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Home My WebLink AboutCollege Gilbert pptOverview of Request for Proposals process for the College St /Gilbert St development proposals Summary of finalist proposals Dec 18, 2012 I1 L� L J M J � r W O z Project Location f ''.1 �' r EJ - El R E JEFFERSON ST L� r j -- FL 0 F-1 L - —L r' ` I1 L� L J M J � r W O z Project Location EJ FL 0 F-1 L n R r r- �' E COURT ST`I T Ij / z Iowa City Transit E "WINDOW PaNldn9 Structure Fie bcaEan: S.4o CiT GISFCO _IAWs1_Udsn_PlarmmMM120420_John Wison RedevelopnenrMap 2 mzd Rk6otim:Slm CKVGfSPCD_Maps1 Urbw Mwa ,ng4"'0120429 _J� Wilson RederalopmenNftpt.mW Summary of project elements Jake 8 Bike Library 2 Christensen& (lower level); Tim Dwight New Pioneer Co -op Steve Rohrbach 20 Movie theaters 3 / Bowling alley / cafe Jesse Allen 18 New Pioneer 2 Co -op George 13 New Pioneer 1 Sherman Co -op Marc 5 New Pioneer 0 Gullickson and Co -op Jim Bergman 5 57 units 69,727 138,728 15 inc. hotel 35 hotel units / 127,032 283,322 floors 69 residence 14 11 78 units 58,972 182,301 132 units 52,624 199,223 4 59 units 24,800 69,100 Property tax comparison 0 0 0 0 0 $3,890,000 $6,800,000 $7,170,000 $3,167,500 $957,000 $5,846,600 $7,780,000 $13,600,000 $19,120,000 $12,217,500 $3,857,000 $12,976,600 $11,670,000 * Preliminary estimates, based on constant valuation and tax rates. Estimated time to retire TIF based on National Development Council Dec 10, 2012 memo. Criteria included in RFP • Increasing the taxable valuation of property • Redevelopment of blighted property • Encouragement of desirable projects such as downtown hotels, workforce housing, arts and entertainment venues, downtown grocery, class A office space, and similar uses • Encouragement of projects which result in increasing downtown destination points to continue to draw people downtown • Providing a safe and inviting downtown for residents and visitors • Encouragement of housing opportunities for residents from a variety of age groups and income levels Jake Christensen & Steve Rohrbach Tim Dwight 8 20 New Pioneer Co Op Filmscene theaters / 12 -lane bowling alley / Cafe Marc Gullickson and George Sherman Jim Bergman 55 rental 34 rental 55 rental 60 rental 132 rental 2 for sale 36 for sale 24 for sale 35 hotel 55 rental 7 rental 25 rental 60 rental 132 rental 7 sale 138,728 283,322 182,301 69,100 199,223 43 52 52 30 69 Bike library (lower Art & sculpture Cafe; outdoor Exterior patio; Rooftop terrace; level); exterior dining gallery; rooftop patio; seating; resident residential amenities; resident amenities area; rooftop Rohrbach Assoc. one amenities; roof wine rooftop garden /patio (Club room & fitness) garden /plaza floor of office; 35- garden; unspecified unit hotel theater LEED Platinum Commitment for one Terrace gardens Proposal indicates This proposer desires building proposed; floor of office integrated into LEED strategies will to sell office space to net -zero energy ( Rohrbach & Assoc.); building; outdoor be pursued, including the City. Enterprise residential; potential Transparent exterior amphitheater a green roof, Zone Tax Credits, for 1 additional floor wall 15' & 2n^ floor; proposed; energy- stormwater CDBG, HOME, and has been discussed 16 -floor alternative efficient /LEED design collection for New Market tax by applicant. discussed by discussed by irrigation, and solar credits will be applicant. LEED applicant panels. Additional pursued. LEED discussed. floor discussed. discussed. C!7 .. College Street /Gilbert Street • Current decision at hand is about selecting a developer with whom the City would like to flesh out the development concept and negotiate possible financial assistance through a development agreement. • The only apples to apples financial comparison that can be made at this time is of the estimated property tax increment based on the projects as proposed. M National Development Council GJ College Street /Gilbert Street Project/ Development Team 4 Zero The Chauncey Chauncey Ryan / Iceberg Sherman otal Project Cost of Components 29,041,062 53,830,112 Gardens 17,151,606 Associates Calculated Assessed Valuation with 231.02 291.24 350.54 271.39 264.44 Residential Rollback (see discussion) $17,010,588 $29,890,806 $22,641,683 $7,316,981 $17,835,646 Calculated Annual Property Tax Increment @ 3.2% $544,339 $956,506 $724,534 $234,143 $570,741 Requested TIF Support— Component Reporting $5,500,001 $13,450,000 $12,000,000 $3,914,129 $6,744,115 Est. Years to Repay TIF principal Given Calculated Increment 10.10 14.06 16.56 16.72 11.82 Total Area of Project Components 125,706 184,828 138,356 63,200 189,519 otal Project Cost of Components 29,041,062 53,830,112 48,500,000 17,151,606 50,115,746 $ /SF - Average for All Components 231.02 291.24 350.54 271.39 264.44 National Development Council FU Basic Gap Analysis Total Project Cost . Loan Amount (maximized per lender terms) . Owner Equity that yields Market return = Gap National Development Council The Stages in the Development 11 Process • Forming the idea • Creating the development concept • Identify a target market and a type of building attractive to that market • Who wants to be at this location? • What type of structure would be attractive to them? • Testing the market • How many households are there? • What are they willing /able to pay? • Occupancy rate and rents for comparable buildings? M National Development Council 12 Development Process Stages (cont.) • Determining financial feasibility • Evaluating the site and design constraints and estimating development costs • What kind of building can be built within the building /land use regulations? • How much will it cost to build - contractor? • Constructing the Pro Forma Income and Expense Statement • Income sources and rent rates? • Projected vacancy? • Operating expenses? M National Development Council L? Development Process Stages (cont.) • Pro Forma Income and Expense Statement (pre -tax) CASH GROSS RENT Rent Collected Fully Occupied IN OTHER INCOME - VACANCY FACTOR Rent Not Collected Due to Vacancy = EFFECTIVE GROSS RENT CASH OUT - OPERATING EXPENSES FOR Taxes OPERATIONS Maintenance Insurance Utilities Management Fee Replacement Reserves = NET OPERATING INCOME National Development Council Expected Cash Rents Collected Cash Expenses Cash Flow Generated by Property LEA Development Process Stages (cont.) • Net Operating Income (NOI) — Most important number in any rental real estate • Is the overall return on all invested capital • Determines • The amount of debt that the project can support • The cash return on equity National Development Council 15 Development Process Stages (cont.) • Preparing sources and uses of funds statements — construction and permanent • What are all the costs that must be funded in order to complete the project — design, construction, legal, financing, etc.? • What funding sources might be available to cover these costs? National Development Council 16 Development Process (cont.) • Securing financing • Obtaining a permanent loan commitment • Banks • Mortgage companies • Insurance companies • Finding equity and gap (government) financing • Obtaining a construction loan commitment • Negotiating a tri -party (or four - party) agreement • Primarily for the benefit of the construction lender • Binds permanent financing sources to pay off construction loan • Sets stage for construction financing closing and notice to proceed to contractor National Development Council 17 Development Process (cont.) • Development • Prepare final construction drat /6ngs • Solicit proposals from contractors • Execute construction contract • Oversee construction • Owner's responsibility to "manage" contractor and architect • Control change orders • Operations • Select property manager • Oversee leaseup and initial operations • Manage the property manager (asset management) • Disposition National Development Council Due Diligence • Finalize selection of a development concept that is supported by the community and the market and associated development team • Review operating pro forma • Review sources and uses • Verify development team experience and references M National Development Council ME Due Diligence (cont.) • Key Operating Pro Forma Issues • Are the projected rents achievable? • Verified in appraisal? • Reasonable allowance for vacancy? • Appraiser's allowance? • Are operating expenses adequate but not overstated? M National Development Council RAX Due Diligence (cont.) • Key Sources and Uses Issues • Is the developer contributing equity to the deal? • Construction costs verified in construction contract? If developer is contractor, is profit and overhead reasonable? • Architectural and engineering fees as percentage of construction? • Is there a developer fee in the budget? Is it "reasonable ?" M National Development Council Due Diligence (cont.) • Key Developer Issues • Does the developer have experience with this particular type of project? Real estate development is a specialized business. • Does the developer have the financial strength to cover cost overruns or operating losses? • How much equity is the developer willing to contribute? National Development Council