HomeMy WebLinkAbout2015-06-08 Public hearing9
Publish 6/1
NOTICE OF PUBLIC HEARING OF THE IOWA CITY CITY COUNCIL ON THE MATTER
OF THE PROPOSAL TO ENTER INTO A DEVELOPMENT AGREEMENT, INCLUDING
THE CONVEYANCE OF LAND, WITH THE CHAUNCEY, L.L.C., AND THE HEARING
THEREON
Public notice is hereby given that the Iowa City City Council will hold a public hearing
on June 8, 2015, at 7:00 p.m. in Emma Harvat Hall, at City Hall, 410 E. Washington Street, Iowa
City, Iowa, or, if said meeting is cancelled, at the next meeting of the City Council thereafter as
posted by the City Clerk, at which meeting the Council proposes to take action on the proposal to
enter into a Development Agreement (the "Agreement") with The Chauncey, L.L.C. (the
"Developer").
The Agreement would obligate the Developer to invest $49,000,000 in development costs
toward the construction of certain Minimum Improvements as defined in the Agreement on
certain real property located within the City -University Urban Renewal Area as defined and
legally described in the Development Agreement. Said land is currently owned by the City of
Iowa City and would be conveyed to The Chauncey, L.L.C. pursuant to said Development
Agreement. The project will consist of the construction of a 15 -story mixed use building with
Class A office space, a hotel, a bowling alley, two movie theatres, cafe, gallery space, residential
condominiums, and upgrades to the Chauncey Swan Park, together with related site
improvements, all designed and constructed to at least LEED Silver standards, as detailed in the
proposed Development Agreement. In exchange for construction of the Minimum Improvements
and the creation of a $30,128,234 minimum assessment value on the project once complete, the
City proposes to convey land to the Developer for the appraised value, and to make certain
contributions to the project, including the acquisition of five one -bedroom condominium units to
be owned and maintained by the City for affordable housing, and a $14,187,250 economic
development construction grant.
A copy of the Agreement is on file for public inspection during regular business hours in
the office of the City Clerk, City Hall, City of Iowa City, Iowa.
At the above meeting the Council shall receive oral or written comments from any
resident or property owner of said City, to the proposal to enter into the Agreement with the
Developer. After all comments have been received and considered, the Council will at this
meeting or at any adjournment thereof, take additional action on the proposal or will abandon the
proposal to authorize said Agreement.
This notice is given by order of the City Council of the City of Iowa City, Iowa, as
provided by Section 364.6 of the City Code of Iowa.
Dated this 1 st day of June, 2015.
MARIAN K. KARR, CITY CLERK
ITEM 2a
Presentation #1
By: Economic Development Coordinator
The Chauncey
The Site
The Chauncey
Projection
g Room
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�1 Person
Theater
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North - South Section
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150 Person Theater Souflobby I
:
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Parking Level
The Chauncey
JIM ..
OWN ��■
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Li
What is TIF?
• The only source of funds for cities to use for
Economic Development incentives.
• A method of reallocating property taxes
resulting from an increase in taxable valuation.
NEW DOLLARS that would not be available but
for the project that generates them.
• The increment is the change between the
former value and the new value.
Before Owner is the City:
$0 tax generated
..................................
$0 taxable value
z
LU
LL
W
U
z
Owner ALWAYS Pays
After 100% of the Property taxes:
+/- $1,170,000 per year
Protected
Debt Levy
+I- $250,000
....................
$30,000,000 taxable value
$1,400,000
Ah
The Chauncey TIF
$1,200,000
owner
pays 100% of the property
taxes
due:
upwards
of
$1.17 M per
I
$1,000,000
-
; All tax
i revenues
I flow to City,
a $800,000
County
'School &
z
-----_ _ _
;District.
TIF levy comes back to City
i Begins at
$600,000
Wto
repay TIF Revenue Bond.
$1.17 M per
a
y1a1
$400,000
T1T-
$200,000 1L1LJ1J1_d_t3_tLiJ1J1_1_ll_1L1LJ1Ji_�_N_1t1tJ#11 11
current propertytax protected debt levy: Approximately $250,000 year two i
generation =$0 New taxes generated by project flow to City, County & Schools
$0JM I I I I 1 11 -TI-Tr7r7T77-f-rl-Tr7T7T7T-7-Tl-Tr7r�-Tl-Tr1�
.n to r' 00rn0.�Nmv toncorno.-tNmaLntor-�000)0mvton00
0000000000000000000000000 �8 8 8 8g
N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N
Fiscal Year
RFP: stated goals for downtown
Redevelop blighted property
Increase taxable valuation
Encourage hotels, workforce housing,
downtown groceries, arts and entertainment
venues
Encourage destination points to draw people
downtown
Provide safe and inviting downtown for
residents and visitors
Encourage variety of housing opportunities
RFP: stated goals for project
Urban building with commercial uses on first floor;
commercial, office, hotel, residential or a
combination
Class A office space on at least one floor taking
advantage of highly visible prominent location;
quality architecture encouraged
Other unique uses
If residential, a mix of efficiencies, one- and two -
bedrooms
If residential, housing for at least a portion of the
project designated for households between 60% -
150% of area median income
Economic Development Policies
High quality architectural and site design
Energy efficiency and sustainability above
building code
Affordable housing
High quality job creation
Developer equity is equal to or greater than
financing request
Redevelopment of underutilized or blighted
properties
Meet public purposes outlined in comprehensive
plans, urban renewal plans and/or City Council
adopted strategic plans
City Council Strategic Priorities
Overarching principals guiding all work:
Inclusivity and Sustainability
Healthy neighborhoods
A strong urban core
Strategic economic development activities
A solid financial foundation
Returns on Investment
Short term
Long term
New property taxes of more than $1.1 million per year Ensuring development of a high-quality, architecturally
begin to flow; designed building resulting in maximum property tax
About $250,000 of the new property taxes immediately flow
to City, County and School District;
5 downtown apartments added to the inventory of low-
income housing with no expiration date
New downtown living units attractive to long-term residents
further diversify the downtown resident population and add
to downtown market demand for goods and services;
Two more non-bar/non-restaurant businesses are added to
downtown entertainment options drawing more residents
and visitors who also add to the downtown marketplace;
At least 35 new hotel rooms attract out-of-town visitors and
their spending power;
New hotel -motel taxes estimated at $99,000 annually;
Office space to attract employers of high quality jobs — one
already committed;
Approximately $60,000 per year generated for the Iowa
City Downtown District for use in marketing, events,
cleaning, and safety programs; and
An updated and reconstructed Chauncey Swan Park.
generation;
Ensuring development of a project offering enhanced
public benefit to the community;
The Chauncey will generate annual property taxes in
excess of $1.1 million per year after the TIF debt is
retired;
More employment opportunities downtown, adding to
employment diversity and options
Supports sustainable development that requires no
additional infrastructure; lowers the cost of public
service such as transit, sidewalks, water and sewer,
school and public safety; makes better use of existing
infrastructure; takes pressure off of developing at the
community's edge and redeveloping historic
neighborhoods; reduces time, money, energy and air
pollution associated with commuting; strengthens the
real estate market; and strengthens the downtown
economy, which is inherently more sustainable..
The Chauncey
94LIP,
War*
41
ITEM 2a
Presentation #2
By: Director, NDS
Chauncey Affordable Housing
Success in providing
affordable housing is the sum
of small efforts, repeated
project by project
Units
• Units: 5 one -bedroom
• Location: Scattered throughout building
• Design: constructed to same quality as market rate
one -bedroom units (667 square feet +/-)
• Accessible building and units
• Energy efficient design
• Source of funds: Affordable housing set aside funds
(no local dollars, 1995 Broadway public housing sale)
• Purchase price: $200,000 per unit (aligned with other
affordable housing programs, e.g. $218,000 HOME
program, $200,000 workforce housing program)
Ownership
• Iowa City Housing Authority (ICHA)
Affordable housing in Johnson County
since 1969
• Longterm commitment to affordable
housing
• Units managed/leased compliant with
housing choice voucher program/public
housing
• Tenants selected from ICHA waiting list
Affordability
• Income eligibility: Not "work force" housing -
tenants at or below 60% AMI (area median
income, $34,620 household of 1)
• Rent: not to exceed HUD standard FMR (fair
market rent) of $630 month
• HOA paid by owner (ICHA)
• Section 8 voucher eligible (tenant's portion of
rent may not exceed 30% of income)
• ICHA has a demand for one -bedroom units from
elderly/disabled clients
• Long term
Location
• Downtown: walkable to services, Senior
Center, library, ICHA office, community
activities (e.g., Farmer's Market, Jazz
Festival), entertainment, multiple transit
routes, etc.
• Included within Chauncey building
community with access to all amenities
ITEM 2a
Presentation #3
By: Tom Jackson, National Development Council
NATIONAL
DEVELOPMENT
COUNCIL
Gap Financing Analysis:
Chauncey Mixed -Use Development
Partners in
COM
DEVELOPSINCE
M U N I T Y
MENTI 969
NATIONAL
DEVELOPMENT
COUNCIL Gap Financing Analysis:
Chauncey Mixed -Use Development
• How does NDC define the Financing Gap?
Total Project Costs (Reasonable)
- Permanent Debt — sized to market terms
- Net Residential/Commercial Condo Sales
- Equity - sized to a market return
= Financing Gap
� Partners in
Ti
COMMUNITY
r; L. �� s: DEVELOPMENT 969
NATIONAL
DEVELOPMENT
COUNCIL Gap Financing Analysis:
Chauncey Mixed -Use Development
• How does NDC define the Financing Gap for
the proposed Chauncey project?
Total Project Costs
- Permanent Debt
- Condo Sales
- Equity
= Financing Gap
$49,142,748
$19,733,784
$ 11000,000
$1412211714
$14,187,250
Partners in
COMMUNITY
r2. L" r�C�� �, s. DEVELOPMENT 969
.:. .
NATIONAL
DEVELOPMENT
COUNCIL
Gap Financing Analysis:
Chauncey Mixed -Use Development
• How is the amount of Permanent Debt
determined?
• Lender Underwriting Criteria applied to Projected Net
Operating Income
• Loan to Value Ratio
• Debt Coverage Ratio
• Capitalization Rate
• Interest Rate
• Term (Maturity and Amortization)
Partners in
COMMUNITY
r--,. L" r�C�� s. DEVELOPMENT 969
NATIONAL
DEVELOPMENT
COUNCIL
Gap Financing Analysis:
Chauncey Mixed -Use Development
• How is the amount of Equity determined?
• Internal Rate of Return
• Dollar received today is worth more to most
of us than a dollar received a year from now
• How much more is influenced by perceived
risks, opportunity costs and inflation
• Projected after-tax cash flows over life of project
Partners in
Ti COMMUNITY
r�; DEVELOPMENT�969
NATIONAL
DEVELOPMENT
COUNCIL:
Gap Financing Analysis:
Other Factors Influencing Gap
• Uses —bowling alley and film theaters —that
command rents that are well below those for
other commercial uses (e.g., retail, office,
etc.) and require atypical build out drive
additional gap.
• Lack of developer fee (typically 8-15%)
reduces gap.
Partners in
Ti
COMMUNITY
r2. L" r�C�� �, s. DEVELOPMENT 969
s., .:. .
NATIONAL
DEVELOPMENT
COUNCIL' Gap Financing Analysis.
Chauncey Mixed -Use Development
Total Project Costs
Permanent Financing Sources
$49,142,748
Projected Bank Loan $19,733,784 40.16%
Affordable Unit Presales $ 11000,000 2.03%
City Gap Funding — TIF $12,097,250 24.62%
City Gap Funding — Non -TIF $ 21090,000 4.25%
Required from Developer $14,221,714 28.94%
Total Permanent Sources $49,142,748 100.00%
Partners in
' COMMUNITY
L_7v�Alr
SINCE
!1 , DEVELOPMENT1969
NATIONAL
DEVELOPMENT
COUNCIL:
For More Information
Tom Jackson, Director
tiacl<son@nationaldevelopmentcouncil.or
New York Office
708 Third Avenue, Suite 710
New York, NY 10017
212-682-1106 Office
Training Division
927 Dudley Road
Edgewood, KY 41017
859-578-4850 Office
www.nationaldevelopmentcouncil.org
Partners in
COMMUNITY
DEVELOPMENT1969
ITEM 2a
Presentation #4
By: Finance Director
Chauncey Building
Tax Increment Revenue Bonds
Public Hearing
June 8, 2015
Dennis Bockenstedt,
Finance Director
Economic Development Grant
Economic Development grant for
Chauncey Building- $14,187,250
Proposed Funding Sources:
TIF revenue bonds - $12,097,250
Sale of property - $1,870,000
Geothermal easements - $220,000
Dennis Bockenstedt,
Finance Director
Proposed Debt Schedule
June 1, 2016 - Issue construction note
January 1, 2018 (FY2020) - Partial tax
assessment
June 1, 2020 - Refinance construction note with
TIF revenue bonds
January 1, 2019 (FY2021) - Full tax assessment
June 1, 2021 - First principal payment
Dennis Bockenstedt,
Finance Director
l�
Construction Note
Issue Date - June 1, 2016
Four year note maturing June 1, 2020
Capitalize interest during construction
Partial tax assessment (TIF) to pay
remaining note interest
Refinance Date - June 1, 2020
Reason - Long construction period;
Short term interest rate savings
Dennis Bockenstedt,
Finance Director
TIF Revenue Bonds
Issue Date - June 1, 2020
�j 25 year bonds maturing June 1, 2045
Includes grant amount plus capitalized
interest and issuance costs
e Minimum tax assessment (TIF) on Chauncey
to cover 100% of financing cost over life
of project
r- Also secured by Park@201 Building, Debt
Service Reserve, Developer's personal
guarantee, and City -University TIF
district
Dennis Bockenstedt,
Finance Director
TIF Bond Structure
Debt payments higher in earlier years
y Shortens average bond life, lowers debt cost, and
reduces risk
Minimum tax assessment (TIF) calculated
using average bond payment
A restricted Debt Service Reserve will be
created in the Debt Service Fund
Overall, the bond structure is intended to
minimize finance costs
Dennis Bockenstedt,
Finance Director
$1,400,000
$1,200,000
$1,000,000
$800,000
$600,000
$400,000
$200,000
TIF Bond Structure
Chauncey TIF Payments versus
Debt Principal & Interest Payments
ON N M Q N M N M M O � N M Q N W N M M O N M Q N
N N N N N N N N N M M M M M M M M M M Q Q Q Q Q Q
O O O O O O O O O O O O O O O O O O O O O O O O O O
N N N N N N N N N N N N N N N N N N N N N N N N N N
Chauncey Min TIF ■ Bond Payments
Dennis Bockenstedt,
Finance Director
Finance Summary
Development grant - $14,187,250
Bond financing of grant - $12,097,250
4 year construction note
25 year TIF revenue bonds
Minimum tax assessment (TIF) on Chauncey
will cover 100% cost of bond financing
Projections do not include other revenues
generated such as hotel/motel taxes,
protected property tax levies, parking
fees, utility or franchise taxes
Dennis Bockenstedt,
Finance Director
ITEM 2a
Presentation #5
By: Marc Moen, Developer
m o e n g r o u p development projects
Downtown Iowa City
Benefits resulting from City incentives
•quantifiable economic benefits
•unquantifiable benefits
n
tijind Healy
Center .
{
stwfhdhealiflgc
,� tet Vitro°. <,nference center
�� � � .•wM - �� � i • 1.(� dam_
The businesses at Plaza Towers welcome
over one million people each year.
Increase in assessed value:
534.3 million
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FILM
SCENE
IN ITS FIRST YEAR FILMSCENE EXHIBITED OVER 200 DIFFERENT
FEATURE FILMS TO OVER 35,000 PATRONS...
IN A 65 SEAT THEATER
Increase in assessed value,
over $1 million
w
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n • _ ^ r miss`
Park@201 site is 40'x 80'
Approximately 100 people work at Park@201
59.3 million
IA •Johnson Co. •Iowa City Owl
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BUILDING THE TAX BASE
• The entire downtown is assessed at $200.7
million.
• Plaza Towers, Park and Packing & Provision
(Vitos) account for $45.5 million of that total.
• Chauncey will bring that amount to $83.6
million in assessed value.
Marian Karr
From:
Tom Markus
Monday, June 08, 2015 11:41 AM
Sent:
To:
Marian Karr
Cc:
John Yapp; Eleanor M. Dilkes
Subject:
FW: Chauncey
Please send to council as another late handout or according to our policy.
From: John Yapp
Sent: Monday, June 08, 2015 10:38 AM
To: 'sanctuarypub'
Cc: Tom Markus; Eleanor M. Dilkes; Wendy Ford; Doug Boothroy; Sara Greenwood Hektoen
Subject: RE: Chauncey
Daryl — I've gathered answers to your questions — see below.
Thanks,
John Yapp
From: sanctuarypub[mailto:sanctuarypub@gwestoffice.net]
Sent: Friday, June 05, 2015 3:54 PM
To: John Yapp
Subject: Chauncey
John,
A reading of the Chauncey development agreement has raised several questions.
The City will invest the revenue form the sale of City owned property, geothermal easement and parking facility
easement in the proposed project. This is separate from the TIF. The gap is $14,187,250, but rather than issue
TIF revenue bonds in this amount, the developer will first pay the City the appraised value of the City -owned
parcels for $1.87 million, plus the appraised value of easement rights necessary for this project (which will
include approximately $220,000 for the a utility easement for the geothermal system, as well as an access
easement through the Chauncey Parking Ramp). These amounts will be invested in the project to reduce the
amount of the TIF financing required. That leaves $12.09 million - the Developer's request for upfront tax
increment financing assistance to be financed through TIF. Will these funds be repaid to the City? No;
however, the City does expect to have other revenue to be derived from the Chauncey other than TIF such as
hotel/motel tax revenues, parking revenues, utility services charges, franchise taxes, and debt service levy
property taxes.
Tax revenue from park 201 will be pledged to the Chauncey TIF.
What would be the payoff date for the Park 201 TIF under the original agreement for that
development? Assessment date 1/1/2030 for fiscal year 2032 is last bond payment for the Park@201 building
(Minimum Assessment Agreement for Park@201 terminates 20 years from issuance of bonds for Park@201 or
when bonds are paid off, whichever is earlier. New Minimum Assessment Agreement on the remaining units
owned by the Developer in connection with the Chauncey will extend the minimum assessment on those units
to 29 years from the issuance of the debt on the Chauncey or when the debt is paid off, whichever is earlier)
What will be the anticipated length of time and total amount of revenues from Park 201 to be used for the
Chauncey TIF? The Chauncey building is paying for all of its own financingibonds; the Park@201 is only a
contingency; the agreement should end with a January 1,
2043 assessment date for fiscal year 2045. The City
requires that the project generate sufficient increment to pay the debt service over the length of the bonds, even
though the TIF revenue bonds are secured with the increment in the entire district. Such is the case with the
Chauncey. The minimum assessment agreement on units still owned by the Developer at Park at 201 simply
provides additional assurance of minimum value in the District during the length of the agreement. The
minimum assessment agreements provide that if an increase in the minimum assessment is necessary to cover
the debt service, the minimum value will be increased and the Developer guarantees any shortfall. TIF revenue
bonds are not secured by the full faith and credit of the City; all debt service will be paid with taxes on the TIF
increment. This is the same arrangement the City had with the Plaza Towers.
The ICHA proposes to purchase 5 units in the Chauncey for $1 million. What are the annual association fees
for those units and will the fees be paid by the developer or the ICHA? Association fees will be paid by ICHA,
as ICHA will be the property owner of five units. ICHA pays association fees for its other properties that are
subject to association fees, such as in the Peninsula. Association fees are based on the maintenance and
insurance costs for common areas and facilities in the building, divided by square footage of owned space. It is
unknown at this time specifically what the association fees will be until final design and maintenance estimates
are completed, but at Park at 201 the fees are about $2.50 per SF per year, and we expect the Chauncey fees will
be in the same range. By law, association fees are based on actual maintenance and insurance costs of the
facility with no upcharge.
The entrance to the Chauncey on site parking will be through the City Chauncey Swan parking facility first
floor.
How many parking spaces will removed to provide that entrance? Subject to final design, but it will be 3 -
spaces. The Agreement requires that the Developer pay appraised value for any necessary access easements.
How many vendor locations for the Farmers Market will be lost to provide that entrance and access to tenants
during market hours? Subject to final design, but a few vendor locations will be affected in that corner
Will there be a cost to reconfigure the ground floor of the parking facility to provide access to the Chauncey
parking during Market hours? What will be that estimated cost and will the cost be borne by the City or the
developer? Cost will be borne by the developer. At this stage, we do not have specific cost breakdown for this.
Film Scene is a non-profit corporation. Will Film Scene be leasing or purchasing it's space in the proposed
development? Filmscene is leasing their space
If they purchase the commercial space how much will that reduce the taxable value of the proposed
development? The minimum assessment agreement will prevent the taxable value of the Chauncey from being
lower than $30,128,234, the amount necessary to service the debt.
Renderings appear to show a large exterior stairway on the North side of the development that appears to be
within Chauncey Swan Park. Will they be on the development land or on City park land? If they are on the
park land who will be responsible for the construction and ongoing maintenance and snow removal from those
stairs? A portion of the stairs would extend into the park and be available for public use as
seating. Construction and Maintenance would be the responsibility of the developer.
I appreciate your attention given the short time frame that was necessitated by the release of the development
agreement yesterday and the final Council action in 3 days. The Agreement has been on file with the City Clerk
and available for public inspection since May 28 when the public hearing was set by the Council. The general
site design concept has been available for approximately 2.5 years, and in its current version with the shorter
15 -story building for several months as the project has been making its way through the zoning process.
2
Daryl Woodson
Proprietor
Sanctuary Pub
405 S. Gilbert St
Iowa City, IA 52240
THE CHAUNCE'Y, L.LC.
221 L COLLEGE STREET
Sun=
IOWA Cm►, IOWA E2M
yr c-apoenfLouo.com
wwwjroengrQup.com
P11011C
319 4W 10
July 10, 2D14
City Coved Econo n c Dwelapnrent Connm�
Jeff Davidson, Economic Development Administrator
410 E. Wad*Vion Street
Iowa Clty, IA 52240
RE: Proposed DeveWnent - NE CORNER COLLEGE 5T/GlLBERT ST
Dear Jett,
Mamte
J19ffi8 "8
I have enc kwd k*vnotlon regarding The Chaney p qod for
submission Jo the City Council Economic Development Committee:
We arecomivill fro spending a mirimum of $49400,000 On this PmIB&-
I would be pleased to answer any questions from you or the cOl I m t m.
The
rwem wW manapw
a4-3
SITE: College St/Gilbert St NE Corner Site abutting the north side of E. College Street
and East side of South Gilbert Street. The area is currently owned by the City of
Iowa City and MIdAmerican Energy and Is outlined in red on the diagram below.
The proposed site also includes the 20' wide alley from South Gilbert Street to the
Chauncey Swan Parking Facility directly north of the sites outlined in red.
L'' '` L r a: . Y V k
ECT;
15 Story Mixed Use Development
Uses & Net Square Footage approximations
➢Level 1 and 2 (Made fhe■wra; bewhry center Laff; ReddenHal a Hood Lobby;
pnbUc8amain6 and pUery mss): -24,653 Sq Ft
➢Levels 3 and 4 (dm A office, or slmnar fscdwes): -34,850 Sq Ft
➢Level S -7 (appraa. 35 howl rooms, eonfermm roam, nmeu roomy roof t,r,om): -23,100 Sq Pt
➢Level S (approc 14 studio condos for lease - potmtW br conversion to hotel room): -7.700 Sq Pt
>Level 9.15 (approz 52 - Se studio, me and two bedroom condos for Ism and for sale): -56,175 Sq Pt
Preliminary Plans:
D PARKING:
4
LEVEL 1: (Commercial Level)
02 screen movie theater
• First level of bowling center cs of 12 lanes)
•C,aflk [opens onto Chauncey Park and also provides food Service to Bowling Center and 7Leaters]
*Lobby area serving office, hotel and residential levels
• Public space (including gallery areas for two and three dimensional works of art)
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�E MU: (Commercial Level)
•2 screen movie theater; film education center/lab
•Second level of bowling center (1 of iz Lases)
LEVEL_3: ( Office Level)
•class A office space (•r Amiiar. )
iE
a --
LIME1. 4: (Office Level)
OCIM A office space (or simuar we)
LEE
LE_XWi 6 & 7: (Hotel Levels)
-these 3 floors are hotel rooms/states (approximately 35) with amenities
Including a conference room, fitness room and roof top patio on level S.
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WFAVEL_6: (Residential Level)
•approximately 14 studios for lease (d"W" for patentW for mnverabn W howl:
iK 111 IIS
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Aftwi im
LEVELS Q til rm,01 0: (Residential Levels)
-studios, one and two bedroom condos for lease and for sale (•prom se - 54 umta)
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LEVEL 1_5: (Residential Level)
•two bedroom xmits (4 units)
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PR01ZCT DESCRIPTION:
On September 28, 2012, The Mwncey was proposed in response to the City of
Iowa City's -Request for Proposal for Pdvnk Devebper for 6* College R / Gibat
St Norfreast Comer Site". The fall proposal can be viewed online at:
http;//www.icgov org/site/CMSy2_/8le/collgge"11 ertltheChauncey,vdf
On January S, 2013 the Iowa City Council selected the Chauncey as the preferred
proposal.
TheChauncey Is designed as an arts and enter Munent destination fnduding uses
that are absent in downtown Iowa City Including a two -scram movie 0 P al P with
appro-dmately 250 seats and a 12 -lane bowling center. FilmScene will operate the
theater in conjunction with University of Iowa's Hf jou Theater. This model has been
tested at 218 S College (a 63 seat venue) which has enjoyed overwhelming success
and community support with sales nearing 20,000 tickets In the short time it hos
been open.
Howling has been widely requested from a diverse group of people and has been
cited in mw ket studies as a missing component In downtown Iowa City. The
Chauncey, LLC. commissioned a bowling center nual t survey for downtown Iowa
City, which supported of a boutique 12 lane Bowbug Center.
Chauncey will provide a11admately 34ASO net square feet of class A office space.
Class A office space has been lading in downtown Iowa City. Marketek, Inc. was
retained by the C IW of Iowa City to conduct a downtown market study. One of the
conclusions reached by idarketek is that a passive approach to downtown office
development would likely result In downtown Iowa Qty r@Wfsing only a fraction of
Its potential in atbailing ofte users. The space that has been developed in eoent
years at Plass Towers, Packing A Provision Building and Park@201 has met with
success and has attracted a significant number of well paying jobs to downtown
Iowa City. Whose users have all confirmed MarkeWs conclusion that it Is impohtant
to have space available within a relatively short time frame in order to attract users.
Office users are an important component to establishing a critical mass of people
living and working in downtown Iowa City. Those users support the services and
retail businesses shindy existing downtown and encourage more mall and service
businesses to locate downtown and more permanent residents to live downtown.
The hotel component on levels S, 6 and 7 has 3S spacious quality rooms,
representlng smart growth in the hospitality supply rather than flooding the mar imt
with rooms, which could potentially undermine existing hotels. The goal is to
enhance the existing hospitality Industry downtown as was acconhplf" with
hotelVetr% Ihcoellence in architecture, distinctive interiors and quality construction
are important In maintaining the inter" of our unique downtown environment
The density of The Chauncey also represents smart growth. The project includes 66
to 72 residential units, In addition to the 35 hotel rooms. 14 of the residential units
are on level 9 and can be converted to hotel use. Dense development in the
downtown area lessens sprawl and the burden on neighborhoods bordering the
downtown.
The construction of The Chauncey will be orchestrated to assure that the Farmer's
Market stays in operation during the construction period.
The project will also utilize geothermal wells, built under Chauncey Swan Parks, and
The Weidt Group will consult on the effidency of the mechanical electrical systems
with the goal of achieving the most sustainable building feasible. Although
certification is not required, the building will be built to at least Silver Meed
standards.
The development site currently generates no property taxes. The net taxable value
(after rollbacks) is estimated in excess of $24M the first year of full assessment,
which will increase over time.
With little or no infrastructure costs to the City, and no added emergency personnel
or physical plant; the City will gain a significant tax base from a property that
currently provides no property taxes to the City.
The construction site is a blighted area that has long needed attention. The
opportunity to build adjacent to what will be a beautiful park presents a rare and
very special opportunity to create something spectacular. The scope of the project
includes upgrading Chauncey Swan Park to create a more inviting and comfortable
Public space, enhancing it's function for the Farmer's Market and creating a space
conducive to outdoor moving screenings. Approval of the specific park
Improvements will be obtained from the Parks and Recreation Director prior to
construction. We are committed to spending up to $500,000 in construction costs
for such improvements.
The Chauncey indudes a two screen movie theater with appraadmately 250 seats
and a 12 -lane bowling center. These will increase traffic downtown and they
respond to the needs identified in market studies commissioned by the City and the
University.
The Chauncey will add an additional 3 5 quality downtown hotel rooms with the
potential to ramp that up to 49 rooms depending on demand. This wig have a
positive ripple effect on the downtown economy with guests eating and shopping
downtown and will also produce hotel -motel tax revenue.
It is important that we retain and attract the best and brightest, and quality office
space is an important component of this.
Having this diversity of people invested in downtown is important to the continued
vitality and growth of our downtown.
Permanent residents become invested in our downtown and they quickly become
part of the fabric of our downtown. When done well, there is a real feeling of
community in mixed-use buildings. A considerable amount of dynamic open public
space in The Chauncey assures a sense of place that is welcoming to the public.
Downtown residential units for permanent residents provide a strong and very
stable property tax base.
aI ,F M,
Through the hard work and vision of many individuals, groups, organizations, the
University of Iowa and the Iowa City Council, we have an enviable downtown that
keeps improving, Plasa Towers has become downtown hub, where everyone is
welcome, and which is enjoyed by hundreds of people every day. The Chauncey,
focused on arta and entertainment, will continue the process of moving downtown
forward.
The cost of The Chauncey project is, at a minimum, $49,000,000. The National
Development Council, as consultant to the City of Iowa City, has had full access to all
numbers associated with this project GAP financing in the amount of $14,187,250
is required. TIF Financing is requested in the amount of $12,200,000 with the
balance of the GAP financing coming from proceeds from the (Pty's sale of the site
and subterranean rights. The independent gap analysis of this project concludes
that these funds are necessary and warranted for this project
�6.®4 at CITY OF IOWA CITY
MEMORANDUM
RT
Date: June 1, 2015
To: Thomas M. Markus, City Manager
From: Wendy Ford, Economic Development Coordinator
Re: Development Agreement for The Chauncey
Introduction
Since the mid -seventies, the City has desired to control development of the northeast corner of College
and Gilbert Streets and began buying the parcels between Chauncey Swan Park and Chauncey Swan
Parking garage. In 2000, the City acquired the last of the parcels it now owns at this site. The nearly one-
quarter block area is comprised of the Wilson Building and a sub -standard surface parking lot where the
former Greyhound Bus Depot and U -Smash -Em -I -Fix -Em auto repair shop were once located.
Originally intended for expansion of the municipal campus, the City determined that these parcels were
not needed for such use following a 2012 facilities study. In August 2012, therefore, the City requested
proposals for redevelopment of this corner (which would also include a parcel owned by Mid -American for
an electrical sub -station). The Request for Proposals (RFP) described high expectations for the
redevelopment and stated the possibility for City financial assistance for projects meeting the goals of the
RFP.
The City received ten proposals in late September 2012. An evaluation committee comprised of
representatives from the City Council, City Manager's office, City Attorney's Office, Neighborhood
Development Services (formerly, Planning and Community Development), and Public Works and
Engineering Departments narrowed the list to five finalists who presented their proposals at a public City
Council work session meeting on November 26, 2012. The City Council further narrowed the list to three
at its December 18, 2012 public meeting. Throughout the process, the City received public input at City
Council meetings, in writing, and through presentations by City staff to various community groups. In
January 2013, the City Council selected The Chauncey as the preferred development proposal.
Since that time, Staff has been working with the Developer to negotiate a development agreement. The
Developer anticipates building a $49 million, fifteen -story mixed-use building including Class A office
space, a hotel, a bowling alley, two art -cinema theatres and 5 units of low-income housing. The
developer's agreement contemplates that the building will assess at a minimum of $30,128,234 once
complete. The Developer and its lender propose to finance 71 % of the construction costs with debt ($19.7
million), pre -sales of housing units to the ICHA (Iowa City Housing Authority) ($1 million), and developer
equity ($14.2 million) and has asked for the City's assistance in funding the remaining project costs with
tax increment financing.
In exchange for construction of the project and the creation of a $30,128,234 minimum assessment value,
the Developer's Agreement contemplates that the City would convey land to the Developer for the
appraised value of $1,870,000, convey certain easement rights to the Developer for the appraised value
of $10 per square foot, and to make certain contributions to the project, including the acquisition of five
one -bedroom condominium units from the Developer for $200,000 each once the project is complete,
which ICHA will own and maintain for affordable housing, and to make a $14,187,250 economic
development construction grant, paid through the use of tax increment financing and reinvestment of the
proceeds from the Property.
The City's $14,187,250 economic development construction grant will comprise approximately 28.95% of
the project costs. TIF revenues are derived from taxable value a new project creates and only
become available as a result of new value. In other words, TIF is not taken from existing tax
revenues; it is created by the additional taxes generated from the development of the project.
June 4, 2015
Page 2
A full financial analysis of the project was conducted by National Development Council, the report for
which follows. In July, 2014, the City Council Economic Development Committee voted 3-0 to
recommend a financial assistance request for The Chauncey to the full City Council.
History I Project goals
The RFP stated that any financial assistance would be based on the ability of the project to meet a set of
goals for the downtown and for the project, specifically. The goals and a description of how the project
furthers each of these goals are listed below.
City -University Urban Renewal Plan
On October 2, 1969, the Iowa City City Council adopted the City -University Project I Urban Renewal Plan
(URP) to promote redevelopment of the City -University Urban Renewal Area. The property at the
northeast corner of College and Gilbert Streets was added to this Urban Renewal Area on October 23,
2012. Among the goals and objectives in the URP are objectives to create residential living spaces for
young professionals and other members of the "creative class" by offering a variety of housing options,
including high-density, affordable urban apartments; to create a more livable community by supporting
affordable, energy-efficient housing and the suitable reuse of idle or underutilized land; to create a
vibrant, mixed-use, pedestrian -oriented neighborhood; and to increase the amount of office space
available in the Area by promoting mixed-use developments that contain quality office space. The
proposed Project satisfies these goals and objectives for the reasons described below.
General downtown goals
The RFP stated that any financial assistance would be based on the ability of the project to meet a set of
goals for the downtown and for the project, specifically. The goals, numbered below, and the proposed
project's ability to meet each follow.
1. Increase taxable valuation of property.
Most of the property has been owned by the City for decades and has not generated any property
tax. The estimated taxable valuation and minimum assessment of The Chauncey is $30 million,
ensuring that property taxes from the project cover the debt incurred by the City. Once this debt is
paid off by the taxes generated by the project, the new taxes generated by the project will flow
into the City's general fund and to the County and the School District to be used for the benefit of
the entire community. From year one of tax collection, the owner pays about $1.1 million in
property taxes, of which $250,000 go to the City, County and School District debt levies. While
not related to the taxable value of the building, the project is all expected to generate $100,000
per year in hotel motel taxes.
2. Redevelop blighted property.
The property on the corner once housed a gas station turned bus depot and a car repair shop.
Both have since been demolished. The site is now underutilized as sub -standard surface parking.
The basement level of the former car repair shop served as storage space for the police
department. The northern wall of the basement storage area fronting the alley is crumbling, and
has required frequent repair to prevent it from falling. This vacant lot creates a gap in the
downtown streetscape, is broken up, an eyesore on an arterial street and invites illegal parking.
Development of the project will add active building uses and new street life in place of this vacant
lot.
3. Encourage projects such as downtown hotels, workforce housing, downtown grocery, arts and
entertainment venues, and similar uses.
The Chauncey proposal includes an approximate 35 -room hotel, 5 units of low-income public
housing, an art gallery, two art -house cinema theaters and a bowling alley. It contemplates large
areas dedicated to public use and the reconstruction of the Chauncey Swan Park may allow for
enhanced offerings in the Park, such as outdoor movies and concerts.
4. Encourage projects which increase downtown destination points to continue to draw people
downtown.
A market study has shown that Iowa City can support several more bowling lanes than currently
exist at Colonial Lanes and respondents to two downtown market surveys indicated that bowling
June 4, 2015
Page 3
and movies are highly desired entertainment options. The Chauncey's hotel will add to the City's
ability to host overnight visitors downtown. Visitors and residents will have more entertainment
options with bowling, movies and a cafe with adjacency to The Chauncey Swan Park — a public
outdoor venue next to the site. The park itself will be designed and reconstructed when The
Chauncey is complete.
5. Provide a safe and inviting downtown for residents and visitors.
The Chauncey has been designed by professional architects who have paid close attention to
creating a human -scale environment for pedestrians walking along Gilbert and College Streets.
The first two floors will be comprised of nearly 100% glass, and there will be step backs at the 3rd
and 5th floors. The building will be well -lit and the main entrance will include a covered drop-off.
The architect intends for this building to be a landmark structure.
6. Encourage housing opportunities for residents from a variety of age groups and income levels.
The Chauncey will offer studio, one and two-bedroom condos for lease and for sale. Of those, 5
one -bedroom units will be purchased by the ICHA for lease to income -qualified households.
These units will be held long term and will not revert to market rate like some do under other
programs or assistance models. These housing options will help increase the diversity of the
downtown's residents.
Project -specific goals
The Request for Proposals for this Project set forth certain specific goals for redevelopment of this
property. For the reasons described below, The Chauncey satisfies those goals.
1. Build an urban building, with commercial uses on the first floor. Upper floors may be commercial,
office, hotel, residential or a combination of uses.
The Chauncey is designed as an urban mixed-use building with an open and transparent
storefront design at the street level, which invites views into the interior and will contribute to an
active and pedestrian -friendly streetscape. Above the first two floors of glass, will be two more
floors of brick which complement other downtown buildings and add interest and variety to the
vertical surfaces while creating a transition to the residential units on the upper floors.
Commercial uses on the first 7 floors including retail, office and a hotel combined with residential
on the remaining 8 floors are characteristic of the density and mix of uses common in urban high-
rise buildings.
2. Class A office space on one or more floors. Office space may be contemplated for public as well as
private tenants. As a corner lot on a highly visible, prominent property, quality architecture is
encouraged.
There are approximately two floors of Class A office space planned for private commercial
tenants on Levels 3 and 4. Class A offices are considered the most valued and sought-after
because they are built to very high standards with features expected by modern office users.
Class A offices occupy prestigious locations and command higher rents, thus adding to a
building's value.
3. Other unique uses for the Project will be considered.
Unique uses planned in The Chauncey include a six lane bowling alley and two theaters of
approximate 100 and 150 seats for the expansion of Film Scene.
4. If residential uses are proposed, a mix of efficiencies, one -bedroom and two-bedroom units is
encouraged.
A mix of studio, one- and two-bedroom units for sale and for lease are planned. 14 of the studio
units will be designed for lease or conversion to additional hotel rooms.
5. If residential uses are proposed, workforce housing is encouraged for at least a portion of the Project.
Workforce housing is defined as rental or owner -occupied units affordable to, and designed for
working households between 60% and 150% of the Area Median Income.
The City would purchase 5 units scattered throughout the building to lease to income eligible
households indefinitely.
Project Description
Since The Chauncey was selected as the preferred development, The Chauncey development team has
been working to make changes to the design of the building to address early concerns about the building
height and mass of the building as originally proposed. As shown in the renderings, the building height
June 4, 2015
Page 4
has been reduced from the originally proposed 20 story building to 15 stories. The base of the building
has been reduced from five to four stories. This was negotiated in response to concerns about the height
of a 20 story building. In the 15 story building, there is one fewer office floor and four fewer residential
floors proposed.
The drop in size to 15 stories, combined with the step back designed into the street sides of the building,
reduce the building mass and shadow cast by the building. Shadow studies show neighboring buildings
impacted by The Chauncey shadow will experience nearly the same shadow duration as those that would
be allowed by right in CB -5 and CB -2. There is no shadow effect on Chauncey Swan Park in the summer
months, and only a little in the spring and fall. Winter shadows are plentiful, but are cast so far north that
the affected areas include only the Commerce Center Building, City Hall and the Chauncey Swan Park, at
a time when usage of the park is at a minimum.
The mix and approximate size of uses in The Chauncey are proposed as follows:
Basement........ ............................................................................................ 24,000 gross square feet (GSF)
Levels 1 & 2 .... Movie theatre, bowling alley, cafe, lobby, and gallery space ............................ 33,000 GSF
Levels 3 & 4..... Class A office space.......................................................................................... 38,000 GSF
Levels 5 - 7 ...... Hotel and associated facilities........................................................................... 33,750 GSF
Level 8-15........ Residential Units................................................................................................ 87,382 GSF
Level 8: 14 studios
Levels 9 -14: approximately 8 units per floor, mix of studio, 1 & 2 bedroom
Level 15: 4 two-bedroom units.
Required parking for the residential units will be provided in a parking facility underneath the building. All
residential units on Level 8 will be included in the formula for determining the required parking, regardless
of whether those units are used for the hotel or privately owned. Parking for the remaining uses in the
building, which are not required to have parking on-site, will be provided by unused on-site spaces and
the 457 space Chauncey Swan Ramp next door.
During construction of The Chauncey, a portion of the adjacent park will be used as a construction
staging area, similar to how Black Hawk Mini Park on the pedestrian mall was used for construction
staging for the Park@201 project. Care will be taken to reserve adequate space for Farmer's Market
activities and to limit disruptive construction activities during Farmer's Market hours of operation. At some
point during construction, the geothermal system will be installed underneath Chauncey Swan Park.
The Developer will be responsible for reconstructing the Park. This will require close planning with the
Director of Parks and Recreation and the Parks and Recreation Commission to determine how the park
will be reconstructed following completion of The Chauncey. Approval from the Parks and Recreation
Director is required before reconstruction begins. The Developer has committed to paying for the design
costs and spending $500,000 in actual construction costs for the reconstruction. Any construction costs
above $500,000 will be at the City's expense.
The Developer's proposal contains the following statement: "The opportunity to build adjacent to what will
be a beautiful park presents a rare and very special opportunity to create something spectacular. The
scope of the project includes upgrading Chauncey Swan Park to create a more inviting and comfortable
public space, enhancing its function for the Farmer's Market and creating a space conducive to outdoor
movie screenings."
Proiect Development Costs, Operational Costs and the Ga
Many factors contribute to expense of the project and resulting financial gap. The developer has
committed to building a high quality building using steel frame construction, high quality building
materials, and sustainable features to meet LEED Silver or Gold standards (described in more detail
below), including a geothermal energy system, which will all add significant long term value to Iowa City in
a number of ways, not the least of which is substantial yearly property tax revenues from a building that is
designed to last a century or more. In addition, the desired entertainment uses and affordable housing
requested in the RFP, while furthering the stated goals for downtown Iowa City, will not generate sufficient
revenue to cover the initial cost. The revenue generated by the diversity of the upper floor uses (retail,
June 4, 2015
Page 5
hotel, office, and residential) will help, but are not sufficient. The sale or lease of commercial and
residential space and the operations of the hotel are necessary to help offset the expense of the bowling
alley, movie theaters and public space — features that were highly desired by Council in their selection of
The Chauncey. The lease rates for the bowling alley and the theater will be below market rate and, as
such, increase the financial gap.
The City places a high value on sustainable features and requires them in exchange for City financial
participation, thus increasing the gap. The Developer has committed to constructing the building to LEED
Silver standards, with the goal of achieving LEED Gold. The LEED standards will be verified by LEED
accredited architects, though LEED certification will not be required. The Chauncey will be heated and
cooled, in part, using a geothermal energy system that runs deep under Chauncey Swan Park. For the
rights to use the land under the park for this system, the Developer will pay the appraised value of $10
per square foot, or about $220,000. Other sustainable design features will include wall and roof insulation
to 30% better than Energy Code minimum.
As a part of the development agreement, the City has offered to purchase 5 one -bedroom units to lease
to income -qualified tenants as determined by the Iowa City Housing Authority. These units will be
scattered throughout the building and built to the same standards as the market rate units. The Developer
has agreed to the City's offer of $1,000,000 for the five units that the City intends to lease the units to
families whose household incomes are at or below 60% of the average household income. The Housing
and Urban Development (HUD) fair market rent used in the Iowa City Housing Authority rental assistance
programs, for a one -bedroom unit is currently capped at $630 month, and the 60% income eligibility for a
household of two is $39,540 or below. HUD regulations require that no more than 40% of the eligible
family income can be spent on rent.
The reduced height of the building from the initial proposal has also added to the gap. Because four floors
of residential and one floor of office space were removed, so were 50,000 square feet of revenue
generation. However, the higher cost aspects of the building remain: the steel construction, the
geothermal system, the public spaces, the movie theater, bowling alley and low-income units result in a
higher cost per square foot to build and operate.
As the RFP stated, the City would consider financial participation in a project meeting the goals set forth.
The City's policy on financial participation requires that all other sources of funding be maximized and that
City funds be the last dollars required to make the project work.
The Chauncey funding sources:
a) $19.73 million in bank financing. When a financial institution considers how much to loan for a project,
they consider the loan to value ratio and a debt coverage ratio. Typically, value is considerably lower than
cost and as such, the maximum loan size is lower than if cost were the denominator. The Chauncey
project has maximized the loan it can get by reaching its lender's loan to value maximum of $19.7 million
b) $14.22 million in developer equity. The Developer seeks a 7.5% internal rate of return (IRR). The IRR
describes the discount rate at which the present value of income generated after taxes from the project
equals the equity invested by the Developer. NDC has advised that a 7.5% IRR is within reason for public
participation, particularly, when there is no other developer fee included in project development costs. By
City policy, developer equity is required to be equal to or greater than financial gap assistance requested.
c) $1 million from the pre -sale of five (5) low-income housing units.. The ICHA will purchase five one -
bedroom units for $200,000 each. Funds for the purchase would be, in part, from the sales proceeds from
the Iowa City Housing Authority's Section 5h Homeownership Plan (last home sold in 2006) and/or the
Disposition of Public Housing units that had been located on Broadway Street (sold in 1995; HACAP paid
off loan in 2009).
d) $14,187,250 in economic development construction grants to be covered by two sources:
i) Approximately $2.09 million in non -TIF funds. The Developer will pay the City the appraised
value of the City -owned parcels for $1.87 million, plus the appraised value of any easement rights
necessary for this project (which will include approximately $220,000 for the a utility easement for
June 4, 2015
Page 6
the geothermal system, as well as an access easement through the Chauncey Parking Ramp).
These amounts will be invested in the project to reduce the amount of the TIF required.
ii) $12.09 million in TIF funding. This is the Developer's request for upfront tax increment
financing assistance. It was determined that the funds be provided upfront, as opposed to
rebated, before new City policies allowing rebates only went into effect. The annual TIF increment
generated by the project would be used to repay a City -issued bond.
Solution I Alignment with Strategic Plan and Economic Development priorities
As noted in the History and Project Goals section above, the project meets the goals stated in the RFP. In
consideration of the City's financial participation, staff has also studied the proposal for its alignment with
broader community goals covered in the City Council's Strategic Planning Priorities and Economic
Development Policies. Those priorities and policies are numbered below with a statement about the
project's consistency with each.
City Council Strategic Planning priorities
The City Council has placed an emphasis on making Iowa City more inclusive and sustainable and
intends for these to be overarching goals that filter through all activities and initiatives.
Healthy Neighborhoods
The Chauncey adds residential units to a pedestrian -oriented neighborhood adjacent to a park,
the central business district, public parking facility, the University and recreation facilities. These
units will include amenities attractive to long-term residents. The building will also be home to two
film theaters, a bowling alley, cafe, gallery space, professional offices and a hotel, all adding to
the vibrancy and diversity of the community, the downtown and of the neighborhoods.
2. A strong urban core
The Chauncey's urban design adds to the built environment in a way that will help attract a much
needed workforce to businesses desiring downtown locations. High tech and software
development businesses seek downtown locations for their offices and employees because of the
vibrancy, the amenities, the walkability and co -location with similar business.
3. Strategic Economic Development Activities
The Chauncey will add downtown Class A office space sought by employers of high-quality jobs.
New opportunities for high quality, high density residential living in the downtown area within
walking distance of jobs, retail services, and recreational and cultural amenities will create new
opportunities for people to live close to where they work and rely less on automobiles.
4. A Solid Financial Foundation
A large investment at the outset will help ensure the highest and best use of the property for
decades. The high density multi -use building at a key intersection downtown will increase in value
and provide dividends to the community. For example, property tax revenues will increase from
the day the doors open. The building will house more residents, stemming urban sprawl; provide
more jobs in a walkable environment and expand entertainment options downtown. When the TIF
debt is retired, more than $1.1 million per year will flow to the City, County and the School District
(see following chart).
Economic Development Policies
The cornerstones of the Iowa City Economic Development policies are to attract new residential,
commercial and industrial development in order to grow the property tax base, encourage new business
and retain and expand existing businesses (April, 2014). The policy states that the City will consider the
use of financial incentives to implement the goals and strategies of the City Council Strategic Planning
priorities. In order to receive financial assistance from the City, developers are expected to meet all or
some of the following minimum standards for their projects.
1. High quality architectural and site design
June 4, 2015
Page 7
The Chauncey is designed by local architects Rohrbach Associates PC with great attention to
building massing, materials and the adjacent public park.
2. Energy efficiency and sustainability features beyond what is required through adopted building codes.
The Chauncey's design will be built to LEED Silver standards and attempt to reach LEED Gold.
3. Provision of affordable housing
The Developer has agreed to sell five units within The Chauncey to the ICHA which will own and
lease them to income -eligible households over the long term.
4. Creation and retention of high quality jobs
Beyond the creation of construction jobs during the 2 -year construction phase, there will be other
high quality employment associated with The Chauncey. The 38,000 sq. ft. of Class A office
space is anticipated to include an architecture office and tech -related businesses. The
commercial spaces in the building will include management level positions likely to meet or
exceed County median wage and benefit levels.
5. Developer equity equal or greater than public financing requested
Developer equity is $14.22 million, or 28.94% of project cost and public financing of an economic
development construction grant is $14.18 million, or 28.87% of project cost.
6. Redevelopment of underutilized or blighted properties
The properties that make up the development site meet the state code definition of a blighted
property (chapter 403.17).
7. Projects achieving public purposes as detailed in the Comprehensive Plan, Urban Renewal Area
planning documents, and/or the City Council adopted Strategic Plan.
The Iowa City Comprehensive Plan shows this area as appropriate for general commercial
development. The Urban Renewal Area Plan cites as specific goals to remediate blight, create a
vibrant mixed use pedestrian -oriented neighborhood, create residential living spaces for young
professionals and other members of the creative class, and create office space.
Filling the financial gap
During the RFP selection process, all semifinalists' proposals were analyzed for their feasibility, public
benefit, development costs, operational costs, property tax potential and financial sources and uses. After
The Chauncey was selected, the financial analysis intensified. As detailed in the attached report from
Tom Jackson, the City's consultant from the National Development Council, the financial analysis
scrutinized all project costs, ensured the Developer had secured the maximum debt possible for the
project, confirmed the equity required and ensured that returns to developer were within reason if City
participation was included. The intent of the analysis is to ensure that all other financial resources are
secured and maximized so that the last dollars required -- the financial gap request from the City —
achieves community objectives without allowing undue enrichment to the Developer.
The Chauncey was selected in 2013 as the preferred development before the policy change making TIF
rebates, as opposed to up -front financing, the new standard. Because negotiations commenced before
this change in policy, Staff has continued to follow the previous policy that supported up -front TIF
assistance. The Chauncey is the last project to be considered under the previous policy of up -front
financing with TIF. Now, all projects considered for TIF are financed on a rebate basis. In an up -front TIF
agreement, the City would typically sell bonds to provide the financing to the Developer at the beginning
of the project, and then pay itself back from a portion of the new property taxes paid by the owners
generated by the project. Conversely, in a TIF rebate, the Developer would typically get a private loan to
finance all of the up -front costs and the City would typically rebate back to the Developer a portion of the
property taxes generated from the project after they have been paid to the City.
June 4, 2015
Page 8
$1,400,000
$1,200,000
$1,000,000
Y
u
d $800.000
c
n
f
$600,000
$400,000
The Chauncey TIF
_ owneryays loo%of_Me aronertr taxes due: upward of $1.17M per year
MONOSSON All tax
revenues
flow to City,
County &
School
District.
TIF levy comesNbacktotyBegins at
to repay TIF Revenue Bond. $1.17 M per
year.
$200,000 --�tLiL11.J1J1_U_U_1L11J1J1_ll_u_1LILJLJI_u_ll_
cunentorepaaym �If1 Protected debt levy: Approximately $250,000 yextwo
peneratlon etp New taxes generated by proodflowtoCity, County& Schools
$e O O- LLo IJl. i i .fir_ 1J 11 y_i'-i�-4�-rii`'i.-.fes'-'
N M V V1 t0 N D] 01 O N N M V N ,p N W Of O •'� NN y My Vl l0 Ny W
,y N w w ti N N 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 O O S O
N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N N
Fiscal Year
The Chauncey Developer has agreed to a Minimum Assessment which guarantees the project will
generate the property tax required to pay the City back for providing the TIF funding. It is important to
note that the property tax used to pay for the TIF comes from the project and does not take away from
any existing City funds. These are funds that would not be available unless there was a new
development on the site. Additionally, when the City enters into an agreement using TIF assistance, it
does not result in 100% of all property taxes from the project being captured. There are new tax revenues
generated from the project that immediately flow to the taxing entities outside of the TIF increment. These
new tax revenues go straight to the City, County and Schools' protected debt levies and will begin at
about $250,000 per year.
The graph above illustrates the timeline for the TIF. While construction begins in 2016, a partial tax
assessment will be made on the January 1, 2018 value of the building. The property taxes due on the
2018 valuation arrive in Fiscal Year 2020 to pay for interest due on the construction note. A full tax
assessment will be made on January 1, 2019 that would be available for the City's debt service beginning
in Fiscal Year 2021 on the TIF revenue bond debt.
The fine details of the financing structure are covered in a report by Dennis Bockenstedt, Finance
Director. The fundamentals of it are that the City would finance the $12.09 million TIF in two steps. In the
first step, the City would take out a short-term construction loan to be drawn down as the project meets
certain construction milestones. The second step happens when the construction loan matures in four
years at which time it would be replaced by a 25 year TIF revenue bond. To cover the City's debt service
on the bonds, the Developer agrees to a minimum assessment on the property which guarantees that the
tax increment financing (TIF) property taxes generated from the development will cover the debt service
costs of the project. Of the total property taxes generated by the minimum assessment, approximately
80% go to pay the City's financing of the project, and 20% go to the City, County and School District's
protected debt levies.
Recommendation
The Economic Development Committee recommended approval of the proposed Development
Agreement with The Chauncey, L.L.C. at its July 14, 2014 meeting. Staff also recommends approval.
June 4, 2015
Page 9
There is no question the request for City investment and the timeframe for payback are significant. The
return on this investment is also significant, and is the basis for these recommendations.
The immediate returns on investment for this project can be measured several ways:
When complete, the Project will generate a minimum of $30,128,234 of new tax base upon which taxes
will be paid pursuant to the protected school debt service levy, school physical plant and equipment levy,
county debt service levy, city debt service levy, community college debt service levy and school
instructional support levy, and upon which the self -supported municipal improvement district taxes will be
levied.
• New property taxes of more than $1.1 million per year begin to flow;
• About $250,000 of the new property taxes immediately flow to City, County and School District;
• 5 downtown apartments added to the inventory of low-income housing with no expiration date
• New downtown living units attractive to long-term residents further diversify the downtown
resident population and add to downtown market demand for goods and services;
Two more non-bar/non-restaurant businesses are added to downtown entertainment options
drawing more residents and visitors who also add to the downtown marketplace;
• At least 35 new hotel rooms attract out-of-town visitors and their spending power;
• New hotel -motel taxes estimated at $99,000 annually;
• Office space to attract employers of high quality jobs — one already committed;
• Approximately $60,000 per year generated for the Iowa City Downtown District for use in
marketing, events, cleaning, and safety programs; and
• An updated and reconstructed Chauncey Swan Park.
Long- range returns on investment include the above, plus;
• Ensuring development of a high-quality, architecturally designed building resulting in maximum
property tax generation;
• Ensuring development of a project offering enhanced public benefit to the community;
• The Chauncey will generate annual property taxes in excess of $1.1 million per year after the TIF
debt is retired;
• More employment opportunities downtown, adding to employment diversity and options
• Supports sustainable development that requires no additional infrastructure; lowers the cost of
public service such as transit, sidewalks, water and sewer, school and public safety; makes better
use of existing infrastructure; takes pressure off of developing at the community's edge and
redeveloping historic neighborhoods; reduces time, money, energy and air pollution associated
with commuting; strengthens the real estate market; and strengthens the downtown economy,
which is inherently more sustainable..
MEMORANDUM oil
Date: June 2, 2015
To: Wendy Ford, Economic Development Coordinator, City of Iowa City
From: Tom Jackson, Director, National Development Council
RE: Chauncey Mixed -Use Project Gap Financing Analysis - Updated
At your request, the National Development Council (NDC) has reviewed materials submitted by
the development team led by Marc Moen (hereinafter, "the Developer") in support of a request
for City gap financing for the development of a project site at the northeast corner of South
Gilbert and East College streets. NDC has requested updated project cost, operating revenue
and expense and sales projections during meetings, phone conversations and through email
correspondence with the Developer since its proposed project, the Chauncey, was selected by
the City in January 2013 following a competitive Request for Proposals (RFP) process.
The RFP was directed to private developers and development teams interested in the
development of an urban, downtown -density building (the "Project") at the northeast corner of
East College and South Gilbert streets, one block east of the Downtown Iowa City Pedestrian
Mall. The City's goal was to convey the property to the development team which best met the
City's goals for an urban, downtown -density development, which will be walkable to downtown
Iowa City and the University of Iowa campus. The Project was envisioned as a privately -owned
urban building containing commercial, hotel, office and/or residential uses.
Financial projections have been reviewed for several scenarios for the Project, including a
twenty -floor option, but the Developer has refined these plans to focus on the development of
a fifteen (15) floor mixed-use building that includes:
• space for film theaters, bowling alleys, and cafe on floors 1 and 2;
• 38,000 square feet of office space on floors 3 and 4;
• a 35 room hotel on floors 5 through 7; and,
• a mix of studio, one and two bedroom residential condominiums, ranging in size from
550 to 2,600 square feet, on floors 8 through 15, or which 52 will be available for rental
or sale and 14 on floor 8 will be held as rentals or for expansion of the hotel given
adequate demand.
Since its selection as the preferred developer for the Project in early 2013, the Developer has
supported its assumptions and projections on the Chauncey's development costs, operating
revenues and expenses and sales revenues with increasing detail as information has become
available and in response to requests by the City and NDC. The developer has provided the
following documentation to support their request for gap financing and NDC's analysis of the
request:
Update - Chauncey Mixed -Use Development
June 2, 2015
Page 2
• a development budget based on:
o conceptual designs by Rohrbach Associates PC, Architect, Iowa City; and,
o construction cost estimates provided by McComas-Lacina Construction, Iowa
City;
• the Developer's operating revenue and expense pro forma (revised pursuant to the
completion of a market analysis);
• a "Market Analysis" prepared by Keith J. Westercamp, MAI, of Appraisal Associates
Company of Cedar Rapids, dated May 13, 2014; and,
• a "Bowling Center Survey," prepared for the project by William Kratzenberg of Bowling
Services, Inc., Atlanta, Georgia, dated September 7, 2012
• a term sheet for commercial financing identifying a maximum loan amount, rate, term
and underwriting criteria from the University of Iowa Community Credit Union dated
May 26, 2015.
Documents that have not yet been available for review include:
• an appraisal for the Chauncey identifying the project's as -complete fair market value.
Most of the required elements of an appraisal were included in the market analysis
identified above. The Developer has represented that lenders it has consulted for
financing have also indicated that they will accept an appraisal of value by the market
analyst's author, Appraisal Association Company.
NDC's analysis of the projected financials for the project suggest that City gap financing in the
amount of $14,187,250 is required to bring the Chauncey's sources in line with projected uses,
as follows:
Total Project Costs $49,142,748
Permanent Financine Sources
Projected Bank Loan $19,733,784 40.16%
Affordable Unit Presales $ 1,000,000 2.03%
City Gap Funding — TIF $12,097,250 24.62%
City Gap Funding — Non -TIF $ 2,090,000 4.25%
Required from Developer $14,221,714 28.94%
Total Permanent Sources $49,142,748 100.00%
The estimates and projections the Developer has provided, as modified and confirmed by the
independent market analysis, support a recommendation for gap financing for the project
through a combination of Tax Increment Financing (TIF) and the use of the sales proceeds from
City -owned property and subterranean rights associated with the Chauncey for the following
reasons:
1) The market analysis prepared for the Chauncey suggests residential rents in the range of
$1.70 to $2.00 per square foot, with smaller units commanding the higher rates. NDC's
analysis, in concert with Developer projections, keeps to the higher end of this range,
Update - Chauncey Mixed -Use Development
June 2, 2015
Page 3
assigning rents of $1.85 to $2.00 per square foot. Residential vacancy rates were projected
at 3%, below the 5% recommended by the market analysis.
2) The market analysis suggested rents of $17.00 per square foot for the office component,
whereas the Developer had projected $18.00 given the Chauncey's amenities. NDC's
analysis used $17.50 as well as a below-market 5% vacancy rate for office space at
stabilization. Signed leases and/or letters of intent for the office space were not available
for review at the time of NDC's analysis.
3) The Developer projected fully net lease rates for the Chauncey's cafe, film theater and
bowling alley components of $20, $10 and $10 per square foot, respectively. The market
analysis supported this conclusion and they were used in NDC's analysis. The low, $10 per
square foot, market rates for the film theater and bowling alley support a value of
approximately $138 per square foot that is well below those for other project components
as follows:
a. $300 per square foot for for -sale residential (117% higher)
b. $250 per square foot for office space (81% higher)
c. $275 per square foot for the cafe (99% higher)
The lower revenue and market values associated with the theater and bowling alley uses
also reduce the Project's capacity for debt and equity attraction and contribute significantly
to the financing gap. For comparison purposes, the gap would be reduced by just over $1.9
million if both uses commanded the projected $17.50 per square foot office rents. At the
same time, the City's RFP process and the market analysis both recognized the
attractiveness of the Chauncey's unique commercial uses to residential and commercial
tenants, as well as to the overall Downtown Iowa City market. Signed leases and/or letters
of intent for the three uses were not available for review at the time of NDC's analysis.
4) The three floors of hotel space will be designed to allow for their transition to and from use
as residential condominiums and were modeled consistent with the upper eight floors of
residential units at $2.00 per square foot on a full -net lease basis, not including food,
vending, telephone and internet revenue. A lease/management agreement with a hotel
operator was not available for review at the time of NDC's analysis.
5) The City and Developer have agreed to purchase five (5) one -bedroom residential units at
project completion for a total of $1,000,000. The size of the units will be refined through
the design process. In NDC's analysis, the sale of these five residential units at the time of
project completion are the only sales contemplated. The Developer intends to sell
additional units and the market analysis suggests that sales, including presales, of 25% to
30% of the residential units would be reasonable during the first three years of operations.
The gap analysis is more favorable to the City, however, to treat all of the units outside the
City's affordable housing purchase as rental and to include the long-term (25 year) after-tax
cash flow and appreciation in the estimates of the project's debt and equity capacity. For
example, projecting the sale of a mix of eight (8) of the smaller units, in addition to the
City's five (5) units (13 total or 25% of the 52 units being made available for sale) would
increase the gap by $351, 818 given NDC's debt and equity criteria and assuming that the
early sales were at or close to $250 per square foot.
Update - Chauncey Mixed -Use Development
June 2, 2015
Page 4
6) The estimated bank debt attracted to the deal, $19,733,784, has been maximized given the
projected operating proforma and underwriting criteria (1.2 debt coverage ratio, 80% loan
to value) that are very favorable to the project. The maximum projected loan amount is
also influenced by the capitalization rate, which was identified by the market analysis as
being in the 7.0% range. NDC's analysis set the cap rate at 7.50% given the mix of
residential, office, restaurant, and, in the case of the bowling and film theater venues, new
and untested uses. The final capitalization rate will be set by as -complete appraisal.
7) The recommended equity contribution of $14,221,714 was determined based on a 7.5%
internal rate of return given the projected after-tax cash flow and net sales proceeds of the
project if held as a rental property for 25 -years. The Developer intends to offer units in the
project for sale as demand is evidenced in the market, but, per the discussion in item 5,
above, NDC's underwriting has focused on the value of the project as a rental property
given the uncertainty of the condo sales schedule and the lower up -front gap financing
required given this assumption.
8) The Developer has not identified or requested a developer fee in its proposed uses and NDC
has not included one in its analysis. As to other proposed uses, the project has only
progressed through the conceptual design phase. As final designs progress and as a pre-bid
estimate is developed, the budget for this project should be reviewed to reaffirm the
recommended level of gap financing.
9) Also, with construction on the Chauncey not projected to be completed until past 2016,
market changes that may strengthen or weaken projected rental and for -sale condominium
revenues should be reviewed for both the residential and commercial units.
Conclusion: the project as presented demonstrates a need for gap financing in the amount of
$14,187,250, of which $12,097,250 would be generated through Tax Increment Financing and
the balance of $2,090,000 would be generated in the project's account by payments from the
Developer for the acquisition of City -owned property and for subterranean rights for
geothermal lines beneath City property.
If the terms of the selected senior debt and updated project costs are substantially different
from what the Developer has projected, NDC will review this evaluation as requested by the
City.
Marian Karr
From: Peter Byler <peterbyler@yahoo.com>
Sent: Thursday, June 04, 2015 1:51 PM
To: Tom Markus; Council
Subject: Chauncey development agreement
Hello fellow Iowa Citians,
Thanks for taking the time to read this. There are three questions I am planning to pose at the June 8 meeting when the
Chauncey agreement is discussed. I though if I sent them ahead maybe someone could have an answer for them, or
maybe one of the councillors will decide to expand on one of them. Or not! They are:
1. In my reading of the agreement, we have allowed the developer to share the responsibility for the repayment of the
bonds with other property he owns in town. While this may sound at first like a good idea because it ensures the bond
service will be paid even if the property would otherwise default, on second thought what it really does is offer a general
fund backstop of the developer's ability to pay. If we are giving such a backstop we should demand equity in the event it
is needed. In other words, if we have to kick in $150,000 some year to pay the debt service, we should get another unit
in the building. This is not hotel or golf course equity, these are beautiful condos in downtown Iowa City! Let's not offer
something for nothing.
2. The developer's original response to the RFP offered 20% workforce housing. Why in the world did we negotiate this
down to 5 of the 50- plus units? Affordable housing is a clear city and city council priority. We are holding the checkbook
(and the free land) in this negotiation and I hope we did not let this go too easily.
3. The whole premise of this agreement has a deep flaw due to the fact that the architect and general contractor are
equity partners in the developer. Thus, the developer's promise to invest $49,000,000 in the construction requires an
huge leap of faith on our part. What if it ends up the building can be built for $46,000,000? Do we expect a refund check
for $3,000,000? No, what I would expect is that the developer will be terribly tempted to bill itself for the full price and
pocket the difference. I'm not trying to make an accusation or question the character of the development partners, and I
might be overly paranoid in this instance, but this is generally a huge flaw. The city requires three sealed bids for any job
even over $100,0001 believe. But here we are spending over $14,000,000 on a construction project that will only be
accepting one bid: from the people asking for the $14,000,000.
Again, thanks for reading. And thanks for all the thought and effort that has gone into this project.
Peter Byler
30 Ashwood Dr.
Marian Karr
From: Gene Chrischilles <tgenec@gmail.com>
Sent: Thursday, June 04, 2015 12:23 PM
To: Council
Subject: Developer's agreement for Chauncey project
To the Council:
I am sending you this idea a few days before the June 8 vote in order to give you some time to ponder it. The
proposed agreement uses the "old" TIF model in which all the money is given to the developer up front. What if
the agreement was changed to use the "new" model which uses the partial rebate approach? This was the model
used in the Madison Street project and as I understand it, will be the model used by the city going forward. Use
of the "new" model provides a couple of benefits to the city as a whole.
1. It provides more immediate property tax revenue during the entire term of the TIF rather than having to wait
until it is paid off to see the full monetary benefit. As you remember with the Madison Street TIF, it turned out
to be an extra $100,000 per year during the term of the TIF. This revenue can then be used for other needs
rather than paying down the obligation. With the investment of 14 million dollars, I don't think it is
unreasonable to expect more for our money than the extra amenities that are currently proposed.
2. It lessens the risk to the city if the project encounters financial difficulties or failure.
I would appreciate your consideration and hopeful implementation of this change at the June 8 meeting. Thank
you.
Gene Chrischilles
Iowa City
Marian Karr
From: Steve McDowell <steve.d.mcdowell@gmail.com>
Sent: Wednesday, June 03, 2015 8:49 AM
To: Council
Subject: Chauncey Site
Happy to see the first vote for rezoning pass and I hope this project progresses on to eventual construction and
completion.
Steve McDowell
Marian Karr
From: James Throgmorton <jthrogmo@yahoo.com>
Sent: Wednesday, June 03, 2015 4:13 PM
To: Matt Hayek; Susan Mims; Terry Dickens; Kingsley Botchway; Rick Dobyns
Cc: Tom Markus; Geoff Fruin; Eleanor M. Dilkes; Marian Karr
Subject: TIF data
Attachments: Tom Jackson 2013 TIF table.pdf; DPV of annual property tax payments Chauncey.pdf
Hello to all.
Last night I referred to a table Tom Jackson had given us a few days before our January 8, 2013, work
session. It appeared in a Jan 2, 2013, memo from John Yapp to Tom, which was contained in our formal
meeting packet for the January 8 meeting. I've attached a PDF of that table.
I also referred to a graph of those data as they pertain to discounted present value city tax benefits of The
Chauncey and the generic 5 -story building. A PDF of that graph is also attached.
Since none of you had an opportunity to see the table and graph last night, I thought I should send it to you.
I sent the same two PDFs to Geoff Fruin earlier today.
Jim
Tom Jackson table, which appeared in the packet for the Formal Meeting on Jan 8, 2013.
It was conveyed as part of a Jan 2, 2013, memo from John Yapp to Tom Markus:
30 YEAR PRESENT VALUE TABLE, PREPARED BY NATIONAL DEVELOPMENT COUNCIL
UNDISCOUNTED CITY TAX RENEWS
VALUE B 5%
Financed TIF Contribution
0
-5_500,000
-13,450,000
-17,000AM
a
-S,SM000
-13,4SOA00
A2A00A00
0
1
226,177
5,529
-136,587
400,670
215,406
5,265
-130A13
381,590
Note: this irAornutidn
2
2"4 51W
35A36
-114,507
412590
222,186
31,779
-103,861
374,312
should be considered
3
264,308
55,429
-91,763
425,071
228,319
56,520
-79,269
367,192
preliminary, and is based on
4
284,23S
K733
-68,338
437,823
233,841
79,583
-56,222
360,198
tancept-leMaialTsis
5
3D4,761
128,977
44,210
450,958
238,788
101.057
-34,640
353,337
6
32S,9D2
162,188
-19,358
464,486
243493
123,027
-14,445
346,607
7
347,677
196,395
6,240
478,421
247,088
139,574
4.435
340A05
B
370,106
231,628
32AM
492,774
250=
156,775
22A69
333529
9
393,208
267,919
59,762
507,557
253,465
172,703
38,523
327,176
10
417,002
305,299
87,733
522,783
256,003
187,426
53,861
320,9"
11
441,511
343,798
116,543
538,467
258,142
2D1,022
68,141
314AN
12
466,75S
383,454
146,218
SS4,621
259,906
233,521
RIA20
308,634
13
492,756
424,299
176,783
571,260
261,319
225,015
93,752
302,951
14
519537
466,369
208,265
588,397
262,401
235,51E
1051188
297,181
IS
$47,121
509,702
24OA91
606,049
263,175
245,175
115,777
292,520
16
575533
554,335
274,090
624,231
263,658
253,947
125,564
285,967
17
604,798
600,306
30BA91
642,9SR
263,871
261,912
134,594
I90520
18
6341940
647,657
343,924
662,246
263,831
269,115
142,908
275,177
19
66S,987
6%,428
380,420
682.124
263,SS4
275,600
1S0,54S
269.936
20
697,965
746,663
418,011
702,S?7
263AS6
281A09
157,$44
264,794
21
1,130,849
1,776,456
1,329,342
723ASS
405,910
637,645
477,157
258,750
22
1.164,775
L829,7S0
1,369,222
745,364
398,178
6251500
468,068
254,803
23
1,1991718
1,884,643
1,410,299
767,725
390,594
613,566
459,153
249,949
24
1,235,709
1,941,182
1,452,608
790,757
383,154
6011898
450,407
245,188
2S
1,272,781
1,"9A17
1,496,186
914AW
375,856
580,433
441,328
24DS1E
26
1,310,964
Z059AM
L541A71
838,91
368,696
MAW
433,432
235,937
27
1,350293
2,121,112
1,587,304
864,081
361,674
568,155
125,157
23IA43
28
113901802
2,184,817
1,634,923
890,004
3541735
$57,333
417.058
227,031
29
1,432526
2,250,362
I.633,970
916,704
348,027
546,717
409,114
222,710
30
1A75502
2,317,373
1,734,490
944,205
341.398
536,303
401,322
238A"
Totals 21,789,155 27,233,224 17,554,429 19A6I,0421 8,739,976 9,370,721 5,258,475 8,782,410
3WIVA ,LIVUAPMJ tUft"02M '2M#VBA3V Xb.L A113 ?V"t4NV
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=� -04, CITY OF IOWA CITYI�
`Q�w MEMORANDUM
Date: June 5, 2015
To: Tom Markus, City Manager
Cc: City Council
From: Dennis Bockenstedt, Director of Finance
Re: Cash Flow Comparatives for Chauncey Building
I have reviewed the cash flow comparisons that were included in a memorandum from John
Yapp to you dated January 2, 2013 and were mentioned by City Councilor, Jim Throgmorton, at
the public hearing for the rezoning of the corner of College and Gilbert Streets. It is my
understanding after discussing this with other City staff that the information relating to the
comparative analysis between a Generic five -story apartment/multi-use building and the
Chauncey building was originally done in an expedited manner and inserted by staff into the
National Development Council (NDC) analysis at the request of Jim Throgmorton. After
reviewing the cash flow analysis in more detail, I have found several factors that significantly
impact the overall cash flow results being discussed.
General Building Valuation and Tax Rate
When reviewing the property tax cash flows for the Generic five -story apartment/mixed-use
building, I have discovered that the valuation used for the present value cash flow analysis was
not intended to represent an actual, constructed building but was set at a level that would make
the analysis easier to manipulate and apply to another project. The property tax calculation in
the analysis used a $10 million taxable value. By using $10 million, the analysis could be ported
to another value easily by the City Council or by the public without having to do a great deal of
complicated math. The $10 million value is not and was not intended to be a realistic valuation.
For instance, I used Assessor information to try to identify a comparable building that already
exists in Iowa City. The closest comparison I could find was 307 South Linn Street (5 story
total/1 commercial) at a value of $4,371,860 with 60 apartments and 325 East College Street (4
story total/1 commercial) at a value of $6,722,310 with 48 apartments. Of the developer
proposals that the City received, there was a five -story, 59 unit proposal submitted by
Ryan/Iceberg which had an estimated assessed value of $7,316,981, but they also had a TIF
request of $3,914,129. In order to derive a more realistic assessed value for an updated cash
flow comparison, I used a conservative estimated assessed value of $8 million for the Generic
building. This valuation change was not the only part of the calculation that needed to be
updated.
In addition to the valuation difference, there was also an error in the property tax rate that was
used for the Generic building. The cash flow projection for the Generic building used the total
City property tax rate of $38.90 per $1,000 of value. For the other projects in the analysis, the
property tax rate used was the tax increment financing (TIF) property tax rate of $32.00 per
$1,000 of value. By using a higher property tax rate, the projected cash flows for the Generic
building were overstated.
After applying the $8 million valuation change and the TIF property tax rate of $32.00 to the
Generic building, the present value cash flows for the Generic building over the 20 year period
was reduced from $6,396,610 to $4,209,594. There are still other revenue issues that should
be considered in the cash flow analysis, however.
Total Project Revenue
Another factor that should be considered for this analysis is the total revenue to be generated
from this site. The cash flow analysis presented in the memo only considered the tax increment
financing (TIF) revenue to be generated by each project. It did not consider the entire property
tax levy that will be paid by each development nor did it consider other revenues that would be
generated by each project. When the protected property tax levies are factored into the
equation along with the corrected valuation for the Generic building, the year at which the
present value cash flows of the Chauncey building exceed the cash flows of the Generic
building are year 9 ($2,549,629 for Chauncey, $2,547,165 for the Generic building.) When the
estimated hotel/motel taxes for the Chauncey ($99,000 per year) are added into the cash flow
projections, the year of crossover is reduced to year 2 ($629,546 for Chauncey, $604,730 for
the Generic building.) The 20 -year totals are also then changed to $8,527,777 for the
Chauncey building and $5,117,288 for the Generic building. There are other revenue
differences that have not been determined but would also impact this analysis including water
charges, sewer charges, storm water charges, utility and cable franchise taxes, parking
revenues, and building permit fees. There has been no analysis of the entire revenue impact of
any of the projects, but this is still a factor that should be taken into consideration.
Property Tax Law Changes
Another major factor that impacts the cash flow analysis is the change in the property tax laws
that have transpired since the original analysis was completed. Since the original analysis, the
State of Iowa has created a multi -residential class of property. This change in the property tax
law significantly impacts the cash flow analysis. In the analysis, the Generic building is
presented as a commercial class apartment/mixed-use building that is being taxed at 100% of
its assessed value. Due to the change in the property tax law, the taxable value of the Generic
building would gradually be reduced to the equivalent value of a residential class property.
When this factor is applied to the cash flows of the Generic building along with the full property
tax rate and the hotel/motel tax revenues, there is not a year where the cash flows from the
Generic building exceed the cash flows from the Chauncey building. Furthermore, this change
in the property tax law did not impact the cash flows of the Chauncey building. The minimum
assessment in the development agreement is for $30,128,234 which is higher than the
assessment that was in the original Chauncey proposal of $29,890,806 despite the loss of the
top five floors of residential development. After applying this change in the State property tax
laws along with the other factors mentioned above, the 20 -year cash flows for the Chauncey
building are still $8,527,777, but the estimated cash flows from the Generic building are reduced
to $2,828,932.
Other Issues
There are still other issues with the overall cash flow comparisons that should also be
considered. One issue is the appropriate number of years used for analytical purposes should
be determined in order to make a fair and reasonable decision. The 20 -year period that has
been used for this analysis was also the anticipated debt repayment period for the Chauncey
2
Building. This is a period that an individual might expect lower cash flows due to the debt
repayment. It seems reasonable to expect that a lesser building with no debt would have better
or equal cash flows than a larger building with debt over that period of time. The financial
analysis by NDC contemplates a 30 -year payback and uses that length of time for the analysis.
The actual useful life of the building may be significantly longer than 30 years. The City Council
would need to determine what the appropriate payback period for this project is and how many
years are needed for good decision making. The 30 -year present value cash flows are
$12,576,783 for the Chauncey and $3,339,017 for the Generic five -story building after all of the
factors discussed above are included.
Another issue to review is the use of a `generic' building for comparison at this site. This project
is not typical or generic as it involves City owned property that is being developed through a
Request -for -Proposal (RFP) and is not on a site that is already owned by a developer. The
project has complications such as the Chauncey -Swan Park and the Farmer's Market. There is
also an expensive and complicated issue regarding the relocation and purchase of the
MidAmerican transfer station site. There was also a desire in the RFP for affordable housing
and special amenities to attract individuals to the downtown area as well as meeting LEED
standards. These are not typical considerations for a developer of a generic site. Many of
these desires and complications contributed to the gap in the finances that caused most of the
developers to submit proposals requesting TIF assistance. There was also a desire that this
property not be another student housing development which is somewhat contrary to the market
of the surrounding area. It should be noted that there was no proposal submitted to the RFP
that did not ask for TIF assistance.
Summary
To summarize my review of the cash flow analysis, there are a number of pertinent factors that
need to be considered. Those include 1) the assessed valuation and property tax rate figures
used for the Generic building were not accurate, 2) all of the revenues that will be generated by
each project were not used in the analysis, 3) there has been changes in the property tax laws
that have greatly impacted the original analysis, and 4) this site and the RFP do not make this a
generic project. After all of the factors are placed into an updated analysis and the other issues
are considered, the Chauncey building clearly generates better cash flows over a 20 year period
than a generic five -story apartment/mixed-use building, and under the circumstances of the
RFP, a generic project is not realistic.
3
Marian Karr
From:
Tom Markus
Sent:
Friday, June 05, 2015 3:03 PM
To:
Marian Karr
Cc:
Council
Subject:
FW: Chauncey development agreement
Please add to late handouts.
-----Original Message -----
From: Wendy Ford
Sent: Friday, June 05, 2015 3:03 PM
To: Tom Markus
Subject: FW: Chauncey development agreement
Dear Mr. Byler,
Thank you for the well -reasoned questions about the Development Agreement for The Chauncey -- the answers to
which follow.
1. The City requires that the project generate sufficient increment to pay the debt service over the length of the bonds,
even though the TIF revenue bonds are secured with the increment in the entire district. Such is the case with the
Chauncey. The minimum assessment agreement on units still owned by the Developer at Park at 201 simply provides
additional assurance of minimum value in the District during the length of the agreement. The minimum assessment
agreements provide that if an increase in the minimum assessment is necessary to cover the debt service, the minimum
value will be increased and the Developer guarantees any shortfall. TIF revenue bonds are not secured by the full faith
and credit of the City; all debt service will be paid with taxes on the TIF increment. This is the same arrangement the
City had with the Plaza Towers.
2. The City had encouraged "workforce" housing. At some point during the conversation with the Chauncey developer, it
became clear that what the City needed to encourage was low income/affordable housing. This caused us to pursue the
five units of low income housing which became a more permanent solution to the need for affordable housing in Iowa
City. On Monday evening, Mr. Doug Boothroy will provide a more detailed explanation including a description of the
income limits associated with scenarios for workforce and for low income/affordable housing.
3. It is our understanding that neither the architect nor the general contractor nor their companies are equity partners in
the development. NDC tells us that when the contractor is part of the Development team, they are always concerned
about "pancaking" fees (e.g. General Contractor overhead, General Contractor profit, Developer's fee). In this case, a)
the General Contractor is not part of the Development team, b) combined General Contractor overhead and profit is 5%
- well below national averages - and c) there is no Developer Fee. NDC informs us that the absence of a Developer fee
trims $3 - $6.5 million off the gap. In addition, NDC notes that the last construction estimate it received from McComas
shows that approximately 73% of the work will be performed by subcontractors who will bid on the contracts. Finally,
the Development Agreement provides that the grant funds from the City will be released to the Developer on a pro rata
basis with the proceeds of the construction loan for progress payments to the contractor. Payments will be based on
Applications for Payment submitted by the contractor as such time as certificates of payment are issued by the architect
and in the amounts so certified. Both the Bank and the City will have the architect's certification that payment is due for
work completed prior to making each payment and the City's payments will not get ahead of those provided by the
bank.
Please let me know if we can provide any further insight.
Sincerely,
Wendy Ford
Economic Development Coordinator
City of Iowa City
-----Original Message -----
From: Peter Byler [mailto:peterbyler@yahoo.com]
Sent: Thursday, June 04, 2015 1:51 PM
To: Tom Markus; Council
Subject: Chauncey development agreement
Hello fellow Iowa Citians,
Thanks for taking the time to read this. There are three questions I am planning to pose at the June 8 meeting when the
Chauncey agreement is discussed. I though if I sent them ahead maybe someone could have an answer for them, or
maybe one of the councillors will decide to expand on one of them. Or not! They are:
1. In my reading of the agreement, we have allowed the developer to share the responsibility for the repayment of the
bonds with other property he owns in town. While this may sound at first like a good idea because it ensures the bond
service will be paid even if the property would otherwise default, on second thought what it really does is offer a general
fund backstop of the developer's ability to pay. If we are giving such a backstop we should demand equity in the event it
is needed. In other words, if we have to kick in $150,000 some year to pay the debt service, we should get another unit
in the building. This is not hotel or golf course equity, these are beautiful condos in downtown Iowa City! Let's not offer
something for nothing.
2. The developer's original response to the RFP offered 20% workforce housing. Why in the world did we negotiate this
down to 5 of the 50- plus units? Affordable housing is a clear city and city council priority. We are holding the checkbook
(and the free land) in this negotiation and I hope we did not let this go too easily.
3. The whole premise of this agreement has a deep flaw due to the fact that the architect and general contractor are
equity partners in the developer. Thus, the developer's promise to invest $49,000,000 in the construction requires an
huge leap of faith on our part. What if it ends up the building can be built for $46,000,000? Do we expect a refund check
for $3,000,000? No, what I would expect is that the developer will be terribly tempted to bill itself for the full price and
pocket the difference. I'm not trying to make an accusation or question the character of the development partners, and I
might be overly paranoid in this instance, but this is generally a huge flaw. The city requires three sealed bids for any job
even over $100,0001 believe. But here we are spending over $14,000,000 on a construction project that will only be
accepting one bid: from the people asking for the $14,000,000.
Again, thanks for reading. And thanks for all the thought and effort that has gone into this project.
Peter Byler
30 Ashwood Dr.
Publish 6/1
NOTICE OF MEETING OF THE CITY COUNCIL OF THE CITY OF
IOWA CITY, STATE OF IOWA, ON THE MATTER OF THE
PROPOSED ISSUANCE OF NOT TO EXCEED $14,200,000
URBAN RENEWAL TAX INCREMENT REVENUE BONDS,
SERIES 2015B OF THE CITY OF IOWA CITY, AND THE
N
HEARING ON THE ISSUANCE THEREOF
PUBLIC NOTICE is hereby given that the City Council of the City of Iowa City, State of
Iowa, will hold a public hearing on the 8th day of June, 2015, at 7:00 o'clock P.M., in the Emma J.
Harvat Hall, City Hall, 410 E. Washington, Iowa City, Iowa, at which meeting the City Council
proposes to take additional action for the issuance of not to exceed $14,200,000 Urban Renewal Tax
Increment Revenue Bonds, Series 2015B, of the City. The bonds will not constitute general
obligations or be payable in any manner by taxation, but will be payable from and secured by the net
revenues of the City -University Project 1 Urban Renewal Area under Section 403.19(2) of the Code
of Iowa. The bonds are proposed to be issued for the purpose of paying costs of aiding in the
planning, undertaking, and carrying out of an urban renewal project for the redevelopment of real
property, including one or more grants to a redeveloper, The Chauncey, L.L.C., in connection with
the construction of Class A office space, workforce housing, a hotel, a bowling alley and movie
theatre at the northeast corner of College and Gilbert Streets.
At the above meeting oral or written objections from any resident or property owner of the
City to the above action shall be received. After all objections have been received and considered,
the Council will at the meeting or at any adjournment thereof, take additional action for the issuance
of the bonds or will abandon the proposal to issue the bonds.
This notice is given by order of the governing body as provided by Sections 362.3 and 403.9
of the City Code of Iowa.
Dated this 1 st day of June, 2015.
Marian K. Karr
City Clerk, City of Iowa City, State of Iowa
(End of Notice)
Date: June 2, 2015
Sunday
CITY OF IOWA CITY
M E M 0 R"ANDUM
To: Tom Markus, City Manager
From: Dennis Bockenstedt, Director of Finance 0,5
Re: Financing Structure for Chauncey Building
Following a public hearing regarding the issuance of debt for the tax increment financing (TIF)
project, the Chauncey Building, there is a bond resolution to institute proceedings for the
issuance of Urban Renewal Tax Increment Revenue Bonds (TIF Revenue Bonds) in order to
finance the economic development grant.
As per the proposed development agreement, the City's contribution to the project is
$14,187,250. Of this amount, $2,090,000 is expected to be financed through the sale of City
owned property and easements at the corner of East College Street and South Gilbert Street.
The remaining balance of $12,097,250 will be financed through the use of a combination of
short-term and long-term debt financing.
The construction of the Chauncey Building project is expected to commence in the spring of
2016. During the construction period, it is projected that the City will issue a four-year
construction note which will require replacement with permanent, long-term financing at its
maturity. The resolution presented to the City Council will authorize staff to institute
proceedings for the issuance of both the short-term construction note and its replacement with
long-term bond financing.
The City is anticipating issuing a four-year construction note on June 1, 2016 to fund a portion of
the construction of the Chauncey Building. The four-year construction note will include the
capitalization of interest for the first 30 months of the note. The final 18 months of interest on
the note is expected to be paid from the first partial year of property taxes/TIF revenue being
generated by the Chauncey project. The four-year, short-term construction note allows the
Chauncey project to be constructed at a lower interest rate, which lowers the total cost of
financing for the project. The issuance of short-term financing, however, does present risks due
to the uncertainty of future interest rates, legal requirements, and the ability to obtain long-term
financing. The extended construction period for the project warrants the split between the
construction financing and the permanent financing. The partial minimum assessment
requirement for the Chauncey Building to repay 18 months of the construction note interest is
$16,345,771. This value is expected to generate TIF revenue of $500,346.
The permanent, long-term financing for the Chauncey project is anticipated to be a 25 -year,
taxable Tax Increment Financing (TIF) Revenue Bond. The security for this bond will be the TIF
revenues from the City -University Urban Renewal Area, a minimum assessment agreement on
the Chauncey Building, a minimum assessment agreement on the units still owned by the
Developer (or a related entity) at the Park @201, and a Debt Service Reserve Fund equal to the
bond's highest annual debt service (a restricted Debt Service Reserve Fund will be created for
the bonds in the Debt Service Fund.) In addition, the proposed development agreement
provides that if the property tax revenue is for any reason insufficient to pay the debt service,
the Assessor will increase the assessment, and if the Assessor does not do so, the Developer is
personally obligated to cover the difference. This personal obligation, however, is not secured.
The minimum assessment requirement for the Chauncey Building is $30,128,234 which is
expected to generate annual TIF revenues of $922,229. The minimum assessment is
calculated using the average estimated debt service payments and is not based upon the actual
estimated debt service payments. This allows the development agreement to set one minimum
assessment value for the life of the project and not fluctuate annually, but it also creates a
disparity between the annual TIF revenue expected from the project and the annual debt service
payment expected on the bond.
The estimated debt schedule for the 25 -year TIF Revenue Bond is being proposed as a
schedule with an uneven annual debt service payment. Typically, long-term bond issues are
designed to have nearly equal annual debt service payments over the life of the bond. The
anticipated bond schedule for the Chauncey Building has larger debt service payments in the
early years of the bond that will gradually decrease over the life of the bond. By structuring the
bond in this way, it lowers the overall cost of the bond's debt service, and it lowers the Average
Life of the bonds which reduces some of the risk of the bond issue. During the first fourteen
years of the bond schedule, the TIF revenues from the project are expected to be insufficient to
meet the annual debt service payments; however, over the last eleven years of the bond
schedule, the TIF revenues from the project are expected to be greater than the annual debt
service payments. Over the life of the outstanding bonds, the TIF revenues from the Chauncey
Building are expected to pay all of the debt service costs of the project. Attached following the
bond resolution are the estimated debt service schedules and the minimum assessment
calculations.
Overall, the financing for the Chauncey building will be completed in two steps. The first step
will be to issue short-term construction financing, and the second step will be to issue long-term
TIF revenue bond financing. A minimum assessment agreement will be executed to recover the
entire cost of the project financing from the Chauncey Building over the life of the project. (The
debt coverage and repayment projections do not include other revenues that will be generated
by the project such as hotel/motel taxes, the debt service property tax levy, SSMID taxes,
parking fees, utility service charges, and franchise taxes.) By approving the bond resolution
presented, the City Council will authorize the City to institute proceedings to issue the necessary
debt instruments for the construction of the Chauncey Building.
2
$ 23,556,067.26
Average $ 922,228.85 $ 30,128,234
(not counting partial year)
Chauncey Minimum Assessment
TIF Revenue Bonds
TIF Property Tax Rate:
$
30.61012
(no SSMID/estimated TIF rate)
Assessment Date
Fiscal Year
Debt Payment
Assessed Value
1/1/2018
2020
$
500,346.00
$
16,345,771
1/1/2019
2021
$
1,045,866.46
$
34,167,343
0.00%
1/1/2020
2022
$
1,048,092.00
$
34,240,049
0.21%
1/1/2021
2023
$
1,047,690.72
$
34,226,939
-0.04%
1/1/2022
2024
$
1,049,962.24
$
34,301,147
0.22%
1/1/2023
2025
$
1,044,976.16
$
34,138,258
-0.47%
1/1/2024
2026
$
1,048,541.54
$
34,254,735
0.34%
1/1/2025
2027
$
1,045,439.92
$
34,153,408
-0.30%
1/1/2026
2028
$
1,040,791.06
$
34,001,535
-0.44%
1/1/2027
2029
$
1,029,172.34
$
33,621,964
-1.12%
1/1/2028
2030
$
1,001,362.42
$
32,713,443
-2.70%
1/1/2029
2031
$
978,038.08
$
31,951,462
-2.33%
1/1/2030
2032
$
948,971.26
$
31,001,880
-2.97%
1/1/2031
2033
$
924,412.54
$
30,199,573
-2.59%
1/1/2032
2034
$
919,118.80
$
30,026,632
-0.57%
1/1/2033
2035
$
922,027.68
$
30,121,662
0.32%
1/1/2034
2036
$
902,802.96
$
29,493,611
-2.09%
1/1/2035
2037
$
876,799.92
$
28,644,119
-2.88%
1/1/2036
2038
$
849,960.04
$
27,767,289
-3.06%
1/1/2037
2039
$
827,273.32
$
27,026,138
-2.67%
1/1/2038
2040
$
803,432.90
$
26,247,297
-2.88%
1/1/2039
2041
$
773,708.78
$
25,276,241
-3.70%
1/1/2040
2042
$
753,568.32
$
24,618,274
-2.60%
1/1/2041
2043
$
732,406.82
$
23,926,950
-2.81%
1/1/2042
2044
$
725,218.30
$
23,692,109
-0.98%
1/1/2043
2045
$
716,086.68
$
23,393,789
-1.26%
$ 23,556,067.26
Average $ 922,228.85 $ 30,128,234
(not counting partial year)
SOURCES AND USES OF FUNDS
City of Iowa City, Iowa
Taxable TIF Revenue Capital Loan Note, Series 2016
Dated Date 6/1/2016
Delivery Date 6/1/2016
Sources:
Bond Proceeds:
Par Amount 12,635,000.00
Other Sources of Funds:
Funds on Hand 2,090,000.00
$14,725,000.00
Prepared by Public Financial Management, Inc. Date: 515/2015
$14,725,000.00
Uses:
Project Fund Deposits:
Project Fund
14,187,250.00
Other Fund Deposits:
Capitalized Interest
416,955.00
Delivery Date Expenses:
Cost of Issuance
59,150.00
Underwriter's Discount
56,857.50
Other Uses of Funds:
Additional Proceeds
4,787.50
$14,725,000.00
Prepared by Public Financial Management, Inc. Date: 515/2015
Date
Draw Principal
Coupon Interest
Debt Service
Cap. Int.
Net D/S
6/1/2016
2,105,833
12/1/2016
2,105,833
27,797
27,797
(27,797)
0
6/1/2017
2,105,833
55,594
55,594
(55,594)
0
12/1/2017
2,105,833
83,391
83,391
(83,391)
0
6/1/2018
2,105,833
111,188
111,188
(111,188)
0
12/1/2018
2,105,833
138,985
138,985
(138,985)
0 Interest payments toQbe
6/1/2019
166,782
166,782
166,782 included in rollover to long.
12/1/2019
166,782
166,782
166,782 term Revenue Bonds.
6/l/2020
12,635,000
2.64% 166,782
12,801,782
12,801,782
$12,635,000 $12,635,000
$917,301
$13,552,301
($416,955)
$13,135,346
Note: 05-04-15 FHLB 4 -yr Fixed Rete Advance (1.64%) + 50bps Credit + 50bps Timing
Prepared by Public Financial Management, Inc. Date: 5/6/2015
SOURCES AND USES OF FUNDS
City of Iowa City, Iowa
Proposed Taxable TIF Revenue Bonds, Series 2020
Dated Date 06/01/2020
Delivery Date 06101/2020
Sources:
Bond Proceeds:
Par Amount
12,965,000.00
Other Sources of Funds:
Debt Service Fund Reserves
1,050,000.00
14,015,000.00
Uses:
Project Fund Deposits:
Principal payment on Capital Loan Notes
12,635,000.00
Other Fund Deposits:
Debt Service Reserve Fund
1,049,962.24
Delivery Date Expenses:
Cost of Issuance
70,500.00
Underwriter's Discount
259,300.00
329,800.00
Other Uses of funds:
Additional Proceeds
237.76
14,015,000.00
Note: 05-06-15 Treasury+ PFM Pricing Group Estimate Spread+ I00bps Timing
�i 1•i 1�
`` �tt i}' itflfr:'FSii1
May 6, 2015 3:1 Opm Prepared by Public Financial Management, Inc. Page I
Underwriter's Fees (per $1000)
Average Takedown
Other Fee 20.000000
Total Underwriter's Discount 20.000000
Bid Price 98.000000
Par
Average Average
The PFM Group
Bond Component
Value Price
BOND SUMMARY STATISTICS
City of Iowa City, Iowa
Paid by TIF Revenue
Proposed Taxable TIF Revenue Bonds,
Series 2020
Dated Date
06/01/2020
Delivery Date
06/01/2020
Last Maturity
06/01/2045
Arbitrage Yield
5.462331%
True Interest Cost (TIC)
5.683793%
Net Interest Cost (NIC)
5.702805%
All-In TIC
5.745222%
Average Coupon
5.559932%
Average Life (years)
13.998
Weighted Average Maturity (years)
13.998
Duration of Issue (years)
9.330
Par Amount
12,965,000.00
Bond Proceeds
12,965,000.00
Total Interest
10,090,721.26
Net Interest
10,350,021.26
Total Debt Service
23,055,721.26
Maximum Annual Debt Service
1,049,962.24
Average Annual Debt Service
922,228.85
Underwriter's Fees (per $1000)
Average Takedown
Other Fee 20.000000
Total Underwriter's Discount 20.000000
Bid Price 98.000000
May 6, 2015 3:10 pm Prepared by Public Financial Management, Inc. Page 2
Par
Average Average
PV of 1 by
Bond Component
Value Price
Coupon Life
change
Paid by TIF Revenue
12,965,000.00 100.000
5.560% 13.998
11,579.35
12,965,000.00
13.998
11,579.35
All -In
Arbitrage
TIC
TIC
Yield
Par Value
12,965,000.00
12,965,000.00
12,965,000.00
+ Accrued Interest
+ Premium (Discount)
-Underwriter's Discount
-259,300.00
-259,300.00
- Cost of Issuance Expense
-70,500.00
- Other Amounts
Target Value
12,705,700.00
12,635,200.00
12,965,000.00
Target Date
06/01/2020
06/01/2020
06/01/2020
Yield
5.683793%
5.745222%
5.462331%
May 6, 2015 3:10 pm Prepared by Public Financial Management, Inc. Page 2
The PFM Group
BOND PRICING
City of Iowa City, Iowa
Proposed Taxable TIF Revenue Bonds, Series 2020
Maturity
Bond Component Date Amount Rate Yield
Price
Paid by TIF Revenue:
06/01/2020
First Coupon
12/01/2020
Par Amount
06/01/2021
395,000
1.968219%
1.968219%
100.000
06/01/2022
405,000
2.568219%
2.568219%
100.000
06/01/2023
415,000
3.067100%
3.067100%
100.000
06/01/2024
430,000
3.485138%
3.485138%
100.000
06/01/2025
440,000
3.735138%
3.735138%
100.000
06/01/2026
460,000
3.935138%
3.935138%
100.000
06/01/2027
475,000
4.136600%
4.136600%
100.000
06/01/2028
490,000
4.411985%
4.411985%
100.000
06/01/2029
500,000
4.561985%
4.561985%
100.000
06/01/2030
495,000
4.711985%
4.711985%
100.000
06/01/2031
495,000
4.861985%
4.861985%
100.000
06/01/2032
490,000
5.011985%
5.011985%
100.000
06/01/2033
490,000
5.161985%
5.161985%
100.000
06/01/2034
510,000
5.311985%
5.311985%
100.000
06/01/2035
540,000
5.411985%
5.411985%
100.000
06/01/2036
550,000
5.636916%
5.636916%
100.000
06/01/2037
555,000
5.736916%
5.736916%
100.000
06/01/2038
560,000
5.836916%
5.836916%
100.000
06/01/2039
570,000
5.936916%
5.936916%
100.000
06/01/2040
580,000
5.986916%
5.986916%
100.000
06/01/2041
585,000
6.006916%
6.006916%
100.000
06/01/2042
600,000
6.026916%
6.026916%
100.000
06/01/2043
615,000
6.046916%
6.046916%
100.000
06/01/2044
645,000
6.066916%
6.066916%
100.000
06/01/2045
675,000
6.086916%
6.086916%
100.000
12,965,000
Dated Date
06/01/2020
Delivery Date
06/01/2020
First Coupon
12/01/2020
Par Amount
12,965,000.00
Original Issue Discount
Production
12,965,000.00 100.000000%
Underwriter's Discount
-259,300.00 -2.000000%
Purchase Price
12,705,700.00 98.000000%
Accrued Interest
Net Proceeds 12,705,700.00
May 6, 2015 3:10 pm Prepared by Public Financial Management, Inc. Page 3
AW,'
-- The PPM Group
BOND DEBT SERVICE
City of Iowa City, Iowa
Proposed Taxable TIF Revenue Bonds, Series 2020
Period Annual
Ending Principal Coupon Interest Debt Service Debt Service
12/01/2020
325,433.23
325,433.23
06/01/2021
395,000
1.968219%
325,433.23
720,433.23
1,045,866.46
12/01/2021
321,546.00
321,546.00
06/01/2022
405,000
2.568219%
321,546.00
726,546.00
1,048,092.00
12/01/2022
316,345.36
316,345.36
06/01/2023
415,000
3.067100%
316,345.36
731,345.36
1,047,690.72
12/01/2023
309,981.12
309,981.12
06/01/2024
430,000
3.485138%
309,981.12
739,981.12
1,049,962.24
12/01/2024
302,488.08
302,488.08
06/01/2025
440,000
3.735138%
302,488.08
742,488.08
1,044,976.16
12/01/2025
294,270.77
294,270.77
06/01/2026
460,000
3.935138%
294,270.77
754,270.77
1,048,541.54
12/01/2026
285,219.96
285,219.96
06/01/2027
475,000
4.136600%
285,219.96
760,219.96
1,045,439.92
12/01/2027
275,395.53
275,395.53
06/01/2028
490,000
4.411985%
275,395.53
765,395.53
1,040,791.06
12/01/2028
264,586.17
264,586.17
06/01/2029
500,000
4.561985%
264,586.17
764,586.17
1,029,172.34
12/01/2029
253,181.21
253,181.21
06/01/2030
495,000
4.711985%
253,181.21
748,181.21
1,001,362.42
12/01/2030
241,519.04
241,519.04
06/01/2031
495,000
4.861985%
241,519.04
736,519.04
978,038.08
12/01/2031
229,485.63
229,485.63
06/01/2032
490,000
5.011985%
229,485.63
719,485.63
948,971.26
12/01/2032
217,206.27
217,206.27
06/01/2033
490,000
5.161985%
217,206.27
707,206.27
924,412.54
12/01/2033
204,559.40
204,559.40
06/01/2034
510,000
5.311985%
204,559.40
714,559.40
919,118.80
12/01/2034
191,013.84
191,013.84
06/01/2035
540,000
5.411985%
191,013.84
731,013.84
922,027.68
12/01/2035
176,401.48
176,401.48
06/01/2036
550,000
5.636916%
176,401.48
726,401.48
902,802.96
12/01/2036
160,899.96
160,899.96
06/01/2037
555,000
5.736916%
160,899.96
715,899.96
876,799.92
12/01/2037
144,980.02
144,980.02
06/01/2038
560,000
5.836916%
144,980.02
704,980.02
849,960.04
12/01/2038
128,636.66
128,636.66
06/01/2039
570,000
5.936916%
128,636.66
698,636.66
827,273.32
12/01/2039
111,716.45
111,716.45
06/01/2040
580,000
5.986916%
111,716.45
691,716.45
803,432.90
12/01/2040
94,354.39
94,354.39
06/01/2041
585,000
6.006916%
94,354.39
679,354.39
773,708.78
12/01/2041
76,784.16
76,784.16
06/01/2042
600,000
6.026916%
76,784.16
676,784.16
753,568.32
12/01/2042
58,703.41
58,703.41
06/01/2043
615,000
6.046916%
58,703.41
673,703.41
732,406.82
12/01/2043
40,109.15
40,109.15
06/01/2044
645,000
6.066916%
40,109.15
685,109.15
725,218.30
12/01/2044
20,543.34
20,543.34
06/01/2045
675,000
6.086916%
20,543.34
695,543.34
716,086.68
12,965,000
10,090,721.26
23,055,721.26
23,055,721.26
May 6, 2015 3:10 pm Prepared by Public Financial Management, Inc. Page 4