Briefing: North of Broad/Downtown Neighborhood Redevelopment Project - PowerPoint PPT Presentation

Member NYSE|FINRA|SIPC Briefing: North of Broad/Downtown Neighborhood Redevelopment Project City of Richmond, Virginia November 2, 2018

Due Diligence – Independent 3 rd Party Economic Analysis  Goals and Objectives of the Analysis  Global Observations and Findings  Financial Results November 2, 2018 1

City Due Diligence rd party economi  The Mayor or commi mmissi ssione oned d an indepen penden ent t 3 rd nomic c analysis sis (the “Analysis”) that outlin ined ed the direct, ct, indirect ect and induced ced (i.e. e. outsi side de the proposed sed TIF F District) trict) imp mpact acts s to be underta taken en in conju junct nction on with h negoti otiati tion ons. s.  The purpose se of the Analysis sis was to indepen endent dently y exami mine e the finan anci cial al imp mpact act of the Project. ct.  Hunden n Strategic egic Pa Partner ers, s, a Chicago cago based sed Desti tina natio tion n Real Estat ate e Developmen opment t Consult sulting ing Firm, was engaged ged to provide de the Analysis ysis for the North h of Broad/Do d/Downt wntown wn Neighb ghbor orho hood od Redevel elop opmen ment t Project. ct. – Hunden n has worked d on more than n 500 projects/ cts/studi studies es in the past t 20 years. s. – Hunden n has no affil iliat ation ion with h the Developer oper, its proposa osal or any of the affilia iated ed partie ies s in conne necti ction on to the proposed sed Project. ct. November 2, 2018 2

Due Diligence – Goals & Objectives of the Analysis  To independ penden entl tly analyze yze the economi nomic c bene nefit its/costs s/costs to the City ty of the proposed sed Project ct to include: ude: – Dire rect ct Imp mpact ct of the proposed sed Project ct developme elopment nt. – Direct, ct, Indirect irect and Induced uced imp mpact acts on the area surround ndin ing g the Project ct development elopment and the City y as a whole. e. – Impa mpact ct on Arena, event nt and enterta tain inmen ment. t. – Impa mpact ct on Greater er Richmo hmond nd Conven enti tion on Center er and hot otel/m el/meeti ting ng activity ivity. – Impa mpact ct on existi sting ng and pot oten ential tial for new ret etail and restau auran ant t activity ivity. – Imp mpact ct on existi sting ng and pot oten ential tial for r new office ice space. ce. – Pot otent ntia ial for cannib ibalizati alization on of existi sting ng busin iness esses es in surroun undin ing g areas. s. – Ad Addit itiona onal 1. 1.5% Meals s Tax for School ools. s. November 2, 2018 3

Due Diligence – Global Observations and Initial Findings  Global al Obse servat ation ions – The unique e nature e and scop ope e of the Project ct would d benef efit it not ot only the immedia diate e Project ct area, but also the surroundi nding ng existi sting ng busin iness esses. es. No o canni nibaliz alizat ation on expect ected. ed. – The critica ical mass s of the Project ct would d actuall ually be benef efici icial al to current t busi sine ness sses. es.  Initi tial al Findings ngs: – The Hu Hunden n re report estim imates es an even n more re fa favorab orable e economi omic c benef efit it to the City than n the Developer oper and provide de over $1 Billio ion n of net et new tax revenue nue over 30 years (1 (1). – A New arena a would d attract tract many nationa onal enterta tain inment ment tours s and provide e a strong ng oppor ortu tunit ity y for a sports ts franchise, chise, likely the American ican Hockey y League ue . – The proposed sed Convent ntion ion Center er Hot otel (Hyatt yatt Regen ency cy) ) is what t the market et needs s to bet etter er leverage age the Conven enti tion on Center er and optim imize ize the perfor orma mance nce of existi sting ng and new hot otels . (1) Excludes estimated $278 Million of increment from two new Dominion Towers. November 2, 2018 4

Due Diligence – Global Observations and Initial Findings (cont.)  Initi tial al Findings ngs (cont nt.): ): – The influx ux of thousands sands of new residen ents ts and day-ti time me worker ers s from the proposed osed residen enti tial al and office ice devel elopme opment nts will deman and d and suppor ort t more, bet etter er and diver erse se shoppi ping g and dining g options ons . – Resid iden enti tial al properti ties es in downt ntown wn Richmond hmond have e experie ienced nced imp mproved ed performa mance nce in recent t years s with h high average age occupancy upancy rates, s, stead ady y rental al rate growth th and low concession cession ra rates . – New office ce buildin ings gs would d be welcome comed d by the downt ntown wn Richmond hmond Market t due to the aging g inven entor ory and lack k of suita table, e, large conti tigu guous ous space ce . – Richmo hmond nd Public ic School ols s will benefit efit from additi tion onal (1. 1.5%) %) meals s taxes es for r school ools s due to the Project, ct, which ch will be applied ed to the designat gnated ed funds ds for school ool invest estment. ment. This his amoun unt t is in additi tion on to pot otent ntia ial allocat cation ion of new City y revenu nues es that t can be availa ailable. e. November 2, 2018 5

Financial Results City Revenues (Total over 30 Years) $2.0 Billions Do t the Project ct “Do the Project” “Do Nothing” – estima imated ed estima imated ed increm emen ental tal $1. 1.7 B $1.5 increme emental tal real eal estat ate e real eal estat tate e tax reven enues es, , tax reven enues es of the other ot er loc ocal al tax reven enue e propos oposed ed TIF District ict and d aren ena/ a/ parking ing rec eceiv eived d by the City reven enue e rec eceiv eived ed by the $1.0 assumin ming no Proje ject. . City as a result t of the Proj ojec ect (1 (1) . Do Not Nothi hing $0.5 $480 0 M $0.0 (1) Real Estate and Other Local Tax revenue estimates are from the Hunden Analysis. Parking /Arena revenue estimates from the Respondent. November 2, 2018 6

How will the Project be Funded?/ Financial Benefits to the City November 2, 2018 7

How Will the Project be Funded?  The Project ct will be funded ded from three e sources: ces: Source ce One: Privat ate investm estment nt: Approx. x. $1. 1.1 1 Billion on Source ce Two: New Reven enues es genera erated ed by the Project: ct: Approx. . $600 0 Mill llion on Source ce Three: e: Incremen ementa tal Real Estat ate Reven enues es of the Approx. x. $1. 1.1 1 Billion on TIF F District: trict: November 2, 2018 8

How Will the Public Portion of the Project (“Arena/Blues Armory/Leigh Street”) be Funded?  The Public ic Portion ion of the Project ct will be funded ed from Non-recour ecourse se Reven enue ue Bonds ds repaid d from Sources es Two and Three: – New Reven enues es genera erated ed by the Project ct (Sour urce ce Two); ); and – Incremen ementa tal Real Estat ate Reven enues es of the TIF District trict (Source ce Three). ). November 2, 2018 9

New Revenues Generated by the Project (Source Two)  New Revenue nues s generat ated ed by the Project ct as follows: ws: 1. 1. Increm emental ental Sales Tax Revenues s fro rom the Pro roject ct Blocks cks – City’s local and the Commonwealth’s share, which ch is subject ct to General ral Assembly appro rova val. – Existing Sales tax revenues will remain in the City’s General Fund. 2. 2. Increm emental ental Other Local Tax (Meals, s, Ad Admi missi sions, ns, BPOL) L) Revenues s fro rom the Pro roject ct Blocks cks. – Existing Sales tax revenues will remain in the City’s General Fund. NOTE TE: the rec ecen ently ly adop dopted ed additio ditional al 1.5% % Meals als Tax dedicat edicated ed to schoo hools ls will ll not ot be includ luded. d. 3. 3. Increm emental ental Park rking ng Revenue ues. – Existin ting g Parkin ing g revenu nues es will remain in the City’s Parking king Enter erpri rise se Fund. 4. 4. New Arena Revenues es. – Do not t curre rently tly exist; t; Curre rent nt Colise iseum is subsidi sidize zed. d. 5. 5. Rebate of Increme ment ntal al Lodgi ging ng Taxes in excess of the City’s obligation to the Greater Richmond Convention Center Authority (“GRCCA”). – To the e exten ent t ava vail ilable ble in an amou ount nt not t to exceed eed the e Lodgi odging g Taxes es gene nerat rated d by the e new Conven entio tion n Cent nter er Hot otel. November 2, 2018 10

Incremental Real Estate Revenues (Source Three) from the Proposed TIF District  Incremen ementa tal Real Estat ate Tax Reven enue ues generat ated ed by the TIF F District trict (high ghligh ighted ed in orange): ge): st and 10 th th Streets, – Bounde nded d on the east t and west st by 1 st ets, respecti ectively. – Bounde nded d on the north h and south th by I-64/I 4/I-95 and I-195 95 (Downt wntown wn Express essway), y), respecti ectivel ely. – Existin ting g Real l Estate Tax reven enues es in the e distr trict ict will remain in in the e City’s General Fund. d. November 2, 2018 11