1

City Manager Laszlo Palko

Downtown DevelopmentProposals Work Session

2

Agenda

1. Updated Concept Plans for Phases III & IV

2. Fiscal Impact of Developments (Phases III & IV)

3. City Hall Building & Financing

4. Phase III PPEA/PPTA Comprehensive Agreement/ Phase IV Sale Agreement Highlights

3

Phase III & IV Concepts

4

Our Downtown

Phase IV

City Hall

5

What's needed to make this work & being worked on right now?

• Anchor(s)• VRE Garage in

correct location• City Hall• Additional Retail

(4 corners)• Parking for

Phase I Retail

Phase IV

6

Development Team for Phases III & IV

Phase III– Norton Scott

(www.kincora.com)– Toll Brothers

Phase IV– Aksoylu Properties

7

Updated Concept for Phase III

City Hall and Ground Floor Commercial/Library

(Building A)

Commercial Building (Building C)

174 Two-over-Two Condos

VRE Garage with underground City

owned Public Parking

Public Plaza

Commercial Building (Building B)- Anchor

140 Two-over-Two Condos

8

Visual Concept for Phase III

9

City Hall and Public Plaza

10

11

Phase IV Concept- Aksoylu Properties

395 Apartment Units

100K SF Commercial Office Building/ Potential Hotel

150 PublicParking Spaces for Phase 1

Below parking allows 28K-35K in supportable retail

Additional Public Parking

12

Phase III & IV Fiscal Impacts

13

Fiscal Impact- $78M-$92M Profit for City

Updated Financial Table with 314 units (more revenue) and 3 Story City Hall (lower expenditure).

Net Fiscal Impact (Profit) was $81.4M with 4 story option and 290 units.

City will evaluate TIF option if it does not exceed $13.5M costs over 30 years. The TIF option guarantees that only new tax revenues from the development are used for City Hall and Public Infrastructure- think of it as an insurance premium if the residential development is delayed to ensure no existing taxpayers pay for the Lease Purchase costs.

FY22-FY52 TotalTax Revenue 123,569,179.41$ Proffer/Land Revenue 8,657,194.98$ Subtotal Revenue 132,226,374.39$

Lease Purchase Cost 39,961,075.00$ Subtotal Expenditures 39,961,075.00$

Net Fiscal Impact (Profit) 92,265,299.39$

TIF Expenditure Option 13,500,000.00$

Net Fiscal Impact with TIF 78,765,299.39$

14

Land Values and Proffers

Roughly just over $1M per net acre of residential land (13 acres) + roughly $50K per acre of commercial land (2 acres). Commercial land was less due to risk for commercial development. Reminder that City sold Phase II eight-acre tract for $44K per acre (half of which is residential), thus the nearly $1M per acre for Phases III & IV is a vast improvement.

$13.3M provided for residential land total ($1M for 1 acre in Phase IV, remaining $12.2M from 12 acres on Phase III)+ roughly $100K for commercial land (2 acres on Phase III).

Proffer Value: $2.4M+ from Phase III + $5.9M+ from Phase IV.

Total Cash Flow to City after deductions for public improvements (City Hall + Public Infrastructure) = $8.6M ($5.9M from Phase III + $2.7M from Phase IV).

15

City Hall Building/Public Infrastructure + Financing

16

Phase III- City Hall/ Infrastructure Budget

Note:

This analysis shows the total transaction value if all payments were made at once and all revenues received.

In actuality the City will enter into a Lease Purchase Agreement to pay the net of the total costs ($35.5M) minus the revenues from Financing Premiums and Phase 1 Land Value ($12.3M) for a total of $23.2M ($39.9M over 30 years with interest). The remaining $5.9M in revenue received as cash as the development progresses.

Cost for Building 16,483,391.00$ Lease Finance Costs incl Capitalized Interest 2,002,072.35$ Cost for Public Infrastructure (roads, parking, stormwater, water and sewer) 9,776,859.12$ Cost for Land Acquisition- Public use 7,250,000.00$ City owes: 35,512,322.47$

Financing Premiums (3,567,322.00)$ City Land Phase 1 Value (8,805,000.00)$ City Land Phase 2 Cash (3,500,000.00)$ Cash Proffers (2,417,594.97)$ City receives: (18,289,916.97)$

Net Amount City Owes if paid/received all at once 17,222,405.50$

Cost of City Hall and Infrastructure Minus Land/Proffer ValuesCity Hall + Public Infrastructure Costs

Revenues

17

Financing Mechanism

30-Year Lease-Purchase Agreement between the City and Developer Lease-Purchase Agreement is Secured by New City Hall Building

Developer secures investment revenue (Tax-Exempt Certificates of Participation) into an escrow fund held by a Trustee (est. October 2020)

Escrow drawn down by Developer to pay City Hall project costs

Developer/Contractor guarantees project cost and completion schedule

City to Appropriate Lease Payments to Developer in Annual Budget commencing July 2023 (after scheduled occupancy) using revenues created from the Development itself

Unencumbered (Full) Title of the City Hall Building to City at End of Lease Term (July 2052)

18

Non-Appropriations Clause

19

Payment Schedule First 10 years

FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 FY 30Tax Revenue -$ 775,879.08$ 1,282,287.50$ 2,237,967.60$ 3,013,591.51$ 3,452,816.35$ 3,521,872.67$ 3,592,310.13$ 3,664,156.33$ Proffer/Land Revenue -$ 1,690,926.82$ 160,000.00$ 6,526,268.16$ 160,000.00$ 120,000.00$ -$ -$ -$ Subtotal Revenue -$ 2,466,805.90$ 1,442,287.50$ 8,764,235.76$ 3,173,591.51$ 3,572,816.35$ 3,521,872.67$ 3,592,310.13$ 3,664,156.33$

Payment to Norton -$ 866,175.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ Subtotal Expenditures -$ 866,175.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$ 1,348,100.00$

Net Fiscal Impact -$ 1,600,630.90$ 94,187.50$ 7,416,135.76$ 1,825,491.51$ 2,224,716.35$ 2,173,772.67$ 2,244,210.13$ 2,316,056.33$

Without TIF

With TIFFY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 FY 30

Tax Revenue -$ 775,879.08$ 1,282,287.50$ 2,237,967.60$ 3,013,591.51$ 3,452,816.35$ 3,521,872.67$ 3,592,310.13$ 3,664,156.33$ Proffer/Land Revenue -$ 1,690,926.82$ 160,000.00$ 6,526,268.16$ 160,000.00$ 120,000.00$ -$ -$ -$ Subtotal Revenue -$ 2,466,805.90$ 1,442,287.50$ 8,764,235.76$ 3,173,591.51$ 3,572,816.35$ 3,521,872.67$ 3,592,310.13$ 3,664,156.33$

Payment to Norton -$ 1,316,175.00$ 1,442,287.50$ 2,153,912.50$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$ Subtotal Expenditures -$ 1,316,175.00$ 1,442,287.50$ 2,153,912.50$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$ 1,798,100.00$

Net Fiscal Impact -$ 1,150,630.90$ -$ 6,610,323.26$ 1,375,491.51$ 1,774,716.35$ 1,723,772.67$ 1,794,210.13$ 1,866,056.33$

20

City Hall and Public Plaza

21

City Hall Concept

22

City Hall Concept

City Administration

23

City Hall Concept

Schools

24

Phase III PPEA/PPTA Comprehensive Agreement/ Phase IV Sale Agreement

25

Phase III Agreement Structure

Base Agreement- spells out what is to be developed, phases & timelines, theater lease/purchase parameters, land swaps, rezoning, condemnation, and legal contract language.

Exhibits– Exhibit A: Master Development Plan– Exhibit B: Vacation Plats/Boundary Line Adjustments– Exhibit C: Interim Budget– Exhibit D: City Lease Term Sheets– Exhibit E: City Hall Function Narrative– Exhibit F: Proffer Statement– Exhibit H: Initial Schedule

26

Phase III PPEA Agreement Highlights

Land Swaps – after approval of comprehensive agreement, to consider conveying the Bays Tract to Developer in exchange for Cash Payment (Escrow Fund) to be used to purchase remaining private land under contract.

Rezoning – rezoning of Phase 1A after approval of comprehensive agreement by Governing Body. Remaining Phases to be rezoned in Fall of 2020.

Condemnation – after approval of agreement by Governing Body, City will acquire, by eminent domain if necessary, remaining privately held parcel for City Hall and adjoining public parking and road.

City retains ownership of parcel for Building B to negotiate deal for theater.

Phasing of Development – see next slide

Phase 1A Commercial Completed by December 2022

After Phase 1A Commercial Completed and City moved to New City Hall. Goal is 2024.

70 of 140 units permitted. Once Building B Commences construction, remaining 70 Units can be developed.

Expected completion by FY27/FY28

174 Units permitted

28

Phase III PPEA Agreement Highlights

Base Plan A- described previously.

Contingency B- if Final Budget is too high and thus City Hall unaffordable:– Developer Constructs and Owns Building A (14K-51K square feet) and City owns

Building C (6K square feet) instead for Library/Coffee Shop.– City finds other option for City Hall to allow for construction of Building B Anchor.

Contingency C- if Governing Body rejects rezoning of Phases 1B and 2:– Developer Constructs and Owns Building A (14K-51K square feet) and City owns

Building C (6K square feet) instead for Library/Coffee Shop.– Only Phase 1A developed- Phases 1B and 2 not developed.

Land Purchase Option- if by December 2027, Building B not completed, City has first purchase right options at fair market value for privately held land in Phase 2 to enable future development of 70 remaining units and Anchor.

29

Phase 4 Sale Agreement Highlights

Phase 1 Parking Goal for City- “Development on the Property will not begin until a 150-space parking lot has been constructed in the location generally shown on the Master Plan and the City has obtained a release and termination of its ground lease on the Property from GH City Center LLC and the City has inspected and accepted the new parking lot.”

“Financial Considerations:– (1) The Purchaser will pay the City One Million Three Hundred Eighty-Seven Thousand One

Hundred Thirty-Nine and 24/100 Dollars ($1,387,139.24) upon the completion of Residential Building 1 and prior to receiving a certification of occupancy for Residential Building 1.

– (2) The Purchaser will pay City One Million Three Hundred Fifty- Three Thousand Four Hundred Sixty and 76/100 Dollars ($1,353,460.76) upon the completion of Residential Building 2 and prior to receiving a certificate of occupancy for Residential Building 2.”

“Conner Drive. The Purchaser will extend Conner Drive to Manassas Drive and will connect Conner Drive to Market Street”

“Commercial Building 3. The Purchaser will construct what is shown on the Master Plan as …“Commercial Building 3”), containing approximately 100,000 square feet of commercial space.”

Project Component Summer 20 Fall 20 2021 2022 2023 2024 2025 2026 2027

Phase IIResidential Site Plan Review Commence Construction Construction Completion

Office Site Plan Review Commence Construction Construction CompletionRestaurant Site Plan Review Commence Construction Construction Completion

Phase IIICity Center Phase 1A (includes City

Hall)Rezoning, Waivers, Land

TransactionsDeveloper seeks Financing, City Hall Budget Finalized

Site Plan, Commence

Construction Construction Completion

VRE Garage 10% Redesign Completed Land Agreement with CityCommence

Construction Construction Completion

Phase 1A 174 two over two's

Rezoning, Waivers, Land Transactions Developer seeks Financing

Site Plan, Commence

ConstructionFirst Few units

completedMore Units Completed Completion

Phase 2 70 two over two's Rezoning Prep Rezoning Site Plan, Site Work Site Work

Commence Construction

First Few units completed

More Units Completed Completion

City Center Phase 1B (anchor)

Rezoning Prep, Negotiate Parking Ground Lease

AmmendmentRezoning + Begin

negotiating with AnchorDeal with anchor

Finalized, Site Plan Site Work

City moved to new City Hall,

Commence Construction

Continued Construction or

Completion CompletionPhase 2

70 two over two's Rezoning Prep Rezoning Site Plan Site WorkCommence

ConstructionFirst Few units

completedMore Units Completed Completion

Phase IV150 Space Parking

LotRezoning/ Negotiate Parking Ground Lease Ammendment Site Plan Review

Construction Commences Completion

Conner Drive Rezoning Site Plan ReviewConstruction Commences Construction Completion

Residential Building A Rezoning Site Plan Review

Construction Commences Construction Completion

Additional Parking Lot

Last Properties Acquired;

Rezoning, Site PlanCommence

Construction CompletionResidential

Building B Rezoning Site Plan ReviewCommence

Construction Construction CompletionCommercial

Building Rezoning Site Plan Review Site Plan ReviewConstruction Commences Completion

31

Questions- Your Turn!