Loading...
HomeMy WebLinkAbout05-11-15 Work Session minutes - CRADublin City Council Work Session Monday, May 11, 2015 Minutes of Meeting Mayor Keenan called the Monday, May 11, 2015 Work Session of Dublin City Council to order at 6:10 p.m. at the Dublin Municipal Building. Members present were: Mayor Keenan, Vice Mayor Gerber, Ms. Chinnici-Zuercher, Mr. Lecklider, Mr. Peterson, Ms. Salay and Mr. Reiner. Staff members present were: Mr. McDaniel, Ms. Mumma, Ms. Crandall, Mr. Foegler, Ms. Puskarcik, Mr. Langworthy, Mr. Earman, Ms. Ray and Ms. Burness. Also present were Mr. Franzmann and Mr. Daniels of Squire Patton Boggs. Mayor Keenan moved to adjourn to executive session for discussion of the purchase of property for public purposes, conferences with an attorney for the public body concerning disputes involving the public body that are the subject of pending or imminent court action and personnel matters related to the employment of a public employee. Mr. Reiner seconded the motion Vote on the motion: Mr. Peterson, yes; Ms. Salay, yes; Mr. Reiner, yes; Mr. Lecklider, yes; Mayor Keenan, yes; Ms. Chinnici-Zuercher, yes; Vice Mayor Gerber, yes. The meeting was reconvened at 6:50 p.m. Update on Bridge Street Proiects Mr. Foegler presented a brief overview of activities within the Bridge Street District, in particular, infrastructure and roadway projects that are advancing, and implementation of some of the key transportation grid recommendations of the Bridge Street plan. With the Bridge Street District Area Plan, the grid of roadways recommended in that plan and some of key circulators that were established within it. Basically, current activities are occurring around the Library, Bridge Park West, Bridge Park East and Tuller Flats. The contracts for relocated Riverside Drive and the roundabout at SR 161/Riverside Drive projects have been awarded, and those contractors are mobilizing. Emerald Parkway Phase 8, the first phase of John Shields Parkway, and the Dale Avenue-Tuller Ridge connector have been completed. "The Grand" Vrable Healthcare Skilled Nursing Facility should be completed within the next few months, including the adjacent roadway system. Tuller Flats has completed the approval process, and that road grid is being developed. The Bridge Park East project has completed the preliminary development review and approvals; Final Development Plans are now being reviewed by the Planning Commission. [Showed total roadway system proposed for the future phases of the Bridge Park East network.] In addition, the City has acquired the right-of-way necessary to extend Bridge Park Avenue, providing effective connectivity all the way to Sawmill Road. Those elements have occurred in sync with the John Shields Parkway project to the north, and many of the important roadway improvements are either programmed for approval or have acquired right-of-way. Bridge Park West, located just east of Dublin Road on the northern end of the Historic District. The critical part of roadway improvement will be the extension of Riverview North, which will have a couple of functions in addition to providing another means of access to this project. It is also Dublin City Council Work Session Monday, May 11, 2015 Page 2 of 19 viewed as a major roadway through the parkland that the City has assembled in this location. It also provides a means for fire safety equipment to enter and leave this area quickly. When the pedestrian bridge construction begins, a haul road can be established here minimizing the disruptive effects on the Historic District. Update on Proposed Dublin Library Site Location The new building will be placed in the eastern half of the existing Library site. The new parking structure will be placed in the western half. New road alignments In conjunction with the Library project, the alignment of Rock Cress Parkway to the north of the site has begun, which will separate the Library site from the park and the Veterans Memorial. Extension of Franklin Street along the western end will occur within the existing surface parking area. Future school activities will dictate when and how this roadway extension occurs. North Street will be improved in this area, as well. The future bridge crossing will be also be considered within this design, as well as where the North Riverview connection is located. The location of the pedestrian bridge from North Street to Rock Cress will provide an alignment to John Shields Parkway. This segment of that road should be completed within the next 24 months. This occurs in sync with the construction of Riverside Drive, at which time left -turn movements will be eliminated from the Tuller/Riverside Drive intersection. Potential City investments related to the new Library development include: 1. 200-250 structured parking spaces in addition to the 210 Library spaces. At the cost of$22,000/per space, additional parking could cost $4.5 to $5.5 million, if the City chooses to maximize the parking opportunities within that structure. 2. Preliminary cost estimates for the alignments of Rock Cress, North, Franklin and High streets, as needed to accommodate the Library, range from $7.4 to $8.0 million. Street standards have not been finalized for the Historic District, although they have been for the rest of the Bridge Street District, but some of the higher -end finishes, such as brick, are included in the costs. 3. Burial of overhead utilities - $1.5 — 2.0 million. Burying these utilities in the rock, such as is Historic Dublin, has been a challenge in the past. 4. Adding $10,000 - $13,000 square feet of City programming space to the Library building - $4.0 million. Mr. McDaniel noted that the City has been Dublin Schools aware of the possibility of an alignment with Franklin Street, which would affect the original School administration building. Conversation regarding additional community space in the Library has been ongoing, including discussion with Dublin Arts Council (DAC) and Dublin Convention and Visitors Bureau (DCVB) about the possibility of relocating into the Library. DCVB expressed interest in doing so. DAC is not interested in relocating, but is interested in providing art programming within Library space. Recent analysis regarding Rec Ctr. services and space shows that more space could be used for general recreational programming; some of that could be located in the Library. Present considerations regarding community space within the new Library are the result of Council dialogue over the past few years regarding Library possibilities and trends. Dublin City Council Work Session Monday, May 11, 2015 Page 3 of 19 Discussion regarding the need for additional parking within this area, as well, and past and present Councils have attempted to address the parking needs of Historic Dublin. To be able to leverage the opportunity for additional parking space with this project, beyond that which is needed by the Library, would be a significant opportunity, in particular, doing so without impacting the existing Darby parking lot. Approximately 250 additional parking spaces could be added. Other Planning Efforts Mr. Foegler stated that other efforts including planning efforts along the park. Several public sessions on that topic have been held, and more are planned, to advance the planning on this. There has been significant land acquisition on both sides of the river. Assembling riverfront property for park purposes has been a long-term goal of the City. Some of the projects have given the City opportunity to advance that goal significantly, sot that planning is moving forward. The pedestrian bridge analysis was done previously, and the City is initiating negotiations for the final design of that facility. Both park improvements and one of the most iconic elements of this park system — the pedestrian bridge, should have design moving forward significantly this year. West Side — Road System Key Elements As the road alignments and extensions occur — John Shields Parkway to Shawan Falls, Post Road, Rock Cress, the Frantz Road intersection and connection to the roadway to the north, significant more connectivity on the west side -- opportunities to avoid the major intersection in downtown Dublin and distribute traffic beyond what is handled in the Bridge Street District should provide significant improvements. The alignment study of those roadways initially focused on the roadway system around the Library, but the scope for this design effort is being finalized. We expect to have the design work advanced or completed this year, so that the locations of those roadways work in conjunction, creating the least impact on property owners. Mr. McDaniel stated that the while the roadway to the north edge of the Dublin Schools site is shown here, there is nothing in the works that would demonstrate that could happen in the near term. Mr. Foegler stated that the first leg of that road must be designed with the understanding it likely continues with a northern trajectory, which will minimize the impact on the property for any purposes. Mayor Keenan inquired the estimated timeframe for that. Mr. McDaniel stated that he has no idea, certainly not in the near term. Mayor Keenan stated that it is not in the CIP, which is a five-year window, which should alleviate any concerns. Mr. Foegler noted that the project would probably be driven by the School District's long-term facilities planning. Some of the roadway systems that will be coming in relate to Dublin Village Center projects, Tuller Flats, the Skilled Nursing Facility, Bridge Park West, Bridge Park East, and the Library. The pedestrian bridge, which will provide pedestrian and bicycle circulation within this District, will be part of that critical loop, as well. Dublin City Council Work Session Monday, May 11, 2015 Page 4 of 19 The proposed parking on the Library site, and with the Bridge Park West project, and the two initial parking structures built in phase one, all of which the City pay have some participation in — would be significant parking assets to serve the City core. Ms. Chinnici-Zuercher stated that, earlier, she mentioned to Ms. Puskarcik and her staff that now that Dale Drive and John Shields is open, it would be good to show that as completed on the City's Bridge Street District website. The public may not be aware that those projects are completed, and provide a very interesting visual of the City from the top of the hill, looking west. Mr. Reiner stated that the planning efforts on this project have been superb. Mr. Foegler, the staff and the consultants have mapped out the next 20 years of Dublin, solving many of the circulation and parking problems, which should result in a wonderful City. Mr. Foegler responded that staff believes in the importance of the District. The initial stages of this project occurring where they are will reinforce and achieve the desired objectives sooner than anticipated. Presentation — Crawford Hoving Brent Crawford, Crawford Hovina, provided an update on the progress of the development. Development Phasing The development will be phased in by blocks. Block C is the first block, which will begin in June, followed by Block B a couple months thereafter, and Block D, Block A, Block H — a "for sale" townhome project, to be developed by others, but their anticipation is to finalize that deal soon. They would move forward with their own planning and zoning for final approval. Block F and G will be the final blocks. There have been some changes in timing and one change in product type — there has been a reduction in the number of apartments and an increase in the amount of office space and restaurants. Leasing Update There are several factors that determine when leasing begins. When they reach the necessary leasing level, they proceed with financing. They have been asked if they have a loan commitment for the entire development. They do not consider that form of financing. They finance the project by block, because there is not a performa to provide for future blocks at this point. They applied for a loan for Block C 45-60 days ago and have received a loan commitment. So as they secure the appropriate leasing level, they will move to finance it. They stagger the leasing of the development to avoid bringing in too much of one product at one time. For this reason they will develop all the mixed-use blocks on their own. If they were to sell off a block to another developer, they would want to develop it immediately. They will develop their own apartment, which will create direct competition with their apartment. This could cause vacancy and rental rate issues, so they do not want to introduce that direct competition. The better way to handle this is, as they secure the leases and become stabilized, they will move on to the next phase. Market Analysis A market study was conducted by Danter Company, a local company that is a nationally recognized leader in apartment studies, to determine what rent rates and products they should have. The original study was conducted a year ago, and they are waiting on an update. The reason they wanted an update is that the market continues to move forward in a positive way in Dublin City Council Work Session Monday, May 11, 2015 Page 5 of 19 terms of absorption and rental rates. As they have been able to lay out the development further in terms of the product type to the Danter Company, that will have an effect on what they would expect for rentals and absorption. The rental rates they are currently projecting are in line with what the apartment study indicates. They are taking a more conservative rate in terms of absorption. The Danter Company believes it will be aggressive and quick, based on several reasons — what is being proposed by the City, such as the park and roadways, and the very limited number of apartments within the Dublin market, compared to other suburbs in Ohio. The commercial side is treated differently. We don't have and would not need to obtain a study for the commercial. The apartment study helps them to know ahead the anticipated rental rate. Apartment dwellers aren't looking to lease until the development is nearly finished. They know the commercial rates well ahead of time. They started the commercial leasing process a year ago. They met with local and national retailers, so they were able to identify at that point what lease levels were acceptable within the commercial market, compared to similar product developments within the local and nation marketplace. 1. An urban, walkable infill development. The Danter Study backs up this type of product. From anecdotal evidence and other walkable, mixed used developments, it was easy to see where this development would place within the rent levels. Their Lane Avenue development started at $1.50 per square foot; leases are not coming in at $1.65 per square foot. The competition and studies match with their vision. 2. Large step/up, step down populations. With other developments, they have received phone inquiries as soon as development started, but the interest was not as high as with this residential development. They are receiving 5-40 calls from local Dublin residents per week. The projected rents are comparable to other developments, such as Grandview Yard, though less than those at Easton. Leasing is focused on Block C because it is the first block to close, though Block B will follow closely. The pre -leasing level is higher than normally expected. Top of market rents are being achieved: - Office - $17.00 NNN per SF - Retail - $30.00 NNN per SF - Restaurant - $37.00 NNN per SF This reflects a significant interest to live in Dublin. There has been a lot of pent-up demand, especially on the restaurant side, for a walkable location, and from empty nesters downsizing. Commercial Leasing Progress Initial phase: - Block C (1't phase): 54% signed LOI and leases - Block D (2nd phase): 45% signed LOI and leases - Block Z (west 1't phase): 45% signed LOI and leases. - 6 restaurants. - Over 60,000 SF office space - Fitness and personal services — banking, salons, are also part of the first phase, and leases with 30+ tenants are being negotiated now. As the development proceeds, they expect to see increased interest. - Ongoing negotiations with 30+ commercial tenants Future phases: Dublin City Council Work Session Monday, May 11, 2015 Page 6 of 19 - Block A — 150 key hotel and event center. They believe it will be an AC by Marriott, which is a high-end boutique hotel, such as those they have in Europe, New York and Boston. - Block D — 76,000 SF grocery. They are in lease negotiations with a grocer at this time. With the restaurants, there will be a great product mix, something for everyone. They anticipate there being 11-12 restaurants within the total development. Last year was the first year that people spent more money dining out than dining in. That trend of 52% - 48% is expected to continue and could reach 60%. Empty nesters play a big part in that, and they are spending more dollars on dining out versus golf club memberships, etc. It also the major source of entertainment for millennials today. They are having conversations with office users both outside and inside the local market. Those within the local market are making the decision to either stay in Dublin or leave Dublin, but they aren't going to stay in their existing locations. They want something new that fits their desire for walkable infill. Mr. Reiner inquired if they were briefing all the applications about the City's specific sign code for that area. Nelson Yoder, Crawford Hoving, responded that they have developed the signage criteria in conjunction with Kolar Design, who is working on the City's wayfinding project. As they have negotiated with them, they have shared their draft signage criteria package, which will be brought before the Planning and Zoning Commission within the next month. It has been very well received. Some of these tenants are looking for opportunities to have a unique branding that will fit well within a vibrant, more urban environment. The draft signage package has been well received by all the tenants with whom they have spoken. Mr. Crawford stated that the goal is to see more interesting things on the first floors. The tenants will design their own exterior spaces; each one will have a different flair and feel to their entry space, and each one of those will have to go before PZC to get their signage approved, as those leases are completed. There will be a much more interesting feel as the patios are designed and from the different awnings and signage. Development Feasibility • Lender commitments are in place - Block C — lit phase, east side - Bridge Park West — lit phase, west side - Block B — 2 n phase, east side In many cases, they have multiple commitments, especially for Block C. They are fully approved on Bock C and Block B. They will not move forward on attempts to secure financing for further pieces until those pieces are ready to be submitted to the lender with full performance, leases in place, etc. That is a strong statement to the project's overall feasibility, because following the real estate collapse of 2008-2012, lenders are far more conservative than they were previously. The approval process for borrowers is far more stringent. In determining liquidity, overall financial strength, credit, etc. — that has all been vetted fully and financing commitments are in place. Dublin City Council Work Session Monday, May 11, 2015 Page 7 of 19 Mr. Reiner inquired who the lenders are. Mr. Crawford responded that they have ended up with S&T Bank and FC Bank, both of which they have some relationships, and Fifth Third Bank is financing the west side. This is the construction loan. As soon as they are close to being fully lease, they will immediately proceed to permanent financing, which would be non-recourse, take-out financing that would be fixed for ten years. Successful leasing of Blocks C and B should occur quickly. As soon as construction is finished and tenants have begun to move in, they can get a forward commitment on those take-out loans. This important, because they want to eliminate any construction debt as quickly as possible. They have had questions concerning the "what ifs" — what if they begin the project and do not have the remaining funding? What if the equity does not come in? What are the various risks? When the construction loan closes, all of the money is funded at that point — the bank loans and the private money. The private money is spent first, before they begin to draw on the construction loans. For the lender to close, they will require that the equity be in the bank, the preleasing documents to be in hand and reviewed, independent third -party appraisal completed to verify the values used, final PZC approval, issuance of building permits, as well as other development agreements — CRA, CNA and other related documents. Once the construction loan closes, there is no going back at that point. They will have everything needed to complete the development. Project Scope: This is the Crawford-Hoying portion, not the hotel land or the condominium piece, which will be sold to different developers. They are not financing either one of those; they are straight land sales. The total cost for the Crawford-Hoying portion is $240 million, with a total construction debt of $178 million and total estimated private equity requirement of $62 million. As the development proceeds, greater success could change either of those levels -- they could be required to put more money or less money down, depending on how the development is moving at that point. They have conservatively obtained 70 percent financing with the first two loans. They are contributed 30% cash for both Blocks B and C. In regard to Crawford Hoying's ability to do this -- Bridgepark is a 36 -month development period, so they looked at the previous 36 months of borrowing by Crawford Hoying. People may be surprised at the scope and size of the project, but they have been doing this a long time. Many of the lenders are partners that he has had for nearly 20 years. In addition, from transactions this past year, they have received $77 million in equity from deals they have closed on and sold. Mr. Reiner inquired if they have the 30% cash to put down. Mr. Crawford responded that it has already been raised. They have a vast investor group, many of whom are from the Dublin marketplace, who have been with him for many years. This amount has essentially been spent, as Crawford Hoying has purchased $17 million in land for the development, and they have already paid out $7.7 million in soft costs to consultants. That money has been spent to further all the architecture and engineering design, legal and consultants necessary to get the project to this point. That has involved 2-1/2 years, 180 company employees, and hundreds of hours spent with City staff, working in a collaborative effort to match the City's vision plan. City Participation and Benefits Mr. Yoder stated that there will be high rents here, but even higher first-time development costs than what is seen anywhere else, due to: • 100% structured parking to maximize density and walkability as best in class in design and technology. This is necessary to maximize the density and walkability. In the shorter term, Dublin City Council Work Session Monday, May 11, 2015 Page 8 of 19 it makes it meet the market trends that are driving the mixed-use development. In the longer term, it maximizes land value over the coming years. City staff have said this development is essentially 10 times denser from what would typically be developed on land like this. Currently, there is a driving range and an unsuccessful strip center on this site. The ability to deliver structured parking here in the core of the City to help leverage City assets makes this a viable project • Dublin materials — This is another major cost driver in this project. As we have refined our project over the last year, working through various iterations with Council and PZC, we have raised the bar to incorporate 100% brick, stone, metal, glass and hardie plank on exteriors of buildings, and concrete and steel framed commercial spaces. The project will now have aluminum windows. That increase in quality has come with an increase in costs. There will be concrete and steel -framed commercial spaces. They have built versatility into these spaces to allow those spaces to keep up with upcoming market trends. Building C2 in Phase One, locate at the corner of pedestrian bridge and Bridge Park Avenue, is a 100% commercial building — all steel, all concrete. • Open spaces reflect the highest quality public open spaces. They have worked closely with staff and MKSK in developing these spaces, which will cost millions of dollars over the scope of the project, from $1 - $2 million in the initial phase. They have been creating spaces that are very high quality generational -type gathering spaces, which are not limited to their patrons and residents, but to the general public. The site includes some pieces intrinsic to the site, including large granite boulders salvaged from the site. The sites have been programmed for flexibility in the future, including outdoor laptop areas with WiFi and outdoor performance pavilions, making it a flexible open space. These spaces are within the private development party, not within the right-of-way. They are between buildings, constructed at their cost. • High quality street grid and wayfinding built from scratch, supporting the City's plans for a new street network on both the east and west sides. Mr. Reiner stated that an architect member of PZC recently raised a concern about the fasteners that hold the elevations of the buildings together, indicating that after three -five years, some of the fasteners might mar the building fronts. Has this issue been discussed? Mr. Yoder responded that it was raised at the last PZC meeting. The type of system they are proposing addresses that concern. They have invited the PZC members to visit a site that shows the type of system they are proposing. They are also considering incorporating some metal panels into those elevations. The initial feedback they received was that fiber cement was the only acceptable material, other than stone, glass, brick, etc. However, they learned at the last PZC meeting that they are open to seeing some metal panels in different locations. They are looking into that and will be bringing that item back to PZC in June. Mr. Reiner noted that they do not want the buildings looking worn after five years. Mr. Yoder stated they do not want that either. One benefit with fiber cement is that there is the ability to come back and paint and maintain it easily, unlike EIFS and metal panel, with which repairs are more costly. They will continue to work through this issue with Council and PZC to their satisfaction. • Proposed Solution. They have been working with staff on the CRA coupled with a TIF and New Community Authority (NCA). The goal is to harness Bridge Park's future real estate Dublin City Council Work Session Monday, May 11, 2015 Page 9 of 19 taxes to facilitate the construction of some of the critical infrastructure needed to make the project feasible. Benefits of City Participation Benefits of the City's participation through the CRA and NCA is that it will extend Dublin's offerings to the City and to the region. • This will be a new office space and residential development that is capable of attracting and retaining talent and employers here in Dublin. Young people and empty nesters want to be in walkable environments. One of the reasons Dublin is so strong is that many CEOs have chosen this location to locate their businesses and families. They want to make sure that Dublin continues to have the environment that CEOs want. • Create a first-class dining/entertainment destination to keep Dublin's entertainment dollars here and bring in even more. Dublin's downtown Historic District has somewhat of a destination quality, but this project will augment that. • A new event center, larger than anything in the current market, and uniquely situated near park to cater to residents and corporate citizens that now leave Dublin for larger venues elsewhere. • A new Class A hotel unlike any other hotel currently in Dublin or any other Columbus suburb. • A grocery store topped with residential and served by structured parking, unlike any other grocery in any other Columbus suburban market. They are currently negotiating a lease with this tenant. • It will start a power trend. There is the opportunity with this first catalytic project to set a transformative tone in Bridge Street. This will position other sites on Bridge Street and near the City's core for near and mid-term redevelopment. This will send a message to the region that Dublin is open for business and investing in its future. Other interested developers are looking at this project to see whether it's a success or fails to get off the ground. Direct City Benefits: • Creation of public structured parking. Thousands of parking spaces will be available to the public, which will help serve the riverfront parks, Historic Dublin and the projects themselves — paid for by project taxes. As the project moves forward, it is able to generate and leverage a lot of new taxes on the site, which will create these amenities for the project and the core of the City. • Establishment of the street grid. The construction of critical pieces of a new City street grid will connect the rest of the City to the park and Riverside Drive. This will be paid for over time through project RE and payroll taxes. • Their current model estimates $100 million return to the City over the next 30 years, including: - Cash contributions to the City of over $40 million in PILOT and real estate tax payments - Commercial payroll tax. Over $60 million of payroll tax generated from the office space. Some of the benefits will be jobs saved and not jobs brought into the City. - Bed Taxes — over $15 million generated over 30 years. Dublin City Council Work Session Monday, May 11, 2015 Page 10 of 19 - Construction payroll tax — City will capture a portion of the $2.5 million of projected total labor taxes. Development Timing and Critical Path A signed development agreement and construction start by end of June is critical due to: • The project went to bid, and all the bids were received March 3, 2015 with the anticipation that we were moving forward this spring toward closure. Those tens of millions of dollars of hard subcontractor bids are set to expire the end of June. This season is busier that it has been for a long time. If we lose the prices that subcontractors bid in March, there constructions cost will increase by millions of dollars. • Leasing seasons, commercial and residential. Because of the work we invested in last fall and now, at -risk building teardown on both sides of the river. • Construction season — It is much easier to pour concrete in the summer than in the winter. The west side will take a significantly more amount of time to pour the concrete for it, so it is very important for the west side of the project to move forward. • It is important to create a critical mass of activity early enough next year for restaurants and retail that all of the retailers, restaurants and apartments can benefit on the east side. Mr. Reiner stated that this has to be the best year since the Depression for construction, so he recognizes how important it is to get this project underway before losing the subcontractor bids. Also, Dublin does not have a downtown like Worthington or Westerville, so it is good that we are creating a walkable downtown in this phase of our City's history. IT will be the kind of place that future generations will appreciate. Dublin has never had a strong City core like many other cities, so it is time for this to happen. This will be a wonderful project for the community. Mr. Lecklider inquired what hedges are in place in the event of a potential market downturn. Mr. Crawford responded that is the reason for the phased development. They won't begin construction of a block until they have secured the signed leases. No lender will issue a loan unless we have those in place. With the present demand, they are confident that they will be able to deliver all phases. The hotel is a critical piece and they want to start that relatively quickly after we have started Blocks B and C. Making sure we are pre -leased is an important factor. Another important factor is that we have put down a larger down payment than usual. That gives us better flexibility with how long it can sit vacant. They have very favorable terms with their lender due to the additional cash we are putting in. Mr. Yoder noted that another advantage is that is a mixed-use project. A broad market downturn is one thing; individual sectors taking a downturn is another. We are well hedged by having so many different leasing pieces that this project really should be able to weather a downturn in any one of those sectors. Mr. Reiner inquired if the project launches in June, what is the construction timeline? Mr. Yoder responded that immediately after the final development plan is approved, PZC should approve the project in June or July. They would be putting concrete in the ground the next day. They are working to address PZC's comments at the last Council meeting. They are staying away from any open items with PZC. As soon as they start pouring concrete, they will be in a position to start getting office and retail tenants for the spaces. Near the beginning of next year, they will begin fitting out the internal spaces and building the patios. What will control the opening of that first phase is in spring 2016, the site contractor will remobilize and finish the final courses of asphalt and landscaping — making everything look good. On Block C, that should take about three Dublin City Council Work Session Monday, May 11, 2015 Page 11 of 19 months. In June or July 2016, the restaurants should be ready to open and residential dwellers ready to move in. The B Block phase will be a couple of months behind that. They will begin to start concrete work in the western phase shortly after closing in July. Mayor Keenan inquired about the Riverside Drive construction timing. Mr. McDaniel responded that it is an 18 -month construction projects, so it should align well with the completion of the first phase. Mr. Foegler stated that the City's design and construction managers coordinate with Crawford Hoying's design and construction team to make sure the projects mesh, although there may be interim conditions with regard to access. Ms. Salay looking at what is being developed with Tuller Flats, is there sufficient residential density to support this project? Mr. Foegler responded that with project proceeding in phases, the market will be able to indicate how that is being absorbed. He believes the apartment rental piece is critical to activating this. The restaurants they are talking with aren't interested if there isn't a significant number of apartments, as well. They feedback is the same in regard to the offices. That residential piece there does much to activate this area. The market demand will be known soon as these blocks begin to roll out. In terms of opportunities for housing, these two sites — this and Tuller Flats, reflect two of the bigger pieces of land. The scale of things coming forward from others will begin to reflect smaller projects, including an interest in condominium projects. Mr. Reiner inquired when the western phase anticipated completion date is. Mr. Crawford responded that based on a June start date, they expect the first residential tenants to move in September or October 2016, with final owners moving in by the end of that year. It is an all concrete and steel building — a lot of concrete to be poured. It will take a long time to build that structure due to the quality and materials used. Mr. Reiner stated that he had heard that there has been more demand for larger units, so they were shrinking the number of units. Mr. Hoying responded that they originally had 72 units; now there are 42. People have combined units to make one unit. Most of the larger units went first. Last week, he received 17 phone calls from Dublin empty nesters interested in the west project — that is with no advertising. There is a substantial market. Mr. McDaniel stated that the developer is still working through the approval processes with PZC for the east side phases. Ordering materials and removing the buildings at 94 North High is a risk they take on their end. They know there is a decision process. Ms. Mumma introduced the finance team that has been working on this project: Greg Daniels and Chris Franzmann - Squire Patton Boggs; City's financial advisor, Brad Sprague - PRISM Municipal Advisors. He has assisted Dublin with bond issues over the past couple of years. This financial team has been an integral part of their work with Crawford Hoying on this development. She will discuss the larger business terms related to the development agreement for the Bridge Park development. They have been working on the terms of this agreement for a year. Bridge Park is a private development, comprised of commercial, retail, residential and multifamily, which is valued at approximately $224 million. Leveraged against that are the community facilities. Community Dublin City Council Work Session Monday, May 11, 2015 Page 12 of 19 facilities are run through the New Community Authority (NCA) and funded using the development charge levied on the properties within the NCA. The community facilities include seven parking structures and a conference center, valued at $80 million. Their negotiations have been centered on financing the public improvements in the community facilities — the internal road network, seven parking structures and the conference facility and are valued at $80 million. Although previously proposed, a performing arts center is no longer contemplated as part of the Bridge Park Development at this this. They have looked at how the City can obtain revenue from the project that can be dedicated to the City for either a contribution to our $1.5 million annual payment to the School District or any other District -wide improvements that we have been making. We have also discussed the economic development tools that the City is willing to provide to facilitate this project, and Council has taken some action recently to leverage some of those tools. In addition, we have discussed various land exchanges that would need to take place for this development to occur. The goal of this project and the development agreement is to partner with the developer to ensure the successful development of Bridge Park while also advancing the City's vision for the overall Bridge Street District. Goals and obiectives: The goal of this project and the development agreement is to partner with the developer to ensure the successful development of Bridge Park while also advancing the City's vision for the overall Bridge Street District. 1. Mitigate construction risk — ensure that the private development is completed in close coordination with any public improvements within the development 2. Mitigate against interest rate risk. We want to make sure that the public dollars are used in the most efficient manner and minimize the City's exposure to any interest rate fluctuations that may exist in the future. 3. Funding for the City — provide an income stream to the City that can be used to offset a portion of the School District cooperative agreement commitment and reimburse the City for a portion of the District -wide improvements. 4. Share in the development's success 5. Minimize project stress Proposed Financing Tools for Bridge Park: (1) Tax increment financing for 30 years. (2) Bridge Street CRA. The City expects to enter into a 15 -year agreement with the developer that would abate the property taxes for the properties within the development for 15 years. This would run concurrent with the TIF. (3) When the Bridge Park New Community Authority was created, the NCA governing body was authorized to put in place a community development charge. Years 1-15: Primary revenue is the NCA community development charge assessed on all private development within the District. Each phase of the private development will support is own community facilities. Years 16-30: Primary revenue source is TIF revenue with the NCA community development charge as a back-up. It is assessed on all taxable properties, including the events center. Public Roadways: The City contribution to the roadway network is $17 million. • Phase 1A (estimated cost: $7.8 million) - Bridge Park Avenue (between Dale Drive and Riverside Drive) Dublin City Council Work Session Monday, May 11, 2015 Page 13 of 19 - Mooney Street (between Tuller Ridge Drive and Drive and Bridge Park Avenue - Longshore Street (between Tuller Ridge Drive and Bridge Park Avenue - Tuller Ridge Drive (between Riverside Drive and Dale Drive) - North Riverview Street - Portion of North High Street • Phase 1B (estimated cost: $3.4 million) - Banker Drive (between Riverside Drive and Mooney Street) - Mooney Street (between Bridge Park Avenue and Banker Drive) - Longshore Street (between Bridge Park Avenue and Banker Drive) • Phase 2 (estimated cost: $2.9 million) - Longshore Street (between Banker Drive and Mooney Street) - Mooney Street (between Banker Drive and SR 161) - Banker Drive (between Mooney Street and Dale Drive) • Phase 4 (estimated cost: $2.6 million) - Longshore Street (between Tuller Ridge and Riverside Drive) - Mooney Street (between Tuller Ridge Drive and John Shields Parkway) Community Facilities: (7 parking garages and the events center) - $80 million • Scenario 1 — Columbus Franklin County Finance Authority (CFCFA) issues debt for all community facilities - $8 million Ohio Water Development Authority (OWDA) alternative stormwater program loan - $72,265,000 in CFCFA construction bonds Total revenues available from NCA charge, NCA bed tax revenue, NCA operating revenues. 041 TIF revenues, .40 [c] TIF revenues. Income tax revenues are not included in this analysis. The total revenues available less the debt service on the community facilities leaves excess revenue. As part of the negotiations, we have been identifying priorities for those excess revenues, which include: 1. NCA operating expenses (in a not to exceed amount) 2. City contribution (based on a sliding scale) 3. Debt service reserve 4. Annual capital expenditures and maintenance not covered by CAM charges 5. Remaining excess split between City and developer Pros Besides internal public roadways, City provides no additional financing/funding toward project (limits City's exposure to $17 million internal public roadway investment) Cons 1. Reinvestment/Interest Rate Risk — when developer refinances construction loan (year 5), OWDA loan (year 10), rates could be higher than 6% used in model, potentially reducing the amount of excess revenue. 2. Places City in a subordinate position on the entire development. - Lenders not amenable to City placing minimum guarantee payment on properties so that some portion of City payment is guaranteed. - Any decline in revenue from the NCA/TIF would negatively impact the amount of excess revenue. Dublin City Council Work Session Monday, May 11, 2015 Page 14 of 19 Other Considerations One consideration is the ability for property owners/tenants to pay. In the current model, 5 mills will be charged, in addition to payments in lieu of taxes in (years 16-30). Currently, that is 11.674190 for commercial; 91.431181 for residential. Five mills is five percent higher than what is today assessed on a commercial property. • Scenario 2 — City finances approximately $20 million of $39 million of Phase 1 parkin garages (garages B, C and Z). CFCFA finances the remaining $35.7 million for parking garages and $5.5 million for events center. - $8 million Ohio Water Development Authority (OWDA) alternative stormwater program loan - $50,670,000 in CFCFA construction bonds - $20,000,000 in City of Dublin bonds. With Scenario 2, the amount CFCFA finances is reduced by $20 million. The City will finance $20 million in City bonds. The benefit of this scenario is that those bonds would be issued to go towards the public parking structures at a rate that would be locked in at the time the debt is issued. For planning purposes, a 30 -year rate at 4.0% is used, which would eliminate the uncertainty that exists with this portion of the project. Phase 1 Parking Garages Phase 1 parking garages are Garages B and C are on the east side and Garage Z on the west side. The recommendation is that the City contribute to Phase 1 parking garages B and C. Future phase parking garages would be funded through CFCFA. In the three parking garages, tentatively, there will be 721 reserved spaces and 1,210 public spaces (63%). Total Revenue Generated in B & C Blocks Revenues generated in these two blocks are the NCA charge and the .41 TIF revenues in years 16- 30. The City receives the first dollars available from Blocks B&C to fund debt service on the garages. The developer's debt would take a subordinate position for the remaining portion of the garages. Pros • Enhances overall viability of the project and gets it off the ground • Certainty that comes with City issued debt. - Lower interest rate - Long-term financing upfront (eliminates reinvestment/interest rate risk) • Reduced expenses allow more certain upside potential to City with respect to the excess revenues, which can be used as City sees fit. • City has a priority position on the revenues in Garages B and C to pay debt service; developer's debt is subordinate. Cons • City provides financing toward $20 million in parking structures. It has been a long standing goal of Council to address parking concerns in downtown Dublin. • Slight risk that the City must pay for the debt service using income tax funds/non-tax revenues if NCA/TIF revenues do not materialize, but this is highly unlikely given that the City is in the first position. Dublin City Council Work Session Monday, May 11, 2015 Page 15 of 19 Apples to Apples Comparison Comparing Scenario 1 and 2 reveals that there is a benefit in the City's participation in this, the benefit of locking in a lower interest rate from Day 1. The excess revenues that would be available from B and C Blocks after the debt service is paid is approximately $10 million. This would go towards DCS compensation payment and roadways. In Scenario 1, there is no excess revenue because it is all of a larger pot. In Scenario 1, the City would receive approximately $21.8 million after the debt service and other priorities are met. In Scenario 2, the balance of everything beside B and C blocks, the City would receive approximately $17.5 million. In summary, that is $21.8 million in Scenario 1; $27.5 million in Scenario 2. These are estimates based on assumptions we are using today. Other Revenue Considerations There are potential additional revenue sources: • Income tax revenue • Hotel/Motel tax revenue • TIF revenues generated from a hotel at the Cooker site, estimated to be around $95,000- $280,000 annually. None of these numbers were used for the purpose of this analysis. Debt Implications • $17 million in debt for roadways - $1.3 million in annual debt service payment t(20 years, 4% interest rate), General Obligation (G.O.) Bonds issued, AAA rating • $20 million in debt for parking structures - $1.5 million in annual debt service payment (30 years, 4% interest rate), G.O. versus non -tax revenue bonds; taxable versus non-taxable. If non -tax revenue, AA rated. If this project moves forward, they will be working with their financial advisors, legal counsel and the developer to determine the best financial method to finance the parking structures. General Obligation vs. Non -Tax Revenue Bonds • General Obligation (G.O.) Bonds - Backed by the full faith and credit of the City of Dublin - City commits its full resources to paying the bondholders, including general taxation and the ability to raise more funds through credit. • Non -Tax Revenue Bonds • Often used when there is a dedicated revenue stream to repay the debt • Not backed by the full faith and credit of the City of Dublin • City will pledge other sources of revenue (in this case non -tax revenue) to paying bondholders • City may use any other lawfully available funds to repay the debt in addition to the pledged revenue but isn't obligated to do so. Rating and Interest Rate Impact • G.O. bonds will be rated higher than non -tax revenue bonds • City has previously received a AAA rating from Mood's and Fitch on G.O. bond deals; would expect a AA rating on a revenue bond deal. Taxable versus Tax Exempt Debt Dublin City Council Work Session Monday, May 11, 2015 Page 16 of 19 • Taxable Bonds - Investor is subject to taxes on the interest income earned. - Increased flexibility as they can be issued on any project — public or private • Tax Exempt Bonds - Can only be issued on qualifying public projects - Lacks flexibility because you lose ability to utilize any portion for private purpose as long as the bonds are outstanding. Although we know the proposed relationship between the private and public spaces in this project, we want to ensure that if there is a need to increase the number of public spaces because of a commercial tenant, we are not cutting it so close that the developer and the City cannot collaboratively work together. The rate differential is based on the value of the tax exemption. - The request is for the City to finance $20 million of $39 million of Phase 1 parking garages (Garages B, C and possibly Z) - Remaining $35.7 million of parking garages and $5.5 million Events Center will be funded through CFCFA - City's total contribution to parking would be approximately 51% of the Phase I parking structures; 27% of the total cost of parking structures. The initial estimates show at least 63% of unreserved public spaces. - Crawford Hoying is revising their garage layouts to determine the amount of reserved spaces needed for each structure. This will determine the distribution of taxable versus tax-exempt debt issued. City's Ability to Pay Based on Revenue and Resources. When the City considers issuing debt, there are a number of considerations, such as any legal limitations. The City is nowhere near reaching its debt capacity and certainly would not introduce a project or funding source that would negatively impact our future borrowing capabilities from a legal limitation standpoint. We also look at the City's ability to pay. Although State statue may permit the City to issue a given amount of debt, is the City able to meet that debt payment? The City dedicates 25% of its income tax revenue to fund capital improvements. Of that 25%, 60% is allocated to finance projects — projects we will issue debt with, and the balance is paid on a cash basis. We are able to come up with a formula based on the City's existing debt as well as future programs debt that we are expecting, based on our capital projects. [List of projected new debt, 2015-2019 was reviewed]. Some income tax revenue has been allocated for the parking structures, should something occur that would negatively impact the funding. A percentage of the debt payment has been set aside to be funded from income tax revenue if needed, although that is highly unlikely. The City will also have some costs for the public library, as outlined in the meeting materials. The projects that were proposed to be financed with debt service, 2016 — 2019, have not changed. If the City issues debt for those projects, the City will continue to have the ability to utilize debt in the future. It will not limit our ability to do other projects moving forward. The City will look at the best way to structure the debt. Other Examples of Communitv Reinvestment Areas (CRAs • Worthington: - Worthington Station — 10 year/75% - Road Runner Project — 10 year, 60% - Worthington Professional Park— 10 year/75% Dublin City Council Work Session Monday, May 11, 2015 Page 17 of 19 • New Albany: Primarily used for greenfield sites, based on a pre -established formula: - Corporate office — projects exceeding 150,000 sf. - Production — revenue benchmark based on acreage of the site and income tax collection. - Data Center — based on the amount of investment job creation and long term investment in the community. • Westerville: - Has four CRAS in place - Standard abatement is 12 year/100% - School compensation agreement — annual payment in lieu of tax from the property owners to cover school payment. - Can be used for redevelopment or greenfield development - Mixed use is eligible for CARs in uptown Westerville, but eligibility is limited to office, medical and industrial in other areas. Council Questions Mr. Peterson stated that: (1) In Scenario 2, the City would generate $20 million by issuing bonds, take that $20 million and put it into construction of parking structures. We then pay that money back through the fees and TIF money generated by the development. We would not be using Dublin City resident tax dollars currently in the City's coffers to fund the project? Ms. Mumma responded that is correct. This should be a self -funding mechanism. Only a small percentage of the debt service is allocated from our income tax line. Mr. Peterson stated that the City's contribution to be used for the parking garages is money that will be paid back through TIFs and fees generated by the project itself. Ms. Mumma stated that it also includes the NCA charge. Mr. Peterson said the percentage of public to private use was about 62% public use. The City would be funding about 49.5% of the construction. Ms. Mumma stated that if all of the parking structures came to be all seven, it is a lower percentage that we would be funding. Mr. Peterson referred to the earlier presentation about Scenario 1 and 2 — what do the numbers$ 21 million and $27 million refer to? Ms. Mumma responded that if the assumptions are the same under both scenarios, that is the difference in revenue we could expect back to the City in both scenarios. Mr. Peterson inquired if that is after the bonds have been paid off Ms. Mumma responded that it is correct; it is after the debt service over a 30 -year period has been paid off. Mr. Peterson summarized that the City would issue bonds for $20 million to help invest in the parking structures. The fees and the TIF revenue would pay for that parking structure, then the City would get $27.7 million on top of that? Ms. Mumma stated that is correct. Mayor Keenan inquired who sets the CRA fees. Is that set by the Authority? Ms. Mumma confirmed that it is. Mayor Keenan inquired if the fee needs to follow the normal tax bill. Dublin City Council Work Session Monday, May 11, 2015 Page 18 of 19 Ms. Mumma responded that it is not required to do so. There are different models, but the way in which this one is set up it would be the same amount as what would have been collected, had the taxes not been abated. Mr. Lecklider stated that Council discussion in recent years was that there was a present need for a parking garage in Historic Dublin. However, his position was different due to the expense of these structures. Looking at the model proposed here, he is much more comfortable with this method of financing. Tax increment financing has been used to fund public infrastructure for over 25 years in the City, thereby it follows that past Councils have supported the use of this type of financing structure. This project is relatively large, but, to put it into perspective, there is the McKitrick TIF. It was instituted in 1994. The public improvements financed in that particular TIF were approximately $31 million. That has been our largest TIF. The Thomas Kohler TIF, instituted in 1996, was for $13 million in public improvements. There are a number of others. What is the total value of the City's TIFS? Ms. Mumma responded that $125 million of public infrastructure has been built with the expectation that the debt service payments from those TIFs have either funded, or will fund, those improvements. Mr. Lecklider stated that this is certainly not a new financing method. The City is not doing this for the first time. The six percent interest rate considered here is a conservative rate. Mayor Keenan noted that the City's bond rates are much lower than that — 4.2 percent. The six percent is related to the refinancing of the loan that would occur. Ms. Chinnici-Zuercher stated that in regard to the long history of discussions about a parking garage — the reason a parking structure never materialized on the west side is that we never discussed how to finance it. The restaurant owners and others who requested it had indicated that they could not contribute funds to it, because they did not have that kind of capital. The City would have needed to finance it, and we never came up with a formula, such as we are being presented with tonight. This is the first time we have seen a way in which to acquire the parking structures, which we've always known were not inexpensive. We will be seeing more activity in the Historic District with this development, and the parking garages will be essential to the ultimate success. We are hearing these presentations several times, but it is a huge project. Every time she hears the presentation, she learns something new. She has read about similar plans of other suburban communities, particularly those with a relationship to an urban environment that is moving forward. Certainly, that describes Columbus — it is one of the biggest urban cities that has revitalized itself for the future. Dublin is competing with that. People want to be in a walkable environment where there is activity. This project and ones like it will give Dublin that edge and an opportunity to recruit new people and meet the needs of current residents who are looking for a "living in place" concept. Hats off to Crawford Hoying for taking the risk and continuing to refine this project to end up with a product that we will all be excited about. Mr. Reiner stated that many Council members have been pushing for a parking garage in the Historic District, but there has always been a funding issue. This is a good way in which to fund it. Having the parking structures will attract other developers, as well, to help finish this project. Mayor Keenan stated that it hasn't been very many years ago when there were just a couple service stations on the street corners in the Historic District. The parallel todat is the failed center Dublin City Council Work Session Monday, May 11, 2015 Page 19 of 19 on the east side that has been deteriorating. There were naysayers about the BriHi Square, too, but today it is thriving. He and others have pushed for a parking garage in the past, but there was always a funding issue. This will solve that issue for the Library and other businesses on that side. He is excited about what will happen there. He fully believes that there will be the same result as with the Bridge and High building. Ms. Salay inquired about the new debt, specifically, the Justice Center renovation for $10 million. She did not recall that. Mr. McDaniel stated that the cost may be a little higher than that given; staff will be providing an update to Council. Ms. Mumma stated that the CIP has $9 million scheduled for the project. Ms. Salay inquired the current status of the City's operating reserve. Ms. Mumma responded that the City closed March with a General Fund balance of 97% of anticipated 2015 expenditures — about $63 million. Ms. Salay stated that the City is in an extremely strong financial position. She agrees that although Council has heard the presentations several times, she, too, understands more each time. She requested a copy of the PowerPoint given tonight. It should also be online, because it provides very good information. Vice Mayor Gerber requested that Council be provided a breakdown on the two figures of $21,800,000 and $27,500,000. Mr. McDaniel stated that in the National Citizen Survey, much emphasis was placed on addressing traffic and parking needs in these type of environments. This proposal is doing that. Addressing the potential parking solutions in partnership with the Library ensures that Historic Dublin is not left behind. In fact, we project its further success as a result of doing these kinds of things. He was notified that there will be a Library capital campaign. Staff will continue negotiations with the developer on this project and continue our dialogue with Columbus Metropolitan Library System. Work will continue on the development agreement with the assumption that Scenario 2 is preferred, unless Council indicates otherwise. Mayor Keenan inquired Council consensus. Council consensus was to move forward with Scenario 2. Mr. McDaniel indicated that staff will move forward with the direction provided by Council. The meeting was adjourned at 9:10 p.m. Clerk of Council