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Renaissance Downtowns Depot Square Phase I Financial Proposal; Supplemental Submission

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AUGUST 15, 2014
Depot Square Phase I
Financial Proposal
Supplemental Submission
LEXINGTON PARTNERS LLC
Renaissance Downtowns at Bristol LLC2
TABLE OF CONTENTS
Introduction ………………………………………………………………………………………………. 3
Building A Wo...
3
Following the April 24th, submission of the Depot
Square Phase I Financial Proposal, the development
team of Renaissance...
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Renaissance Downtowns Depot Square Phase I Financial Proposal; Supplemental Submission

  1. 1. AUGUST 15, 2014 Depot Square Phase I Financial Proposal Supplemental Submission LEXINGTON PARTNERS LLC
  2. 2. Renaissance Downtowns at Bristol LLC2 TABLE OF CONTENTS Introduction ………………………………………………………………………………………………. 3 Building A Working Document Visualizing The Future ……………………………………………………………………………….. 5 Site Plan Comparison …………………………………………………………………………………. 6 Floor Plan Comparison ………………………………………………………………………………. 8 Unit Comparison ……………………………………………………………………………………….. 10 Finishes and Amenities ……………………………………………………………………………… 11 Façade Comparison …………………………………………………………………………………… 12 Land Take Down Comparison …………………………………………………………………….. 14 Housing Study Data …………………………………………………………………………………… 15 Existing Downtown Amenities …………………………………………………………………… 16 Potential Bonding Scenarios ………………………………………………………………………. 18 Building B Proposal Introduction ………………………………………………………………………………………………. 21 Phasing Analysis ………………………………………………………………………………………… 22 Pro Forma Estimates ………………………………………………………………………………….. 23 Case Studies Introduction ……………………………………………………………………………………………… 29 Roanoke, VA. ……………………………………………………………………………………………. 30 Bloomfield, NJ. ………………………………………………………………………………………….. 31 Dubuque, IA. ……………………………………………………………………………………………… 32 Glastonbury, CT. ………………………………………………………………………………………… 33 Conclusion …………………………………………………………………………………………………. 34
  3. 3. 3 Following the April 24th, submission of the Depot Square Phase I Financial Proposal, the development team of Renaissance Downtowns, D’Amato Realty and Lexington Partners (“RDL”) were asked to both collaborate with the BDDC and the City on the April submission details and prepare and submit a comparative proposal that would consider the development of Building B (the mixed-use building) as the initial building of the approved Phase I to be constructed. Therefore this package serves as a supplement to the April 24th submission . This supplemental submission contains three main sections that describe: 1) The work done by the RDL Team and the BDDC/City working subgroup over the past several months to both clarify the questions raised on the April submission and determine next steps for the effort; 2) a comparative proposal for starting Phase I with the construction of Building B and; 3) a series of additional case studies of downtown revitalization and the process by which those revitalizations took place. The challenges of the cost of construction and operation of the larger Building B, which includes a significant retail component, is also outlined in this submission. Current market conditions, the size of the development and the multiple construction typologies necessary to separate the retail and residential components make the financial realities Introduction of the Building B proposal even more of a challenge. That said there are also some creative options of mitigating the challenges associated with Building B. The RDL team has also included what can potentially be expected going forward in terms of next steps for the project. Through continued work with the subgroup of City parties, the RDL team will further develop a final financial plan for the first phase of Depot Square Development and the revitalization of Downtown Bristol. While the economic realities of the Bristol market present certain challenges, Renaissance Downtowns and its partners are committed to seeing the beginning of the Depot Square Revitalization becoming a reality.
  4. 4. Renaissance Downtowns at Bristol LLC4 Supplemental Submission Building A Working Document
  5. 5. 5 Over the past several months, RDL has been working with members of the BDDC sub-group and the City of Bristol to answer ques- tions and clarify information contained in its April 24th Depot Square Phase I Financial Proposal Submission. Since then, RDL and the various municipal entities have participated in series of collaborative strategy sessions during which time the intent was to review the financing options presented to date, and collectively agree upon a strategy moving forward that would provide the partnership the best approach towards realizing the revitalization of Downtown Bristol. Following these strategy sessions it was concluded that RDL would be given 90 days to provide the BDDC with an additional Financial Proposal Submission. The purpose of this additional submission was for RDL to apply the finance structure for Building A to Building B, so the partnership would have as much infor- mation as possible when rendering its decision on how best to move forward. The original 90 day time allotment was then reduced to 60 days following the City’s determination that it may want to put this matter of municipal financing out to a public referendum, thereby pushing up the submission date from September 15th to August 15th , 2014. The following submission provides answers to various questions to provide clarification of the following:  Site plan modifications  Impacts to building square footage including residential, commercial and common space  Further detail with respect to interior building finishes, unit sizes and amenity space  The revised architectural treatment of the building exterior  Subdivision and shared parking modifications  Municipal Bond Financing Depot Square today Depot Square Showing proposed Building A VISUALIZING THE FUTURE
  6. 6. Renaissance Downtowns at Bristol LLC6 At the time that the Unified Downtown Development Project (UDDP) was approved, Phase I contemplated including approximately:  Building A - 100 units & 944 sf of retail space  Building B - 140 units & 20,000 sf of retail space  Building C - 125 Key Hotel and;  All of the associated site improvements including the public piazza. Once the Phase I site plan began to take shape, the decision was made to move the hotel into a later phase due to both general market conditions as well as the development of the new Double Tree Hotel. The Phase I site plan was then fully engineered to include Buildings A, B and all of the associated site improvements, including the 110 foot x 145 foot public piazza. This plan also included a permanent parking field behind Building A which served both buildings with handicapped accessible parking and a portion of the new road that will run the length of the site. The remainder of the required parking was intended to be in a temporary field west of the new road. ORIGINAL APPROVED SITE PLAN RENDERING
  7. 7. 7 Significant Site Plan Changes Phase I is now proposed as two smaller phases with Phase IA to include; Building A - 101 units & 2,000 sf of retail space Adjusted Parking Plan allows for the entire Building A parking field to be built behind the building (previously 30 spaces now 155 spaces) leaving public parking along Main Street for current Main Street Retailers which is currently a concern The Pedestrian Mews is only partially developed until the construction of Building B An improved green space allows for public events and activities to begin to take shape with the construction of Building A The current Riverside Avenue curb cut can be used to service Building A. The Bus Shelter can remain in its current location until the development of Phase I B begins Additional on street parking and streetscapes are constructed as part of Phase I B Estimated Site Cost Proposal: $3.8 mm Estimated: $245,000 for Roads and Public Parking $550,000 related to potential for non-compactable soils Approximately $ 3mm in Site Costs for Building A foundation, utilities, and associated Landscaping & Parking Resident Parking Temporary Public Parking Temporary Public Parking (Future Building B Site) MODIFICATIONS TO THE SITE PLAN FOR BUILIDNG A OPTION The working subgroup asked the RDL Team to provide further explanations as to the site plan changes that occurred between the original approved Phase I site plan, and the proposal submitted in April of 2014. In addition, the group asked for a more detailed estimate of the site work contemplated for the Building A proposal. As was explained, the site work contemplated takes into account the challenges experienced by the new McDonalds during construction of their new facility. The demolition of the old downtown during urban renewal was made worse by the fact that the foundations, roads and infrastructure were largely buried by construction debris, adding to the potential cost of development today.
  8. 8. Renaissance Downtowns at Bristol LLC8 Proposed Build “A” Ground Floor Original Build “A” Ground Floor FLOOR PLAN COMPARISONS Proposed Build “A” Typical Upper Floor Original Build “A” Typical Upper Floor
  9. 9. 9  Commercial Space Increase to 2000+ sf  Increase of ground floor commercial of 40+%  Overall Increase in Common Space (55+%)  The new total of common space in the building to 10176 SF  Removal of the Pass through  Adds more leasable space to units  Feedback from equity investors indicates the desire for Building A’s parking field to be exclusive to tenants  Increases Safety and Security to Building A Residence  Decreases Cost  24 foot increase in overall length  Allows for a more standardized and efficient unit layouts while increasing the average unit size  Removal of front stoops and direct entrances  Increases in usable space inside individual units  Increases Safety and Security to Building A Residence  Decreases Cost  A more clearly defined elevator lobby area and corridor configuration  Allows for more efficient circulation throughout the building improving ease of use  Increases leasable space within the units  Less odd shaped units  Improves overall unit marketability  Allows for more common space to be available to residents  Storage units added in the basement  Saves more desirable ground floor space to be dedicated to living space within the units  Relocation of Commercial Space to the more prominent Main Street corner of the building  Increases visibility to street traffic  Improves the commercial space’s viability as a leasable space  Relocation of Egress Stairs  Allows for more corner units  Increases areas within units where window can exist making units more desirable  Elimination of East and West Building Entrances  Shifts the focus of the building approach to the main entrances and elevator lobby  Mailroom has been relocated  Concentration of Common spaces and service areas available to all tenants makes for a more marketable building  Removal areas open to ground floor on upper floors  Adds leasable space  Adds 1 unit per floor  Increase in Common Storage Space  Provides more room for public use on interior corners of corridors on the upper floors  Removal of front balconies facing the railroad tracks  Significant cost savings are realized after the determination was made that the balconies added little to the building from an aesthetic perspective  More efficient corridor configuration  Allows for more efficient circulation throughout the building improving ease of use  Increases leasable space within the units  Trash, mechanical, and service areas are less visible  Necessary building services are able to be provided in a way that does not have a significant affect on the building’s visual appeal The working subgroup asked the RDL Team to provide further explanations as to the typical floor plan changes to Building A that occurred between the original approved Phase I site plan and the proposal submitted in April of 2014. The graphics on the right, as well as the following bullets describe these changes:
  10. 10. Renaissance Downtowns at Bristol LLC10 Studio Apartment Typ. 505 Sqft 165 Sqft Increase 1 Bedroom Apartment Typ. 707 Sqft 172 Sqft Increase 2 Bedroom Apartment Typ. 986 Sqft 121 Sqft Increase Note: Average Bedroom Size approx. 120 SQFT UNIT COMPARISONS The working subgroup asked the RDL Team to provide further explanations to the typical unit floor plan changes that occurred between the original approved Phase I site plan and the proposal submitted in April of 2014. ORIGINAL UNIT FLOOR PLANS MODIFIED UNIT FLOOR PLANS
  11. 11. 11 Current Proposed Interior Finishes Include: Vinyl Plank Flooring (Faux Wood Flooring) in Kitchens and Living Rooms Tile Flooring in Bathrooms Marble Vanity in Bathroom Carpeted Bedrooms Granite Countertops Pendant Lighting in Kitchens Stainless Steel, Energy Star Appliances Oak Cabinetry In Unit Stacked Washers and Dryers Image Shown during Residential LOI Campaign Additional Building Amenities Include: Approximately 2,000 Sqft of Common Space Approximately 2,000 Sqft of Commercial Space Basement Storage Units Elevators PROPOSED FINISHES AND AMMENITIES The working subgroup asked the RDL Team to provide further explanations as to the consistency of the finishes between the original approved Phase I site plan and the proposal submitted in April of 2014. In addition, RDL was asked to further detail the anticipated building amenities associated with the latest Building A proposal.
  12. 12. Renaissance Downtowns at Bristol LLC12 Above is the Building A Façade from the Unified Downtown Development Project Special Permit Application. It is important to note that the purpose of the architectural renderings shown as part of that application was to conceptually illustrate the architectural character proposed for the revitalization of Depot Square. While this elevation closely resembled Building A, it was developed to show typical conditions that could be part of the design of a residential building on the site. Its generic rhythms, colors, modulations, roof lines, and key accents, such as corner conditions were intended to be further developed on a building by building basis. The Façade originally proposed consisted of several materials that could be used for this scale of residential construction. A more durable precast masonry material would be used at the ground level representing about 35% of the overall façade. The skin enclosing the upper floors would be divided between a brick material (roughly 32%) and a concrete siding or HardiPlank (approximately 26%) FAÇADE COMPARISON The working subgroup asked the RDL Team to provide further explanations as to the proposed facade changes that occurred between the original approved Phase I site plan and the proposal submitted in April of 2014. The following pages display and describe the façade amendments as currently proposed. The façade currently proposed is slightly larger due to the increase in overall building length . It is still the intention to concentrate durable materials in areas more likely to experience wear and tear. 39% of the façade is proposed to be constructed out of brick or other type of masonry material such as precast concrete panels . 61% of the fa- çade is proposed to be a HardiPlank finish, pre- dominantly on the upper floors. The HardPlank or concrete siding is roughly 50% of the cost of brick on a per square foot basis when one material is directly compared to the other. When viewed as a single item, the cost of concrete siding / trim / Azak, seems comparable to the cost of brick, but the limited nature of the trim work, as well as the increase in square footage for this wall covering system represents a cost savings over an all brick building.
  13. 13. 13 As currently proposed the Building A façade has a more traditional New England architectural look. The modulation of the units within the building, along with varying exterior finishes, develops a language that is more consistent with the organic nature of development seen in many downtowns. The introduction of flat roofs gives the structure a more commanding presence and establishes a geometric dialog between Building A and the already existing architectural fabric on Main Street. The main entrance of the building is much more clearly defined allowing end users to quickly understand the structure and its most efficient use. Architectural details, such as defined cornice lines and classical manipulations of the façade planes around windows and doors, give the building even more definition. Variations in materials and colors ensure that the building’s height and bulk are regulated to a scale that is appropriate for the surrounding area. The inclusion of peaks and sloped roofs add definition to key elements at the building’s corners and main entry point. Building A’s architectural language will better define the trend of development through out future phases by beginning the connection to the existing architecture of downtown while establishing a more modern twist.
  14. 14. Renaissance Downtowns at Bristol LLC14 While the adjustment to Phase I to include a sub Phase will require changes to the contemplated 1st property takedown, the RD team believes that with the subdivision process complete this will require a simple lot line adjustment. Below are the estimated changes to the initial land takedown. Original Phase I projected takedown under site plan = 4.23 Acres Proposed Phase IA Projected take down = 3.35 Acres The parties are currently contemplating financing options that may require the use of a ground lease which will ultimately have an impact on the land ownership and takedown but should have little to no impact on the area contemplated for Phase IA improvements. PROPOSED LAND PURCHASE COMPARISON The working subgroup asked the RDL Team to provide further explanations as to the proposed acreage takedown changes for the initial construction that occurred between the original approved Phase I site plan and the proposal submitted in April of 2014.
  15. 15. 15 Letter Of Interest Signee Data Zimmerman Volk Associates, the premier housing market analysts in the country provided data showing the projected price per square foot ranges that can be reasonably expected in the Bristol Market. The chart on the left is from the original housing study done in 2010 for the Concept Plan Submission. The Chart on the right is from the 2013 Study update which came after price and community surveys as well as the introduction of several new downtown businesses, including the Barley Vine and the reestablish- ment of a downtown grocer. 2010 2013 Description of steps utilized 197 Letter of Interest - Housing 400 Q1 2012 - LOI Campaign 2013 - Price Point Resurvey Q3 2013 - Phone Survey Q2 2014 Updated Call Survey Data conducted between 5/22/14 and 6/5/14 - Called 64 people spoke with 33 of the 64 and of those 33, 28 people still say they are still interested in downtown living regardless of the phasing change - Those who are no longer interested all cite a change in living situation as the reason. DATA FROM HOUSING STUDIES The working subgroup asked the RDL Team to provide further explanations as to why the RDL Team feels that Building A can achieve rents of $1.85/sf/month, a sample space of updated Letter of Interest survey data on folks that had originally expressed the desire to live in new apartments downtown and why the RDL Team feels there are significant amenities that exist for new downtown residents (see page 16-17).
  16. 16. Renaissance Downtowns at Bristol LLC16 The key to making any downtown successful involves balancing the proper mix of uses. Every healthy downtown needs the right mix of residential, retail, office, recreational and cultural uses in order for it to thrive and be the type of destination people want to frequent. Although the City of Bristol has a strong supply of cultural and recreational uses, it is undersupplied when it comes to the type of residential product needed for a successful downtown. This lack of residential contributes to Bristol’s over supply and vacancy of retail and commercial office space, thereby creating an imbalance that has led to an underutilized downtown environ- ment. RDL understands and acknowledges that residents of Bristol want to see a stronger downtown retail base consisting of spe- cialty shops and high quality restaurants. However, all of the market data indicates that this problem will not be solved by build- ing additional retail space given that there currently exists an abundance of vacant retail space in Downtown Bristol. Time and time again in markets all over the country it has been proven that “retail follows rooftops”. In order for Bristol to attract the types of retail businesses that it wants it must provide a new customer base to its existing downtown. By building new market rate resi- dential units in its downtown, Bristol will have the ability to attract the patrons it so desperately needs to fill its already vacant downtown retail space. Today, there currently exists a significant amount of vacant retail space within blocks of the Depot Square development site. Despite the need to bring new customers to the downtown to eventually fill this retail space (as well as build additional new retail space), Downtown Bristol currently contains a number of conven- ience related and other retail options that are well suited to serve the current population and initial additional residents, all within walking distance of the Depot Square development site. These existing businesses would now serve as the nearby shopping amenity for new resi- dents and would, in turn, reap the benefits of this new cus- tomer base. SUMMARY OF DOWNTOWN AMENITIES
  17. 17. 17 Of the 75 amenities listed above, 45 of them are retail establishments, and 25 are restaurant/food service businesses. Please review the Downtown Amenities Map for locations and distances from the proposed Phase I A. Current Downtown Businesses and Amenities 1. Public Green 2. Chambers of Commerce and United Way 3. T Salon 4. Barley Vine Gastropub * 5. Bristol Cleaners 6. Webster Bank 7. Liquor Outlet 8. People’s Marketplace * 9. United Bank 10. Medical Offices 11. Bristol Hospital Downtown Campus 12. Fiddlin’ Around Music Shop 13. Bristol Public Library 14. Mafali’s Plaza 15. Walgreens Pharmacy 16. ImagineNation Museum 17. Bristol Baptist Church 18. St. Anthony’s Church 19. Brackett Park 20. Tailor Shop 21. Ice Cream Churn 22. Subway 23. CVS Pharmacy 24. Sevi’s Pizza 25. Bristol City Hall 26. Bristol Police Department and Court- house 27. Post office 28. McDonalds Restaurant * 29. New England Carousel Museum 30. Bristol Elk’s Club 31. CT. Bicycle 32. Oak Hill School for the Blind 33. South Side Meat Market 34. ArtisTree Tea House * 35. West End Pizza 36. St. Anne’s Church 37. Immanuel Lutheran Church 38. Bristol Boys and Girls Club 39. Bristol Pizza 40. Fire Department 41. Dunkin Donuts 42. Bristol Historical Society 43. Firefly Hollow Brewing Company * 44. Razzleberries 45. Polonia Market 46. Milestone Restaurant 47. Parkside Cafe 48. LJ’s Pizza 49. First Congregational Church 50. Federal Hill Green 51. St. Joseph’s Church 52. Bristol Hospital Main Campus 53. American Legion 54. Monterey Restaurant 55. Riverside Restaurant 56. People’s Choice Pizza 57. Pequabuck River 58. Memorial Boulevard Park 59. Public Tennis Courts 60. 457 Mason Jar Cafe * 61. PC Techs 4 U 62. Rite Aid Pharmacy 63. Supernatural Market and Deli 64. Tunxis Community College Bristol Campus 65. Burger King 66. Santander Bank 67. St. Stanislaus Church 69. First Bristol Federal Credit Union 69. Bank of America 70. American Clock and Watch Museum 71. Rockwell Park 72. Skate Park 73. Sabino’s Restaurant 74. Muzzy Field 75. McCabe Waters Little League Center *Business developed as a result of Bristol Rising Initiatives
  18. 18. Renaissance Downtowns at Bristol LLC18 OUTLINE OF POTENTIAL BONDING SCENARIOS The working subgroup asked the RDL Team to provide further explanations as to the potential scenario should the City choose to utilize municipal financing through a General Obligation Bond (G.O. Bond) as relates to the proposal submitted in April of 2014. Aggregate Debt Service DATE 2014 Case 3: $6.0MM (Downtown) Total Issue PMT LESS ESTIMATED RDL TAXES 1 06/30/2016 210,000.00 88,800.00 2 06/30/2017 504,750.00 379,914.00 3 06/30/2018 494,250.00 365,668.92 4 06/30/2019 483,750.00 351,311.49 5 06/30/2020 473,250.00 336,838.33 6 06/30/2021 462,750.00 322,245.98 7 06/30/2022 452,250.00 307,530.86 8 06/30/2023 441,750.00 292,689.29 9 06/30/2024 431,250.00 277,717.47 10 06/30/2025 420,750.00 262,611.49 11 06/30/2026 410,250.00 247,367.33 12 06/30/2027 399,750.00 231,980.85 13 06/30/2028 389,250.00 216,447.78 14 06/30/2029 378,750.00 200,763.71 15 06/30/2030 368,250.00 184,924.13 16 06/30/2031 357,750.00 168,924.35 17 06/30/2032 347,250.00 152,759.58 18 06/30/2033 336,750.00 136,424.87 19 06/30/2034 326,250.00 119,915.11 20 06/30/2035 315,750.00 103,225.07 21 06/30/2036 305,250.00 86,349.32 Total $8,310,000.00 $4,834,409.93 AVG YRLY PMT $230,210.00 AVG MONTHLY PMT $19,184.17 In working with the RDL Team’s Bond Council, the City Assessor and the City Comptroller analysis was conducted to determine the estimated cost of a $6 million G.O. Bond issuance should the determination be made that municipal financing will be pursued for the Building A proposal. As described in the chart to the left, a $6 million G.O. Bond issuance would cost approximately $8.3 million over the life of the 20 year bond, of which close to half would be covered by the estimated taxes paid by the building. This balance equates to approximately $230,000/year or $19,000/month. If the $6 million in municipal bonding were utilized as gap financing, the remaining debt service on the bond after the buildings contribution could amount to between $2 and $3 per year to the average taxpayer* for the life of the bond, and, for a homeowner in Bristol, the additional cost could be between $6 and $8 per year for the life of the bond. IN ADDITION THE CONSTRUCTION OF THE INITIAL BUILDING A WILL SPARK SUBSEQUENT DEVELOPMENT THAT WITH PROVEN RENTS WILL LIKELY REQUIRE SIGNIFICANTLY LESS ASSISTANCE TO NO ASSISTANCE AT ALL AND THUS ADD SIGNIFICANT ADDITIONAL TAXES TO FAR OUTWEIGH THE INVESTMENT IN BUILDING A. Note*: Average tax payer includes all tax accounts of Personal Property, Motor Vehicle and Real Estate. Real Estate accounts are broken down in to Residential (single family) and Commercial Real Estate accounts WHEN YOU COMPARE THIS TO A SCENARIO THAT WOULD SUGGEST NO DEVELOPMENT IN THE DOWNTOWN OR A DEVELOPMENT THAT IS NOT ROUTED IN MARKET REALITIES IT BECOMES MORE EVIDENT THAT THE FUTURE SUCCESS OF DOWNTOWN BRISTOL LIES IN TAKING THAT INITIAL CATALYTIC STEP THAT WILL STIMULATE SUBSEQUENT MIXED-USE DEVELOPMENT FOR THE OVERALL DOWNTOWN. THE MUNICIPALITIES IN CONNECTICUT THAT HAVE DETERMINED TO MOVE FORWARD WITH ECONOMIC DEVELOPMENT INITIATIVES THAT ADDRESS MARKET REALITIES ARE EXAMPLES THAT SHOULD BE LOOKED TO.
  19. 19. 19 As stated in our previous submission the following represent just two examples municipalities that have taken the necessary measures to stimulate economic development in their communities. Storrs Center Mamsfield, CT HOME OF UCONN* Population: 15,344(CDP) Size: 20 acre mixed use development  Total Project Cost: Penciled at $225 million • Public Funds: * $24+ million in public funding sources already com- mitted for planning Storrs Road, the 660 space parking garage, as well as project infrastructure Private: $200 MM Public: $25 MM Blue Back Square West Hartford, CT Population: 63,268 Size: 20.7 acre mixed use development Project Cost: Penciled at $159 million Public Funds: * $48.8 million non-obligation bonds (straight bonds) contributed by the City of West Hartford to underwrite key elements of project including two parking structures that the City would own and operate as well as improvements like construction of a park, streetscaping, and various building improvements. Private: $110.2 MM Public: $48.8 MM
  20. 20. Renaissance Downtowns at Bristol LLC20 Supplemental Submission Building B Proposal
  21. 21. 21 INTRODUCTION As described earlier, following the submission by the RDL team of the Depot Square Phase I Financial Pro- posal in April, City representatives and the RDL team agreed that the best next step was a collaborative re- view of the current proposal in order to make a determination on how the partnership should move forward. The partnership ultimately developed a schedule that outlined a series of steps intended to implement the De- pot Square Development and bring about the revitalization of Downtown Bristol. These steps included:  Clarification of various components contained in the Building A proposal (outlined earlier)  Submission of a Building B supplemental proposal that analyzes the project utilizing a similar financ- ing structure to that of Building A  Determination by the City parties as to whether a referendum would be utilized as an element in deter- mining whether or not to move ahead with the use of municipal financing  Dissemination of all information to the public, including but not limited to explanations and input ses- sions on the Building A proposal working document as well as the Building B proposal  Determination by the Partnership as to how best to proceed with the development The following pages outline the current RDL proposal for financing and developing Building B as if it were to be the initial building built for the approved Phase I of the Depot Square development. As pro- posed, Building B currently contains 138 residential units, 23,000 square feet of retail space and a Public Piazza.
  22. 22. Renaissance Downtowns at Bristol LLC22 BUILDING B PHASING ANALYSIS Phase IB is proposed for +/- 138 Residential Units & +/- 20,000 SF of Retail Space, Ample Parking, and associated site improvements Boundary of Takedown Area Boundary of Shared Parking Area The RDL team was asked to look into the specifics of the mixed-use building fronting both Main Street and Riverside Avenue, conventionally known as Building B. The site plan below shows Building B and the associated site improvements that are necessary for service of the building. The new parking design shows a resident parking field to the north of the buildings, with 144 parking spaces, at least one spot per unit in this designated field. The pad site where the future hotel is proposed has been redesigned to include reverse angle parking to serve Building B’s retail base . Due to the size of the building’s retail component, as well as the increased number of residential units, additional parking will be needed to satisfy the total parking requirements. Those additional spaces will be sited in a temporary surface lot to the west of the new road. The site plan to the right shows how Building A can be integrated with the site once Building B is constructed. When additional site elements like the pedestrian mews are realized, the resident parking field is shifted further to the north, and additional spaces are designated in the western temporary field. The varying construction typologies needed for commercial retail space below residential, additional residential units, and more comprehensive site amenities all contribute to the increase in costs for this option, thus making it the more risky option currently being discussed at this point.
  23. 23. 23 Rendered Building B Main Street Elevation Completed Phase I showing Buildings A and B
  24. 24. Renaissance Downtowns at Bristol LLC24 PRO FORMA ESTIMATES The following tables illustrate the pro-forma re- sults of the RDL Team’s current thoughts on un- derwriting the development and construction of Building B. The current Building B proposal con- tains 138 residential units, 23,000 sf of retail, a Public Piazza and the associated access road(s) and parking facilities. With respect to the costs and revenues associated with this type of development, the RDL Team has extensive experience in the local markets; with team members currently constructing similar pro- jects in the Central Connecticut region. That said, the accelerated nature of having only 45-60 days to analyze this option will require that further de- tailed analysis be done in the future to provided a more concrete estimate. The total project costs for Building B are current- ly estimated at $26.5 Million. A few reasons be- hind the increased building construction costs when compared to Building A, have to do with the fact that Building B contemplates building the residential component over the significant amount of retail space included in the plan. These increases are due in part to fire safety separation requirements, construction complexities and changes in materials. The total estimated hard construction costs are just under $23 million, with total soft costs of approximately $2.4 mil- lion. For a project of this nature, soft costs typi- cally run at approximately 10%-15% of hard costs. Construction financing costs are estimated to be just over $700,000 over the life of the build- ing hold period. The estimated operating expens- es are also based upon past experience with oper- ation and maintenance of existing similar product in the region. Regarding estimated revenues, the RDL Team is utilizing a $1.85 per square foot per month rent estimate for the residential units and a $10 per square foot per year rent estimate for the retail com- ponent (assuming a triple net lease arrangement). Cur- rent rents in this area of downtown generally range be- tween $8 and $14 dollars per square foot. While newer retail could potentially attract rents on the higher end of this range, the current vacancy in the area poses a chal- lenge to adding a significant amount of new retail space to the market and, therefore, is the reason behind RDL’s approach on the retail income side. As described earlier the below chart outlines the esti- mated payments for a $12 million G.O. Bond issuance. Aggregate Debt Service DATE 2014 Case 3: $12.0MM (Downtown) Total Issue PMT LESS ESTIMATED RDL TAXES 1 06/30/2016 420,000.00 298,800.00 2 06/30/2017 1,009,500.00 884,664.00 3 06/30/2018 988,500.00 859,918.92 4 06/30/2019 967,500.00 835,061.49 5 06/30/2020 946,500.00 810,088.33 6 06/30/2021 925,500.00 784,995.98 7 06/30/2022 904,500.00 759,780.86 8 06/30/2023 883,500.00 734,439.29 9 06/30/2024 862,500.00 708,967.47 10 06/30/2025 841,500.00 683,361.49 11 06/30/2026 820,500.00 657,617.33 12 06/30/2027 799,500.00 631,730.85 13 06/30/2028 778,500.00 605,697.78 14 06/30/2029 757,500.00 579,513.71 15 06/30/2030 736,500.00 553,174.13 16 06/30/2031 715,500.00 526,674.35 17 06/30/2032 694,500.00 500,009.58 18 06/30/2033 673,500.00 473,174.87 19 06/30/2034 652,500.00 446,165.11 20 06/30/2035 631,500.00 418,975.07 21 06/30/2036 610,500.00 391,599.32 Total $16,620,000.00 $13,144,409.93 AVG YRLY PMT $625,924.28 AVG MONTHLY PMT $52,160.36
  25. 25. 25 Phase IB Proforma Model
  26. 26. Renaissance Downtowns at Bristol LLC26
  27. 27. 27 A mixed-use development of this type and scale in a market like Bristol would typically require that the cash on cash investment returns on the equity invested in the project be in the range of 7%-10%. While the RDL Building A proposal estimated lower returns in the 3%- 5% range, there are several reasons why lower returns projected for Building A can possibly still attract equity and debt financing. With respect to private sector invest- ment appeal, a project that contains approximately 100 residential units and 2,200 square feet of retail space falls right within an investor ‘sweet spot’ in terms of project size. This ideal project size is attractive to private investors, therefore a portion of the development risk is mitigated by way of the allure of the investment profile. These factors ultimately allow for investment communi- ty to accept lower returns. On the contrary, with its 37 additional units and over 20,000 square feet of additional retail space, the Build- ing B development is approximately 40% larger on the residential end and over 1000% larger on the retail end. This additional building program equates to additional initial risk to potential investors. The investment com- munity needs to mitigate this additional risk and does so by requiring higher more standardized minimum returns (7%-10%). The rent values currently being achieved for the retail space in downtown today, coupled with exist- ing vacancy cause the need for the projected residential rents of $1.85 per square foot per month to subsidize the proportionally lower retail rents. This will likely im- prove over time as development occurs, but initially will require a cross subsidy from the residential component. Once they are there, the new apartment residents will help support the existing and, ultimately, the new retail below them. In order to provide the returns necessary for both the private sector equity investors (7%-10%) and private sector debt (4%-6%) gap financing is a necessity. For the Building B proposal, the sources of funds that will make up the total $26.5 million in costs are estimated to be $2 million dollars in new investor equity, $12.5 million in new investor debt and $12 million in gap financing. It is envisioned that this gap financing could potentially be provided through municipal financing options such as bonding. If $12 million in municipal bonding were uti- lized as gap financing, the developer would pay a por- tion of the debt service over the life of the bond (20 year bond). The remaining debt service on the bond could amount to between $6 and $8 per year to the average taxpayer for the life of the bond, and, for a homeowner in Bristol, the additional cost could be between $18 and $22 per year for the life of the bond. In summary, there are several challenges to successfully financing Building B as the initial building to be devel- oped. These challenges include but are not limited to:  The ability to provide investors a level of com- fort that adding 23,000 sf of retail to a market that contains significant retail vacancy within a 4 block radius of the Depot Square site is the ap- propriate first step  The ability to provide investors a level of com- fort that initially constructing an additional 40% more units in the first phase of the development is the appropriate first step and best way to kick- start the project  The ability to provide investors a level of com- fort that starting with a construction typology that is more expensive in nature is the appropri- ate first step Additional methods discussed by the working group for mitigating the size of any bond issuance included:  Potential retail rent subsides or backstopping of increased retail rents at a higher the $10 amount  Municipal investment as equity ownership of the project as opposed to debt  Mitigation of land valuation  Reduction in permitting costs Considering the truncated timeframe of these working sessions further exploration of these options will require additional time and collaboration.
  28. 28. Renaissance Downtowns at Bristol LLC28 Supplemental Submission Case Studies
  29. 29. 29 INTRODUCTION Like most downtowns across the country, the City of Bristol did not just wake up one morning and find itself confronted with the problems it current- ly faces today. There are no quick fixes, especially when dealing with issues that have come to be over the course of the last 50 years. To date, RDL has demonstrated a strong willingness to explore any and all options that would enable the imple- mentation of the vision that has been co-created over the past several years through its partnership with the City of Bristol and the Bristol communi- ty. Although there are several options still availa- ble that could enable this vision to come to frui- tion, they are not without their challenges. RDL is committed to working in partnership with the vari- ous stakeholders to come up the right solution for the City of Bristol. The Depot Square Phase I Financial Proposal Submission in April provided several exam- ples of successful completed and ongoing re- vitalization projects throughout Connecticut. The common theme connecting each of these projects was that they all needed assistance in order to get going. RDL recognizes that not all projects need assistance in order to be success- ful, however in certain instances the economic realities surrounding a development oppor- tunity warrant an initial capital infusion that gives a revitalization effort the push it needs to get off the ground. In recent conversations with the BDDC working sub-group, RDL was asked to provide additional case studies that involve area revitalization by way of the intro- duction of new residents. The following are multiple case study examples of revitalization efforts that were sparked by the addition of new residents to a suffering downtown area.
  30. 30. Renaissance Downtowns at Bristol LLC30 CASE STUDIES Roanoke Virginia — The revitalization of downtown Roanoke Virginia began with 25 residential units resulting in further redevelopment that has transformed the area around Kirk Avenue into a destination neighborhood. Developer Ed Walker’s efforts led the way to redevelopment through the acquisition of 9 storefronts which when renovated were able to attract new life to the neighborhood. With other developers following suit, downtown Roanoke now boasts over 1,200 residents when not long ago only 10 residents lived in the area. A $20 million dollar renovation of prominent historic hotel which now houses over 130 apartments along with commercial space continued the redevelopment trends. Since the commencement of construction on new and renovated housing stock in 2009 over 25 new restaurants have opened in a 10 block area in downtown. The State of Virginia has been very aggressive with tax credit programs that allow for large scale redevelopments to happen. In addition to the Kirk Avenue developments, historic renovation tax credit programs have opened the door to development opportunities in Roanoke’s waterfront neighborhood. Old mill buildings and department stores have been converted into residential units, some of which command rents at the top of market rates. Restaurants and retail establishments continue to follow in the path of residential developments. While the overall number of residential units was fairly small in the early stages of development, it led the way Roanoke Bristol Area Median Income $38,265 $58,814 in bringing new life into downtown Roanoke. With the influx on new residents the culture in and around the downtown area has shifted to celebrate the new found vibrancy. For Roanoke this is a huge shift in psyche with residents now believing in downtown being a good place to live and do business. Pride in a place is a crucial element in fostering future development, and it is only possible through the experiences and successes by the pioneers in the early phases.
  31. 31. 31 Bloomfield, New Jersey — Redevelopment in Bloomfield, New Jersey was sparked by a four story residential project aimed to be student housing. Since the beginning of this project, seven other projects have gotten underway. An 82 unit senior housing complex is now under construction in large part due to a $15 million dollar grant from the New Jersey Housing and Mortgage Finance Agency, further building the mass of residents in the downtown area. Redevelopment has focused on blighted and economically challenged areas and has proven to be a much needed boost in the municipal tax base. A former abandoned factory building has undergone a $60 million renovation transforming the old industrial space into 332 residential units each bringing in between $1,300 and $2,200 in monthly rents. Though much of this project was developed through private investment, significant state assistance for the project came in the form of historic tax credits and grants from the Community Development Block Grant programs,. In addition to projects already underway, a proposal including 224 more residential units and 60,000 square feet of new retail space is set to begin on a 3 acre parcel, adjacent to a recently constructed structured parking facility all sparked by the original residential additions to downtown. Although new residential units are the clear catalyst in the redevelopment, the restoration of the City's train station, reinforcing the transit connection to Manhattan Bloomfield Bristol Area Median Income $62,831 $58,814 has City leaders most proud. The transit connection not only helps build demand for new residential product, but also helps to foster local job creation as retail and personal service industries continue to grow in order to better serve the new residents.
  32. 32. Renaissance Downtowns at Bristol LLC32 CASE STUDIES Dubuque Iowa — Through the revitalization of its historic Millwork District Dubuque Iowa has attracted over 1,000 new residents, along with several new businesses into the downtown area. In the mid to late 1980’s, Dubuque saw rapid decline due the collapse of the agricultural economy along with associated manufacturing markets directly tied to agriculture. Although this phenomenon has caused the people of Dubuque to learn the hard way not to depend on a single employer, the redevelopment of a downtown department store for new tenant, IBM was a key element in the city center’s turnaround. 250 new residential units then became the spark needed to foster large scale revitalization in the Millwork District as well as the surrounding neighborhoods, most notably Washington Neighborhood, one of Dubuque’s most economically distressed areas. While significant private capital was utilized to rehab old brick structures into new residential units, the city of Dubuque took an active role as a partner in the revitalization by pursuing federal grant money to improve the city’s downtown infrastructure, replacing century old utilities, to allow for new development. In the 17 block area which makes up the Millwork District new residential units, office space, retail establishments, and civic amenities have become common sights. The influx of new development and new service based markets has also reversed the impacts of the economic downturn of the 80’s. Dubuque Bristol Area Median Income $44,309 $58,814 Dubuque was given the distinction of being one of the nation’s fastest growing cities boasting over 4,600 new jobs in the downtown area. Economic development has led to job creation and it was the first major residential development that was the initial domino in the rebirth of Dubuque Iowa.
  33. 33. 33 Glastonbury Connecticut — Redevelopment in Glastonbury has been sparked by two similar residential developments. The Addison Mill Apartments, which were completed in 2009, offered new housing options in a community where the average age of a dwelling unit was between 40 and 50 years old. The new residential product reached a 95% occupancy rate in just seven months. Developer Martin Kenny and his Hartford Based Lexington Partners an RDL Team member, invested over $12 million dollars in the Addison Mill project, citing changing demographics and the desire for new rental apartments with amenities that the aging housing stock could not provide. Today all 55 units are full. This success has proved to be the catalyst for the Flannigan’s Landing project which is now underway across town. This $35 million dollar development will boast over 230 residential units once completed. The mix of studio, one bedroom, and two bedroom apartments will command rents ranging from $900 to $2,300 per month in a market that is still underserved in terms of new rental product. The first 30 units are slated to be housed in an exiting industrial building on the 33 acre site. Once proven to be successful, an additional five buildings of new construction are proposed in phases to complete the development. Though the former industrial site posed significant challenges in terms of environmental cleanup, the demand for new housing stock and the past success at Glastonbury Bristol Area Median Income $80,660 $58,814 Addison’s Mill propelled development forward. New housing stock has attracted younger working professionals to this suburb of Hartford generating a buzz within the local economy, driving new businesses to the area to meet market demand resulting from the influx of residents, increasing the tax base and opening doors to future development.
  34. 34. Renaissance Downtowns at Bristol LLC34 CONCLUSION As with most large scale revitalization projects, the initial stages often face challenges, in particular challenges regarding project financing. Despite the challenges encountered to date, it is important to consider the success- es of not only the partnership, but the Bristol community as well. The Bristol Rising crowd and the various achievements it has garnered are a direct result of all parties working together towards solutions for the better- ment of Bristol. The RDL Team has invested significant financial and human capital over the past 4+ years in a direct effort to not only improve downtown along the way but to realize the vision that has been co-created for the future suc- cess of downtown Bristol. Communities all over the country have faced these challenges and worked together to provide the resources necessary to jumpstart the revitalization process and the majority of those communities did not have near the history of collaboration and success that Bristol and this partnership have had in recent years. The City of Bristol is now at a crossroad. It can elect to turn its back on all the hard work and all the accom- plishments it has made through its partnership with RDL, or it can choose to forge ahead and continue to col- laborate towards a solution that is truly in the best interest of the Bristol community. The City has the chance to seize an opportunity to invest in itself, its future and to bring about change for the better. The RDL Team is as committed as ever to figure out a way to continue to work hand in hand with the City and community to bring this project to fruition. To give up should not be an option. To start over should not be an option. To maintain the status quo should not be an option. Without vision nothing meaningful happens.

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