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PHOENIX LAND ING
DEVELOPMENT PROPOSAL
THE HAROLD E. EISENBERG FOUNDATION
MIDWEST REAL ESTATE CHALLENGE 2016
U N I V E R S I T Y O F M I S S O U R I - C O L U M B I A
B E N B E U S S I N K , C O L E C A M E R O N , M E G H A N C A R N O T ,
T R E N T K E A L , & J O S H V A S L I E
M A R C H 2 5 T H , 2 0 1 6
2
TABLE OF CONTENTS
EXECUTIVE SUMMARY 3
PROPERTY ANALYSIS 4
PROPOSED REDEVELOPMENT PLAN 5
COMMUNITY OBJECTIVES 6
STRATEGIC PARTNERSHIPS 7
FINANCIAL ANALYSIS 9
ECONOMIC ANALYSIS & DEMOGRAPHICS 9
MUNINCIPAL INCENTIVES 14
ZONING & ENTITLEMENTS 16
SUSTAINABILITY 21
MARKETING 22
CONCLUSION 23
EXHIBITS 23
STUDENT BIOGRAPHIES 27
REFERENCES & OUTSIDE RESOURCES USED 28
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P H O E N I X L A N D I N G
D E V E L O P M E N T P R O P O S A L THE HAROLD E. EISENBERG MIDWEST REAL ESTATE CHALLENGE
EXECUTIVE SUMMARY
Englewood Square, located at the intersection of 63rd Street and Halstead, was once a center for
economic activity and municipal pride. Our proposal of Phoenix Landing, outlined below, is a
roadmap to restoring significant value to this area. The Phoenix Landing Development will consist of four distinct sites – Site A, Site B, the Berms,
and Site D.
Site A – This site will consist of a two level structure facing 63rd Street, with the lower-
level of the structure designed to accommodate up to seven retail tenants and the upper-
level planned host a personal gym. Behind the aforementioned structure, there will be a
multi-level storage facility consisting of five levels and a basement. Site B – This site will be centered on the refurbishing, both externally and internally, of
the historic firehouse property. Once the renovating of this property is complete, it will
serve as a banquet hall space and can also be used as a community center for after school
tutoring, neighborhood group meetings, etc. Directly behind this structure, urban gardens
will be developed in partnership with Whole Foods and Growing Home Gardens to
beautify the space and to serve community initiatives to provide nutritional food the local
community
Berms – This site will primarily be additional gardens, maintained by the neighborhood
community. It will also include benches manufactured from recycled from reused
shopping bags and natural prairie landscaping, supporting local sustainability initiatives
within the Englewood Neighborhood.
Site D – This site will contain a one level retail building housing a large retail tenant. The
building will be able to accommodate a multitude of different types of retailers; however,
we propose that a discounted clothing retailer be targeted as occupying the space. Our report outlines the economic and strategic analysis conducted in developing this proposal, as
well as the ways in which this project can be financed through both private and municipal funds. The Phoenix Landing Development will not only support local initiatives such as having access to
nutritional food and an exercise facility, but will also be financial feasible and wholly profitable. -The University of Missouri-Columbia Team
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PROPERTY ANALYSIS
The Case Site contains 7.4 acres of city owned land that is located in a historically significant
neighborhood of Englewood. The site is part of a larger 13 acre parcel that was once home to
Englewood Mall, the second busiest shopping districts in Chicago and a focal point for the
community. The area’s prosperity was largely attributable to the successful collaboration of mall
management, community leaders, and social services. The mall was known for holding
community events, such as parades, concerts, and broadcasts. However, the area experienced a
decline in economic activity starting in the 1950’s with the emergence of popular shopping malls
outside of the inner city. As the local economy declined, so did the average household income.
The community has experienced gradually increasing crime rates, housing vacancies, and a host
of other sociological challenges in the decades since1.
Both the city and private developers have taken steps in recent years toward revitalizing the area.
In 1999, the City of Chicago approved construction of the new Kennedy-King College at the
corner of 63rd and Halsted in Englewood. In addition to providing new educational opportunities
for citizens, the college is intended to serve as an anchor to new real estate development in the
community2. In 2013, city officials and developer DL3 Realty announced a planned retail
development on a five-acre parcel of the 13 acres available on the corner of 63rd and Halsted. The
development will includes a Whole Foods Market, Starbucks, Chipotle, and other retail stores.
The city also designated and spent $10 million of TIF funds to prepare the property for
commercial development.
Our aim is to augment and expand upon the efforts of the City and DL3 Realty, and our proposal
is the next phase of development for the area. We developed a set of goals for our development
based on the background information in the case, as well as our initial research. We sought to
create a proposal that:
Will generate adequate returns on investment for investors.
Generates economic activity in the community.
Invigorates the area and utilizes new retail space to develop a site comparable to the
highly successful retail site that occupied the space in the mid-1900’s.
Fulfills community specific objectives, as outlined by local government and not-for-profit
entities.
Meets the needs of community stakeholders, including local community groups.
Utilizes TIF financing and other municipal incentives.
Will maintain or appreciate in value, such that real estate and sales tax payments will
provide adequate returns to the city as a means of compensation for their TIF
investments.
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PROPOSED REDEVELOPME NT PLAN
Our development will consist of construction and renovation projects that will meet multiple
community needs. A graphical view of our proposal generated using Sketthup.com is presented
below, followed by narrative descriptions of our proposal for each site.
Site A
We will construct a two level structure designed to accommodate up to seven retail tenants on the
lower-level, and a personal gym business on the upper-level (1A) on the street facing side of Site
A. Behind this structure, we will build a multi-level storage facility (2A), and provide adequate
parking for both structures. The dimensions for each floor in the retail building will be 255 ft. by 98 ft., for a total square
footage of 24,990 sq. ft. for each floor, with a height of 26 ft. The total square footage of this
entire structure is 49,980 sq. ft. It will be an ideal location for retail tenants, given its street
frontage on 63rd Street and proximity to the new Whole Foods development. Within the
Englewood area, there is a significant demand for goods, products, and services currently
provided by retailers outside of the immediate neighborhood. The proposal of these retail spaces
will capture much of this activity, and will result in significant financial gain for these retailers.
The gym will provide local citizens and college students with an ideal location to engage in
physical exercise, and serves as a means of promoting healthy living in the community. The dimensions for each floor in the storage building will be 175 ft. by 100 ft., for a total square
footage of 17,500 sq. ft. for each of the five floors, with a height of 50 ft. The total square footage
of this entire structure is 87,500 sq. ft. This structure will provide a service for the community not
currently offered, with only four personal storage facilities within a square mile of the
development. The structure will contain security features that prevent theft of customer
belongings. The parking lot in the northwest corner of the lot that contains 112 spaces, an
adequate amount for both facilities.
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Site B
We will renovate the firehouse into a banquet hall and develop urban gardens behind the
structure, as well as on the berms. The unique significance of the firehouse and central location
makes it an ideal setting to hold community events, family reunions, wedding receptions, and
other gatherings, particularly with the gardens situated behind the building. We will develop and
maintain the gardens in partnership with Whole Foods, and Growing Home Gardens in order to
expand upon prior community initiatives to provide more healthy food to the local community.
The site will include a parking lot that contains 48 parking spaces.
Berms
We will designate additional gardens to be maintained by
seniors and other community members on the berms and
surrounding area. This is an ideal activity for residents living
at Bethel Terrace apartments across the street, as well as
other community residents. We will also include benches
recycled from reused shopping bags and natural prairie grass
landscaping to augment local sustainability initiatives within
the Englewood neighborhood. These garden will be modeled
after other community gardens, such as the one on
Hermitage Street Chicago Community Gardens (pictured to
the right).3
Site D
We will construct a retail building designed to accommodate a discounted clothing retail store,
such as a TJ Maxx. The dimensions for the retail building will be 184 ft. by 110 ft., for a total
square footage of 20,240 sq. ft., with a height of 20 ft. This is the approximate size of an average
TJ Maxx store in the U.S. This type of retail business will bode well in the community, as its
relatively reduced prices will appeal to local residents, as well as college students from the
Kennedy-King College. There is a lack of access to this type of retail store in the area, and we
believe that it will be financially successful in this space. The site will also include a parking lot
that contains 96 parking spaces.
COMMUNITY OBJECTIVES
Our proposal meets the objectives outlined in multiple reports published by governmental and
not-for-profit entities in the local community and the City of Chicago. The following is a list of
relevant reports, as well as a description of how our project meets the designated objectives. 1. Green Healthy Neighborhoods, Chicago Department of Planning & Development4
This report outlines the long-term economic planning strategy for multiple communities
in the South Side of Chicago. The report states that developers should concentrate retail
spaces in strategic locations, in order to minimize vacancies. It also mentions that the city
intends to assist such retail developments with public subsidies. Our proposal meets these
criteria, as we are proposing retail projects in an established retail hub, and we are going
to utilize public subsidies to help develop the lot.
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The City also encourages adaptive reuse of vacant historic buildings through incentives
and planning efforts. We will carry out this strategy with the firehouse structure on Site
B. 2. Englewood: Making a Difference, Teamwork Englewood5
This is a quality of life plan set forth by Teamwork Englewood in 2005. This report
included 10 strategies to improve the neighborhood, several of which are relevant to our
proposal. Strategy 3 is to rebuild a vibrant and diverse retail and business community at
key locations throughout the neighborhood. Our retail proposals carry out this strategy, as
they will be constructed in a retail-focused area. Strategy 5 is to promote healthy
lifestyles that include physical fitness, good nutrition and better use of healthcare
resources. We are fulfilling this strategy by constructing a facility designed to
accommodate a gym, as well as developing an urban garden. 3. Chicago Neighborhoods 2015: Assets, Plans, and Trends - South Side,
The Chicago Community Trust6
This report provides an overview of the current state of the South Side of Chicago,
including a discussion of the new Whole Foods shopping center and Kennedy-King
College. The report asserts that there is strong expectation that the new Whole Foods will
spur traffic in other local developments. It further states that this traffic can support
mixed-use infill opportunities nearby. Our multipurpose development is such a project, in
that our proposals uniquely fit the size and shape of the parcels and synergize with the
buildings on the surrounding parcels. The report goes on to say, “the area’s most
important challenge is to reverse negative perceptions developed over the years of decline
and made worse by media coverage.” The only way to overcome this challenge is to
maintain a long-term focus. These types of problems are not solved overnight, but
incremental improvements produce positive, long-term results.
STRATEGIC PARTNERSHI PS
Our proposal is designed to meet the needs of the local community. We will develop strategic
partnerships with the following community groups and organizations as part of our
implementation strategy to ensure the overall success of the development proposal. 1. Greater Englewood Community Development Corporation (CDC)
This is a NFP dedicated to improving Englewood’s economy and quality of life. With
their assistance, we can create an economically viable project.
2. Resident Association of Greater Englewood (RAGE)
RAGE is a local activist group, whose mission is to improve the lives of Englewood
citizens, as well as the public’s perception of the area. Our development group will send
representatives to attend local meetings held by RAGE to engage dialogue with local
residents. For example, a meeting was held on March 19th, 2016 by a local Economic
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Development Focus Group in which ideas were discussed on what to develop on our site.
A member of our team will attend such meetings as they are held.
3. Teamwork Englewood
This is another group of activist citizens that provides resources to businesses and local
citizens to help them improve the community. Over 10 years ago they published a report
entitled Making a Difference, which includes strategies to improve the quality of life for
local citizens, and in 2016, they began working on an updated version. They have
scheduled multiple community meetings in the coming months to discuss ways that the
community can be improved. By having representatives attend these meetings, our
development group can play a part in improving the quality of life for local residents.
4. Bethel Terrace, Mercy Housing, Greencastle of Englewood
These are local housing facilities for seniors, disabled individuals and low-income
individuals. We will designate part of our gardens located on the berms for these
individuals to maintain. Academics and health professionals have cited numerous health
benefits realized by such individuals who engage in gardening activities7 (Detweiler,
2012). This is a charitable endeavor that will bring happiness to these community
members. This may also help us generate traffic in our retail stores or increase interest in
the Firehouse.
5. Imagine Englewood If/Growing Home Gardens
Imagine Englewood If is another local NFP who sponsors programs that support the
community’s youth. They currently sponsor community gardens at two different
locations in Englewood, both of which are used to educate youth on different gardening
techniques. Growing Home Gardens owns two local organic gardens and employs local
residents and trains them on urban gardening practices. Partnerships with these entities
will help us develop and establish gardens on site B and the adjacent berms.
6. Kennedy-King College
Over 14,000 students attend this local community college. Both the gym proposed on Site
A and the discount retail store on Site D will appeal to the local college population. These
students represent an important target market for our tenants. We will partner with school
representatives to promote our development, and we will encourage companies leasing
from us to offer promotions and discounts to local college students.
7. Whole Foods
Whole Foods is the anchor of this property, and our proposal will build upon the
strengths of their presence. Part of the success will be attributable to our ability to draw
Whole Foods customers to our tenants’ businesses. Whole Foods has already provided
support for Growing Home and other organizations in Englewood, so we aim to secure
funding from them for our charitable gardening operations.
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8. Local Citizens
Our success will come as a result of our efforts and those of local community members.
They will be the ones working for our tenants, buying goods from the retail stores,
maintaining the gardens, and utilizing the banquet hall. We will create and realize
economic value, but only in partnership with those in the community.
FINANCIAL ANALYSIS
Discount Cash Flow Model
We created a DCF model using data from multiple sources, as well as multiple assumptions.
The following are key findings or outputs of our model:
NOI projections yield a property value of about $40 million for the development in
the year 2019, which will increase to $57 million by the year 2036.
NOI is projected to grow from $3.2 million in 2018 to $4.6 million in 2036.
Revenues are projected to grow from $3.4 million in 2018 to $4.8 million in 2036.
The present values of the discounted net operating incomes between 2016 and 2036
plus the present value of the reversion summarize to $38.2 million.
These projections are based on the following key assumptions.
We used comparable transactions provided to us by our advisors to project lease
revenues to be received. These can be found in Exhibit 1.
Construction costs for this project will amount to about $21.3 million. These costs
were based on the hard costs per square foot of comparable developments, which are
listed in Exhibit 2.
Land is projected to cost a total of $6.8 million. However, we will apply for and
receive TIF financing of $2.0 million, which will reduce the cost of the land for us to
$4.8 million.
The following are other key assumptions of our DCF model
We reduced our projected revenues by a vacancy allowance of 5%, based on
comparable transactions.
Our leases will be structured as triple net leases, therefore all property taxes will be
paid for by the tenants.
We will pay our brokers a commission of 2% of agreed upon leases.
The income tax rate will approximate 20%. We felt a reduced rate was justified given
that we are likely to realize tax incentives to support the continued operation of the
development.
Maintenance Costs and yearly rental rate increases will be 2% every year.
Property management costs will amount to 3% of effective gross income.
The cap rate and weighted average cost of capital will remain constant at 8% and
9.26% each year. The WACC calculation is shown in Exhibit 4 of the model, and the
DCF model is included in Exhibit 5 of the appendix.
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Pre-Development Budget
Our pre-development budget came to be about $982,250. We obtained these figures from
comparable transactions in the City of Chicago provided to us by our advisors.
Development Budget
Construction costs and costs of land are outlined in Exhibits 2 and 3.
Project Timeline
This development will take about 24 to 36 months to complete and will be divided between 2
phases.
Phase 1 - Groundbreaking is tentatively scheduled to occur on 7/1/2016. Construction of
our building proposals will begin on Sites A and D at this time. We will also install the
gardens on the berms and clean up the exterior of the firehouse building. Improved
landscaping will help us attract new tenants for our structures. We anticipate this phase
will last between 9 and 12 months.
Phase 2 – In this phase, we will restore the firehouse and develop the greenhouse garden
structure behind it. These tasks have been moved to phase 2 due to the amount of time it
takes to develop partnerships with Whole Foods and Growing Home Gardens. This also
gives us more time to find a tenant for the firehouse building, which will be somewhat
challenging due to its unique nature. We anticipate this phase will last between 9 and 12
months. All construction will be completed and tenants will be installed by 7/1/2019.
Once this phase is finished, our goals will be focused on maintaining relationships with
tenants and the local community.
Capital Structure
Based on discussions with our advisors, we determined that if we are unable to pre-lease these
retail units, then we will have to finance half of this project with debt and half with equity.
However, in the event that we are able to pre-lease, we can increase the leverage level to about
60% of total cost. This would effectively reduce our weighted average cost of capital and reduce
the required return of the development.
Tax Incremental Financing Return on Investment
The city has already invested $10,000,000 in TIF financing to get the area ready for construction
and we will obtain an additional $2 million, which will reduce the cost of the land and make the
project more feasible for us and our investors. This TIF funding is an investment by the city, and
they hope to achieve returns on the investment. We estimate that retail buildings we will build on
these properties will generate $574,000 of sales tax receipts and about 2,000,000 in property tax
receipts each year. These are based on sales of comparable businesses and tax rates for the area. If
these estimates hold, the city will receive its investment back in approximately 5 years. All
receipts received after that time are a net gain for the city. See Exhibit 6 for TIF ROI calculations.
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ECONOMIC ANALYSIS & DEMOGRAPHICS
Economic Activity Generated
Using the Keynes Marginal Propensity to Consume, we were able to project out the total
economic activity that will be generated if the Phoenix Landing Proposal is implemented. The
model is 1 / (1 - Consumption Rate) = 1 / Savings Rate. This model creates a multiplier for
economic creation from investment, similar to the economic expansion that occurs from the
required reserve rate from our fractal reserve banking system.
The lower the savings rate the higher the multiplier. For example, if the savings rate in the area
that you are analyzing is 5%, then the economic multiplier = 1 / .05 = 20x. So, an investment of
$10 million would potentially result in total economic expansion is $200 million. For our project,
we have used a savings rate of 5.2% provided by the St. Louis Federal Reserve Bank. Using this
figure and the assumption that the total construction expenditures in this project are roughly $21
million, the total economic activity generated for this project is approximately $400 million in
perpetuity. We are making an assumption that local construction companies will be used to build
our development.
This model does not take into account the time that it would take for the full cycle to take effect
for the $21 million dollar investment to result in $400 million in economic expansion in
perpetuity. To take the time value of money into account, we looked at the velocity of money
figures provided by the St. Louis Federal Reserve Bank. The velocity of money figure is 1.482.
This velocity will allow you to graph the expansion (Y-Axis) by the timeline post-investment (X-
Axis).
Using the assumptions listed above of a savings rate of 5.2%, a 1.482 velocity of money figure,
and a total investment of $21 million, the potential total economic activity created with the
development of Phoenix Landing is approximately $400 million in perpetuity, with around $100
million of economic activity generated from this investment within the proceeding two to three
years. This proceeding statement could also be framed as saying that for every $1 invested in this
development project, the area will see at least $5 of cumulative economic activity. See Exhibit 7
for a graphical representation of these figures.
Economically Comparable Areas
Other cities that have recently partnered with Whole Foods to provide healthier food options to
those with limited access to healthy and fresh-food options include Detroit, Mi., New Orleans,
La., and Newark, Nj. As with the tentative development plan in place for this project in
Englewood Chicago, these comparable areas have experienced accompanying real estate
investment in commercial, residential, and retail properties to re-establish property values in the
area. Outlined below are the aforementioned real estate developments in similar areas to the
Phoenix Landing Development.
1. Detroit, Mi.
About 40% of Detroit's more than 680,000 residents live below the poverty line,
according to 2013 U.S. Census data. In Englewood, the percentage of residents below the
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poverty line is just under 49%. Since the Detroit store has been open, Whole Foods has
more than doubled its own goals in terms of profitability. The retail mix within the
immediate surrounding to this Whole Foods includes Starbucks, Great Lakes Coffee (an
upscale cafe serving micro-roasted coffee as well as craft beer), Union Street (an art deco
eatery), Avalon International Breads (an independent bakery and eatery), Jolly Pumpkin
Pizzeria & Brewery (a micropub), among other newly established retail fronts. This
amount of activity has generated significant activity in the immediate surround area,
Midtown, a district that has similar demographics to the Englewood neighborhood. This
case illustrates the case that an investment in a development in a lower-income
comparable area can be wholly profitable.
2. New Orleans, La.
This project, named the ReFresh Project, was developed by Broad Community
Connections, a local non-profit, and L+M Development Partners, a New York-based firm
that specializes in low-income and market-rate housing. ReFresh also provides indoor
and outdoor community space for gardening, fitness and education classes. Goldman
Sachs, spearheaded by their Urban Investment Group, provided a large portion of the
financing for this project with more than $6 in loans and equity, representing a trend in
corporate lending to invest in downtrodden communities.
3. Newark, Nj.
L+M Development Partners (previously mentioned), Prudential Financial, and the
Goldman Sachs Urban Investment Group partnered to develop this project, again
representing the ability to obtain financing for urban revitalization projects. The Newark
project area will provide more than 180 residential units, an underground parking garage,
80,000 square feet of commercial, community, and office space on upper floors, and 50,000
square feet of ground-level retail space in addition to the Whole Foods Market. The mix of
tenants is similar to those suggested in the Phoenix Landing proposal outlined above, with
examples of retail business of including an Aaron’s, an AT&T store, a UPS store,
Starbucks, among other commercial and retail businesses.
Economic Opportunities
Within the Englewood area, many of the residents lack immediate access to many of the goods,
products, or services that they, as consumers, demand. As such, much of the economic activity
that is generated through the residents of purchasing these goods, products, or services is leaving
the Englewood neighborhood, and being spent in other areas. In 2012, the Green Healthy
Neighborhoods Plan, an initiative spearheaded by the Chicago Metropolitan Agency for Planning
(CMAP), conducted an economic study in which they quantified the specific amount of dollars in
economic activity being generated outside of the Englewood neighborhood by Englewood
residents. Attached below is a financial projection from the CMAP study:
Food and Beverage Stores $22,375,375 Food Service and Drinking Establishments $10,938,587 Health and Personal Care Stores $15,656,330 General Merchandise Stores $45,806,375 Electronics and Appliance Stores $5,987,950
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Clothing and Clothing Accessories Stores $12,825,559 Furniture and Home Furnishing Stores $3,959,217 Miscellaneous Store Retailers $6,535,753 Sporting Goods, Hobby, Book and Music Stores $4,697,578 Building Material, Garden Equipment and Supply Dealers $20,643,408
Total Opportunity Dollars $127,234,049
With over $120 million dollars of economic activity generated by Englewood residents currently
outside of the Englewood neighborhood, this offers an economic opportunity to prospective
retailers within the proposed Phoenix Landing Development to meet the demand of the
consumers in the area, and capture significant financial gains. In addition to capturing the economic activity leaving the Englewood area, there is also an
opportunity to capture consumers entering into Englewood via access from the Chicago Transit
Authority (CTA). There are currently eight CTA bus routes, three CTA Red Line ‘L’ stations, and
two CTA Green Line ‘L’ stations in the immediate Englewood neighborhood, making the area
highly accessible.
Demographics
The total population of the Greater Englewood area is approximately 37,260, with roughly 12,219
people per square mile. According to the 2010 census, the racial makeup of Englewood is 0.3%
white and 97.2% African-American. Over 60% of all children and 55% of all adults in the
neighborhood are classified as either overweight or obese according to their respective body mass
index. Roughly half of adult residents in the area claim they have had zero days of physical
activity, specifically in a place such as a gym because of lack of access.
Within Englewood, there are over 300 churches and non-revenue generating agencies. In all of
Englewood, there are fewer than 500 businesses in total. In terms of home ownership, only 25%
of Englewood residents are homeowners and 36% of homes and lots are vacant. In terms of
average income, 9% of residents earn salaries of over $75,000 per year, 20% of residents earn
salaries of over $50,000 per year, and the overall median salary residents earn is approximately
$24,304 a year.
All of the demographic information was provided by the Chicago Community Trust and the
Greater Englewood Community Development Corporation.
Demographic Metrics Englewood Chicago
Unemployment Rate 26.9% 12.6%
Population Below Poverty
Line 33.8% 22.7%
Household Median Income 22,633 47,099
Childhood Obesity 48% 22%
Percentage of People 3 Years
or Older Enrolled in K-12
Schools 35.6% 16.5%
Percentage of Students K-12
Enrolled in Private Schools 75.3% 14.0%
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MUNINCIPAL INCENTIVES
Tax Incremental Financing (TIF)
Tax Increment Financing is a special funding tool used by the City of Chicago to promote public
and private investment across the city. Funds are used to build and repair roads and infrastructure,
clean polluted land and put vacant properties back to productive use, usually in conjunction with
private development projects.
Under Illinois state law, areas proposed for TIF designation must possess numerous blighting
factors to be eligible (65 ILCS 5 §11-74.4-2):
Age
Obsolescence
Code violations
Excessive vacancies
Overcrowding of facilities
Lack of ventilation, light, sanitary
facilities
Excessive land coverage
Inadequate utilities
Deleterious land use or layout
Lack of physical maintenance
Lack of community planning
Dilapidation or deterioration
Our site is located within the Englewood Mall TIF District. This district has a current fund
balance of $1,991,381. The Englewood Mall site has been in decline for decades and currently
sits vacant. In addition to age and excessive vacancies, the site lacks physical maintenance,
community planning, proper sanitary facilities and/or utilities, and has generally fallen into
obsolescence. Because the site possesses so many blighting factors, we propose a full allocation
of the remaining $1,991,381 TIF funds to go towards our project, which will revitalize the area
and cure the existing blight. Additionally, our development will produce significant tax revenues
and increase the property tax increment, which will go towards restoring the TIF fund for future
development projects in the area.
Community Loans
In addition to TIF funding, we will seek financing from the Chicago Community Loan Fund
(CCLF). The CCLF provides flexible, affordable and responsible financing and technical
assistance for community stabilization and development efforts and initiatives that benefit low-to
moderate-income neighborhoods, families and individuals throughout metropolitan Chicago.
The following outlines the CCLF’s requirements for financing:
Project selection criteria:
Project has collateral or guarantor
Loan-to-collateral value does not exceed 100%
Project has sufficient cash flow to meet debt service at a ratio of 1:2 or better
Borrower’s management and financial capacity are sufficient for their project
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Eligible Borrowers:
Nonprofit corporations
Worker-owned enterprises
Affordable housing or business cooperatives
Mission-driven for-profits and single purpose entities
Eligible Projects:
Affordable housing acquisition, rehabilitation and new construction
Community facility space acquisition, rehabilitation and new construction
Commercial real estate acquisition, rehabilitation and new construction
Equipment purchase or working capital for a community development social enterprise
Other economic development projects
Based on the above criteria, it appears likely that our project could receive financing from CCLF.
We can meet the project selection criteria by providing collateral in our site buildings.
Additionally, we qualify as an eligible borrower because we are a mission-driven for profit that is
seeking to produce a highly profitable development with the mission of revitalizing the
Englewood Mall area, while also providing sustainable urban gardens. Finally, our project is
eligible because it would fall under the commercial and community real estate acquisition,
rehabilitation, and new construction category provided by CCLF.
Based on CCLF providing financing in excess of $500,000 to urban farm projects in the past, we
believe that they would be particularly interested in funding our urban garden because of the
significant environmental sustainability and public health value we will provide to the Englewood
area.
Historic Incentives
Class L Property Tax
We will apply for Class L property tax incentives from Cook County. Cook County offers the
Class L property tax incentive to encourage the preservation and rehabilitation of landmark
commercial, industrial, and income-producing non-for-profit buildings. Owners can have their
property tax assessment levels reduced for a 12-year period provided they invest at least half of
the value of the landmark building in an approved rehabilitation project.
We will qualify for the Class L property tax incentive. As it stands, the firehouse (aka Engine
Company 84, Truck 51) is of little value as it is vacant and will require significant capital to
renovate. We will be investing well over half the value of the firehouse to rehabilitate it into a
suitable banquet hall.
Under the Class L incentive, the assessment levels for the improvement or building portion of the
assessment are reduced to 10 percent for the first 10 years, 15 percent in year 11, 20 percent in
year 12, and back to the regular assessment level in year 13. The other portion of the assessment,
the land portion, is also eligible for the incentive if the building has been vacant or unused
continuously for the prior two years.
16
We will qualify for the tax incentive for the building portion and the land portion, as the firehouse
has been vacant for well over two years. Whether we actually need the tax incentive will depend
on our lease. If we are able to secure a triple net lease with a tenant, then the tax incentives will
be irrelevant, as we will pass those costs onto the tenant. If we aren’t able to secure this type of
tenant, then the tax incentive will save us a significant amount of money.
We will need to seek approval from both Cook County and the City of Chicago to get the
incentive granted.
Other Historical Incentives
The firehouse (Engine Company 84, Truck 51) is classified as a Chicago Historical Landmark.
As such, the building is eligible for economic incentives for repair and rehabilitation through the
aforementioned Class-L Property Tax Incentive, Federal Rehabilitation Tax Credits, and a State
Property Tax Assessment Freeze program.
Additionally, all Chicago Landmarks are eligible for a Permit Fee Waiver for City of Chicago
building permit fees and special allowances for certain building code requirements. Owners of
historic buildings also have free access to experienced rehabilitation professionals who may
provide assistance with technical issues.
The fact that the firehouse is a Chicago Historical Landmark provides us with several tax credits,
permit fee waivers, and building allowances, which will save us significant time and money
during our rehabilitation efforts.
ZONING & ENTITLEMENT S
Zoning Compliance
Applicable C 1-2 Zoning Requirements
The development site is zoned as Commercial 1-2 (C1-2). C1-2 zoning accommodates a
very broad range of small-scale, business, service and commercial uses. C1 zoning is
distinguished from B1 zoning by the range of use types allowed: C1 permits more
intensive, more auto-oriented commercial use types than does B1. The C1 district also
allows taverns and liquor stores by-right (§17-3-0105).
The FAR for C1-2 is set at 2.2 (§17-3-0403).
The Maximum Building Height varies by lot frontage and whether the building has
ground floor commercial space (§17-3-0408).
For C1-2, buildings with ground floor commercial space and frontage of 100 feet or more
are limited to heights of 50 feet. Buildings without ground floor commercial space are
limited to 45 feet (§17-3-0408).
The gross floor area of commercial establishments in C 1-2 districts may not exceed
25,000 square feet (§17-3-0302-A)
17
Setbacks are not applicable unless the property borders an R zoned lot or contains
dwelling units (§17-3-0404).
Parking Group M details the parking and bike space requirements for C 1-2 zoned lots
that contain retail, eating and drinking establishments, and participant sports activities,
etc. (§17-10-0207-M). Most of our structures uses fall into Category M. The
requirements are as follows: no parking is required for the first 4,000 square feet and then
2.5 spaces per 1000 square feet. Health clubs require 1 spot per 10 persons of capacity.
The required bike spaces are 1 bike space per 5 auto parking spaces. Parking for our
storage structure on Site A falls into Category Q, which covers storage warehouses (§17-
10-0207-Q). The parking requirements are determined by the Chicago Department of
Planning and Development (§17-10-0207-Q).
In C districts, minimum off-street automobile parking ratios for non-residential uses may
be reduced by up to 100 percent from the otherwise applicable standards for new
construction or rehabilitation or reuse of existing structures located within 1,320 feet of a
CTA or METRA rail station entrance or within 2,640 feet of a CTA or METRA rail
station entrance when the subject building is located along a pedestrian street or a
pedestrian retail street. The 1320-foot and 2640-foot distances specified in this section
must be measured along a straight line between the rail station entrance and the entrance
of the building for which the parking reduction is requested. (§17-10-012).
Vehicular parking ratio reductions for transit-served locations are authorized only when
the subject development includes at least one bicycle parking space for each automobile
parking space that would otherwise be required under the applicable standards (§17-10-
012).
Any party requesting a reduction in excess of 50% under this Section shall provide notice
to the alderman of the ward in which the subject property is located, and no such
reduction shall be approved until at least 10 days after the date that such notice was
delivered to the alderman.
Vehicular parking ratio reductions for transit-served locations are authorized only when
the subject development includes at least one bicycle parking space for each automobile
parking space that would otherwise be required under the applicable standards of Section
17-10-0200. When such calculations result in a bicycle-parking requirement in excess of
50 bicycle parking spaces, the limits described in Section 17-10-0301-B shall not apply.
Site A
General
Site A is located on the corner of W. 63rd St. and W 63rd Parkway. Site A’s area measures 1.8
acres or 78,408 square feet. Two structures will be located on this site. Structure 1A will contain
retail commercial space on the first floor and a full-service gym on the second floor. The
dimensions of Structure 1A measure 255 feet by 98 feet by 26 feet with an area of 24,990 square
feet per floor (49,980 sq. ft. building total). Structure 2A will be a 5 story storage facility. The
dimensions of Structure 2A measure 175 feet by 100 feet by 50 feet with an area of 17,550 feet
per floor (87,500 sq. ft. building total).
18
Structure 1A
The FAR for Structure 1A is .64 and therefore compliant with the C 1-2 zoning requirements of a
FAR of 2.2 or less. This FAR was calculated by taking the total area of Structure 1A (49,980 sq.
ft.) divided by Total Area of Site A (78,408 sq. ft.).
The building height of Structure 1A is 26 feet (13 feet per floor). Structure 1A features ground
floor commercial space with frontage greater than 100 entitling it to a 50-foot maximum height
under C 1-2 zoning regulations. Structure 1A’s building height is thus compliant.
Setbacks are not applicable because Site A does not border an R zoned lot, nor does it contain
dwelling units.
Structure 2A
The FAR for Structure 2A is 1.12 and therefore compliant with the C 1-2 zoning requirements of
a FAR of 2.2 or less. This FAR was calculated by taking the Total area of Structure 2A (87,500
sq. ft.) divided by Total Area of Site A (78,408 sq. ft.).
The building height of Structure 2A is 50 feet. Structure 2A features ground floor commercial
space with frontage greater than 100 entitling it to a 50-foot maximum height under C 1-2 zoning
regulations. Structure 2A’s building height is thus compliant.
Setbacks are not applicable because Site A does not border an R zoned lot, nor does it contain
dwelling units.
Site A Parking
The proposed parking lot for Site A will measure approximately 175 feet x 155 feet (23,000 sq.
ft.) with a curve built in and will hold 112 spaces. Since Structure 1A contains retail space and a
gym, parking requirements for Structure 1A will be dictated by Parking Group M rules. Parking
Group M requires no parking for the first 4,000 square feet and then 2.5 spaces per 1000 square
feet. Additionally, since our gym is a health club, we must provide 1 spot per 10 persons of
capacity. We estimate our gym capacity at 150 persons (based on comparable gyms); therefore,
our gym will need to provide a minimum of 15 spots (150persons/10persons). Parking for
storage Structure 2A is dictated by Parking Group Q rules, which defers determination of parking
to the Chicago Department of Planning and Development (DPD). The DPD generally requires
less parking, as storage units are frequented much less than other commercial establishments. We
will assume that they will require at least 50 spaces for our 5-story structure.
The first floor of Structure 1A totals 24,990 square feet of space. To calculate the total number of
required spaces for Structure 1A, we subtracted 4,000 square feet from the total of 24,990 square
feet and then divided by 1,000, which gave us 21. Next we took 21 x 2.5, giving us a grand total
of 53 required spaces.
The total number of spaces for Site A will be the assumed 50 spaces for the storage unit + 15
required for Structure 1A Gym + 53 required for Structure 1A retail space, which equals 118
spaces. 1 bike space is required for every 5 auto parking spaces; therefore, to determine the
number of required bike spaces we divided 118/5 giving us 24 bike spaces.
19
Our lot containing 112 spaces is just shy of the required 118 spaces, but this shouldn’t be a
problem because the City of Chicago allows minimum off-street automobile parking ratios for
non-residential uses to be reduced in C districts by up to 100 percent from the otherwise
applicable standards for new construction or rehabilitation or reuse of existing structures located
within .25 miles (1,320 feet) of a CTA or METRA rail station entrance or within .5 miles (2,640
feet) of a CTA or METRA rail station entrance when the subject building is located along a
pedestrian street or a pedestrian retail street. Site A, and both of its structures, are located within
.25 miles of the Halsted Green Line, which is a CTA rail station. Based on these facts, Site A’s
parking can be reduced by 100%. A reduction of more than 50% of required parking spaces must
be approved by the City. Any required auto space that is reduced must be replaced with at least
one bicycle parking space.
Since we are not required to provide 118 spaces, we are in compliance with our 112-space
parking lot. We will not need to seek approval from the City as we are not reducing our parking
requirement by more than 50%. Since we are 6 auto spaces short, we will need to provide 6
additional bike spaces, bringing our bike parking total to 30 spaces (24+6).
Site B
General
Site B is nestled between Site A and Site D. Site B’s area measures 1.4 acres or 60,984 square
feet. A firehouse structure currently sits on this site. The firehouse will be converted to a
banquet hall. The firehouse is made up of two stories with an area of 4,500 square feet per floor
(9,000 sq. ft. building total).
Firehouse
The FAR for the Firehouse is .15 and therefore compliant with the C 1-2 zoning requirements of a
FAR of 2.2 or less. This FAR was calculated by taking the total area of the Firehouse (9,000 sq.
ft.) divided by Total Area of Site B (60,984 sq. ft.).
The building height of the Firehouse is 35 feet. The Firehouse is well under any building height
restrictions for C 1-2 zoning regardless of its frontage or first floor usage (lowest height cap for
dash 2 is 45 feet). The Firehouse’s building height is thus compliant.
Setbacks are not applicable because Site B does not border an R zoned lot, nor does it contain
dwelling units.
Site B Parking
The proposed parking lot for Site B will measure 108 feet x 85 feet (9,300 sq. ft.) and will hold
48 spaces. Parking Group M will dictate the parking requirements for the Firehouse structure
since it contains a banquet hall, which qualifies as an eating and drinking establishment under
Group M. Parking Group M requires no parking for the first 4,000 square feet and then 2.5
spaces per 1000 square feet.
The Firehouse structure totals 9,000 square feet of space. To calculate the total number of
required spaces for the Firehouse structure, we subtracted 4,000 square feet from the total of
20
9,000 square feet and then divided by 1,000, which gave us 5. Next we took 5 x 2.5, giving us a
grand total of 13 required spaces. 1 bike space is required for every 5 auto parking spaces;
therefore, to determine the number of required bike spaces we divided 13/5 giving us 3 bike
spaces.
We are providing a total of 48 auto spaces, which is well over the required 13 spaces.
Additionally, we are providing the required bike spaces. Site B’s parking is thus in compliance
with the zoning code.
Site D
General
Site D is located on the corner of W 63rd Parkway and S. Halsted St. Site D’s area measures 1.3
acres or 56,628 square feet. A large one-story retail structure will be located on Site D. Structure
1D’s dimensions measure 184 feet by 110 feet by 20 feet for a total building area of 20,240
square feet.
Structure 1D
The FAR for Structure 1D is .44 and therefore compliant with C 1-2 zoning requirements of a
FAR of 2.2 or less. This was calculated by taking the Total Area of Structure 1D (25,000 sq. ft.)
divided by Total Area of Site D (56,628 sq. ft.).
The building height of Structure 1D is 13 feet. Structure 1D is well under any building height
restrictions for C 1-2 zoning regardless of its frontage or first floor usage. Structure 1D’s
building height is thus compliant.
Setbacks are not applicable because Site B does not border an R zoned lot, nor does it contain
dwelling units.
Site D Parking
The proposed parking lot for Site D will measure 202 feet x160 feet (32,400 sq. ft.) and will hold
96 spaces. Since Site D contains retail space, parking requirements for Structure 1D will be
dictated by Parking Group M rules. Parking Group M requires no parking for the first 4,000
square feet and then 2.5 spaces per 1000 square feet.
Structure 1D totals 20,240 square feet of space. To calculate the total number of required spaces
for Structure 1D, we subtracted 4,000 square feet from the total of 20,240 square feet and then
divided by 1,000, which gave us 16. Next we took 16 x 2.5, giving us a grand total of 40 required
spaces. 1 bike space is required for every 5 auto parking spaces; therefore, to determine the
number of required bike spaces we divided 40/5, giving us 8 bike spaces.
We are providing a total of 96 auto spaces, which is well over the required 40 spaces.
Additionally, we are providing the required bike spaces. Site D parking is thus in compliance
with the zoning code.
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Entitlement Timeline
We estimate the entitlement process to take between 6 months to 1 year to complete. The
estimate is based on several steps that must be taken to gain approval from the Englewood
community and the City of Chicago:
Step 1: Hire a Zoning and Land Use Attorney
Step 2: Speak to Englewood Community Groups, Alderman, and the Chicago Zoning
Administration about our proposed development
Step 3: Draft a Site Plan for the Zoning Administrator’s review (§17-13-0800)
Step 4: Since we are creating a commercial development greater than 4 acres, we will
have to go through the Planned Development review and approval process (§17-13-
0600). This process will take over 60 days to complete and will include our applications
for building permits, zoning certificates, and occupancy certificates. (process outlined by
image below)
Step 5: Make possible revisions or variations to our Site Plan
Step 6: Make possible appeals if we believe the City Administrator made a mistake in
ruling against anything on our Site Plan
Budget for Entitlement Costs
Item Cost
Attorney’s Fees $90,000
Application Fee (New Construction) $4,500
Application Fee (Repairs to Firehouse) $75
Permits + Appeals + Inspections $425
Total $95,000
We estimate the budget for entitlement costs to reach approximately $95,000. Allocations for
attorney’s fees will make up the bulk of our budget, costing us approximately $90,000. Based on
the square footage of our buildings and the fee structure promulgated by the City, application fees
for both new construction and repairs to the firehouse will cost us a combined $4,575 (§17-13-
0103-A). We estimate that miscellaneous permits, appeals, and inspection fees will total around
$425, giving us a grand total of $95,000.
SUSTAINABILITY
In this urban location with large populations and pollution, it was imperative to offer a
sustainable component to the site. The planting of natural prairie grasses to the site on the
berms as well as a component of landscaping around the buildings will be introduced.
Natural Prairie landscaping offers several benefits that traditional landscaping does not.
Natural grasses are less resource intensive by not requiring watering after the roots of the
plant have been established. This eliminates the need from watering during the droughts
that often occur in the Chicago area each summer. In addition to that, these grasses do not
need any synthetic fertilizers or pesticides, reducing the risk of runoff water
contamination and will offer more storm water filtration. Natural grasses will promote
biodiversity in the area, allowing for more native species of birds and insects to return to
the area.8
22
The site will also have sustainable tables and benches installed throughout the property,
particularly on the berms. These tables and benches are created entirely from recycled
plastic shopping bags. Each of these fixtures promotes sustainability in the community
and reducing the consumption of plastic shopping bags. Each of the tables and benches
are received at little to no cost through a grant that will provide funds to make the
purchase of recycled plastic furniture and equipment more affordable.9
MARKETING
The proposition of developing the old Englewood Mall is a way to revitalize the community. We
incorporated this in our project by branding it Phoenix Landing. A phoenix is a bird from Greek
mythology that is long-living and periodically reborn from the ashes of its predecessors. This new
development is intended to bring new life to the community by allowing it to prosper to the
heights it reached in the 1950s. It is imperative to show the community that people from outside
community are willing to invest in the community and so should those that reside there. The
center is to serve as a symbol of inspiration and hope for the future.
The proposed uses and tenants for this development will address some of the gaps in supply and
demand that currently exist in the area. Our marketing will be targeting national tenants, in order
to encourage them to bring their products and services to the area.
A collection of marketing tactics will be put into place in an attempt to reach maximum capacity
in the center. It is essential that the development have a dedicated website. The website will allow
for stakeholders to be continually updated on the progress that is being made at the site, as well as
any new breakthroughs that may occur. A groundbreaking ceremony will be taking place to
publicly announce the start of the development. We will hire a public relations spokesperson to
coordinate publicity opportunities, as well as interview residents regarding the plans that are in
place for the development. To complement this, we will be designating a single broker from the
area to serve as our representative that will ensure our retail spaces will be filled by reputable
tenants. The broker will be responsible for marketing to entice potential tenants to our
development.
It is anticipated that we will have an annual marketing budget of $25,000 each year. This budget
will encompass all of the marketing tactics listed above. The majority of this budget will be going
to our public relations spokesperson and the broker. However, it is expected that after a few years
and we have reached full capacity, that we will be able to reduce our marketing expense overall.
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CONCLUSION
The Phoenix Landing Development is a financially profitable proposal that will provide
numerous benefits to the local community. The proposal creates jobs for the community,
generates significant economic activity, and supports several community initiatives and
objectives. We believe this proposal serves as a roadmap to restoring significant value and
opportunity to the citizens of this area.
EXHIBITS
Exhibit 1: Projected Lease Revenues
Exhibit 2: Projected Cost Per Square Foot
Building Sq Ft Rate ($) / SF Source
Storage - A 87,500 18.00 Banner Storage Group
Retail - A
Suite 101 5,411 21.00 REIS Inc. Comps
Suite 102 1,956 22.00 REIS Inc. Comps
Suite 103 3,423 23.00 REIS Inc. Comps
Suite 104 3,912 23.00 REIS Inc. Comps
Suite 105 2,934 23.00 REIS Inc. Comps
Suite 106 2,445 22.00 REIS Inc. Comps
Suite 107 4,890 21.00 REIS Inc. Comps
Gym - A 24,977 18.00 Retro Fitness
Fire House - B 9,000 25.00 REIS Inc. Comps
Gardens - B 87,000 Sprout NOLA
Retail - D 24,000 31.00 REIS Inc. Comps
Parcel Comp/Source Square Feet Comp Sq Ft Comp Cost ($) / Sq Ft Adjusted Cost / Sq Ft Total Cost
Storage Gary Delaney 87,750 70 77 6,756,750
Retail - A In-Line Retail Build 31,670 12,450 185 200 6,334,000
Gym Retail Health Club 41,000 144 200 -
Firehouse Advisors 9,000 18,000 150 2,700,000
Gardens Sprout NOLA - 100,000
Retail - D In-Line Retail Build 24,971 12,450 185 204 5,087,500
Parking Discussion with Advisors 82,166 300,000
Total Construction Costs 21,278,250
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Exhibit 3 – Cost of Land
Exhibit 4 – Weighted Average Cost of Capital Calculation
Paid ($M) Inferred Additional Allocation ($M) Acres
Phoenix Landing - 4,170,909 2,661,871 7.4
Whole Foods 3,100,000 - 1,978,417 5.5
Other - 563,636 359,712 1.0
3,100,000 4,734,545 5,000,000 13.9
Gross Cost Incentives Net Cost
6,832,780 1,991,381 4,841,399
Phoenix Landing Cost of Land
Target Capital Structure
Debt to Total Capitalization 50.00%
Equity to Total Capitalization 50.00%
Debt to Equity Ratio 100.00%
Cost of Equity
Cost of Equity 15.00%
Cost of Debt
30-day LIBOR 0.41%
Spread 4.00%
Cost of Debt 4.41%
Taxes 20.00%
After Tax Cost of Debt 3.53%
WACC 9.26%
25
Exhibit 5 – Discounted Cash Flow Model
Building Sq Ft Rate ($) / SF 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Storage - A 87,500 18.00 - 787,500 1,575,000 1,606,500 1,638,630 1,671,403 1,704,831 1,738,927 1,773,706 1,809,180
Retail - A - - - - - - - - - -
Suite 101 5,411 21.00 - 56,816 113,631 115,904 118,222 120,586 122,998 125,458 127,967 130,526
Suite 102 1,956 22.00 - 21,516 43,032 43,893 44,770 45,666 46,579 47,511 48,461 49,430
Suite 103 3,423 23.00 - 39,365 78,729 80,304 81,910 83,548 85,219 86,923 88,662 90,435
Suite 104 3,912 23.00 - 44,988 89,976 91,776 93,611 95,483 97,393 99,341 101,328 103,354
Suite 105 2,934 23.00 - 33,741 67,482 68,832 70,208 71,612 73,045 74,506 75,996 77,516
Suite 106 2,445 22.00 - 26,895 53,790 54,866 55,963 57,082 58,224 59,389 60,576 61,788
Suite 107 4,890 21.00 - 51,345 102,690 104,744 106,839 108,975 111,155 113,378 115,646 117,959
Gym - A 24,977 18.00 - 224,793 449,586 458,578 467,749 477,104 486,646 496,379 506,307 516,433
Fire House - B 9,000 25.00 - 112,500 225,000 229,500 234,090 238,772 243,547 248,418 253,387 258,454
Gardens - B 87,000 - - - - - - - - - -
Retail - D 24,000 31.00 - 372,000 744,000 758,880 774,058 789,539 805,330 821,436 837,865 854,622
Gross Receipts - 1,771,458 3,542,916 3,613,774 3,686,050 3,759,771 3,834,966 3,911,666 3,989,899 4,069,697
Vacancy Allowance (5%) - (88,573) (177,146) (180,689) (184,302) (187,989) (191,748) (195,583) (199,495) (203,485)
Net Receipts - 1,682,885 3,365,770 3,433,086 3,501,747 3,571,782 3,643,218 3,716,082 3,790,404 3,866,212
Operating Expenses
Building Improvements - - - 50,000 51,000 52,020 53,060 54,122 55,204 56,308
Broker Commissions - 289,882 - - - - 357,635 - - -
Property Management - 50,487 100,973 102,993 105,052 107,153 109,297 111,482 113,712 115,986
Pre-Development Budget 982,250 - - - - - - - - -
Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total Operating Expenses 1,057,250 415,368 175,973 227,993 231,052 234,173 594,992 240,604 243,916 247,294
Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226 3,475,478 3,546,488 3,618,918
Net Operating Income (1,057,250) 1,267,517 3,189,797 3,205,093 3,270,695 3,337,609 3,048,226 3,475,478 3,546,488 3,618,918
Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Property Value (13,215,625) 15,843,961 39,872,464 40,063,663 40,883,686 41,720,110 38,102,819 43,443,477 44,331,097 45,236,469
Present Value of NOI (1,057,250) 1,160,050 2,671,830 2,457,024 2,294,730 2,143,137 1,791,367 1,869,282 1,745,749 1,630,365
Building Sq Ft Rate ($) / SF 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036
Storage - A 87,500 18.00 1,845,364 1,882,271 1,919,916 1,958,315 1,997,481 2,037,430 2,078,179 2,119,743 2,162,137 2,205,380 2,249,488
Retail - A - - - - - - - - - - -
Suite 101 5,411 21.00 133,137 135,800 138,516 141,286 144,112 146,994 149,934 152,932 155,991 159,111 162,293
Suite 102 1,956 22.00 50,419 51,427 52,456 53,505 54,575 55,666 56,780 57,915 59,074 60,255 61,460
Suite 103 3,423 23.00 92,244 94,088 95,970 97,890 99,847 101,844 103,881 105,959 108,078 110,240 112,444
Suite 104 3,912 23.00 105,421 107,530 109,680 111,874 114,111 116,394 118,721 121,096 123,518 125,988 128,508
Suite 105 2,934 23.00 79,066 80,647 82,260 83,905 85,583 87,295 89,041 90,822 92,638 94,491 96,381
Suite 106 2,445 22.00 63,024 64,284 65,570 66,881 68,219 69,583 70,975 72,394 73,842 75,319 76,825
Suite 107 4,890 21.00 120,318 122,724 125,179 127,682 130,236 132,840 135,497 138,207 140,971 143,791 146,667
Gym - A 24,977 18.00 526,762 537,297 548,043 559,004 570,184 581,587 593,219 605,084 617,185 629,529 642,120
Fire House - B 9,000 25.00 263,623 268,896 274,274 279,759 285,354 291,061 296,883 302,820 308,877 315,054 321,355
Gardens - B 87,000 - - - - - - - - - - -
Retail - D 24,000 31.00 871,715 889,149 906,932 925,070 943,572 962,443 981,692 1,001,326 1,021,353 1,041,780 1,062,615
Gross Receipts 4,151,091 4,234,113 4,318,795 4,405,171 4,493,274 4,583,140 4,674,802 4,768,298 4,863,664 4,960,938 5,060,156
Vacancy Allowance (5%) (207,555) (211,706) (215,940) (220,259) (224,664) (229,157) (233,740) (238,415) (243,183) (248,047) (253,008)
Net Receipts 3,943,536 4,022,407 4,102,855 4,184,912 4,268,610 4,353,983 4,441,062 4,529,884 4,620,481 4,712,891 4,807,149
Operating Expenses
Building Improvements 57,434 58,583 59,755 60,950 62,169 63,412 64,680 65,974 67,293 68,639 70,012
Broker Commissions - 394,858 - - - - 435,956 - - - -
Property Management 118,306 120,672 123,086 125,547 128,058 130,619 133,232 135,897 138,614 141,387 144,214
Pre-Development Budget - - - - - - - - - - -
Marketing Expenses 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Other Operating Expenses 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000 50,000
Total Operating Expenses 250,740 649,114 257,840 261,497 265,227 269,032 708,868 276,870 280,908 285,026 289,227
Net Operating Income 3,692,796 3,373,293 3,845,015 3,923,415 4,003,383 4,084,951 3,732,194 4,253,013 4,339,573 4,427,865 4,517,922
Net Operating Income 3,692,796 3,373,293 3,845,015 3,923,415 4,003,383 4,084,951 3,732,194 4,253,013 4,339,573 4,427,865 4,517,922
Cap Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%
Property Value 46,159,948 42,166,167 48,062,685 49,042,689 50,042,293 51,061,888 46,652,431 53,162,664 54,244,667 55,348,310 56,474,027
Present Value of NOI 1,522,595 1,272,935 1,327,923 1,240,115 1,158,105 1,081,510 904,338 943,162 880,764 822,488 768,063
PV Reversion 9,600,787
PV Discounted NOI + Value in 2036 38,229,067
26
Exhibit 6 – City of Chicago ROI for TIF Investments
Exhibit 7 – Cumulative Economic Activity Generated Per Dollar Invested
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
1 2 3 4 5 6 7 8
Quarters Post-Investment
Property Taxes
Approximate Property Value 40,000,000
Real Estate Tax Rate 5.00%
Real Estate Tax Receipts 2,000,000
Sales Projection
Retail Building - Lot A 1,500,000
Fire House 500,000
Retail Building - Lot D 3,600,000
Total Sales 5,600,000
Sales Tax Rate 10.25%
Sales Tax Receipts 574,000
Total Tax Receipts
Total Tax Receipts 2,574,000
Payback Period for Investment (Yrs) 5
City TIF Investments
TIF Expenditures - WF 10,000,000
TIF Expenditures - Phoenix 2,000,000
Total City Investment 12,000,000
27
STUDENT BIOGRAPHIES
Ben Beussink is a Gordon E. Crosby MBA student with an emphasis in Finance,
graduating in May of 2016. He obtained a Bachelor of Science in Business
Administration with an emphasis in Accounting from Southeast Missouri State
University. Previously, Ben worked spent 2 years working in public accounting and
obtained his CPA designation. Following graduation, he hopes to find a full time
position working in accounting or finance within the St. Louis, Columbia, or
Kansas City markets.
Trent Keal is a Gordon E. Crosby MBA student with an emphasis in Finance,
graduating in May of 2016. Prior to graduate studies, he obtained his Bachelor of
Science in Business Administration with an emphasis in Finance & Banking and
Real Estate from the University of Missouri-Columbia. In-between his
undergraduate and graduate studies, he worked for a year in corporate strategy at
Cerner Corporation. Following graduation, he has accepted a role at Ernst &
Young LLP as a consultant within the Banking & Capital Markets division.
Meghan Carnot is a senior at the Trulaske College of Business with an emphasis
in Finance and Real Estate, graduating May of 2016. Her previous real estate
experience includes working as a leasing intern at Allstate Insurance Corporation
in their real estate department for the past two summers and interning at The
Kroenke Group. Post-graduation, she has accepted a position at Cushman and
Wakefield in St. Louis as a Senior Transaction Manager.
Cole Cameron is a licensed attorney and Gordon E. Crosby Dual JD/MBA student
completing his MBA in May 2016. He obtained both a Bachelor of Journalism
with an emphasis in Strategic Communication and a Juris Doctor degree from the
University of Missouri-Columbia. Following graduation from the MBA program,
Cole hopes to find a full-time associate position involving business transactional
law.
Joshua Vaslie is a senior at the Trulaske College of Business studying Business
Administration and International Studies, part of a dual-degree program, with
emphases in Finance, Real Estate, and Spanish as a language. Joshua is a member
of Delta Sigma Pi Professional Business Fraternity, Rho Epsilon, and holds an
executive position as Treasurer for Financial Management Association Missouri
Chapter. He is currently an intern with the Missouri State Treasurer Clint Zweifel’s
office in the unclaimed properties division, and hopes to find a full-time position in
his hometown of Chicago upon graduation this May.
28
REFERENCES & OUTSIDE RESOURCES USED
Advisors
Tracy Larrison, PNC Real Estate
Bruce Kamp, The Private Bank
Other Individuals Consulted
Eric Weber, 33 Realty
Matt Glassman, Sprout Nola
Glen Fulton, Greater Englewood Development Corporation
Asiaha Butler, Resident Association of Greater Englewood
Perry Gunn, Teamwork Englewood
Chris Scheuermann, Banner Storage Group, LLC
Paul Dincin, Catapult Real Estate Solutions, LLC.
References
1 "Englewood." Encyclopedia of Chicago. Encyclopedia of Chicago, 2004. Web. 25 Mar. 2016. 2 Washburn, Gary. “Kennedy-King Site Gets the Green Light.” Chicago Tribune. December 8, 1999. Accessed March 18, 2016. 3 "Urban Agriculture" Streetwise Inc RSS. N.p., Aug. 2012. Web. 25 Mar. 2016. 4 Green Healthy Neighborhoods, Chicago Department of Planning & Development, 2014. Web. March 19, 2016. 5 Englewood: Making a Difference (2005), Teamwork Englewood, 2005. Web. March 19, 2016. 6 Chicago Neighborhoods 2015: Assets, Plans, and Trends - South Side, The Chicago Community Trust, 2015. Web. March 19, 2016. 7 Detweiler M, Sharma T, Detweiler J, Murphy P, Lane S, Carman J, et al. “What is the evidence to support the use of therapeutic gardens for the elderly?” Psychiatry Investigation. 2012. 8 “Sustainable Landscaping”, The Field Museum, 2016. Web. March 19, 2016. 9 Its Easy to Recycle. 2016. Web. March 19, 2016.
