements that will address failing intersections, poor circulation within the area and confusing roadway design. The focus of the proposed traffic improvements is to accommodate existing traffic and additional Small Area Plan (SAP) redevelopment traffic. A traffic study was completed by Kimley -Horn and Associates, Inc. as part of the SAP in February of 2011 and functional engineering for the traffic and storm water improvements has been completed. The transit improvements are divided into 4 separate phases, as shown below, in order to minimize the impact on existing district occupants. All phases are planned to be completed within 24 months. 50 • Phase I - $2.4 million: Improvements to Ephesus Church @ Fordham (West Bound) • Phase II - 4.0 million: Improvements to Fordham Road @ U -Turn (Superstreet) • Phase III - 1.3 million: Improvements at Fordham Road @ Elliot Road • Phase IV - 1.1 million: Multimodal connection between Elliot Road & Willow Dr. Total $ 8.8 million • Stormwater Improvements: As part of the SAP study, Kimley -Horn & Associates conducted a detailed storm water study for the area. As a result of that study and subsequent analysis it was determined that the technical standards for stormwater will be applied to the district as a whole and implemented when each parcel is developed or redeveloped. In order to help address existing water quality and water quantity issues, the Jordan nutrient treatment requirements would also apply to sites that that do not increase impervious surface as a result of redevelopment. The planned $1.2 million in capital funding will be used for up- stream stormwater improvements. The Town also plans to create a Municipal Service District to collect a tax for management of the stormwater facilities in the district. The district tax, if established at the planned rate of 4 cents, would generate about $60,000 per year based on current assessed values. Stormwater management planning for this project is ongoing and there may be changes to some of the elements described above to improve the effectiveness of the plan. The Financing Plan The total cost of the planned public improvements is $10.0 million ($8.8 million for traffic improvements and $1.2 million for Stormwater). The Town plans on issuing debt to finance the capital cost for these public improvements. The most efficient and cost effective way for the Town to finance this project is to coordinate the financing with other projects that can provide collateral for a combined financing. The Town is planning on financing the Town Hall Renovation project and other CIP projects with debt. By combining the financing of these projects using two- thirds bonds and an installment financing using the Town Hall as collateral, the total cost of financing these projects will be reduced and can be completed on the timetable established for the Ephesus Fordham Proj ect. The Projects Town Hall Repair & Renovation $ 900,000 High Priority CIP Projects 800,000 Ephesus Fordham: Traffic Improvements 8,800,000 Stormwater Capital 1,200,000 Total Ef Project 10,000,000 Total All Projects 11,70 0.00 0 51 The Debt Two - thirds General Obligation Bonds $ 1,700,000 Installment Financing 10,000,000 Total Planned Debt issuance 11.700.000 Debt Management Fund: The portion of debt used for Town Hall and CIP projects will be repaid through the Town's Debt Management Fund. The Debt Fund was established in 2009 with a dedicated property tax to provide a source of funds to pay off Town debt obligations. "Synthetic Tax Increment Financing (TIF) ": The portion of the debt used for the Ephesus Fordham public improvements will be repaid using the incremental increase in tax revenues resulting from redevelopment. In other words, the redevelopment we are hoping to generate through the Ephesus Fordham Renewal Project will increase property tax receipts from the area. Those tax receipts, over and above the base level of tax receipts that existed prior to the project, will be dedicated to pay off the debt for the public improvements. Synthetic versus "traditional" TIF: In 2004 the State Legislature approved Tax Increment Financing (aka: Project Development Financing) legislation that enabled local governments to finance economic development projects with a pledge of future additional (incremental) tax revenues from an established TIF district. Because of the cost, complexity and length of the process for approval there have only been two traditional TIFs approved in North Carolina in the last 10 years. Part of the reason for the unpopularity of traditional TIFs in North Carolina is the availability of an easier, faster and less expensive alternative. Many local governments in North Carolina have opted for installment financing that uses a physical asset as collateral and repayment from a tax increment to finance economic development projects. This accomplishes the same thing as the traditional TIF, but is less expensive (lower interest rate) and takes less time to issue. The Ephesus Fordham project, on its own, does not have an asset that can be used as collateral for an installment financing and therefore we have planned to combine the financing with the Town Hall Renovation Project. By combining the projects in one financing the Town Hall property can be used as collateral for both projects. This practice of sharing collateral among projects is a common way of reducing the cost of borrowing for municipalities by providing the best possible security for installment debt. Financing Team: The Town is working with Bob Jessup of Sanford Holshouser LLP as Bond Counsel and Davenport & Company LLC (Ted Cole) as Financial Advisors on this project. We have had a preliminary meeting with the LGC staff to discuss the structure of the financing as described here -in. There was general agreement that the proposed structure is the best option for accomplishing the Town's goals with regard to financing both the Ephesus Fordham and Town Hall Projects. Backstop: There will be a time gap between when we issue the debt and when the redevelopment will begin to generate a tax increment sufficient to pay debt service. To the extent possible, we will structure the debt for the Ephesus Fordham Public Improvements to defer debt payments to match the anticipated timing of incremental tax revenues. However, it may be impossible to avoid a gap between the tax increment and the debt service payments in the early years of the project. The Debt Management Fund has sufficient balance to cover the mismatch 52 in the timing of available tax increment and we plan on using the Debt Management Fund to backstop debt service on the Ephesus Fordham public improvements portion of the debt. Any amounts used would be restored to the Debt Fund once the tax increment surpasses what is needed for debt service. One of the possible consequences of using the debt fund for this purpose is the delay of planned capital expenditures such as the Public Safety Facility and the Transfer Station. Development Scenarios Based on our understanding of the market and assuming completion of public infrastructure improvements and rezoning, we have developed what we believe is a "likely" development scenario for the Ephesus Fordham Renewal Project. We believe that these development assumptions represent reasonable expectations that, along with other information, can help form a basis for decision making regarding the Ephesus Fordham Renewal Project. The scenario is broken down into three parts or phases. The first phase represents development expectations in the first 4 years of the project. For this phase we have relied, in part, on representations by property owners regarding plans for redevelopment. The subsequent two phases, covering years 5 -15 are not based on any specific development plans and reflect a "best guess" estimation. Timing of the completion of development: Base on existing development plans and market analysis our expectations for the timing of completion of the three phases is shown in the following table. The cash flow analysis (Attachment 1) is based on this assumed completion progress of the expected development. Expected Development Completion Percentages Phase 1- Year Completion % FY2016 FY2017 FY2018 25% 50% 100% Phase 2 - Year FY2021 FY2022 FY2023 FY2024 Completion % 25% 50% 75% 100% Phase 3 - Year FY2027 FY2028 FY2029 FY2030 Completion % 25% 50% 75% 100% The expected development scenario shown below takes the area to 68% of maximum build out in 15 years. The square footage values used to determine expected project values are slightly lower that that the existing market. These lower values were used in order to provide a conservative scenario. 53 DEVELOPMENT ASSUMPTIONS (ORIGINAL) TABLE 1 Phase 1 (Years 0 -4) Projected residential Net New Name Property Use units Square Feet Value PSF Projected Value Development Quality Inn Hotel 200,000 $ 175 $ 35,000,000 50,000 Sq Ft The Park Residences 775 680,000 150 102,000,000 577 The Park (comm site) Commercial 1,200,000 225 Total 3,000,000 100% Former Theater Residences 225 240,000 150 36,000,000 225 Former Theater Retail 10,000 100 1,000,000 100% Ram's Plaza /CVS Retail 13,000 100 1,300,000 100% Total 1,143,000 100,000 $178,300,000 15,000,000 Less: Existing Value Volvo Dealership Retail - $14,732,000 125 Net New Value (Year4) 0% Total $163,568,000 870,000 $99,500,000 Less: Existing Value Phase 2 (Years 4 -10) Projected residential Name Property Use units Net New uare Feet Value PSF Projected Value Development University Inn Hotel 100,000 $ 175 $ 17,500,000 0% University Inn Retail 13,000 100 1,300,000 100% Regency Center Retail 4,000 100 400,000 0% DHIC Residences 150 Special Rate 1,200,000 225 Total 117,000 $20,400,000 Less: Existing Value 30,000,000 - $2,600,000 Net New Value (Year 10) Retail $17,800,000 Phase 3 (Years 10 -20) Projected residential Net New Name Property Use units Square Feet Value PSF Projected Value DevelopmE Eastgate Retail 20,000 $ 100 $ 2,000,000 100% Eastgate Office 75,000 150 11,250,000 100% Eastgate Residences 225 200,000 150 30,000,000 100% Eastgate Retail 300,000 100 30,000,000 100% Eastgate Office 75,000 150 11,250,000 100% Eastgate Residences 120 100,000 150 15,000,000 100% Volvo Dealership Retail 100,000 125 12,500,000 0% Total 870,000 $99,500,000 Less: Existing Value - $15,897,000 Net New Value (Year 15) $83,603,000 54 County Participation In addition to the expected tax increment for the Town, the County and the School District will also see a tax increment proportional to their respective tax rates. The annual increment for the County based on the development scenario shown above and using the current tax rate would be $1,389,379 after build -out of phase one and $2,250,717 after build -out of phase three. For the School District, using the same assumptions, their increment would be $337,467 after build out of phase one and $546,678 after build out of phase three. In addition, based on the expected number of multi - family housing units that will be built, it is anticipated that the project will generate $1,922,570 in one -time school impact fees. A complete 20 year tax projection of tax increment for all jurisdictions is shown in Attachment 1. Although we believe that the project will ultimately generate a tax increment sufficient to satisfy debt service needs, there may be an extended period of time when the Town's tax increment, by itself, will be insufficient to cover debt service. The anticipated gap is shown in the following graph: 0 Year Cost Benefit Comparison u ufative Debt gerviee & Tawrt Prapertq Ta $34,004,406 l plcra erxt $18,004,406 $16,000,406 $14,000,000 $1,000,400 SIOA ,800 E s j $$000,000 $6,o0o,4Do $4,000,000 $2,000,000 $0 v► +c n vo- c7 g ti n m a uti � n co- rn v� ra m� }}ti r }}r rya a }}v }n} rw a }v ryya rw }n} rw rw r* }}► }}n r }}*► m L4 Il t LL t t L4 t Yi t LL l4 t I.L t li 44 it li Fiscal Year Because of this potential insufficiency and because of the expected benefits the County will receive from the tax increment, and other revenues associated with the renewal (sales tax, occupancy tax and vehicle taxes), we are requesting that the County participate in the project by pledging a portion of their incremental increase in property taxes toward the payment of debt service for the project's public improvements. Specifically we are requesting that the County pledge the lesser of 50% of the actual increment or 50% of the actual annual debt service cost. By structuring the County's participation in this 55 way the County has no risk of paying more than what they receive in new taxes and their total contribution will be limited to about $400,000 which is 50% of the expected annual debt service. The following graph compares the County's total expected annual tax increment with the proposed contribution for payment of debt services. Projected County Tax Increment 54 , Cu m u lativ SUM," SLOOMM $500)000 50 e N et Tax I n c rem ent � 25, 577, 254 Cash Flow Projections • The projection does not discount of cash flows for debt service or revenues • Development Scenari 14 10 r�l rl ry ry ry [Y N N N [ Y Y ri m m m ;A m D* � it it it it :P- it ❑Net Incrernent ■ DSContrihution By partnering with the County in this manner we believe we can strengthen the financing plan, helping to ensure its approval and improving the marketability of the debt. By contributing to the success of this landmark economic development project the County improves the potential for all three jurisdictions to reap the benefits of this renewal effort. Assumptions Debt: Total Debt Amount: $10,000,000 Term: 20 Years Interest Rate: 5% Annual Debt Service: $802,500 (level debt service structure) No structuring of debt to match the increment is assumed, however it is expected that there will be delay of principal of 1 -2 years o is based on square footage values below current market value