Urbanplan Consulting Exercise

UrbanPlan Consulting Exercise

The city of Yorktown has received a proposal from MariPaul Developers for the Elmwood site. They have hired you to analyze the proposal and advise them of any market or non-market risks and if the proposed physical plan accomplishes the claims in their Vision Statement.

The city has provided the following documents for you to use in your detailed analysis

1. Vision statement

The new Elmwood district will respect the historic value it provided its residents and visitors by recreating the business, civic and recreation opportunities it provided in a dynamic, modern package.

It will be an economically diverse and vibrant neighborhood that insures all residents, workers and visitors, particularly those of low and moderate means, will come to eat, work, shop, play and congregate for civic activity. And a warm, welcoming, festive “Main Street” for all to enjoy 7 days a week.

It will bring together the intellectual capital of the university and the business resources and talents of the central business district to create a dynamic economic environment

2. Annotated site plan

3. Financial model worksheets

a. Summary Sheet

b. Use Allocation Sheet

c. Market Sheet

d. Value Sheet

e. City Revenue Sheet

INSTRUCTIONS: There are questions for each member of your team. Answer the questions associated with your role only. Circle all answers to each question that you believe are correct.

Financial Analyst Objective: Advise the City on financial risks associated with this plan that may cause the project to fail or underperform. 1. Developer/investor return. In the RFP the City stated that the proposal must generate sufficient return to attract the capital/investments to build the project. According to the Summary Sheet, the market value of the project is $139,662,000 with a return to the developer and its investors of 16.7%. At this rate of return is this proposal risk free?

a. Yes, the minimum threshold to attract investment is 15%.

Up consulting exercise_feb 2012 Page 1 of 10 b. Yes, this proposal contractually guarantees the investors a 16.7% return.

c. No, the financial model numbers are only projections based on assumptions of current and projected market conditions and cost of capital during the timeline of the proposal. If market conditions, the cost of capital, and/or timelines change, the actual return could change dramatically – down or up.

d. No, mixed use infill developments are extraordinarily risky investments. The investors are not contractually guaranteed the projected rate of return. Although a projected 16.7% return provides some cushion over 15% in case of changes in market conditions and/or the cost of capital, investors might seek a proposal offering a higher incentive, i.e. projected rate of return, to justify the risk.

2. City tax revenues. According to the RPF, the City needs to break even after 10 years. Does this proposal provide the City the return it is seeking?

a. No, the dollar figure in the Ten Year City Return box must be at least $10,000,000 -the amount the City paid for the land.

b. Yes, the net tax revenues over ten years are $15,250. Revenues exceeding $00 comply with the RFP.

c. Yes, however, this number is very close to the minimum acceptable figure. Minor disruptions or market changes could easily result in a net negative revenue to the City.

d. None of the above

3. Increasing tax revenues. The City is in a less advantageous financial position than it was when the RFP was written. If Council wanted to net substantially higher tax revenues, what single change in the proposal would make the most significant impact?

a. No other single action will accomplish this objective

b. Build more mid-rise office

c. Build more low-rise office

d. Reduce the amount of affordable housing

e. Build additional luxury condos

f. Eliminate parks and open space

4. Absorption Adjustment. The RPF state that the proposal should respond to market demand; however there is an absorption adjustment charge exceeding $3,500,000. a. This charge results from overbuilding mid-rise office demand by 6% or 15,000 SF (demand=225,000SF/ developer built 240,000SF)

b. If the market projections are correct, the buildings will be almost completely full providing very high property tax revenues to the City despite the small amount of empty space.

c. If the market projections are much too high, the reduction in actual tax revenues could be very high.

d. The City may request the developer to demonstrate the impact of replacing the mid-rise with other uses to determine what level of risk is tolerable.

e. All of the above

5. Revenue generating uses. According to the City Revenue Sheet, the QMart generates $2,600,000 in tax revenues to the City. What other single use or mix of uses generate enough tax revenues for the City to subsidize this 108 affordable apartment and 7 townhouse units?

a. Build more high rise office buildings

b. Build more low rise and high rise office buildings

c. Build more luxury condos

d. All of the above

e. No other use/mix can accomplish this result

Site Planner Objective: Advise the City on how well MariPaul’s mix and placement creates, enables, and supports the activities and feel described in the Vision Statement, as well as relevant traffic and flow issues, and if the developer complies with Design Guidelines. The new Elmwood district will respect the historic value it provided its residents and visitors by recreating the business, civic and recreation opportunities it provided in a dynamic, modern package.

It will be an economically diverse and vibrant neighborhood that insures all residents; young families to senior citizens; workers and visitors, particularly those of low and moderate means, will come to eat, work, shop, play and congregate for civic activity. 9th Street will be a warm, welcoming, festive “Main Street” for all to enjoy 7 days a week.

It will bring together the intellectual capital of the university and the business resources and talents of the central business district to create a dynamic economic environment

1. “9th Avenue will be a warm, festive, Main Street for all to enjoy 7 days a week” - East Side of 9th

Up consulting exercise_feb 2012 Page 3 of 10 a. No, the east side of 9th from Madison through Adams Street is primarily office buildings and entrances to structured parking. These uses do not provide a warm or festive look or feel compared to retail shops and restaurants. No goods displayed in windows, no café tables on the side walk, etc.

b. No, the office buildings will be virtually empty in the evenings and weekends creating a dead streetscape.

c. No, the orientation of the retail building on Block 2 minimizes its benefit to the street feel since only one shop can be seen by pedestrians.

d. All of the above

2. 9th Avenue will be a warm, festive, Main Street for all to enjoy 7 days a week” The West Side of 9th

a. Yes, the QMart will bring hundreds of shoppers day and evening to the site.

b. No, although the QMart on block one will bring many shoppers, it will not create a warm, festive feeling on 9th. Pedestrians will see a cement wall extended 3/4 of the block with few or no windows. The entrance will be on 8th where the parking structure is located.

c. No, the sides of two podium apartment buildings front the remainder of the block, providing no visual interest, retail or recreational opportunity.

3. 9th Avenue will be a warm, festive, Main Street for all to enjoy 7 days a week” Block 3

a. Yes, the 14,400 SF of retail on the ground floor – approximately 8 stores - will contribute be enough to create desired environment.

b. Without knowing the exact type of retail uses, I cannot determine the street look and feel. The types of people, days and time of maximum activity will all be determined by what goes into the spaces. A Laundromat, dry cleaner, and fed ex/copy store, and mobile phone store will create very different environment from an ice cream shop, used book store, restaurant and brew pub.

c. Without knowing the specifics of the 34,000 SF of Community facilities in York Dry Goods, I cannot determine who would be on the street, what times of day and days of the week they would be there.

d. No, irrespective of what retail and Community uses are in York Dry Goods, they are not enough to create the “Main Street” described in the Vision Statement.

4. Homeless Shelter – Will the Homeless Shelter augment or detract from the environment described Vision Statement a. Augment – Their Vision statement said the project will provide places for people of “low and moderate means to eat, work, play, and shop”

b. Detract – People don’t live in the shelter. It is open from 4pm to 9am. Unfortunately, the presence of a large homeless population finding comfort in parks, or who may be panhandling around the retail stores and office buildings may intimidate the many other residents, workers, and visitors to the project.

c. Detract – Since the shelter does not open until 4pm, people hoping for shelter that night will have to line up near the door of the shelter – a line that could go around stores, residences, office buildings or parks, depending on the shelter location.

d. Augment – The new shelter is a modern, state of the art building and aligns with developer’s intention to create “opportunities …in a dynamic, modern package.”

e. All of the above

5. Office buildings and parking structures – The developer has placed mid-rise and low rise office buildings/parking garages on blocks 3, 4, and 5. These are adjacent to 160 housing units, the church and small parks. What do you want the city to know about the ramification of these placements?

a. Every week day, and especially in the morning and evening “rush hours” 500 cars will come in and out of the area. These are the times that residents will be trying to leave or return to their homes.

b. These cars will brining congestion, noise, exhaust fumes from idling vehicles waiting to enter garages from smaller streets like Adams.

c. The office buildings and garages with be mostly vacant at night and during the weekends creating a “dead zone” and with no street activity or residents “eyes watching the street” to keep it safe.

d. The mass/scale and height of these buildings – especially the mid-rise – is not compatible with the smaller scale/mass residential buildings, causing them to dominate the area.

e. Placing small parks next to the entrances of busy parking garages may be present a safety hazard – especially for children.

f. All of the above

g. None of the above

Marketing Director Objective: Help the city determine the level of marketing risk associated with this proposal. Based on your analysis of the proposed uses, proposed square footage, and placement in the proposal, will MariPaul’s Marketing Director be able to lease and/or sell all the spaces effectively?

Up consulting exercise_feb 2012 Page 5 of 10 1. QMart - Will the QMart make it easier or harder for the Marketing Director (MD) to lease the 24.400 SF of Neighborhood Retail space in this plan?

a. Easier because the QMart will draw hundreds of consumers from a 12 mile radius who would not otherwise come to the Elmwood District to shop.

b. Easier because it will add many additional consumers on nights and weekends when the office population is probably gone.

c. Harder because it will narrow the range of types of retailers who the MD can approach. Those whose product/service is not in direct price competition with QMart will be interested.

d. None of the above

e. All of the above

2. Homeless Shelter - Will the Homeless Shelter make it easier or harder for the Marketing Director (MD) to lease or sell space in this plan

a. All uses – No impact because all the homeless people will be in the shelter day and night.

b. Apartments/Townhouses - Harder to rent apartments and townhouses because tenant prospects will fear that homeless people will occupy the parks and other public/community spaces during the day.

c. Luxury Condos - Harder to sell the luxury condominiums because prospective purchasers will fear that a homeless shelter and homeless people in the neighborhood will lower their property values

d. Office space - No impact on leasing the office buildings because tenant prospects do not fear that the presence of homeless people in the neighborhood will impair their ability to recruit and retain employees or intimidate clients.

e. Retail space– Harder to lease because tenant prospects will fear that homeless people will panhandle near their stores, intimidate customers, and may cause increased crime.

f. All of the above

3. Community facilities/Non-profit uses – The plan calls for 34,000 SF of unspecified Community and Non-profit uses in York Dry Goods. What risks or opportunities are associated with this uncertainty that could impact the office and retail leasing in York Dry Goods and surrounding space

a. Risk - No, it will make no difference to office tenant prospects, retail prospects, or residential prospects what type of non-profit uses occupy their building or are adjacent to their building. b. Risk Office- Yes, it is imperative that the uses are specified since some office users may object to being in the same building/near a building with one or more of the populations served by the uses: Teen Center, Police Sub-station, Senior Center, Day Care Center , Computer Center, etc. Each use has brings different “demographic” resulting in a different impression of the building and feeling in on the street.

c. Risk Retail- Yes, as with office prospects, some retail users may have strong objections to being near one or more of the populations served by Community/non-profit uses

d. Risk Residential – Yes, Even if those residential prospects who may appreciate the Community/Non-profit facilities, may not wish to live adjacent to some or all of them

e. Opportunity – No, there is only leasing risk associated with these Community/Non-profit facilities

f. Opportunity Office & Retail – Yes, some office and retail businesses might find it extremely beneficial to be close to a specific population if they provide products or services oriented toward one or more of these populations: seniors, teens, infants/toddlers, parents, etc. The MD could market directly to these tenants and fill his properties more quickly at the highest rents

g. Opportunity – Yes, some tenants may find value in being in close proximity to one or more of the services or facilitates. The MD could market directly to these tenants and fill his properties more quickly at the highest rents.

4. Affordable housing - This developer has proposed 115 affordable units. Are there any risks associated with this?

a. Risk –No - Since these units are subsidized by the developer and City, renting below market rates, the developer can expect to lease these easily with little or no risk of vacancies and have low turnover among tenants.

b. Risk – Yes - market rate podium/townhouse – The developer has proposed a very small number of market rate units, which normally would be resistant to all but the very worst case downturn in the markets. However, because the high ratio of 54% affordable podiums and 41% affordable townhouses integrated into the market rate buildings, market rate prospects may resist renting in these buildings causing them to go unleased.

c. Risk -Yes - Luxury condos – The developer’s proposal includes 115 affordable units, as well as a QMart, and Homeless Shelter. Despite demand in the market for luxury condos, there is a high risk that buyers will seek the product in a more upscale environment

d. Risk – All of the above

Up consulting exercise_feb 2012 Page 7 of 10 5. Retail placement – The short side of 10,000 SF retail building on Block 2 is facing 9th Avenue and the long sides faces an office building and a parking structure. Are there risks associated with this placement? Will it be easier, harder, or have no impact on the MD’s ability to lease the space?

a. Risk -No impact - The entrance to the store will be on 9th Avenue

b. Risk – Small impact - There are 4-6 stores in the 10,000 SF building. Shoppers will access the other stores through the alley way between buildings.

c. Risk – High - There are 4-6 stores in the 10,000 SF building. Only the store fronting 9th will have any exposure to the people on the street. This will increase the difficulty of renting the other spaces.

6. Transit stop – Will the transit stop increase, decrease or have no impact on leasing risk?

a. Increase risk– Office, residential and retail tenants will object to the disruption of light rail and bus traffic and resist locating on the site.

b. No Impact – The disruption and convenience will balance out for all users and have no impact on leasing

c. Increase risk – All residential users will object to the disruption of light rail/buss traffic

d. Decrease risk – The immediate access to robust mass transit will significantly enhance the desirability of the site to all users – office, retail, and residential.

City Liaison

Objective: Analyze how effectively this developer has met the specific goals and objectives of the City in the RFP

1. QMart – Based on the City’s goals and objectives in the RFP, how responsive is the QMart to those objectives?

a. Not very – It takes up a lot of room

b. Very – It provides 400 entry level/unskilled jobs.

c. Very – It provides a complete range of products to fill the basic needs of residents along with many “wants”. Residents will not have to take 30-40 minute bus or car rides for groceries, pharmacy needs, or other clothing and home goods needs

d. Very – Everyone in Elmwood who can afford to shop, can afford to shop at the QMart

e. Very – These sales generate very high tax revenues that the City can use to subsidize affordable housing and maintain parks and community services.

f. Very – QMart will provide 50 computers and peripherals to the Computer Center in the Community Center. 2. Trade-offs – If this developer removed the QMart, could another combination of uses provide identical benefits to the City and the residents of Elmwood?

a. Yes, neighborhood retail shops and a full service grocery/drug store could provide the all the necessary products.

b. Yes, neighborhood retail shops and a full service grocery/drug store could provide the same amount of tax revenues and entry level jobs

c. No, neighborhood retail shops and grocery/drug could not provide the same range of goods at the same prices points. It may be harder for lower income individuals or people with large families to find what they need at prices they can afford.

d. No neighborhood retail shops and a grocery/drug store could not generate the same sales tax revenues or entry level jobs.

e. Yes, other businesses have offered to donate computers to the Computer Center

3. Affordable housing - This developer has proposed 115 affordable units. What should the City be aware of?

a. The developer has not been responsive to the City’s affordable housing goals- 43% of the residential units are affordable.

b. The developer has been highly responsive to the City’s affordable housing goals – 43% of the units are affordable.

c. The City did not mandate and number or percent of affordable units, so I cannot ascertain if the developer was unresponsive or highly responsive. Only that the developer did provide 43%.

d. These 115 units come at great cost to the City since it subsidizes the units and receives lower property taxes. The City would net a dramatically higher 10-year tax revenue figure if the developer built fewer units.

e. Housing typically requires more municipal services than office and retail uses. This can be especially true for affordable housing when focused on seniors or families with young and teen age children: schools, parks, social programs, as well as police and fire protection.

4. Does the developer take advantage of the surrounding business, educational, and cultural resources?

a. Yes, I think that a “dynamic, modern package” assumes that they will.

Up consulting exercise_feb 2012 Page 9 of 10 b. I cannot determine this from the Vision Statement or the site plan. Unless the developer provides a list of target tenants for its office space, if it is drawing on the university or the finance/business skills in the surrounding neighborhood.

c. Yes, they have dedicated 34,000 SF for a Community Center.

d. I cannot determine this from the Vision Statement or the site plan. I will need a list of Community facilities the developer proposes.

e. None of the above.

5. Does the proposal reflect the historic heritage of the area?

a. Not if the City is looking for a “small town.” The proposal has a QMart and many large office buildings.

b. Yes, the developer preserved and rehabbed the York Dry Goods and Phoenix Hotel buildings.

c. Yes, the look is modern but historic Elmwood had many businesses.

d. Yes, the historic Elmwood had neighborhood serving retail for all. The new QMart and additional neighborhood retail does the same.

e. Yes, the proposal provides residential options for many age, income, and “life styles. It depends what part of Elmwood’s history you pick to determine if that is reflective.

f. Yes, the developer proposes Community facilities, parks and sport fields that enable gathering for civic and recreational purposes.

g. Each Council Member and resident of may have a different view of what constitutes “reflecting historic heritage.” I can inform council of what this developer has done that is consistent with former uses, services, and appearance.

h. All of the above

Neighborhood Liaison

Objective: Accurately identify and interpret the desires and fears of each interest group. How these relate to the uses in the developer proposal. And, the power of each group to stop or advance the project.

1. Will any groups object to the high amount of office space

a. No, everyone will approve of the jobs.

b. Yes, Jobs and Justice might fear that 1200 new office workers will cause an increase in the price of housing in the area and kind of retail goods and services that are offered. c. Yes, the Neighborhood Alliance will object to the nightmarish traffic, bringing in many people from outside the area, the mass, scale and height of some of buildings, all of which will change the character of Elmwood.

d. It does not appear that the Church will object.

e. ProArts may object –anticipating increasing costs for housing and studio space. However, if the developer has provided the space they requested, they may not care.

f. The Skateboarders will object since the developer has built office buildings on their preferred skate park site.

2. Homeless Shelter – Will any groups have objections to the homeless shelter

a. The Church may object because of location. It wants the shelter, but wanted it adjacent to them since they will be running it and have raised the funds to build it.

b. The Neighborhood Alliance will not object because it is far away from their homes.

c. Jobs and Justice has no opinion on this issue.

d. ProArts and Skate On want the homeless shelter

e. All of the above.

3. QMart – Does anyone object to the QMart? If so, what are their objections?

a. Job & Justice objects because QMart is not unionized.

b. The Neighborhood Alliance (NS) objects because they object to large international corporations in their neighborhood.

c. The NA objects to the volume of traffic 7 days per week from early morning to late at night.

d. The NA objects to any use that brings many new people from outside the neighborhood.

e. The NA objects because the mass and scale of the building changes the character of the neighborhood

f. The Church objects because QMart will not hire the homeless.

4. Skateboard Park – The developer did not propose a skate park. Will this present problems?

a. No, the Skate On group has no power or influence

Up consulting exercise_feb 2012 Page 11 of 10 b. No, the City is concerned about liability of a skate park. No skate park – no liability problem.

c. Yes, the SkateOn group is a “force to be reckoned with” and will stop the project if they do not get their skate park.

d. Yes, these skaters may not have political clout, but they will continue to skateboard throughout the City if there is “hot,” well maintained and managed park. This will continue to make demands on City police services, angry merchants and building managers calling City Council Members, and continued potential liability for everyone.

e. The powerful Neighborhood Alliance supports the park because their children belong to SkateOn!

5. Artists - What does the City need to know about the ProArts situation?

a. Unless the developer provides a detailed list of the uses in the Community/non-profit facilities, I cannot determine if ProArts has been accommodated.

b. ProArts claims to speak for 12 artists who are currently squatting illegally in Victorian Row and not paying rent.

c. The artists seem to be requesting 1500 SF for each of them (18000 SF total) to have “live/work” studio space, but the project is not zoned for “live/work” space

d. The City wants to retain these artists and give them priority in any affordable housing.

e. The artists do not want to pay for the studio space or want highly sub-sized rent.