Final Project Report Boulevard Diamond Stadium Highest & Best Use Analysis

Prepared for The City of Richmond Richmond, VA

Submitted by Economics Research Associates Davenport & Company LLC Chmura Economics & Analytics

September 2008

ERA Project No. 17889

1101 Connecticut Avenue, NW Suite 750 Washington, DC 20036 202.496.9870 FAX 202.496.9877 www.econres.com Los Angeles San Francisco San Diego Chicago Washington DC London New York

Table of Contents

I. Introduction ...... 5 Executive Summary...... 5 Key Findings ...... 6 Discussion of Key Items & Assumptions...... 9 Conclusion ...... 10 II. Methodology and Approach ...... 13 Boulevard and Shockoe Bottom Site Considerations ...... 13 Land Planning Assumptions...... 17 Market Demand Assumptions...... 18 Parking Requirements and Proposed Layout ...... 20 Summary of Development Program Assumptions...... 22 Project Costs...... 22 Project Revenues...... 25 Net Benefit Analysis ...... 29 Appendix A: Net Benefit Analysis – Comparison of Project Costs and Revenues ...... A-1 Appendix B: Highest and Best Use Market Study...... B-1 Demographic and Economic Context: Regional (City v. Metro)...... B-1 Real Estate Market Existing Conditions ...... B-14 Hospitality/Hotel Market Demand Overview ...... B-19 Office Demand Overview ...... B-22 Retail Demand Overview...... B-31 Highest and Best Use Recommendations...... B-34 Diamond Site Highest and Best Use Recommendations ...... B-40 Appendix C: Chmura Economic Impact Report ...... C-1

Economics Research Associates Project Report No. 17889 Page 1

Index of Tables/Figures

Table 1:City of Richmond Economic Impact Summary ...... 8 Table 2: Boulevard Site Property Owners and Acreage...... 14 Table 3: Comparison of Development Program Assumptions...... 22 Table 4: Summary of On-Site Stadium Revenue Assumptions ...... 27 Table 5: Summary of Net Benefit Analysis ...... 29

Figure 1: Map of Boulevard Project Area ...... 14 Figure 2: Map of Shockoe Bottom Project Area ...... 16

Appendix A Appendix Table A-1: Scenario A - Stadium Redeveloped at Current Boulevard Site (New Construction) Appendix Table A-2: Scenario B - Stadium Relocated to Shockoe Bottom Site (Boulevard Site) Appendix Table A-3: Scenario B - Stadium Relocated to Shockoe Bottom (Shockoe Site) Appendix Table A-4: Stadium Spending and Tax Assumptions Appendix Table A-5: Summary of Identified Site Parcel Information Appendix Table A-6: Commercial Parking Garage Assessed Value Assumptions Appendix Table A-7: Boulevard Site Industrial Use Relocation Cost Assumptions Appendix Table A-8: Debt Schedules (Davenport & Company LLC)

Appendix B Appendix Table B- 1: Population Trends, 2000-2012...... 2 Appendix Table B- 2: Share of Population by Age, 2007 & 2012 ...... 3 Appendix Table B- 3: Household Profile of Subject Site Area, Richmond, and the MSA, 2000-2012 . 5 Appendix Table B- 4: Area Income Profile, 2007-2012 ...... 6 Appendix Table B- 5: Share of Households by Household Income, 2007...... 7 Appendix Table B- 6: Net Migration, City of Richmond, 1999-2006...... 8 Appendix Table B- 7: Top Counties for In-Migration to the City of Richmond, 1999-2006...... 8 Appendix Table B- 8: Employment by Industry, 2000 & 2007 ...... 10 Appendix Table B- 9: Virginia Labor Market Statistics Projections for Labor Markets X & XI (Richmond and Surrounding Area), 2004-2014 ...... 11 Appendix Table B- 10: Employment Projections by Industry, City of Richmond, 2000-2020...... 12 Appendix Table B- 11: Top Tapestry Segments by Area...... 13 Appendix Table B- 12: Annual Richmond Citywide Mixed-Use Urban Housing Demand ...... 18 Appendix Table B- 13: Geographic Source of Demand by Product Type ...... 19 Appendix Table B- 14: Tapestry Segmentation of Housing Demand...... 19 Appendix Table B- 15: Metropolitan Richmond Area Hotel Room Supply, 2008...... 22 Appendix Table B- 16: Summary of Area Office Market Statistics, 2005-2008...... 24 Appendix Table B- 17: Class Detail of Near West Submarket Office Statistics...... 25

Economics Research Associates Project Report No. 17889 Page 2

Appendix Table B- 18: Class Detail of Richmond CBD Office Statistics ...... 26 Appendix Table B- 19: Class Detail of Shockoe Submarket Office Statistics...... 27 Appendix Table B- 20: Class Detail of City of Richmond Office Statistics...... 28 Appendix Table B- 21: Class Detail of Richmond Market Office Statistics...... 29 Appendix Table B- 22: Shockoe Bottom Development Program ...... 35 Appendix Table B- 23: Project Capture by Tapestry Segment by Unit Type ...... 36 Appendix Table B- 24: Estimated On-Site Demand by Tapestry Segment by Unit Type...... 37 Appendix Table B- 25: Unit Size and Pricing Recommendations...... 38 Appendix Table B- 26: Boulevard Site Retail Market Characteristics and Capture Rates ...... 43 Appendix Table B- 27: Boulevard Site Comparative Retail Market Characteristics and Capture Rates45 Appendix Table B- 28: Boulevard Site Captured Retail Spending ...... 46 Appendix Table B- 29: Boulevard Site Total Supportable Retail Square Feet by Store Type ...... 47 Appendix Table B- 30: Market Penetration of Hypothetical Shopping Center Tenants...... 48

Figure B- 1: Change in Share in Population by Age, 2007-2012...... 3 Figure B- 2: Growth in Population by Age Cohort, 2007-2012 ...... 4 Figure B- 3: Change in Share of Households by Household Income, 2007-2012 ...... 7 Figure B- 4: 2007 Share of Employment by Industry...... 9 Figure B- 5: Richmond City and MSA Total Building Permits by Type, 2003-2007...... 14 Figure B- 6: Richmond City Building Permits, 1999-June 2008...... 15 Figure B- 7: Regional Retail Space by Jurisdiction...... 31 Figure B- 8: Retail Sales Leakage/Surplus Comparison, City of Richmond and Henrico County...... 32 Figure B- 9: Shockoe Bottom Area of Analysis ...... 34 Figure B- 10: Boulevard Site Convenience Retail Trade Areas...... 42 Figure B- 11: Boulevard Site Comparative Retail Trade Areas...... 44

Economics Research Associates Project Report No. 17889 Page 3

General & Limiting Conditions

Every reasonable effort has been made to ensure that the data contained in this report are accurate as of the date of this study; however, factors exist that are outside the control of Economics Research Associates, Davenport & Company LLC, and Chmura Economics & Analytics and that may affect the estimates and/or projections noted herein. This study is based on estimates, assumptions and other information developed by Economics Research Associates from its independent research effort, general knowledge of the industry, and information provided by and consultations with the client and the client's representatives. No responsibility is assumed for inaccuracies in reporting by the client, the client's agent and representatives, or any other data source used in preparing or presenting this study.

This report is based on information that was current as of September 2008 and Economics Research Associates has not undertaken any update of its research effort since such date.

Because future events and circumstances, many of which are not known as of the date of this study, may affect the estimates contained therein, no warranty or representation is made by Economics Research Associates that any of the projected values or results contained in this study will actually be achieved.

Possession of this study does not carry with it the right of publication thereof or to use the name of "Economics Research Associates" in any manner without first obtaining the prior written consent of Economics Research Associates. No abstracting, excerpting or summarization of this study may be made without first obtaining the prior written consent of Economics Research Associates. This report is not to be used in conjunction with any public or private offering of securities, debt, equity, or other similar purpose where it may be relied upon to any degree by any person other than the client, nor is any third party entitled to rely upon this report, without first obtaining the prior written consent of Economics Research Associates. This study may not be used for purposes other than that for which it is prepared or for which prior written consent has first been obtained from Economics Research Associates.

This study is qualified in its entirety by, and should be considered in light of, these limitations, conditions and considerations.

Economics Research Associates Project Report No. 17889 Page 4

I. Introduction

The team of Davenport & Company LLC (“Davenport”) in conjunction with Economics Research Associates (“ERA”) and Chmura Economics & Analytics (“Chmura”) was retained by the City of Richmond (“City”) to prepare a Highest and Best Use Analysis of the current site of the Richmond Baseball Stadium and surrounding properties, which together are commonly known as the “Boulevard Site”. The analysis included herein evaluated the following three Scenarios for the Boulevard Site:

ƒ Scenario A: Construction of a New Baseball Stadium at the Existing Location, with Relocation of Other Boulevard Site Facilities and Redevelopment of the Site’s adjacent development of a mix of uses. Scenario A reflects redevelopment of the current Boulevard site only.

ƒ Scenario B: Demolition and Removal of Existing Stadium and Complete Redevelopment of Boulevard Site, as well as Construction of a New Baseball Stadium in Shockoe Bottom, with Ancillary Shockoe Redevelopment into a mix of residential, commercial, and entertainment uses; in effect, Scenario B reflects the combined value of redeveloping both sites.

ƒ Scenario C: Substantial Refurbishment of the Existing Baseball Stadium Only

The following report provides the detailed assessment of the magnitude of potential ongoing annual revenues that would be available to the City to offset one-time stadium development capital costs and—ultimately—to determine which scenario would yield the maximum economic return to the City.

Executive Summary

The estimated net benefit of the comparative scenarios to the City of Richmond required the consulting team to assemble a wide range of planning, design, and development assumptions. ERA provides an overview of the approach to the assignment, critical assumptions, and our key findings in the following executive summary.

The highest and best use approach first tested the gross market demand for a range of uses at each site, comparing and contrasting the appropriateness and competitive context of each use at the candidate sites as well as alternative sites within the regional marketplace.

Economics Research Associates Project Report No. 17889 Page 5

Following the market demand analysis, ERA analyzed each site with respect to transportation access, land capacity, existing infrastructure support, and land use/zoning requirements. Within these market and regulatory parameters, ERA tested the economic benefits of a range of use-mix options in the form of comparative development programs by estimating the potential real property and sales taxes, stadium attendance and spending levels, and other potential sources of annual operating income.

Upon identifying the optimum use-mix for each scenario, ERA compared the total estimated annual operating and tax revenues to the estimated annual debt required to fund the total project’s capital investment. The capital investment estimates were based on ERA’s research in the local marketplace, stakeholder interviews with the City of Richmond and the Richmond Metropolitan Authority, published data sources (RS Means Construction Cost Estimators), and other sources. Debt payments assume a term of 25 years and an interest rate of 5.5 percent. The results of the comparative analysis are presented as a calculation of “net benefit” to the City of Richmond, as detailed in the following discussion of key findings.

Key Findings

ƒ 1st: Scenario C generates no incremental revenue to the City from redevelopment of the Boulevard site. Moreover, with an estimated construction cost of at least $45.0 Million, debt service on the stadium renovation would cost the borrower nearly $3.3 million annually. As Scenario C results in no incremental revenue and no discernible cash flow benefit to the City, no further analysis was undertaken.

ƒ 2nd: Redevelopment of the Boulevard site under Scenarios A & B, irrespective of the location of a possible new baseball stadium, generates incremental revenue to the City (but not necessarily a net cash flow benefit) only if certain existing facilities (e.g.; Arthur Ashe Center) are relocated within the existing site area. This conclusion, reached by ERA, reflects their belief that moving the Arthur Ashe Center is the only way to assemble parcels of sufficient size to attract suitable anchor tenants to the Boulevard site. Therefore the cost of the relocation must be factored into the analysis of both Scenario A and Scenario B.

Cost Range for Moving Arthur Ashe Facilities Debt Service

$8.5 - $10.0 Million Up to $750,000

Economics Research Associates Project Report No. 17889 Page 6

ƒ 3rd: Scenario A, which includes a New Stadium at the Boulevard and a 2,000+ space structured parking deck could yield incremental revenues, but there is No Annual Net Cash Flow Benefit to the City. This is principally due to the estimated costs (i.e.; debt service) of redeveloping the Boulevard Stadium and Site exceeding the projected incremental revenue.

Scenario A Financial Summary $ Mil

Incremental Revenue/Existing Funding Sources* 6.4 Less: Debt Service - Stadium & Improvements (8.3) Debt Service - Ashe Center Relocation (0.8) Estimated Annual Net Benefit to City (2.7) * Assumes Continuation of Existing Regional Baseball Funding Partnership

ƒ 4th Scenario B, which entails construction of New Stadium in Shockoe, with attendant development around the Stadium, as well as Maximal Redevelopment at the Boulevard, could generate somewhat higher incremental revenue to the City. To the extent that there is a continuation of the existing Regional Baseball Funding Partnership (or other external funding of like amount is substituted), there could be a net annual Cash Flow Benefit to the City.

Scenario B Financial Summary $ Mil

Incremental Revenue/Existing Funding Sources* 9.6 Less: Debt Service - Stadium & Improvements (7.5) Debt Service - Ashe Center Relocation (0.8) Estimated Annual Net Benefit to City 1.4 * Assumes Continuation of Existing Regional Baseball Funding Partnership or Other External Support.

ƒ 5th According to Chmura Economics & Analytics evaluation of the broader economic impact to the City of Richmond of the two comparative scenarios, Scenario B has the potential to generate significantly more indirect jobs, payroll, and taxes. Chmura concluded that if the stadium is rebuilt at the current Boulevard site (Scenario A), the Boulevard site (stadium and other development on-site) can directly sustain 693 jobs annually and contribute $94.7 million to the economy of the city of Richmond. In addition, 110 jobs and $15.6 million in economic impact are generated throughout the city in the form of ripple

Economics Research Associates Project Report No. 17889 Page 7

effects. These ripple effects will bring in an additional $0.1 million in tax revenue to the city in the forms of sales, meal, lodging, and BPOL tax.

In contrast, if the stadium is moved to the Shockoe site (Scenario B), the direct economic impact is estimated to be $195.2 million and 1,299 jobs, with ripple effects amounting to $46.6 million and 324 additional jobs for businesses throughout the city. These ripple effects will bring an additional $0.2 million in tax revenue to the city.

In addition, the construction of the baseball stadium and associated commercial and residential properties generates a one-time impact of hundreds of millions of dollars in spending and thousands of jobs in the city of Richmond1. The economic impacts are summarized in Table 1.

Table 1:City of Richmond Economic Impact Summary Scenario A Scenario B

Direct Ripple Direct Ripple

One-Time Construction Impacts Spending ($Million) $173.3 $70.8 $350.8 $138.3 Employment 1,638 588 3,107 1,157 Payroll ($Million) $70.4 $28.7 $132.5 $52.3 Annual Ongoing Economic Impacts Stadium Operations Spending ($Million) $2.2 $0.4 $2.2 $0.4 Employment 48 7 48 7 Payroll ($Million) $1.1 $0.2 $1.1 $0.2 Associated Development Spending ($Million) $92.5 $15.2 $195.2 $46.2 Employment 646 103 1,299 318 Payroll ($Million) $37.3 $6.1 $79.0 $18.7 Total Ongoing Impact Spending ($Million) $94.7 $15.6 $197.4 $46.6 Employment 693 110 1,347 324 Payroll ($Million) $38.4 $6.3 $80.1 $18.9 City Tax Revenues ($Million) $0.1 $0.2 Note: The direct sales, real property, and admissions tax revenue is included in ERA’s Net Benefit Analysis. Source: Chmura Economics & Analytics, 2008.

1 The construction activity includes not only construction impacts for the baseball stadium, but also construction impacts for retail and residential development under both scenarios.

Economics Research Associates Project Report No. 17889 Page 8

Discussion of Key Items & Assumptions

1. The existing Regional Baseball Funding Partnership support (Richmond Metropolitan Authority, or “RMA”) is assumed to remain in place if a New Stadium is built at the Boulevard Site (Scenario A). The following constitutes the current shares of the Funding Partnership on an annual basis:

ƒ City of Richmond: $750,000

ƒ Chesterfield County: $750,000

ƒ Henrico County: $750,000

ƒ Hanover County: $225,000 $2,475,000

Moving the New Stadium to Shockoe could, but may not, jeopardize this Funding Partnership. During the course of conducting its research, ERA was informed that there is a strong likelihood that a private sector partner would backfill some or all of the lost RMA Support payments. This conclusion that a Downtown Stadium provides a stronger economic model for baseball is supported by Jones Lang LaSalle and their communications with the private development community.

2. While Davenport, ERA, and Chmura believe, as supported by observations from the development community, that a Downtown Stadium location would generate stronger stadium-based revenues (i.e.; naming rights, luxury boxes, concession leases, etc), for the purposes of this Report, we have treated both New Stadiums equally in terms of revenue generating capacity.

3. The analysis of Scenario B includes the expenditure of $20.0 million for a 1,000-space structured parking deck, despite previous studies indicating that existing parking downtown could accommodate a New Stadium. Davenport and ERA believe that our analysis would be overly punitive to the Boulevard Site if it assumed that a 2,000-space structured parking deck is needed there, while at the same time assuming that no additional parking would be required in Shockoe. With the addition of parking, albeit a smaller garage, to the New Stadium in Shockoe (Scenario B), we believe the analysis is more fairly represented.

4. The estimated incremental revenues to the City (and possible net cash flow benefit) are based upon annual estimates at full buildout of the redeveloped sites. ERA believes that,

Economics Research Associates Project Report No. 17889 Page 9

with the recommended relocation of the Ashe Center, buildout will occur expeditiously at both the Boulevard and Shockoe Sites.

5. In preparation of our report, we were advised that any costs related to the relocation of the Department of Public Works and General Services Administration uses on the current Boulevard site (including environmental mitigation) should be included in both Scenario A and Scenario B. ERA estimates that current City-owned industrial uses occupy nearly 40 acres of the total 59-acre Boulevard project site. Assuming current land and improvement values and site demolition/land preparation/remediation costs of $400,000 per acre, relocation of existing industrial uses could cost up to $24.6 million (see Appendix Table A-7 Boulevard Site Industrial Use Relocation Cost Assumptions for detailed calculations). This estimated value appears to be reasonable considering the average assessed value of existing retail shopping centers in the City of Richmond is approximately $496,000.

6. In preparation of our report, we were advised that any infrastructure costs related to storm water management in Shockoe Bottom are to be held outside the scope of this analysis. Furthermore, ERA confirmed that the required infrastructure improvements (including utility upgrades) for either site could be completed within a six- to nine-month timeframe and would, therefore, have a comparable impact on Minor League Baseball’s operations.

Conclusion

Scenario A and Scenario B both have the potential to provide incremental revenue to the City. Incremental tax collections, while they vary somewhat in magnitude between the two alternatives, should be realized. Scenario A, nevertheless, does not appear to offer any positive net cash flow benefit to the City. Scenario B does offer the possibility of an economic benefit to the City, however, the realization of such benefit is largely predicated on the continuation of RMA Support for baseball (or private sector replacement of same).

As represented in the table below, the loss of RMA Support could result in net cash flow deficit to the City no matter where a New Stadium is built. The range of the potential annual net cash flow deficit ranges from ($5.2) million if the New Stadium is built at the Boulevard to ($0.2) if the New Stadium is built in Shockoe. If RMA support continues at present levels, Scenario B is the option has the highest likelihood of providing a positive net cash flow benefit to the City.

Economics Research Associates Project Report No. 17889 Page 10

Comparing Scenarios A & B $ Millions

Scenario A Scenario B

With RMA Support* Incremental Revenue/Funding Sources 6.4 9.6 Less: Debt Service - Stadium & Improvements (8.3) (7.5) Debt Service - Ashe Center Relocation (0.8) (0.8) Estimated Annual Net Benefit to City (2.7) 1.4

Without RMA Support Incremental Revenue/Funding Sources 3.9 8.1 Less: Debt Service - Stadium & Improvements (8.3) (7.5) Debt Service - Ashe Center Relocation (0.8) (0.8) Estimated Annual Net Benefit to City (5.2) (0.2)

* RMA Support Totals $2.475 million per year.

Other Economic Development Considerations

In addition to unrealized real property and sales tax revenues, retention of the stadium at the current Boulevard site would result in a clear opportunity cost for the City of Richmond. If the stadium were to remain at the Boulevard site, the site and its immediate surroundings would be unlikely to achieve optimal integration within the existing and emerging residential neighborhoods such as Scotts Addition. Likewise, Downtown Richmond would forfeit the catalytic benefits of a powerful entertainment and recreation anchor in Shockoe Bottom.

Relocation of both the stadium and the City-owned industrial uses at the Boulevard will not only allow for better integration of the site into the surrounding residential neighborhoods, but will also encourage a more desirable quantity, mix, and format of retail. If the stadium were to remain, ERA assumes only one to two large-format discount retail anchors in a traditional suburban layout would have the capacity to build on the site. Because retailers desire both control over their immediate environment and a critical mass of similar retailers, the site's configuration is critical to maximizing the benefit to the City of Richmond.

Economics Research Associates Project Report No. 17889 Page 11

ERA’s development programming assumptions take all of these factors into account. For example, if all 59 acres were assembled, ERA assumes that the program would include two to three large format retail anchors supported by a high concentration of restaurants and neighborhood services in an urban format. Such a mixed-use concept would have a much greater chance of attracting the tenants it would need to achieve a high quality, pedestrian-oriented retail destination and to maximize the potential economic benefit to the City of Richmond.

Total redevelopment of the site would attract a higher proportion of restaurants and cafes, ultimately serving the City’s existing civic uses located within one-half mile of the site (i.e., the Children’s Museum of Richmond, the Science Museum of Richmond, and the Virginia Museum of Fine Arts).

Based on current trends nationally and ERA interviews with staff representing ULI-the Urban Land Institute, the Shockoe Bottom site is the optimum location for an urban ballpark. The Shockoe Ballpark concept capitalizes and compliments the more than $440 million in public investments recently made within Shockoe Bottom.

In conclusion, relocation of the stadium to Shockoe Bottom would create the linchpin of Richmond’s emerging downtown entertainment district thereby further supporting implementation of the City’s comprehensive economic development strategy to strengthen downtown’s mixed-use, urban neighborhoods.

Economics Research Associates Project Report No. 17889 Page 12

II. Methodology and Approach

ERA’s comparative analysis concludes that Scenario B, relocating the stadium to the Shockoe Bottom site and redeveloping the Boulevard site into a mix of uses anchored by a destination retail center, yields the highest economic return for the City of Richmond. The results of this analysis are largely driven by the following factors:

ƒ Competitive context of sports, retail, residential, office, and hotel uses at each site with respect to location, access, current physical condition, and surrounding uses

ƒ Market demand assumptions

ƒ Land planning considerations / site capacity constraints

ƒ Development program assumptions

ƒ Parking requirements by use

ƒ One-Time Construction costs

ƒ Annual ongoing operating revenues

o Stadium revenues (contributed income, skybox sales, vendor lease payments, and sales taxes on admissions, parking, and food and beverage income).

o Real property and sales taxes from ancillary development of retail, residential, office, and parking uses.

Boulevard and Shockoe Bottom Site Considerations Boulevard Site Project Area

The Boulevard site is located in an existing light industrial area, adjacent to an exit off of I-95/64, and nestled between stable, relatively affluent neighborhoods to the northeast and a transitioning former industrial area to the southwest (Scotts Addition). The site is also within access to the Downtown and to neighboring Henrico County. The Boulevard site is comprised of nearly 58 acres, of which approximately 40 acres are owned by the City of Richmond for industrial purposes (General Services and Public Works).

Economics Research Associates Project Report No. 17889 Page 13

Figure 1: Map of Boulevard Project Area

Source: City of Richmond; ESRI; Economics Research Associates, July 2008.

These uses occupy nearly 70 percent of the total potential building site and the heavy equipment stored on these properties is incompatible with any form of substantial commercial redevelopment.

Table 2: Boulevard Site Property Owners and Acreage Land Percent Address Property Owner (Acres) of Total 3101 N Boulevard City of Richmond Recreation & Parks 5.5 9.5% 3001 N Boulevard Richmond Metropolitan Authority 8.9 15.4% 3017 N Boulevard City of Richmond Recreation & Parks 3.9 6.7% 2909 N Boulevard City of Richmond General Services 9.8 16.9% 2705 N Boulevard City of Richmond General Services 14.1 24.5% 2720 Hermitage Rd City of Richmond Public Works 15.5 27.0% Total 57.6 100.0% Source: City of Richmond Office of the Assessor; Economics Research Associates, 2008. Regardless of whether the Stadium retains its current site or is relocated to Shockoe Bottom, ERA concludes that the highest and best use of the Boulevard site is predicated upon relocation of these

Economics Research Associates Project Report No. 17889 Page 14

uses to an alternate (third location). Relocation of these uses would require funding for the demolition, site preparation, and environmental remediation of the current site as well as land acquisition, new construction, and moving costs for approximately 100 City of Richmond employees. ERA acknowledges that the City’s supply of large tracts of developable land appropriate for industrial uses is constrained. However, relocation of the site provides the opportunity for several direct and indirect economic benefits to the City of Richmond. Not only would relocation of the Department of Public Works and General Services properties activate a more appropriate third location with an influx of net new employees and their daytime spending, but such a strategy would also allow the City to strategically reassess current land use patterns and relocate industrial uses in a more appropriate location outside the path of urban revitalization trends within the City.

For example, there is evidence of substantial private reinvestment in the adjacent Scotts Addition neighborhood. Former warehouse structures are currently being renovated into loft-style apartment complexes. ERA noted a great deal of construction activity and foot traffic in the area. The majority of residential properties analyzed appear to be performing well within the submarket, both with respect to rental rates per square foot and relatively low vacancy rates. ERA notes an opportunity to connect the Scott Addition neighborhood to future redevelopment of the Boulevard site through roadway improvements, pedestrian walkways, and other streetscape improvements. Future public investment in such public realm amenities would serve to bridging the current hole in the existing urban neighborhood fabric caused by the industrial uses on the Boulevard site.

Based on ERA’s cost/benefit analysis, we conclude that the potential benefits of unlocking the entirety of the Boulevard site for redevelopment will ultimately far outweigh the costs of relocation.

Shockoe Bottom Project Site

ERA defines the Shockoe Bottom project area (Scenario B) extending from I-95 in the west to Leigh Street in the North, including the parcels seen in . This is the area surrounding the Main Street Station. It is important to note that the Shockoe Bottom project area’s boundaries include both public and private land ownership. As such, Scenario B is predicated upon the acquisition of nearly eight acres of privately held land that is not currently associated with any public or private development proposals.

Economics Research Associates Project Report No. 17889 Page 15

Figure 2: Map of Shockoe Bottom Project Area

Source: City of Richmond; ESRI; Economics Research Associates, July 2008.

The Shockoe Bottom location is centrally located within the region and 10 minutes or less from Richmond’s recently expanded international airport. The Shockoe District is the fastest growing census tract within the city and has attracted several new and occupied residential properties (Tobacco Row, The Vistas, American Tobacco). Additional projects currently planned or under construction include: Cold Storage, Rocketts Landing and Tree Hill Farms. These residential projects would have convenient access to the stadium via the Virginia Capital Trail, the Greater Richmond Transportation Connection (GRTC) commuter service and the future Bus Rapid Transit System offered through GRTC.

Shockoe Bottom is also located along the Eastern Corridor served by AMTRAK and passenger rail. The Virginia Department of Rail and Public Transportation’s future rail plan is to continue to expand service to the Main St. Station. The Main St. Station, currently an operational AMTRAK station, will serve the region as the primary Multi-Modal Transportation Center and has received $61 million to

Economics Research Associates Project Report No. 17889 Page 16

date through transit oriented funding to accomplish this goal. For all those utilizing transit, the Main Street Station landmark will become the city’s welcome center. The City is in also the process of developing a Visitors and Tourism Origination Center within the Main St. Station property.

Development in the Shockoe Bottom project area will capitalize on and compliment recent public infrastructure investments within the area, including:

ƒ Flood Wall: $150 million

ƒ Canal Walk $103 million

ƒ Virginia Capital Trail $ 57 million

ƒ Virginia State Capitol and Grounds Restoration $109 million

ƒ Main Street Station Improvements: $ 61 million TOTAL $440 million

Land Planning Assumptions

Evaluation of the redevelopment of each of the sites required reconciliation of multiple land planning factors that were difficult to ascertain in the absence of engineering, traffic, and land capacity assumptions. ERA relied upon industry standards established by the American Planning Association, ULI-the Urban Land Institute, and ERA’s experience with similar mixed-use urban redevelopment projects under construction within the Mid-Atlantic region. At a minimum, ERA factored in the following variables that served to drive the ultimate form of the development programs proposed for each site:

ƒ New construction at the current Boulevard site would require 2,000 dedicated parking spaces. ERA analyzed the potential site configuration of the stadium and adjacent commercial uses based on two parking options: surface parking and a decked, above-grade parking structure. Assuming 350 square feet per parking space, 2,000 parking spaces would require 16 acres of the site’s total 58 acres (28 percent of the total land). Due to the current location and configuration of the VCU Sports Backers Stadium in the middle of the proposed project site, the surface parking option would command a substantial portion of valuable urban land, leaving insufficient and oddly configured parcels of land for the balance of uses.

Economics Research Associates Project Report No. 17889 Page 17

ƒ The current Boulevard site is challenged by over-programmed sports and recreation uses. While simultaneous peak-day usage of the Diamond Stadium, VCU Sports Backers Stadium, and the Arthur Ashe Center are rare, adjacent roadways experience substantial delays on those days. Total redevelopment of the current Boulevard site would require roadway improvements (including the adjacent 95 interchange), a mixed-use development absent the simultaneous demand of three major sports and recreation uses would likely result in a more appropriate trip generation distribution along North Boulevard, Robin Hood Road, and within the surrounding neighborhood.

ƒ Due to the location and configuration of the Sports Backers Stadium, ERA attempted to contact VCU to explore possible relocation of the current facility. VCU could not be reached for comment on this matter. Because the stadium is recently built and in good condition; ERA concludes that it is unlikely that VCU would be able to justify relocation of the facility. As such, ERA assumes that the stadium will remain in its current location.

Market Demand Assumptions

ƒ Retail: ERA’s retail demand analysis suggests that the Boulevard project site could capture demand for a community shopping center of between 350,000 and 500,000 square feet, with a combination of a major general retailer/department store, a high-quality supermarket, and other retailers and restaurants including apparel stores, home goods stores, restaurants, and a drug store. However, if the stadium were to remain at the Boulevard site, there would not be a critical mass of developable land to maximize the retail uses at the site. Relocation of both the stadium and the City-owned industrial uses at the Boulevard will not only allow for better integration of the site into the surrounding residential neighborhoods, but will also encourage a more desirable quantity, mix, and format of retail. If the stadium were to remain, ERA assumes only one to two large-format discount retail anchors in a traditional suburban layout would have the capacity to build on the site. Because retailers desire both control over their immediate environment and a critical mass of similar retailers, the site's configuration is critical to maximizing the benefit to the City of Richmond.

ERA’s development programming assumptions take all of these factors into account. For example, if all 59 acres were assembled, ERA assumes that the program would include two to three large format retail anchors supported by a high concentration of restaurants and neighborhood services in an urban format. Such a mixed-use concept would have a much greater chance of attracting the tenants it would need to achieve a high quality, pedestrian-

Economics Research Associates Project Report No. 17889 Page 18

oriented retail destination and to maximize the potential economic benefit to the City of Richmond.

The design and configuration of the development should maintain the urban quality desired by the City of Richmond’s current planning guidelines. The Boulevard site should be configured in a manner that transitions the site from its current quasi-industrial use to a mixed-use format that integrates the neighborhood surrounding it. The site plan will require maintaining a delicate balance between assuring retailer visibility (particularly from I-95) and presenting a secondary “street face” to adjacent uses and neighborhoods.

ƒ Residential: ERA noted strong demand for multifamily residential development throughout the City of Richmond. In comparing and contrasting specific demand for housing at each respective site and in competitive locations elsewhere, ERA concluded that retention of the stadium at the Boulevard site would not result in a competitive residential project. However, if the stadium were relocated to Shockoe Bottom and the site were entirely redeveloped, ERA concludes that a small multifamily rental project of approximately 200 units could be successful if developed after the retail uses are built out and absorbed.

ERA’s primary research in the local submarket concludes that the Shockoe Bottom area is a highly desirable site for infill housing. ERA’s residential program assumes 200 condominiums and 450 rental units. On-site rental demand is estimated at 213 to 230 units per year; studio units will account for 36 percent of demand, 1-bedrooms about 41 percent, 2-bedrooms 8.9 percent, and 3-bedrooms 14 percent. Condominium demand is expected to require a longer absorption timeframe (estimated at 19 to 24 units per year), as reflected in the smaller condominium program component.

ƒ Office: Based upon the available data, as well as information from those knowledgeable in local real estate conditions, development of office in the City is likely to be limited to rehabilitation/replacement of existing office space or dependent upon the attraction of specific users. In other words, much of the space will not be speculative development, but built for pre- leased tenants or build-to-suit single tenants. Given the predominantly retail use proposed for the Boulevard site, ERA does not include office uses in the proposed development program. However, it is possible that the site could be an attractive site for office use in a later phase of the site’s development after the preliminary buildout and targeted absorption rates have been realized.

Economics Research Associates Project Report No. 17889 Page 19

In contrast, the Shockoe Bottom site is currently housing a variety of office users with a strong preference by small format, creative class professional services workers. ERA’s prior office demand analysis conducted for the Main Street Station highest and best use analysis called for 120,000 square feet of office space. Based upon ERA’s analysis of the overall office market and demand for office space in the region, the Shockoe Bottom area could be expected to attract small format professional office space users. For planning purposes, ERA includes up to 20,000 square feet of office space in refurbished space, such as at the Seaboard Building, or in newly built space over retail. In addition, ERA assumes that approximately 50,000 square feet could be allocated for a build-to-suit tenant, or for when the speculative market for office space recovers.

ƒ Hotel: ERA does not recommend new hotel construction at either the Boulevard Diamond or Shockoe Bottom site. For the business/convention market, a competitive hotel location should be proximate to downtown business activity. Furthermore, the RCVB reports that there is significant hotel building activity underway with approximately 2,000 hotel rooms planned or under construction within the Richmond metropolitan market, of which 500 rooms are located within the City boundaries. The feasibility of new hotel construction is dependent upon the absorption of these new rooms into overall supply. Given that the current pipeline represents nearly 14% of existing supply, it is unlikely that a major hotel investor would identify pent-up demand for new hotel rooms within the City of Richmond until such time as the new room nights in the construction pipeline are fully absorbed into the regional supply chain. The typical industry standards indicating support for new hotel construction require that stabilized occupancy rates are a minimum of 65% and average daily rates for the mid- to upper-scale hotel class reach $120.

Instead, ERA recommends that the City of Richmond encourage future hotel development activity to focus on upgrading the existing supply of hotel properties as opposed to new construction. The Richmond Diamond site is adjacent to two hotel properties that do not appear to meet basic health/safety requirements or building code regulations. Interviews with local property owners suggested that the property be recommended for consideration by the Community Assisted Public Safety (CAPS) Task Force, Richmond’s combined police, fire, and building code violations team. Parking Requirements and Proposed Layout

ƒ Civic/Recreation Uses: According to the RMA, the Major League Baseball will require that stadium be supported by a minimum of 2,000 parking spaces. ERA assumes that the Boulevard

Economics Research Associates Project Report No. 17889 Page 20

site would require a decked structure to allow for maximum economic return to the City of Richmond. If the stadium were to be relocated to the Shockoe Bottom site, ERA assumes that the stadium could be supported by some portion of the existing 3,000 spaces located within five blocks of Main Street Station. For the purpose of the financial analysis, ERA included construction costs for 1,000 new parking spaces that would be dedicated support for a stadium located in Shockoe Bottom.

ƒ Retail: ERA’s development program assumes four parking spaces per 1,000 square feet of retail. For the purpose of this analysis, all retail parking is assumed to be surface spaces. While the Boulevard retail program (240,000 to 305,000 square feet) would require between 960 and 1,220 parking spaces, the Shockoe Bottom retail program (65,000 square feet) would require 220 spaces. ERA assumes that the majority of the Shockoe Bottom retail space would be located on the ground floor of residential or office buildings and that the area has sufficient existing parking to accommodate the retail demand. According to the City of Richmond, the Shockoe Bottom site is served by more than 3,000 parking spaces within a five-block radius, including: a 1,200 car parking structure located at 14th and E. Main Streets; a 90 space surface lot located across the street from the Main Street Station; an 800 car parking structure at 14th and Cary Streets; and approximately 1,000 surface spaces available on lots located between Dock, 14th, 18th, and Marshall Streets.

ƒ Multifamily For-Sale Residential (Condo): ERA assumes an average of 1.25 spaces per unit.

ƒ Multifamily Rental (Apartment): ERA assumes an average of 1.25 spaces per unit.

ƒ Office: ERA assumes one space per 1,000 square feet of office uses.

Economics Research Associates Project Report No. 17889 Page 21

Summary of Development Program Assumptions

Taking into consideration the physical capacity and configuration of each site, market demand factors, parking requirements, ERA prepared the following development program for each Scenario.

Table 3: Comparison of Development Program Assumptions

Scenario A: Scenario B: Stadium Relocated to Shockoe Bottom Site Stadium Mixed- Stadium- Redeveloped Use Anchored Boulevard + at Current Boulevard Shockoe Shockoe Boulevard Site Site Bottom Site Bottom Sites Civic/ Recreation / Cultural Use (SF) 670,000 370,000 308,500 678,500 Retail (SF): 240,000 305,000 65,000 370,000 Office (SF): 0 0 70,000 70,000 Condo (Units) 0 200,000 650,000 850,000 910,000 875,000 1,093,500 1,968,500

Source: Economics Research Associates, 2008.

Note that ERA’s assessment of the Shockoe Bottom project area was informed by a prior study conducted by ERA for the City of Richmond (Main Street Station Highest and Best Use Analysis) and subsequent guidance provided by the City of Richmond Office of Economic Development regarding current planning policy (land use and density limitations) and the City’s primary economic development objectives.

Project Costs

ERA evaluated the full range of potential construction costs associated with redevelopment of the two candidate sites, including:

ƒ Hard Costs: Hard costs are based on current data reported by RS Means Construction Cost Estimators.

ƒ Utilities/Other Infrastructure: For the stadium uses, ERA relied upon construction cost estimates provided by the organization “Baseball for a Better Richmond” and discussions with City staff and the Richmond Metropolitan Authority.

ƒ Soft Costs: ERA applied a factor of 30% to hard costs to allow for soft costs.

Economics Research Associates Project Report No. 17889 Page 22

ƒ Land Acquisition Costs: ERA relied upon current assessment data to develop estimates for the land acquisition costs associated with relocation of the Diamond site’s current city-owned industrial uses and the purchase of privately-held land in Shockoe Bottom. Appendix Tables A-7 and A-8 provide the detailed calculations associated with these estimates.

ƒ Parking Costs: ERA assumes structured parking would require a minimum of $20,000 per space; surface lots are estimated at $8,000 per space. For the purpose of conducting the net benefits analysis, ERA includes only the parking costs associated with civic uses as follows:

o Scenario A: If the stadium were to remain at Boulevard Site would require 2,000 spaces at a minimum of $20,000, or $40 million.

o Scenario B: If the stadium were to relocated to the Shockoe Bottom site, the stadium parking demand could be partially served by existing parking structures. For the purpose of this analysis, ERA assumes 1,000 structured parking spaces at $20,000 each, or $20 million.

ƒ Relocation of Department of Public Works / General Services: ERA could not verify the potential costs associated with relocation of current City-owned industrial uses on the Boulevard site. However, given that ERA’s analysis is predicated upon the relocation of these uses, ERA includes an estimate of the following cost elements in total project costs:

o Land acquisition: The current City-owned industrial uses are located on 39.4 acres (of the total project site’s estimated 59 acres), including: Department of Public Works (15.5 acres) and Department of General Services (23.9 acres).

o Replacement Value: $14.5 million (current value of land and improvements as reported by the City of Richmond Assessments database)

o Demolition/ Site Preparation / Remediation: $10.1 million (39 acres at $400,000 per acre).

o Total Estimated Relocation Costs: $24.6 million.

This estimated value appears to be reasonable considering the average assessed value of existing retail shopping centers in the City of Richmond is approximately $496,000.

Economics Research Associates Project Report No. 17889 Page 23

Table 4: Summary Value of Major City of Richmond Retail Parcels

Retail Property Acres Total Value Finished Land Value Total Val/Acre Chippenham Mall 16.80$ 8,420,000 265,425$ 1,680,000 $ 501,185 Chippenham North SC 55.45$ 37,855,000 231,685$ 16,698,000 $ 682,690 Chippenham Forest Square 55.36$ 41,464,000 425,513$ 22,854,000 $ 748,953 Greenbriar Mall 15.98$ 6,299,000 127,612$ 2,088,000 $ 394,122 Richmond Outreach Center 15.31$ 2,619,000 130,096$ 1,101,000 $ 171,033 Southside Plaza 55.41$ 26,415,000 91,797 $ 5,337,000 $ 476,756 Stony Point Shopping Center 19.49$ 23,146,000 52,972 $ 6,749,000 $ 1,187,470 Stony Point Fashion Park 62.42$ 105,670,000 407,879$ 9,312,000 $ 1,692,841

Source: City of Richmond; Economics Research Associates, July 2008. Stadium Construction Costs

ƒ Substantial Renovation Vs. New Construction: Substantial rehabilitation of the stadium at the current Boulevard site does not appear to be feasible. In addition to the relatively high cost of retrofitting an outdated structure with significant repair and maintenance needs, the current stadium is not likely to remedy important deficiencies with respect to size, configuration, and location. The current programming of 10,000 seats is too large for the typical attendance rates of A / AA teams. Furthermore, food and beverage vendors are unable to serve fans in the upper decks due to the distance between food and beverage preparation stations and the attendees. The sky boxes do not provide sufficient value to corporate users because they are too small and they are easily accessible by any ticket holder. Based on ERA’s research, there are three elements that would be required if the Diamond Stadium were to be substantially renovated:

1. Upgrades to meet ADA requirements

2. Basic upgrades to furniture, fixtures, and equipment to meet current standards of functionality for players and marketability for fans

3. Substantial rehabilitation of the physical structure

For existing stadiums built prior to the enactment of the Americans with Disabilities Act, substantial renovations trigger federal ADA standards. The current condition of the Diamond indicates that that the minimum dollar requirement would exceed $10 million. This number is based on previous construction estimates from 6 years ago, and adjusted to reflect today’s dollars.

Economics Research Associates Project Report No. 17889 Page 24

The Diamond stadium requires basic upgrades to meet the standards of fans and players with respect to marketability and competitiveness within the range of current urban ballparks. These basic upgrades are also costly (estimated at a minimum of $10 million in 2008 dollars). Excluding upgrades to the physical facility, these basic up grades would include, but not limited to, seat configuration, concession layouts, new locker rooms and other player amenities.

Factoring in upgrades to the physical facility itself, ERA estimates that substantial renovation of the entire facility could range from $45 to $60 million ($4,500 to $6,000 per seat). In comparison to the estimated $36 million cost estimate for construction of a new stadium (8,000 seats at $4,500 per seat), the substantial rehabilitation option does allow for the optimum reconfiguration of the stadium site and redevelopment of the balance of the Boulevard site. In conclusion substantial rehabilitation does not yield the maximum economic return to the City of Richmond and ERA does not recommend as an option.

Project Revenues Stadium Revenues The primary components of ongoing annual operational revenue from the baseball stadium include:

ƒ Contributed income: Ongoing annual contributed income from governments in Richmond region is currently $2.475 million, including $750,000 Chesterfield County, Henrico County, and the City of Richmond, and $225,000 from Hanover County. According to the RMA, if the stadium were relocated to the Shockoe Bottom site, these jurisdictions may elect to withhold future operating support. However, there is evidence that the private development community could be expected to provide a comparable level of annual support if the project were to proceed in Shockoe Bottom. As such, ERA assumes that either scenario could be expected to secure a comparable amount of contributed annual support.

ƒ Naming rights: ERA assumes that the value of naming rights could reach $500,000 annually at either site.

ƒ Skybox sales: According to the RMA, skybox sales are expected to reach $1 million annually (25 sky boxes at $40,000 each).

ƒ Parking revenues: Assumptions are based on historic operating data reported by the RMA, with a 20 percent increase in projected game attendance as follows:

Economics Research Associates Project Report No. 17889 Page 25

Assumed Performance - Redeveloped Estimated Annual Parking Revenues Current Performance Stadium Visitors per Year 300,000 360,000 Games per Year 80 80 Visitors per Game 3,750 4,500 Average Party Size 2.5 2.5 Parties per Game 1,500 1,800 Paid Parking Vehicles per Game (25%) 450 540 Parking Cost per Game $5 $5 Gross Parking Revenues per Year $180,000 $216,000 Source: Richmond Metropolitan Authority; Economics Research Associates, 2008. Note that ERA includes only the parking revenues that would be generated by the Stadium garage functions.

ƒ Retail and Food & Beverage Space Sales and Rental Income: With the exception of attendance (and related gross retail and F&B sales), ERA largely relied upon values associated with past performance as reported by the RMA. However, it is important to note that the current Diamond facility is considered a dated facility in a location that does not maximize its potential value as a regional destination. While we believe that a redeveloped stadium located in Shockoe Bottom will perform better than the current stadium, the analysis reflects equal revenues at either location to provide an unbiased and conservative approach to comparing the net benefits of each location. Note that ERA relies upon “Baseball for a Better Richmond” for the rental income assumptions ($300,000 per year). Given that ultimate rental payments will be driven by individual vendor agreements (unknown at this time), ERA opted to rely on these figures.

Economics Research Associates Project Report No. 17889 Page 26

Table 5: Summary of On-Site Stadium Revenue Assumptions

Assumed Performance: Assumed Admissions Sales Current Redeveloped Tax Performance: Taxes Performance Stadium Rate Annual Taxes

Ticket Price / Sales Taxes $4.00 $4.00 Gross Annual Sales $1,200,000 $1,440,000 7.0% $100,800

Estimated Annual On- Site Spending Visitors 300,000 360,000 Food & Beverage Spending (Per Cap) $0.25 $0.25 $75,000 $90,000 1.0% $900

Retail Spending (Per Cap) $1.00 $1.00 Total $300,000 $360,000 1.0% $3,600

Total Annual Admissions & Sales Taxes $105,300

Assumed Total On-Site Performance: Stadium-Based Current Redeveloped Spending Performance Stadium Parking Revenue $180,000 $216,000 Admissions (Ticket Sales) $1,200,000 $1,440,000 Food & Beverage Sales $75,000 $90,000 Retail Spending $300,000 $360,000

Total $1,755,000 $2,106,000

Source: City of Richmond; Richmond Metropolitan Authority; Economics Research Associates, 2008.

Real Property Taxes

With the exception of condominium units, ERA assumes that property taxes are based on replacement value (or construction costs). Real property taxes on condominium units and associated parking spaces are based on proposed sales prices per unit (or an average of $300,000). Real property taxes generated by parking construction required individual treatment as follows:

Economics Research Associates Project Report No. 17889 Page 27

ƒ Stadium: ERA assumes the stadium property and associated parking structures will be exempt from real property tax.

ƒ Apartment and Office: Parking is treated as stand-alone, ongoing income-generating concern and assessed value based on $40 per square foot of decked parking (assuming 350 square feet per parking space) per City of Richmond assessment data pulled for all types of parking garages.

ƒ Retail: Given that retail parking is assumed to be surface construction, property taxes are based on replacement cost of the retail space (in effect, wrapped into value of built space).

Sales Taxes

ƒ Stadium: The City of Richmond impose a one percent tax on gross retail and restaurant (prepared food away from home) sales The stadium’s vendor retail and F&B sales are expected to generate up to $540,000 in gross annual income, generating $5,400 in annual retail sales. In addition, the City of Richmond imposes a seven percent tax on admissions (ticket sales). Assuming 360,000 ticket purchases at $4.00 per ticket, ERA estimates $1.44 million in annual ticket sales, generate $100,000 in admissions taxes. Note that the City of Richmond currently rebates 100% of admissions taxes back to the RMA. It is unknown if the City would continue to rebate admissions tax revenues back to the RMA for the newly construction stadium. As such, ERA includes stadium admissions tax revenue in the comparison of annual public costs and revenues.

ƒ Retail: The targeted retail sales productivity rates employed in ERA’s retail program are based on ERA’s experience in the industry and data reported by ULI-the Urban Land Institute’s Dollars and Cents of Shopping Centers. To present the most unbiased approach to the analysis, ERA holds the retail sales productivity rates constant for each scenario.

Economics Research Associates Project Report No. 17889 Page 28

Net Benefit Analysis

To evaluate the relative economic return to the City of Richmond, ERA and Davenport & Company conducted a net benefit analysis to compare total project costs against total project revenues (annualized, assuming an interest rate of 5.5 percent and a 25-year term.). The detailed calculations supporting our conclusions are located in the following summary table and in Appendix A: Net Benefits Analysis – Comparison of Project Costs and Revenues.

Table 6: Summary of Net Benefit Analysis

Scenario A: Scenario B: Stadium Relocated to Shockoe Bottom Site Stadium Redeveloped at Boulevard + Current Boulevard Site Mixed-Use Stadium-Anchored Shockoe Bottom Sources of Funding /1 Boulevard Site Shockoe Bottom Site Sites RMA Support / Private Investment Henrico $ 750,000 n/a n/a n/a Chesterfield $ 750,000 n/a n/a n/a Richmond $ 750,000 n/a 2,475,000 2,475,000 Hannover 225,000 n/a n/a n/a Stadium Naming Rights 500,000 n/a 500,000 $ 500,000 Luxury Boxes (25 @ $40K) 1,000,000 n/a 1,000,000$ 1,000,000 Other Event Lease & Tickets 300,000 n/a 300,000 $ 300,000 Stadium Parking Revenues 216,000 n/a 216,000 216,000 Stadium Lease to Retail/Restaurant 300,000 n/a 300,000 $ 300,000 Retail / Restaurant / Admissions Taxes - On-Site 105,300 n/a 105,300 $ 105,300 Retail / Restaurant Taxes - Off-Site 755,000 982,500 197,438$ 1,179,938 Real Property Taxes 763,777 1,406,488 2,102,429$ 3,508,917 Total Annual Project-Based Revenues $ 6,415,077 $ 2,388,988 $ 7,196,166 $ 9,585,155

Uses of Funding - One-Time Project Costs Stadium Construction $36,000,000 $36,000,000 Parking (Stadium Only) 40,000,000 20,000,000 Land Acquisition - 9,328,350 GSA/DPW Demolition/Relocation/Environmental 24,641,000 24,641,000 Civic Facilities (Arthur Ashe Ctr Construction) 8,400,000 8,400,000 Infrastructure Re-routing 5,000,000 5,000,000 Soft Costs (Design, Contingency) 6,000,000 6,000,000 Total $120,041,000 $109,369,350

Annual Debt Payment (5.5%, 25 years) ($8,948,979) ($8,153,414)

Net Benefit to City of Richmond Total Annual Revenues $ 6,415,077 $9,585,155 Total Annual Costs (Debt Payment) ($8,948,979) ($8,153,414) Annual Net Benefit ($2,533,902) $1,431,740

1/ See detailed assumptions and calculations in Appendix Tables 1 through 7 for spending, tax revenue, and other funding sources. Source: City of Richmond; RSMeans Construction Cost Estimators; Jones Lang LaSalle; ULI-the Urban Land Institute; Economics Research Associates, 2008.

Economics Research Associates Project Report No. 17889 Page 29

Appendix A: Net Benefit Analysis – Comparison of Project Costs and Revenues

Appendix Table A-1: Scenario A - Stadium Redeveloped at Current Boulevard Site (New Construction) Appendix Table A-2: Scenario B - Stadium Relocated to Shockoe Bottom Site (Boulevard Site) Appendix Table A-3: Scenario B - Stadium Relocated to Shockoe Bottom (Shockoe Site) Appendix Table A-4: Stadium Spending and Tax Assumptions Appendix Table A-5: Summary of Identified Site Parcel Information Appendix Table A-6: Commercial Parking Garage Assessed Value Assumptions Appendix Table A-7: Boulevard Site Industrial Use Relocation Cost Assumptions Appendix Table A-8: Debt Schedules (Davenport & Company LLC)

Economics Research Associates Project No. 17889 Appendix Page A-1 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-1: Scenario A - Stadium Redeveloped at Current Boulevard Site (New Construction)

Civic/ Cultural Development Program Summary Use (SF) Retail (SF): Office (SF): Condo (Units) MF Rental (Units) Total Richmond Baseball Stadium (8,000 Seats) 300,000

Northwest Quadrant 60,000 0 0 0

Northeast Quadrant 180,000 0 0 0

Southeast Quadrant 70,000 0 0 0 0 0

Southwest Quadrant 00 0 0 Total Square Feet 370,000 240,000 0 0 0 610,000

Total Acres 8 6 0 0 0 14

Required Parking Decked (Spaces) 2,000 0 2,000 Surface (Spaces) 200 960 0 n/a n/a 1,160 Total Spaces 2,200 960 0 0 0 3,160

Total Parking Land Area (Acres) 5.62 7.71 0.00 0.00 0.00 13.34 % of Total Total Project Acres (Excluding ROW / Private Streets) 14.12 13.22 0.00 0.00 0.00 27.34 47.4% Total Available Acreage 58 100.0% Acreage available for ROW / Private Streets 30.3 52.6%

Page 2 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-1: Scenario A - Stadium Redeveloped at Current Boulevard Site (New Construction) Development Program Detail

Estimated Annual Percent of Construction Sales City of Richmond Sports / Civic / Cultural Uses Square Feet Total Cost /SF Total Construction Cost Real Property Taxes Productivity Rate Gross Retail Sales Sales Taxes Richmond Baseball Stadium (8,000 Seats) 300,000 81% $ 120 $ 36,000,000 n/a n/a n/a n/a Arthur Ashe Sports Center 70,000 19% $ 120 $ 8,400,000 n/a n/a n/a n/a Sports Backers Stadium n/a n/a n/a n/a n/a n/a n/a n/a Total 370,000 100% $ 44,400,000 $ - n/a n/a n/a

Retail Big Box Retail (2 Large Format Stores) 160,000 67% $ 195 $ 31,200,000 $ 402,480 $ 350 $ 56,000,000 $ 560,000 Grocery/Specialty Foods 40,000 17% $ 156 $ 6,240,000 $ 80,496 $ 500 $ 20,000,000 $ 30,000 Restaurant / Food Service 30,000 13% $ 228 $ 6,825,000 $ 88,043 $ 450 $ 13,500,000 $ 135,000 Neighborhood Services 10,000 4% $ 130 $ 1,300,000 $ 16,770 $ 300 $ 3,000,000 $ 30,000 Total 240,000 100% $ 45,565,000 $ 587,789 $ 92,500,000 $ 755,000

Office Small Format Professional Office Space Users 0 n/a n/a n/a n/a n/a n/a Built to Suit 0 n/a n/a n/a n/a n/a n/a Total 0 $ - $ - n/a n/a n/a

Multifamily Residential For Sale - Condos 0 0 $ 163 $ - $ - n/a n/a n/a Rental Units 0 0 $ 150 $ - $ - n/a n/a n/a Total 0 0 0 $ - n/a n/a n/a

Sales Estimated Annual Percent of Construction Productivity Rate City of Richmond Parking Spaces Total Cost / Space Total Construction Cost Real Property Taxes /Space Gross Retail Sales Sales Taxes Decked 2,000 68% $ 20,000 $ 40,000,000 n/a $ 100 $ 200,000 n/a Surface 960 32% $ 8,000 $ 7,680,000 $ 175,989 n/a n/a n/a Total 2,960 100% 47,680,000 $ 175,989 200,000

Total Development 610,000 $ 137,645,000 $ 763,777 $ 92,700,000 $ 755,000

1/ Summary of Assumptions: One acre is equal to: 43,560 square feet. Required retail parking is equal to 1,000 sf per: 4 parking spaces. One surface parking space requires: 350 square feet of land. New parking deck (sports/civic uses) assumes: 4 decks. Multifamily rental assumes: 1,000 square feet per unit. Multifamily rental assumes: 2 stories Required residential parking is equal to: 1.5 spaces per unit. Real property tax rate = $ 1.29 per $100 Value (based on construction value). City of Richmond Sales Tax = 1.0% City of Richmond Meals Tax = 1.0% City of Richmond Taxable Grocery Sales = 15.0% of gross sales (balance of unprepared food consumed at home exempt)

Source: City of Richmond; VA Department of Taxation; RSMeans Construction Cost Estimators; ULI-the Urban Land Institute; Economics Research Associates, July 2008.

Page 3 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-2: Scenario B - Stadium Relocated to Shockoe Bottom Site

Part I of II: Mixed-Use Development at Boulevard Diamond Site

Civic/ Cultural Use Development Program Summary (SF) Retail (SF): Office (SF): Condo (Units) MF Rental (Units) Total Richmond Baseball Stadium (8,000 Seats) n/a

Northwest Quadrant 76,250 000

Northeast Quadrant 228,750 000

Southeast Quadrant 70,000 0 0 0 200

Southwest Quadrant 000 Total Square Feet 70,000 305,000 0 0 200,000 575,000

Total Acres 2 7 0 0 2 13

Required Parking Decked (Spaces) 250 250 Surface (Spaces) 200 1,220 0 n/a 1,420 Total Spaces 200 1,220 0 0 0 0 0 250 1,670

Total Parking Land Area (Acres) 0.00 9.80 0.00 0.00 1.00 10.81 % of Total Total Project Acres (Excluding ROW / Private Streets) 1.61 16.80 0.00 0.00 3.30 24.01 41.7% Total Available Acreage 58 100.0% Acreage available for ROW / Private Streets 33.6 58.3%

Page 4 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-2: Scenario B - Stadium Relocated to Shockoe Bottom Site Development Program Detail

Estimated Annual Construction Sales Productivity City of Richmond Sports / Civic / Cultural Uses Square Feet Percent of Total Cost /SF Total Construction Cost Real Property Taxes Rate Gross Retail Sales Sales Taxes Richmond Baseball Stadium (8,000 Seats) n/a Arthur Ashe Sports Center 70,000 100% $ 120 $ 8,400,000 n/a n/a n/a n/a Sports Backers Stadium 0 0% n/a n/a n/a n/a n/a n/a Total 70,000 100% $ 8,400,000 n/a n/a n/a n/a

Retail Big Box Retail (3 Large-Format Stores) 225,000 74% $ 195 $ 43,875,000 $ 565,988 $ 350 $ 78,750,00 0 $ 787,50 0 Grocery/Specialty Foods 40,000 13% $ 156 $ 6,240,000 $ 80,496 $ 500 $ 20,000,00 0 $ 30,000 Restaurant / Food Service 30,000 10% $ 228 $ 6,825,000 $ 88,043 $ 450 $ 13,500,00 0 $ 135,000 Neighborhood Services 10,000 3% $ 130 $ 1,300,000 $ 16,770 $ 300 $ 3,000,00 0 $ 30,000 Total 305,000 100% $ 58,240,000 $ 751,296 $ 115,250,000 $ 982,500

Office Small Format Professional Office Space Users 00% $ -$ - n/a n/a n/a Built to Suit 0 0% $ - $ - n/a n/a n/a Total 00% $ -$ - n/a n/a n/a

Multifamily Residential For Sale - Condos n/a 0% n/a n/a n/a n/a n/a n/a Rental Units 200,000 100% $ 150 $ 29,900,000 $ 385,710 n/a n/a n/a Total 200,000 100% $ 29,900,000 $ 385,710 n/a n/a n/a

Estimated Annual Construction Sales Productivity City of Richmond Parking Spaces Percent of Total Cost / Space Total Construction Cost Real Property Taxes Rate /Space Gross Retail Sales Sales Taxes Decked 250 17% $ 20,000 $ 5,000,000 $ 45,830 $ 800 $ 200,00 0 n/a Surface 1,220 83% $ 8,000 $ 9,760,000 $ 223,652 n/a n/a n/a Total 1,470 100% $ 14,760,000 $ 269,482 $ 200,000

Total Development 575,000 $ 111,300,000 $ 1,406,488 $ 115,450,000 $ 982,500

1/ Summary of Assumptions: One acre is equal to: 43,560 square feet. Required retail parking is equal to 1,000 sf per: 4 parking spaces. One surface parking space requires: 350 square feet of land. New parking deck (sports/civic uses) assumes: 4 decks. Multifamily rental assumes: 1,000 square feet per unit. Multifamily rental assumes: 2 stories Required residential parking is equal to: 1.25 spaces per unit. Real property tax rate = $ 1.29 per $100 Value (based on construction value). City of Richmond Sales Tax = 1.0% City of Richmond Meals Tax = 1.0% Property taxes on parking garages include: 1,470 retail and apartment spaces (civic spaces assumed exempt / not applicable) City of Richmond Taxable Grocery Sales = 15.0% of gross sales (balance of unprepared food consumed at home exempt) Source: City of Richmond; RSMeans Construction Cost Estimators; ULI-the Urban Land Institute; Economics Research Associates, July 2008

Page 5 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-3: Scenario B - Stadium Relocated to Shockoe Bottom

Part II of II: Stadium-Anchored Mixed-Use Development at Shockoe Bottom Site

Civic/ Cultural Development Program Summary Use (SF) Retail (SF): Office (SF): Condo (Units) MF Rental (Units) Total Richmond Baseball Stadium (8,000 Seats) 300,000

Sea Board Building - Slave Trail Visitor Center 8,500

Main Street Station Area - West 15,000 50,000 100

Main Street Station Area - East 50,000 20,000 100 450

Total Square Feet 308,500 65,000 70,000 200,000 450,000 1,093,500 65,000

Total Acres 7.1 1.5 1.6 2.3 2.6 15.1

Required Parking Decked (Spaces) 2,000 n/a 280 300 675 3,255 Surface (Spaces) 260 Total Proposed Spaces /1 2,000 0 0 280 300 675 3,255 Total Land Area (Acres) n/a 0.0 1 0.6 1.4 2.5 % of Total Total Project Acres (Excluding ROW / Private Streets) 7.1 1.49 2.17 2.90 3.94 17.58 77.3% Total Available Acreage 22.75 100.0% Acreage available for ROW / Private Streets 5.17 22.7%

1/ ERA assumes the Shockoe Bottom retail program will be supported by existing garage and street parking; retail parking costs are therefore excluded from construction cost estimates.

Page 6 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-3: Scenario B - Stadium Relocated to Shockoe Bottom

Part II of II: Stadium-Anchored Mixed-Use Development at Shockoe Bottom Site Estimated One-Time Construction Costs and Ongoing Annual City of Richmond Real Property and Sales Taxes

Percent of Constructio Sales Estimated Annual City Square Feet Total n Cost /SF Total Construction Cost Real Property Taxes Productivity Gross Retail Sales of Richmond Sales

Civic / Cultural Uses Richmond Baseball Stadium (8,000 Seats) 300,000 97% $ 120 $ 36,000,000 n/a n/a n/a n/a Sea Board Building - Slave Trail Visitor Center 8,500 3% $ 100 $ 850,000 n/a n/a n/a n/a Total 308,500 100% $ 36,850,000 n/a n/a n/a n/a

Retail Grocery/Specialty Foods 16,250 25% $ 156 $ 2,535,000 $ 32,702 $ 500 $ 8,125,000 $ 12,188 Restaurant / Food Service 26,000 40% $ 228 $ 5,915,000 $ 76,304 $ 450 $ 11,700,000 $ 117,000 Neighborhood Services / Drugstore / Other 22,750 35% $ 130 $ 2,957,500 $ 38,152 $ 300 $ 6,825,000 $ 68,250 Total 65,000 100% $ 11,407,500 $ 147,157 $ 26,650,000 $ 197,438

Office Small Format Professional Office Space Users 20,000 29% $ 130 $ 2,600,000 $ 33,540 n/a n/a n/a Built to Suit 50,000 71% $ 163 $ 8,125,000 $ 104,813 n/a n/a n/a Total 70,000 100% $ 10,725,000 $ 138,353 n/a n/a n/a

Multifamily Residential Units For Sale - Condos 200,000 200 $ 163 $ 32,500,000 $ 774,000 n/a n/a n/a Rental Units 450,000 450 $ 150 $ 67,275,000 $ 867,848 n/a n/a n/a Total 650,000 650 $ 99,775,000 $ 1,641,848

Constructio Estimated Annual City Percent of n Cost / of Richmond Sales Parking Spaces Total Space Total Construction Cost Real Property Taxes Sales /Space Gross Retail Sales Taxes Decked 2,255 100% $ 20,000 $ 45,100,000 $ 175,072 $ 100 $ 225,500 n/a Surface 0 0% $ 8,000 $ - $ - n/a n/a n/a Total 2,255 100% 45,100,000$ 175,072 $ 225,500

Total Development 1,093,500 $ 203,857,500 $ 2,102,429 $ 26,875,500 $ 197,438

1/ Summary of Assumptions: Stadium parking requirement supported by: 1,000 existing municipal parking spaces. One acre is equal to: 43,560 square feet. Required retail/office parking is equal to 1,000 sf per: 4 parking spaces. One surface parking space requires: 350 square feet of land. New parking deck (sports/civic uses) assumes: 4 decks. Multifamily residential assumes: 1,000 square feet per unit. Multifamily residential assumes: 4 stories. Required residential parking is equal to: 1.50 spaces per unit. Condo salues value is equal to: $ 300,000 per unit. Real property tax rate = $ 1.29 per $100 Value (based on construction value). Assessed value for commercial real property taxes = 100% replacement cost (construction value). Assessed value for condo real property taxes = 100% sales price / unit. City of Richmond Sales Tax = 1.0% of gross sales. City of Richmond Meals Tax = 1.0% of gross sales. City of Richmond Taxable Grocery Sales = 15.0% of gross sales (balance of unprepared food consumed at home exempt) Property taxes on parking garages include: 955 office and apartment spaces (civic and other retail spaces assumed exempt / not applicable). City of Richmond Admissions Tax = 7.0% of gross ticket price Source: City of Richmond; RSMeans Construction Cost Estimators; ULI-the Urban Land Institute; Economics Research Associates, July 2008.

Page 7 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-4: Stadium Spending and Tax Assumptions

Assumed Performance - Current Redeveloped Annual Parking Revenue Performance Stadium Visitors per Year 300,000 360,000 Games per Year 80 80 Visitors per Game 3,750 4,500 Average Party Size 2.5 2.5 Parties per Game 1,500 1,800 Paid Parking Vehicles per Game (25%) 450 540 Parking Cost per Game $ 5 $ 5 Gross Parking Revenues per Year $ 180,000 $ 216,000 Assumed Performance - Current Redeveloped Admissions Sales Taxes Performance Stadium Assumed Tax Performance: Ticket Price / Sales Taxes$ 4.00 $ 4.00 Rate Annual Taxes Gross Annual Sales$ 1,200,000 $ 1,440,000 7.0% $ 100,800

Estimated Annual On-Site Spending Visitors 300,000 360,000 Food & Beverage Spending (Per Cap) $ 0.25 $ 0.25 $ 75,000 $ 90,000 1.0% $ 900

Retail Spending (Per Cap) $ 1.00 $ 1.00 Total $ 300,000 $ 360,000 1.0% $ 3,600

Total Annual Admissions & Sales Taxes $ 105,300

Assumed Performance - Current Redeveloped Total On-Site Stadium-Based Spending Performance Stadium Parking Revenue$ 180,000 $ 216,000 Admissions (Ticket Sales) $ 1,200,000 $ 1,440,000 Food & Beverage Sales $ 75,000 $ 90,000 Retail Spending $ 300,000 $ 360,000

Total $ 1,755,000 $ 2,106,000

Source: City of Richmond; Richmond Metropolitan Authority; Economics Research Associates, 2008.

Page 8 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-5: Summary of Identified Site Parcel Information

Boulevard Site Shockhoe Site Public Land Private Land Total Area SF (land) 2,510,742 2,510,742 2,510,742 990,812 Acres (land) 57.64 13.23 9.52 22.75 Building Area (sf) 88,749 213,022 97,102 310,124

Land Value $8,138,300 $8,290,100 $6,218,900 $14,509,000 Building Value $24,464,200 $13,815,000 $2,442,800 $16,257,800 Total Value $32,602,500 $22,105,100 $8,661,700 $30,766,800

Total Value Per SF Land $13 $9 $3 $31 Per Acre $565,636 $1,671,328 $909,857 $1,352,630

Land Value Per SF Land $3 $3 $2 $15 Per Acre $141,195 $626,800 $653,256 $637,873

Building Value per Built SF $276 $65 $25 $52

Source: City of Richmond; Economics Research Associates, July 2008.

Appendix Page 9 of 11 Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-6: Commercial Parking Garage Assessed Value Assumptions

Avg Val/ Space (@ Owner Type Total Value Land Value Finished Area Number Avg Value Avg Val/SF 350 SF/Space) Development Authority 73,469,000 21,004,000 1,258,723 11 $6,679,000 $58 $20,429 Private 78,219,000 24,750,000 2,688,502 22 $3,555,409 $29 $10,183 State 6,705,000 1,191,000 223,146 1 $6,705,000 $30 $10,517 VCU 37,232,000 7,804,000 647,654 7 $5,318,857 $57 $20,121 Total 195,625,000 54,749,000 4,818,025 41 $4,771,341 $41 $14,211

Source: City of Richmond; Economics Research Associates, July 2008. Richmond Diamond Boulevard Highest and Best Use Analysis City of Richmond, VA

Appendix Table A-7: Boulevard Site Industrial Use Relocation Cost Assumptions

Total Boulevard Diamond Site Project Area Assessed Value /1

Land Total Value (Land + Address Owner Name (Acres) Building (SF) Use Year Built Land Value Dwelling Value Improvements) 3101 N Boulevard City of Richmond Recreation & Parks 5.5 1,444 Arthur Ashe Center 1975 $ 774,400 $ 75,100 $ 849,500 3001 N Boulevard Richmond Metropolitan Authority 8.9 100 Baseball Stadium 1984 1,254,500 10,556,700 11,811,200 3017 N Boulevard City of Richmond Recreation & Parks 3.9 73,320 Baseball Stadium Parking 1982 546,200 4,877,600 5,423,800 2909 N Boulevard City of Richmond General Services 9.8 - City Motor Pool n/a 1,380,000 490,900 1,870,900 2705 N Boulevard City of Richmond General Services 14.1 1,725 City Industrial Use 1980 1,994,300 5,182,500 7,176,800 2720 Hermitage Rd City of Richmond Public Works 15.5 12,160 Public Works Facility 1955 2,188,900 3,281,400 5,470,300

Total 57.6 88,749 $ 8,138,300 $ 24,464,200 $ 32,602,500

Total Replacement Land Value (Land + Demolition / Site Prep / Total Assumed Assumed Industrial Use Relocation Costs (Acres) Improvements) Remediation /2 Relocation Cost 2909 N Boulevard City Motor Pool 9.8 $ 1,870,900 $ 3,904,665 $ 5,775,565 2705 N Boulevard City of Richmond General Services 14.1 7,176,800 n/a 7,176,800 2720 Hermitage Rd Public Works Facility 15.5 5,470,300 6,218,446 11,688,746

Total 39.4 $ 14,518,000 $ 10,123,110 $ 24,641,110

1/ Project area excludes VCU Sports Backers Stadium. 2/ Estimated cost of demolition/site preparation/ remediation per acre (RS Means Cost Estimators, 2007): $ 400,000 Source: City of Richmond; RS Means Cost Estimators; Economics Research Associates, 2008. Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 1

SOURCES AND USES OF FUNDS

Economic Development Report Debt Schedules: 120,041,000 Project

Dated Date 10/01/2008 Delivery Date 10/01/2008

Sources:

Bond Proceeds: Par Amount 122,495,000.00

122,495,000.00

Uses:

Project Fund Deposits: Project Fund #1 120,041,000.00

Cost of Issuance: Other Cost of Issuance 2,449,900.00

Other Uses of Funds: Additional Proceeds 4,100.00

122,495,000.00 Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 2

BOND SUMMARY STATISTICS

Economic Development Report Debt Schedules: 120,041,000 Project

Dated Date 10/01/2008 Delivery Date 10/01/2008 Last Maturity 10/01/2033

Arbitrage Yield 5.500000% True Interest Cost (TIC) 5.500000% Net Interest Cost (NIC) 5.500000% All-In TIC 5.706456% Average Coupon 5.500000%

Average Life (years) 15.705 Duration of Issue (years) 10.108

Par Amount 122,495,000.00 Bond Proceeds 122,495,000.00 Total Interest 105,807,075.00 Net Interest 105,807,075.00 Total Debt Service 228,302,075.00 Maximum Annual Debt Service 9,134,775.00 Average Annual Debt Service 9,132,083.00

Underwriter's Fees (per $1000) Average Takedown Other Fee

Total Underwriter's Discount

Bid Price 100.000000

Par Average Average Bond Component Value Price Coupon Life

Serial Bond 122,495,000.00 100.000 5.500% 15.705

122,495,000.00 15.705

All-In Arbitrage TIC TIC Yield

Par Value 122,495,000.00 122,495,000.00 122,495,000.00 + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense (2,449,900.00) - Other Amounts

Target Value 122,495,000.00 120,045,100.00 122,495,000.00

Target Date 10/01/2008 10/01/2008 10/01/2008 Yield 5.500000% 5.706456% 5.500000% Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 3

BOND PRICING

Economic Development Report Debt Schedules: 120,041,000 Project

Maturity Bond Component Date Amount Rate Yield Price

Serial Bond: 10/01/2009 2,395,000 5.500% 5.500% 100.000 10/01/2010 2,525,000 5.500% 5.500% 100.000 10/01/2011 2,665,000 5.500% 5.500% 100.000 10/01/2012 2,810,000 5.500% 5.500% 100.000 10/01/2013 2,965,000 5.500% 5.500% 100.000 10/01/2014 3,130,000 5.500% 5.500% 100.000 10/01/2015 3,300,000 5.500% 5.500% 100.000 10/01/2016 3,485,000 5.500% 5.500% 100.000 10/01/2017 3,675,000 5.500% 5.500% 100.000 10/01/2018 3,875,000 5.500% 5.500% 100.000 10/01/2019 4,090,000 5.500% 5.500% 100.000 10/01/2020 4,315,000 5.500% 5.500% 100.000 10/01/2021 4,555,000 5.500% 5.500% 100.000 10/01/2022 4,805,000 5.500% 5.500% 100.000 10/01/2023 5,070,000 5.500% 5.500% 100.000 10/01/2024 5,345,000 5.500% 5.500% 100.000 10/01/2025 5,640,000 5.500% 5.500% 100.000 10/01/2026 5,950,000 5.500% 5.500% 100.000 10/01/2027 6,280,000 5.500% 5.500% 100.000 10/01/2028 6,625,000 5.500% 5.500% 100.000 10/01/2029 6,990,000 5.500% 5.500% 100.000 10/01/2030 7,370,000 5.500% 5.500% 100.000 10/01/2031 7,775,000 5.500% 5.500% 100.000 10/01/2032 8,205,000 5.500% 5.500% 100.000 10/01/2033 8,655,000 5.500% 5.500% 100.000

122,495,000

Dated Date 10/01/2008 Delivery Date 10/01/2008 First Coupon 04/01/2009

Par Amount 122,495,000.00 Original Issue Discount

Production 122,495,000.00 100.000000% Underwriter's Discount

Purchase Price 122,495,000.00 100.000000% Accrued Interest

Net Proceeds 122,495,000.00 Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 4

BOND DEBT SERVICE

Economic Development Report Debt Schedules: 120,041,000 Project

Period Debt Ending Principal Coupon Interest Service

10/01/2009 2,395,000 5.500% 6,737,225 9,132,225 10/01/2010 2,525,000 5.500% 6,605,500 9,130,500 10/01/2011 2,665,000 5.500% 6,466,625 9,131,625 10/01/2012 2,810,000 5.500% 6,320,050 9,130,050 10/01/2013 2,965,000 5.500% 6,165,500 9,130,500 10/01/2014 3,130,000 5.500% 6,002,425 9,132,425 10/01/2015 3,300,000 5.500% 5,830,275 9,130,275 10/01/2016 3,485,000 5.500% 5,648,775 9,133,775 10/01/2017 3,675,000 5.500% 5,457,100 9,132,100 10/01/2018 3,875,000 5.500% 5,254,975 9,129,975 10/01/2019 4,090,000 5.500% 5,041,850 9,131,850 10/01/2020 4,315,000 5.500% 4,816,900 9,131,900 10/01/2021 4,555,000 5.500% 4,579,575 9,134,575 10/01/2022 4,805,000 5.500% 4,329,050 9,134,050 10/01/2023 5,070,000 5.500% 4,064,775 9,134,775 10/01/2024 5,345,000 5.500% 3,785,925 9,130,925 10/01/2025 5,640,000 5.500% 3,491,950 9,131,950 10/01/2026 5,950,000 5.500% 3,181,750 9,131,750 10/01/2027 6,280,000 5.500% 2,854,500 9,134,500 10/01/2028 6,625,000 5.500% 2,509,100 9,134,100 10/01/2029 6,990,000 5.500% 2,144,725 9,134,725 10/01/2030 7,370,000 5.500% 1,760,275 9,130,275 10/01/2031 7,775,000 5.500% 1,354,925 9,129,925 10/01/2032 8,205,000 5.500% 927,300 9,132,300 10/01/2033 8,655,000 5.500% 476,025 9,131,025

122,495,000 105,807,075 228,302,075 Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 5

BOND DEBT SERVICE

Economic Development Report Debt Schedules: 120,041,000 Project

Annual Period Debt Ending Principal Coupon Interest Debt Service Service

04/01/2009 3,368,612.50 3,368,612.50 10/01/2009 2,395,000 5.500% 3,368,612.50 5,763,612.50 9,132,225 04/01/2010 3,302,750.00 3,302,750.00 10/01/2010 2,525,000 5.500% 3,302,750.00 5,827,750.00 9,130,500 04/01/2011 3,233,312.50 3,233,312.50 10/01/2011 2,665,000 5.500% 3,233,312.50 5,898,312.50 9,131,625 04/01/2012 3,160,025.00 3,160,025.00 10/01/2012 2,810,000 5.500% 3,160,025.00 5,970,025.00 9,130,050 04/01/2013 3,082,750.00 3,082,750.00 10/01/2013 2,965,000 5.500% 3,082,750.00 6,047,750.00 9,130,500 04/01/2014 3,001,212.50 3,001,212.50 10/01/2014 3,130,000 5.500% 3,001,212.50 6,131,212.50 9,132,425 04/01/2015 2,915,137.50 2,915,137.50 10/01/2015 3,300,000 5.500% 2,915,137.50 6,215,137.50 9,130,275 04/01/2016 2,824,387.50 2,824,387.50 10/01/2016 3,485,000 5.500% 2,824,387.50 6,309,387.50 9,133,775 04/01/2017 2,728,550.00 2,728,550.00 10/01/2017 3,675,000 5.500% 2,728,550.00 6,403,550.00 9,132,100 04/01/2018 2,627,487.50 2,627,487.50 10/01/2018 3,875,000 5.500% 2,627,487.50 6,502,487.50 9,129,975 04/01/2019 2,520,925.00 2,520,925.00 10/01/2019 4,090,000 5.500% 2,520,925.00 6,610,925.00 9,131,850 04/01/2020 2,408,450.00 2,408,450.00 10/01/2020 4,315,000 5.500% 2,408,450.00 6,723,450.00 9,131,900 04/01/2021 2,289,787.50 2,289,787.50 10/01/2021 4,555,000 5.500% 2,289,787.50 6,844,787.50 9,134,575 04/01/2022 2,164,525.00 2,164,525.00 10/01/2022 4,805,000 5.500% 2,164,525.00 6,969,525.00 9,134,050 04/01/2023 2,032,387.50 2,032,387.50 10/01/2023 5,070,000 5.500% 2,032,387.50 7,102,387.50 9,134,775 04/01/2024 1,892,962.50 1,892,962.50 10/01/2024 5,345,000 5.500% 1,892,962.50 7,237,962.50 9,130,925 04/01/2025 1,745,975.00 1,745,975.00 10/01/2025 5,640,000 5.500% 1,745,975.00 7,385,975.00 9,131,950 04/01/2026 1,590,875.00 1,590,875.00 10/01/2026 5,950,000 5.500% 1,590,875.00 7,540,875.00 9,131,750 04/01/2027 1,427,250.00 1,427,250.00 10/01/2027 6,280,000 5.500% 1,427,250.00 7,707,250.00 9,134,500 04/01/2028 1,254,550.00 1,254,550.00 10/01/2028 6,625,000 5.500% 1,254,550.00 7,879,550.00 9,134,100 04/01/2029 1,072,362.50 1,072,362.50 10/01/2029 6,990,000 5.500% 1,072,362.50 8,062,362.50 9,134,725 04/01/2030 880,137.50 880,137.50 10/01/2030 7,370,000 5.500% 880,137.50 8,250,137.50 9,130,275 04/01/2031 677,462.50 677,462.50 10/01/2031 7,775,000 5.500% 677,462.50 8,452,462.50 9,129,925 04/01/2032 463,650.00 463,650.00 10/01/2032 8,205,000 5.500% 463,650.00 8,668,650.00 9,132,300 04/01/2033 238,012.50 238,012.50 10/01/2033 8,655,000 5.500% 238,012.50 8,893,012.50 9,131,025

122,495,000 105,807,075.00 228,302,075.00 228,302,075 Aug 27, 2008 9:17 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN1) Page 6

PROJECT FUND

Economic Development Report Debt Schedules: 120,041,000 Project

Project Fund #1 (PRO01)

Interest Scheduled Date Deposit @ 5.5% Principal Draws Balance

10/01/2008 120,041,000 120,041,000 120,041,000

120,041,000 0 120,041,000 120,041,000

Arbitrage Yield: 5.5000000% Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 1

SOURCES AND USES OF FUNDS

Economic Development Report Debt Schedules: 109,369,350 Project

Dated Date 10/01/2008 Delivery Date 10/01/2008

Sources:

Bond Proceeds: Par Amount 111,605,000.00

111,605,000.00

Uses:

Project Fund Deposits: Project Fund #1 109,369,350.00

Cost of Issuance: Other Cost of Issuance 2,232,100.00

Other Uses of Funds: Additional Proceeds 3,550.00

111,605,000.00 Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 2

BOND SUMMARY STATISTICS

Economic Development Report Debt Schedules: 109,369,350 Project

Dated Date 10/01/2008 Delivery Date 10/01/2008 Last Maturity 10/01/2033

Arbitrage Yield 5.500000% True Interest Cost (TIC) 5.500000% Net Interest Cost (NIC) 5.500000% All-In TIC 5.706465% Average Coupon 5.500000%

Average Life (years) 15.704 Duration of Issue (years) 10.107

Par Amount 111,605,000.00 Bond Proceeds 111,605,000.00 Total Interest 96,394,925.00 Net Interest 96,394,925.00 Total Debt Service 207,999,925.00 Maximum Annual Debt Service 8,323,050.00 Average Annual Debt Service 8,319,997.00

Underwriter's Fees (per $1000) Average Takedown Other Fee

Total Underwriter's Discount

Bid Price 100.000000

Par Average Average Bond Component Value Price Coupon Life

Serial Bond 111,605,000.00 100.000 5.500% 15.704

111,605,000.00 15.704

All-In Arbitrage TIC TIC Yield

Par Value 111,605,000.00 111,605,000.00 111,605,000.00 + Accrued Interest + Premium (Discount) - Underwriter's Discount - Cost of Issuance Expense (2,232,100.00) - Other Amounts

Target Value 111,605,000.00 109,372,900.00 111,605,000.00

Target Date 10/01/2008 10/01/2008 10/01/2008 Yield 5.500000% 5.706465% 5.500000% Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 3

BOND PRICING

Economic Development Report Debt Schedules: 109,369,350 Project

Maturity Bond Component Date Amount Rate Yield Price

Serial Bond: 10/01/2009 2,180,000 5.500% 5.500% 100.000 10/01/2010 2,300,000 5.500% 5.500% 100.000 10/01/2011 2,430,000 5.500% 5.500% 100.000 10/01/2012 2,560,000 5.500% 5.500% 100.000 10/01/2013 2,705,000 5.500% 5.500% 100.000 10/01/2014 2,850,000 5.500% 5.500% 100.000 10/01/2015 3,010,000 5.500% 5.500% 100.000 10/01/2016 3,175,000 5.500% 5.500% 100.000 10/01/2017 3,350,000 5.500% 5.500% 100.000 10/01/2018 3,535,000 5.500% 5.500% 100.000 10/01/2019 3,730,000 5.500% 5.500% 100.000 10/01/2020 3,930,000 5.500% 5.500% 100.000 10/01/2021 4,150,000 5.500% 5.500% 100.000 10/01/2022 4,375,000 5.500% 5.500% 100.000 10/01/2023 4,615,000 5.500% 5.500% 100.000 10/01/2024 4,870,000 5.500% 5.500% 100.000 10/01/2025 5,140,000 5.500% 5.500% 100.000 10/01/2026 5,420,000 5.500% 5.500% 100.000 10/01/2027 5,720,000 5.500% 5.500% 100.000 10/01/2028 6,035,000 5.500% 5.500% 100.000 10/01/2029 6,365,000 5.500% 5.500% 100.000 10/01/2030 6,715,000 5.500% 5.500% 100.000 10/01/2031 7,085,000 5.500% 5.500% 100.000 10/01/2032 7,475,000 5.500% 5.500% 100.000 10/01/2033 7,885,000 5.500% 5.500% 100.000

111,605,000

Dated Date 10/01/2008 Delivery Date 10/01/2008 First Coupon 04/01/2009

Par Amount 111,605,000.00 Original Issue Discount

Production 111,605,000.00 100.000000% Underwriter's Discount

Purchase Price 111,605,000.00 100.000000% Accrued Interest

Net Proceeds 111,605,000.00 Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 4

BOND DEBT SERVICE

Economic Development Report Debt Schedules: 109,369,350 Project

Period Debt Ending Principal Coupon Interest Service

10/01/2009 2,180,000 5.500% 6,138,275 8,318,275 10/01/2010 2,300,000 5.500% 6,018,375 8,318,375 10/01/2011 2,430,000 5.500% 5,891,875 8,321,875 10/01/2012 2,560,000 5.500% 5,758,225 8,318,225 10/01/2013 2,705,000 5.500% 5,617,425 8,322,425 10/01/2014 2,850,000 5.500% 5,468,650 8,318,650 10/01/2015 3,010,000 5.500% 5,311,900 8,321,900 10/01/2016 3,175,000 5.500% 5,146,350 8,321,350 10/01/2017 3,350,000 5.500% 4,971,725 8,321,725 10/01/2018 3,535,000 5.500% 4,787,475 8,322,475 10/01/2019 3,730,000 5.500% 4,593,050 8,323,050 10/01/2020 3,930,000 5.500% 4,387,900 8,317,900 10/01/2021 4,150,000 5.500% 4,171,750 8,321,750 10/01/2022 4,375,000 5.500% 3,943,500 8,318,500 10/01/2023 4,615,000 5.500% 3,702,875 8,317,875 10/01/2024 4,870,000 5.500% 3,449,050 8,319,050 10/01/2025 5,140,000 5.500% 3,181,200 8,321,200 10/01/2026 5,420,000 5.500% 2,898,500 8,318,500 10/01/2027 5,720,000 5.500% 2,600,400 8,320,400 10/01/2028 6,035,000 5.500% 2,285,800 8,320,800 10/01/2029 6,365,000 5.500% 1,953,875 8,318,875 10/01/2030 6,715,000 5.500% 1,603,800 8,318,800 10/01/2031 7,085,000 5.500% 1,234,475 8,319,475 10/01/2032 7,475,000 5.500% 844,800 8,319,800 10/01/2033 7,885,000 5.500% 433,675 8,318,675

111,605,000 96,394,925 207,999,925 Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 5

BOND DEBT SERVICE

Economic Development Report Debt Schedules: 109,369,350 Project

Annual Period Debt Ending Principal Coupon Interest Debt Service Service

04/01/2009 3,069,137.50 3,069,137.50 10/01/2009 2,180,000 5.500% 3,069,137.50 5,249,137.50 8,318,275 04/01/2010 3,009,187.50 3,009,187.50 10/01/2010 2,300,000 5.500% 3,009,187.50 5,309,187.50 8,318,375 04/01/2011 2,945,937.50 2,945,937.50 10/01/2011 2,430,000 5.500% 2,945,937.50 5,375,937.50 8,321,875 04/01/2012 2,879,112.50 2,879,112.50 10/01/2012 2,560,000 5.500% 2,879,112.50 5,439,112.50 8,318,225 04/01/2013 2,808,712.50 2,808,712.50 10/01/2013 2,705,000 5.500% 2,808,712.50 5,513,712.50 8,322,425 04/01/2014 2,734,325.00 2,734,325.00 10/01/2014 2,850,000 5.500% 2,734,325.00 5,584,325.00 8,318,650 04/01/2015 2,655,950.00 2,655,950.00 10/01/2015 3,010,000 5.500% 2,655,950.00 5,665,950.00 8,321,900 04/01/2016 2,573,175.00 2,573,175.00 10/01/2016 3,175,000 5.500% 2,573,175.00 5,748,175.00 8,321,350 04/01/2017 2,485,862.50 2,485,862.50 10/01/2017 3,350,000 5.500% 2,485,862.50 5,835,862.50 8,321,725 04/01/2018 2,393,737.50 2,393,737.50 10/01/2018 3,535,000 5.500% 2,393,737.50 5,928,737.50 8,322,475 04/01/2019 2,296,525.00 2,296,525.00 10/01/2019 3,730,000 5.500% 2,296,525.00 6,026,525.00 8,323,050 04/01/2020 2,193,950.00 2,193,950.00 10/01/2020 3,930,000 5.500% 2,193,950.00 6,123,950.00 8,317,900 04/01/2021 2,085,875.00 2,085,875.00 10/01/2021 4,150,000 5.500% 2,085,875.00 6,235,875.00 8,321,750 04/01/2022 1,971,750.00 1,971,750.00 10/01/2022 4,375,000 5.500% 1,971,750.00 6,346,750.00 8,318,500 04/01/2023 1,851,437.50 1,851,437.50 10/01/2023 4,615,000 5.500% 1,851,437.50 6,466,437.50 8,317,875 04/01/2024 1,724,525.00 1,724,525.00 10/01/2024 4,870,000 5.500% 1,724,525.00 6,594,525.00 8,319,050 04/01/2025 1,590,600.00 1,590,600.00 10/01/2025 5,140,000 5.500% 1,590,600.00 6,730,600.00 8,321,200 04/01/2026 1,449,250.00 1,449,250.00 10/01/2026 5,420,000 5.500% 1,449,250.00 6,869,250.00 8,318,500 04/01/2027 1,300,200.00 1,300,200.00 10/01/2027 5,720,000 5.500% 1,300,200.00 7,020,200.00 8,320,400 04/01/2028 1,142,900.00 1,142,900.00 10/01/2028 6,035,000 5.500% 1,142,900.00 7,177,900.00 8,320,800 04/01/2029 976,937.50 976,937.50 10/01/2029 6,365,000 5.500% 976,937.50 7,341,937.50 8,318,875 04/01/2030 801,900.00 801,900.00 10/01/2030 6,715,000 5.500% 801,900.00 7,516,900.00 8,318,800 04/01/2031 617,237.50 617,237.50 10/01/2031 7,085,000 5.500% 617,237.50 7,702,237.50 8,319,475 04/01/2032 422,400.00 422,400.00 10/01/2032 7,475,000 5.500% 422,400.00 7,897,400.00 8,319,800 04/01/2033 216,837.50 216,837.50 10/01/2033 7,885,000 5.500% 216,837.50 8,101,837.50 8,318,675

111,605,000 96,394,925.00 207,999,925.00 207,999,925 Aug 27, 2008 9:21 am Prepared by Davenport & Company (Finance 6.007 Richmond, City of, VA:ERARUNS-RUN2) Page 6

PROJECT FUND

Economic Development Report Debt Schedules: 109,369,350 Project

Project Fund #1 (PRO01)

Interest Scheduled Date Deposit @ 5.5% Principal Draws Balance

10/01/2008 109,369,350 109,369,350 109,369,350

109,369,350 0 109,369,350 109,369,350

Arbitrage Yield: 5.5000000%

Appendix B: Highest and Best Use Market Study

To examine the demand potential and highest and best use for the existing Diamond Site (“Boulevard Site”) and for the area adjacent to the Main Street Station in Shockoe Bottom (“Shockoe Site”), ERA conducted analysis of key data points for the region and city as a whole, as well as for the area immediately surrounding the two sites. These data—including population, households, income, household migration, lifestyle segmentation, at-place employment, and others—form the basis for understanding the subsequent demand analysis.

Demographic and Economic Context: Regional (City v. Metro)

Insight into the demographic and economic data of the region and City of Richmond illustrates the overall economic and social conditions of the area. These data will be compared with the findings of the Boulevard and Shockoe Bottom primary trade areas and with the Commonwealth of Virginia and U.S., as appropriate. These data points are often what a retailer or national developer will examine prior to making investment decisions in the area, and therefore can present a picture of the competitive position of the region and the subject sites within the City and region as whole.

Population & Growth

From 2000 to 2007, the Richmond MSA grew by 11 percent, from 1.1 million to 1.2 million. This equals to a compound average annual increase of 1.5 percent. Richmond, however, has been losing population at a compound average annual rate of 0.25 percent during the same period. Richmond’s population of 194,320 represents 16 percent of the metro area.

In the next five years, the population of the City is expected to continue to decline, while the metro area is expected to keep the same pace of growth.

Economics Research Associates Project Report No. 17889 Appendix Page B-1

Appendix Table B- 1: Population Trends, 2000-2012

Diamond 1-mi Shockhoe 1- City of Richmond Radius mi Radius Richmond MSA Population 2000 6,747 12,160 197,790 1,096,957 2007 6,583 13,467 194,320 1,215,134 2012 6,437 13,408 190,505 1,301,993 Change (#) 2000-2007 -164 1,307 -3,470 118,177 2007-2012 -146 -59 -3,815 86,859

Source: ESRI; Economics Research Associates, July 2008

Age

Within a mile of the Boulevard Site, the population is older than in the City and MSA. In 2007, it had a median age of 40.5, versus 35.3 in the City and 38.3 in the MSA. On the other hand, the population surrounding the Shockoe Site is younger, with a median age of 33.2. Of all the residents near both the Boulevard and Shockoe Sites in 2007, 64 percent are in the typical “working” ages, 20-64. In the City and MSA, there are approximately 62 percent of all residents in these age groups. The Boulevard Site area also has a greater share of older residents above the age of 65—18 percent versus 11 percent near the Shockoe Site, 13 percent in the City, and 12 percent in the MSA. The Shockoe Site area, City, and MSA all have a substantially greater share of residents under the age of 20—25 percent or slightly over—versus 17 in the area around the Boulevard Site. These shares of population by age group will not change substantially by 2012, though all areas will increase the number of residents in the over-65 age groups, a reflection of the aging of the Baby Boomers. All areas will add share in the 20 to 24, 55 to 64, and 85+ age groups, and all but the Shockoe Site area will add share in the 65 to 74 age group. The greatest numerical change in population will be in the 55 to 64 age group, again reflecting the Baby Boomer demographic; this cohort will add approximately 4,000 residents in the City.

Economics Research Associates Project Report No. 17889 Appendix Page B-2

Appendix Table B- 2: Share of Population by Age, 2007 & 2012

2007 2012

Diamond 1- Shockhoe 1- City of Richmond Diamond 1- Shockhoe 1- City of Richmond Age mi Radius mi Radius Richmond MSA mi Radius mi Radius Richmond MSA 0 - 4 4.1% 6.0% 6.0% 6.3% 4.1% 6.0% 5.9% 6.3% 5 - 9 3.9% 5.3% 5.6% 6.2% 3.1% 5.2% 5.3% 6.0% 10 - 14 3.5% 5.3% 5.9% 6.7% 3.7% 4.9% 5.1% 6.3% 15 - 19 5.9% 8.1% 7.9% 7.2% 5.6% 7.7% 7.8% 6.9% 20 - 24 9.1% 10.9% 8.6% 6.5% 11.3% 11.3% 10.3% 6.9% 25 - 34 12.5% 13.0% 15.6% 12.3% 8.6% 9.7% 13.5% 12.0% 35 - 44 16.1% 18.1% 13.8% 15.3% 16.3% 19.3% 13.2% 13.6% 45 - 54 15.9% 13.9% 14.0% 15.8% 14.2% 13.2% 13.6% 16.1% 55 - 64 10.8% 8.5% 9.9% 11.7% 13.6% 11.5% 12.1% 13.3% 65 - 74 5.6% 5.6% 5.8% 6.1% 7.2% 5.5% 6.2% 6.7% 75 - 84 6.2% 3.7% 4.8% 4.2% 5.8% 3.9% 4.4% 4.0% 85+ 6.6% 1.6% 2.3% 1.6% 6.6% 1.9% 2.5% 1.8% Total Population 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: ESRI; Economics Research Associates, July 2008

Figure B- 1: Change in Share in Population by Age, 2007-2012

40.0%

30.0%

20.0%

10.0%

0.0% 0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85+

-10.0%

-20.0%

-30.0%

-40.0%

Diamond 1-mi Radius Shockhoe 1-mi Radius City of Richmond Richmond MSA

Economics Research Associates Project Report No. 17889 Appendix Page B-3

4.0%

3.0%

2.0%

1.0%

0.0% 0 - 4 5 - 9 10 - 14 15 - 19 20 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 - 74 75 - 84 85+ -1.0%

-2.0%

-3.0%

-4.0%

-5.0% Diamond 1-mi Radius Shockhoe 1-mi Radius City of Richmond Richmond MSA

Figure B- 2: Growth in Population by Age Cohort, 2007-2012

Households & Growth

Richmond and the region’s household patterns have been following a similar pattern to the changes in population. However, the Shockoe Site area gained households between 2000 and 2007. This is likely due to a combination of larger households moving out and smaller households moving in, as is shown by the increasingly smaller average household size. A decline is projected in both the area around the Diamond and in the City between 2007 and 2012. The MSA households are expected to grow by approximately 8 percent between 2007 and 2012, bringing the total number of households to 508,956.

Economics Research Associates Project Report No. 17889 Appendix Page B-4

Appendix Table B- 3: Household Profile of Subject Site Area, Richmond, and the MSA, 2000- 2012

Diamond 1- Shockhoe 1-mi City of Richmond mi Radius Radius Richmond MSA Households 2000 3,159 4,420 84,549 425,100 2007 3,014 5,214 82,705 473,324 2012 2,942 5,258 81,203 508,936 HH Change (#) 2000-2007 -145 794 -1,844 48,224 2007-2012 -72 44 -1,502 35,612 HH CAGR 1/ 2000-2007 -0.9% 3.4% -0.4% 2.2% 2007-2012 -0.5% 0.2% -0.4% 1.5% HH Size 2000 1.90 2.19 2.21 2.49 2007 1.90 2.04 2.19 2.48 2012 1.89 2.01 2.19 2.48 1/ Compound Annual Growth Rate

Source: ESRI; Economics Research Associates, July 2008

Income

The area surrounding the Diamond Site has higher median and average household incomes than the Shockoe Site area and the City as a whole. In 2007, the area’s median household income was $48,000, slightly under that of the MSA ($59,000) and the nation ($53,000). The higher average income ($65,000) could suggest that there is greater disparity of incomes in the area. This is true of the U.S. as well—where the average income of $73,000 exceeds the median.

Between 2007 and 2012, the incomes surrounding the Diamond and Shockoe sites are expected to grow at a rate that slightly outpaces inflation. The MSA’s average and per capita incomes are expected to grow by nearly 4 percent while the other geographies are expected to grow slightly slower in this category (between 3.6 and 3.7 percent).

Economics Research Associates Project Report No. 17889 Appendix Page B-5

All areas are expected to see increases in the households earning over $75,000. The Shockoe Site area is projected to have a 112 percent increase in share of households earning between $150,000 and $199,000 (though numerically, there would only be an additional 72 households in this group).

Appendix Table B- 4: Area Income Profile, 2007-2012

Diamond 1-mi Shockhoe 1-mi Radius Radius City of Richmond Richmond MSA Median Household Income 2007 $48,084 $27,595 $39,178 $58,635 2012 $56,759 $32,919 $46,152 $68,583 Change $8,675 $5,324 $6,974 $9,948 CAGR 3.4% 3.6% 3.3% 3.2%

Average Household Income 2007 $64,984 $42,903 $58,993 $76,234 2012 $78,011 $51,281 $70,474 $92,224 Change $13,027 $8,378 $11,481 $15,990 CAGR 3.7% 3.6% 3.6% 3.9%

Per Capita Income 2007 $32,656 $20,309 $26,246 $30,263 2012 $39,049 $24,310 $31,352 $36,649 Change $6,393 $4,001 $5,106 $6,386 CAGR 3.6% 3.7% 3.6% 3.9% Source: ESRI; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-6

Appendix Table B- 5: Share of Households by Household Income, 2007

Shockhoe 1-mi Diamond 1-mi 2007 (%) Radius Radius City of Richmond Richmond MSA < $15,000 29.5% 11.1% 18.8% 9.2% $15,000 - $24,999 16.7% 13.4% 13.2% 8.2% $25,000 - $34,999 12.9% 11.7% 13.0% 10.0% $35,000 - $49,999 13.7% 15.9% 15.5% 14.6% $50,000 - $74,999 13.0% 19.6% 17.4% 21.1% $75,000 - $99,999 5.5% 10.7% 8.5% 14.3% $100,000 - $149,999 5.6% 11.5% 7.8% 14.2% $150,000 - $199,999 1.2% 3.4% 2.5% 4.2% $200,000+ 1.8% 2.8% 3.4% 4.1% 100.0% 100.0% 100.0% 100.0% Source: ESRI; Economics Research Associates, July 2008

Figure B- 3: Change in Share of Households by Household Income, 2007-2012

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

-1.0% < $15,000 $15,000 - $25,000 - $35,000 - $50,000 - $75,000 - $100,000 - $150,000 - $200,000+ -2.0% $24,999 $34,999 $49,999 $74,999 $99,999 $149,999 $199,999

-3.0%

-4.0%

-5.0%

Shockhoe 1-mi Radius Diamond 1-mi Radius City of Richmond Richmond MSA

Economics Research Associates Project Report No. 17889 Appendix Page B-7

Migration

The Internal Revenue Service (IRS) publishes annual county-to-county migration data, which utilizes tax returns to estimate the number of households that have moved from one to another. ERA uses this data to understand household migration patterns and in the housing demand model, to assess demand and the type of demand by product type for housing.

Though the City of Richmond has experienced a net out-migration of 400 from 1999 to 2006, the pace of out-migration has tapered somewhat—from a net out-flow of 444 households between 1999 and 2000 to a high of 803 households moving out between 2002 and 2003 to a loss of 95 households in the most recent year with data available, and only one household loss the prior year.

Appendix Table B- 6: Net Migration, City of Richmond, 1999-2006

'99-'00 '00-'01 '01-'02 '02-'03 '03-'04 '04-'05 '05-'06 Total Inflow 7,732 7,839 7,810 7,635 7,608 8,486 8,732 7,977 Outflow (8,176) (8,228) (8,091) (8,438) (8,332) (8,487) (8,827) (8,368) Net Migration (444) (389) (281) (803) (724) (1) (95) (391) Source: IRS Statistics of Income; Economics Research Associates, July 2008.

Appendix Table B- 7: Top Counties for In-Migration to the City of Richmond, 1999-2006

Source County Rank # Bronx , NY 1 116 Queens , NY 2 107 Kings , NY 3 104 Essex , NJ 4 90 Nassau , NY 5 87 Westchester , NY 6 83 Suffolk , NY 7 70 Monroe , NY 8 57 Fairfield , CT 9 52 Jefferson Parish, LA 10 48 Total 814 Source: IRS Statistics of Income; Economics Research Associates, June 2008.

Employment by Industry

In the City of Richmond, the industries with the greatest share of employment are Health Services (15 percent) followed by Public Administration (10.4 percent) and Educational Services (10.2 percent). These are also significant industries in the MSA, though Retail Trade is the second largest employer there to Health Services (69,000 and 75,000 employees respectively).

Economics Research Associates Project Report No. 17889 Appendix Page B-8

Health & Education Services have also been the fastest growing industries in both the City and MSA. In the City, Finance & Insurance and Management of Companies and Enterprises have also grown (at a compound annual rate of 1.6 percent and 1.7 percent) between 2000 and 2007. The MSA saw growth in Accommodation and Food Services (2.5 percent) and Professional and Technical Services (2.6 percent).

18.0% 16.0% Richmond City Richmond MSA 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

g r. s . s ion de s. e c. rv. n rade nsu nie urin Asst. Re dmi ration T Tra e Serv c. & Wh ist struct fact . e & I mpa st l Servic ic A n etail t., & Food Se lesale R Informationnc Co Co anu o Tech Services are/So , En ubl dmin M ransp & Wa T Fina C m. & A Wh in Arts o Ex. P Prof & Mgt. of Educationaealth ublic Adm H Acc rv., P Real Est./Rental/Leasing r Se the O

Figure B- 4: 2007 Share of Employment by Industry

Economics Research Associates Project Report No. 17889 Appendix Page B-9

Appendix Table B- 8: Employment by Industry, 2000 & 2007

Richmond City Richmond MSA Avg. Employment Change Avg. Employment Change Industry 2000 2007 # CAGR 2000 2007 # CAGR Agriculture *** 0 n/a n/a 1,531 589 -942 -12.8% Mining 110 *** n/a n/a 728 1,380 652 9.6% Utilities 224 716 492 18.1% 2,678 3,422 744 3.6% Construction 8,534 8,776 242 0.4% 40,321 46,921 6,600 2.2% Manufacturing 15,684 9,358 -6,326 -7.1% 56,678 42,233 -14,445 -4.1% Wholesale Trade 6,570 5,204 -1,366 -3.3% 24,610 25,603 993 0.6% Retail Trade 9,998 9,314 -684 -1.0% 67,605 69,152 1,547 0.3% Transportation and Warehousing 8,120 5,581 -2,539 -5.2% 22,883 21,525 -1,358 -0.9% Information 4,147 4,232 85 0.3% 12,834 12,682 -152 -0.2% Finance and Insurance 6,935 7,732 797 1.6% 34,628 36,701 2,073 0.8% Real Estate and Rental and Leasing 2,522 2,002 -520 -3.2% 7,891 8,046 155 0.3% Professional and Technical Services 10,310 10,783 473 0.6% 28,681 34,219 5,538 2.6% Management of Companies and Enterprises 9,583 10,790 1,207 1.7% 24,820 24,643 -177 -0.1% Administrative and Waste Services 12,343 9,162 -3,181 -4.2% 37,746 37,761 15 0.0% Educational Services 14,472 16,222 1,750 1.6% 43,669 51,902 8,233 2.5% Health Care and Social Assistance 20,269 24,600 4,331 2.8% 57,569 75,376 17,807 3.9% Arts, Entertainment, and Recreation 3,049 2,857 -192 -0.9% 9,697 10,869 1,172 1.6% Accommodation and Food Services 8,398 9,408 1,010 1.6% 36,476 43,466 6,990 2.5% Other Services, Ex. Public Admin 6,773 5,632 -1,141 -2.6% 19,934 21,090 1,156 0.8% Public Administration 18,683 16,586 -2,097 -1.7% 39,480 39,377 -103 0.0% Total, All Industries 166,782 158,984 -7,798 -0.7% 570,626 606,962 36,336 0.9%

Note: Asterisks indicate non-disclosable data. Industries do not add up to Total because of non-disclosable data and those in unclassified industries.

Source: Virginia Labor Market Information, Labor Market Statistics, Covered Employment and Wages Program; Economics Research Associates, July 2008.

Workforce Virginia’s labor market projections team issues projections by Labor Markets, not individual counties, cities, or MSAs. The City of Richmond is in Labor Market X, which is included with Labor Market XI for projection purposes. In their projections for 2014 (based on 2004 data), they have projected the greatest numeric increase in Health Care and Social Assistance, followed by Professional, Scientific, and Technical Services. These industries are also expected to grow at the fastest rate, along with Administrative, Support, and Waste Services and Accommodation and Food Services.

Economics Research Associates Project Report No. 17889 Appendix Page B-10

Appendix Table B- 9: Virginia Labor Market Statistics Projections for Labor Markets X & XI (Richmond and Surrounding Area), 2004-2014

2004 2014 Total Annual Estimated Projected Employment Avg.% % Industry Title Employment Employment Change Change Change Mining 381 311 -70 -2% -18% Construction 34,874 39,539 4,665 1.3% 13.4% Manufacturing 36,717 35,498 -1,219 -0.3% -3.3% Wholesale Trade 21,125 23,250 2,125 1.0% 10.1% Retail Trade 56,739 63,435 6,696 1.1% 11.8% Transportation & Warehousing 12,874 14,611 1,737 1.3% 13.5% Information 10,710 12,149 1,439 1.3% 13.4% Finance & Insurance 35,848 43,099 7,251 1.9% 20.2% Real Estate & Rental & Leasing 7,628 8,838 1,210 1.5% 15.9% Prof., Scientific, & Tech.Serv. 27,136 37,272 10,136 3.2% 37.4% Mgt.of Companies & Enterprises 20,709 25,279 4,570 2.0% 22.1% Admin.& Support & Waste Mgt. 31,423 40,528 9,105 2.6% 29.0% Educational Services 40,415 48,129 7,714 1.8% 19.1% Health Care & Social Assistance 52,331 68,161 15,830 2.7% 30.2% Arts, Entertainment, & Recreation 8,140 9,427 1,287 1.5% 15.8% Accommodation & Food Services 34,248 42,178 7,930 2.1% 23.2% Other Services (Except Government) 16,002 18,450 2,448 1.4% 15.3%

Note: Industries with non-disclosable data (Agriculture, Forestry, Fishing, & Hunting; Utilities; & State Government) have been removed Source: Virginia Labor Market Statistics Projections Team; Bureau of Labor Statistics; Economics Research Associates, 2008.

The Commonwealth does not provide projections by County/City, and so ERA analyzed projections made by Woods and Poole. According to this data, the City of Richmond is expected to gain under 100 jobs from 2007 to 2015, and between 2015 and 2020, the City is expected to lose approximately 200 jobs. Industries which will consistently increase include Services (which includes Professional and Technical Services, Administration and Waste Management, Management of Companies, Educational and Health Services) and Government. ERA will use these employment projection numbers to gauge potential office demand for the City and the subject sites.

Economics Research Associates Project Report No. 17889 Appendix Page B-11

Appendix Table B- 10: Employment Projections by Industry, City of Richmond, 2000-2020

Actual Forecasts Forecasted Change 2007-2015 2015-2020 Category 2000 2007 2015 2020 # CAGR # CAGR Agricultural & Farm 632 468 526 562 58 1.5% 36 1.3% Mining 195 127 167 143 40 3.5% (24) -3.0% Construction 8,430 8,369 8,497 8,565 128 0.2% 68 0.2% Manufacturing 19,172 12,965 12,357 11,983 (608) -0.6% (374) -0.6% Trans./Comm./Public Utilities 10,940 8,823 7,514 6,698 (1,309) -2.0% (816) -2.3% Wholesale Trade 9,051 7,148 6,796 6,572 (352) -0.6% (224) -0.7% Retail Trade 18,714 17,388 16,979 16,719 (409) -0.3% (260) -0.3% Finance/Insurance/Real Estate 16,548 14,585 13,044 12,039 (1,541) -1.4% (1,005) -1.6% Services 60,928 61,495 63,528 64,707 2,033 0.4% 1,179 0.4% Government (1) 50,482 51,342 53,366 54,596 2,024 0.5% 1,230 0.5% Total: 195,092 182,710 182,774 182,584 64 0.0% (190) 0.0% (1) Includes local, state and Federal government agencies Source: Woods & Poole, Inc., 2007; Economics Research Associates, 2008

Tapestry

ESRI’s Community Tapestry segmentation system characterizes neighborhoods and cities into 65 different segments based on their socioeconomic and demographic composition. ESRI’s methodology uses a combination of more than 60 attributes to analyze and sort geographic areas, including income, employment, home value, housing type, education, household composition, age, and other key variables from several sources including Census and consumer behavior databases. The resulting tapestries can provide an understanding of the lifestyle and behavior of customers in an area, which is a key variable in determining demand for housing and services to the local population. ERA uses the Community Tapestry to both provide a picture of the local demographics as well as in the housing demand model—to isolate those groups most likely to choose housing at the subject site.

As an overview, ERA summarized the top tapestry segments for the basic geographic areas. Around the Boulevard site, there is an almost equal split between the “Metropolitans” and the “Old and Newcomers,” which together make up over 70 percent of all households. The Metropolitans— which is the group with the greatest share of households in the City as well (10 percent)—are a group that prefers city living and tend to be single (though married persons make up approximately 40 percent nationwide). Compared to the national population as a whole, there are a higher number of younger residents aged 20-34 in this category. The category is typically highly educated—with 75 percent having attended college or completed a degree program. “Preferences” of this group include pursuing an active lifestyle, listening to classical and jazz music, going to museums, watching foreign films on DVD, and reading epicurean magazines.

Economics Research Associates Project Report No. 17889 Appendix Page B-12

The second most frequently found group—the “Old and Newcomers”—are a transitional group, made up of people just starting their careers or who have retired and thus contains a higher percentage of those aged in their 20s or above age 70 than the nation as a whole. This group is less affluent than their counterparts in the “metropolitans” but educational attainment is still above the national average. The group is more transient with more than half having moved in the last five years, and 60 percent of the group nationwide rents. This group’s lifestyle considerations include pets (especially cats), reading nonfiction and fiction books, watching television (though more in moderation than the national average), going to the movies or renting videos, going to the zoo, and cooking. This group is also one of the top five found in Richmond as a whole.

While the other top segments found in the City are all more urban, those in the Richmond MSA are slightly more suburban. Most have middle-income ranges, with the exception of “City Commons,” who as a nationwide group has a median household income of only $16,300. On the other range of the spectrum, in the MSA, the Sophisticated Squires and the Exurbanites have median household incomes in the $80,000 range and median net worth between $200,000 and $300,000.

Appendix Table B- 11: Top Tapestry Segments by Area

1-Mile Shockhoe Bottom 1-Mile Boulevard Category #%Category #% Metro Renters 1,517 29.1% Metropolitans 1,378 35.3% City Commons 1,408 27.0% Old and Newcomers 1,326 34.0% Modest Income Homes 751 14.4% College Towns 975 25.0% Social Security Set 620 11.9% Exurbanites 223 5.7% Simple Living 390 7.5% Subtotal: Top 5 4,686 90% Subtotal: Top 5 2,704 90% Remainder 528 10% Remainder 310 10% Total Households 5,214 100% Total Households 3,014 100%

City of Richmond Richmond MSA Category # % Category % Metropolitans 8,304 10.0% Exurbanites 30,484 6.4% Metro Renters 7,418 9.0% Cozy and Comfortable 27,604 5.8% Family Foundations 7,024 8.5% Milk and Cookies 26,145 5.5% City Commons 6,980 8.4% Green Acres 24,882 5.3% Old and Newcomers 5,946 7.2% Sophisticated Squires 21,217 4.5% Subtotal: Top 5 35,672 43% Subtotal: Top 5 130,337 28% Remainder 47,033 57% Remainder 342,987 72% Total Households 82,705 100% Total Households 473,324 100% Source: ESRI; Economics Research Associates, July 2008.

Economics Research Associates Project Report No. 17889 Appendix Page B-13

Real Estate Market Existing Conditions Residential Market Overview Building Permits

As one barometer of residential development activity, ERA looks at building permitting trends over a span of ten years. These data can indicate the pace of development, type of preferred development (single family versus multifamily), changes in development patterns over time, and potential units that remain in the “pipeline.”

As can be expected, the majority of building permits within the MSA took place outside of the City, where developable land is in greater supply. Between 2003 and 2007—the last five full years of available data—there were a total of 43,405 permits issued. Seven percent of these were in the City of Richmond. Of all the building permits issued in the MSA, 87 percent were single family. In the denser City, single family residential permits counted for approximately 67 percent of all permits.

100% 5,649

978 80%

60%

37,756 40% 1,962

20%

0% City MSA

SF Multifamily

Figure B- 5: Richmond City and MSA Total Building Permits by Type, 2003-2007

Building permits within the City peaked in 2005 when 754 units were permitted. In 2007, permitting slowed to 564 units, but this was still above the lower numbers of permits seen in 1999-2001, when less than 300 permits were common. As of June of this year, only 161 permits were issued, suggesting that a further recession will be seen in 2008 as a result of the nationwide housing slow

Economics Research Associates Project Report No. 17889 Appendix Page B-14

down. Permitting in the MSA as a whole has been similarly slow—with approximately 2,800 permits issued as of June—as compared to the full year of 2007 with 7,100 permits and a peak of 9,800 units in 2005.

Figure B- 6: Richmond City Building Permits, 1999-June 2008

800

700

600

500

400

300

200

100

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 As of June 2008

Single Family Multifamily

Overview of Existing Housing Study

Following the City of Richmond’s recommendation that ERA analyze the most Comprehensive Plan Update to inform the residential demand component of this analysis, ERA reviewed a recent residential market study conducted by Zimmerman Volk Associates (ZVA) for the City of Richmond. The study developed demand estimates for housing within the City and in the Downtown area in particular, and was a useful overview of area supply performance and a reinforcement of ERA’s own demand findings (outlined below).

ZVA’s comprehensive look at the supply of existing housing substantially informed ERA’s analysis. Their analysis of rental apartments found that the majority of those in Downtown were in renovated warehouses, such as those at Tobacco Row. Rents ranged from between $0.99 to $1.78 per square foot, depending on the size of the unit. One-bedroom units ranged anywhere from 450 to 1,300 square feet, while 2-bedrooms were sized up to 1,900 square feet, and 3-bedrooms up to 2,300

Economics Research Associates Project Report No. 17889 Appendix Page B-15

square feet. Occupancy rates for rental apartments suggest strong demand, averaging between 90 and 100 percent. Of the Downtown properties, two-thirds were performing at functional full occupancy, having 95 percent or above (all apartment buildings have some vacancy as tenants turn over).

ZVA also examined for-sale multifamily and single family attached projects. There is a wide range of prices—from $117 to $400 per square foot, with the majority ranging between $200 and $275 per square foot. The pace of sales has slowed, to one or less units per month for most projects. Vistas on the James, the largest property marketing units in the Downtown area, reported six units per month, and much of this reflects a pool of investors buying the units. Vistas on the James is a new 168-unit high rise being developed by Daniel Development, developer of the 122-unit Riverside on the James in 2004. Prices in the building for the remaining units range from $309,000 for 846 square feet to $979,000 for 2,342 square feet.

Another significant project is Rocketts Landing, a total of 191 condominiums and 41 townhouses in and around a former ice cream factory. At buildout, the project is expected to contain 1,500 units, including two 14-story towers. The condominium units’ base prices range from $125,000 to $675,000—to over $1 million for custom penthouse units. Townhouses are priced in the mid- $400,000s for 2,400 square feet.

The majority of single family development is happening south of the James River and range from $125 to $187 per square foot. Notably, ZVA cites construction of new and renovated houses around Church Hill (just east of the Shockoe Bottom Site)—in the same general per square foot range as the homes being sold south of the James.

ZVA found that city-wide Richmond had an annual market potential of 16,050 households seeking new or existing housing stock. Approximately 21 percent of this demand is for market rate rentals, 12 percent for multifamily for-sale (all ranges), 6.1 percent for single family attached (all ranges), and 33 percent for market-rate single family. The remainder of this demand is for below market rate rentals and single family homes. Of this demand, ZVA projected that the City could capture 10 to 15 percent of rentals, for-sale multifamily, and for-sale single family attached, and 5 to 10 percent of for- sale single family. The total projected number of annual units, then, was between 1,252 and 2,056 units within the city.

Because the ZVA study focused on Downtown, ZVA also reported on specific demand for Downtown units, and found a market for 4,040 households, with an annual capture of between 404

Economics Research Associates Project Report No. 17889 Appendix Page B-16

and 608 units. ERA relies upon the ZVA data as a starting point for testing demand for residential development at the two subject sites.

Demand Methodology

In order to estimate market demand for housing units at the site, ERA first measured the total annual demand for new housing units in the City of Richmond. New housing demand is expected to be generated by three primary market groups: households already residing within the City who are likely to turn over and relocate to a new home next year (this includes renters who will convert to buyers), households migrating into the City from elsewhere within the MSA, and other types of households migrating into the City—namely those from outside the MSA and a small portion of foreign migration. Data from the U.S. Census American Community Survey (ACS) is used to estimate the number of households likely to turn over within the City and IRS County-to-County migration data is used to analyze the number, and characteristics, of all households migrating into the City.

ERA’s analytical technique includes the use of ESRI Tapestry Segmentation system. The 65 tapestry segments, discussed on page 12, are grouped into 12 summary “LifeMode” segments based on demographic variables such as age, income, home value, occupation, household type, education, and other consumer behavior characteristics. In conjunction with ACS data, ERA utilized this data in order to segment the market groups by income, tenure, unit preference, and locational preference.

Households were income-qualified in order to limit the demand estimate to persons from each lifestyle segment that will be able to afford to rent, or buy, a home in the specified area. For this study, only persons earning at least Richmond’s median household income of $39,178 were included in the potential draw market for the site. Preferences of incoming households to own or buy were estimated through consideration of the ratio of buyers to renters across household income cohorts in the City and the MSA.

This demand estimate is for market rate housing and is limited to households with the appropriate characteristics that indicate they would have some preference to live in the type of housing that would be offered in an urban setting. Total demand includes only persons who would have preference for multi-family rental and multi-family for-sale product in the urban environment of Richmond.

Economics Research Associates Project Report No. 17889 Appendix Page B-17

Demand Source and Characteristics

The primary market segments driving new attached housing demand will be households already residing within the City who are likely to relocate to a new home next year, households migrating into the City from elsewhere within the MSA, and “other” types of households migrating into the City—in other words, those from outside the MSA and a small portion of foreign migration. ERA estimates roughly half of the captured demand for for-sale product will originate in Richmond City from current home owners moving to new homes and from renters who are converting to home owners. Total captured demand—demand from persons who are income qualified and with preference for the type of development proposed—will consist of a total of 4,646 units annually. Annual captured demand will be for 3,779 apartment units, 499 condominium units, and 368 town homes.

Appendix Table B- 12: Annual Richmond Citywide Mixed-Use Urban Housing Demand

#% For-Rent Apartments 3,779 81% For-Sale Condominiums 499 11% Town Homes 368 8% Total 4,646 100% Source: Economics Research Associates, July 2008.

The majority of housing demand across all housing types will be generated from within the City, where households will drive 66 percent of the potential apartment market, 53 percent of the condominium market, and 42 percent of the town home market. The large portion of demand generated by City residents indicates that a successful development program must be competitive with the many other developments already happening in and immediately adjacent to Richmond.

The second largest generator of demand will come from outside of the MSA. Households from outside the MSA account for 21.3 percent of the potential apartment market, 34.6 percent of the condominium market, and 35.78 percent of the Town Home market. MSA households outside of the City provided the smallest share of new housing demand—13 percent of the potential apartment market, 14 percent of the condominium market, and 22 percent of the Town Home market.

Economics Research Associates Project Report No. 17889 Appendix Page B-18

Appendix Table B- 13: Geographic Source of Demand by Product Type Apartments Condominiums Town Homes Richmond City 65.7% 51.9% 41.9% Richmond VA MSA 13.0% 13.5% 22.3% Outside MSA 21.3% 34.6% 35.7% Total 100% 100% 100% Source: Economics Research Associates, 2008.

ERA segmented the demand from each geographic category into lifestyle segmentations in order to analyze the psychographic characteristics of the source markets. Differing preferences in each LifeMode segment will ultimately affect where these households will choose to live. The lifestyle characteristics were analyzed separately for each in-migrating county and Richmond City, and separately for for-sale and rental units based on building size. Tapestry segmentations from each geographic source market were then summed and are presented in the table below.

Appendix Table B- 14: Tapestry Segmentation of Housing Demand Citywide Annual Demand for Mixed-Use Urban Multifamily Housing Unit Percent Condo- Percent Town Percent Apts of Total miniums of Total Homes of Total L1 High Society 4 0.3% 2 0.9% 12 4.0% L2 Upscale Avenues 19 1.4% 8 2.8% 17 5.8% L3 Metropolis 82 6.2% 18 6.4% 67 23.3% L4 Solo Acts 645 48.8% 162 58.5% 72 25.1% L5 Senior Styles 147 11.1% 26 9.5% 18 6.1% L6 Scholars & Patriots 63 4.8% 7 2.7% 5 1.8% L7 High Hopes 14 1.0% 2 0.8% 5 1.9% L8 Global Roots 113 8.5% 20 7.3% 17 5.9% L9 Family Portrait 213 16.1% 26 9.3% 45 15.7% L10 Traditional Living 24 1.8% 5 1.8% 29 10.2% L11 Factories & Farms 1 0.1% 0 0.0% 0 0.1% L12 American Quilt 0 0.0% 0 0.0% 0 0.0% Total Potential Demand (Units) 1,323 100% 277 100% 289 100% Source: Economics Research Associates, 2008.

Hospitality/Hotel Market Demand Overview

ERA was asked to evaluate the supply of existing hospitality venues with respect to current industry standards regarding condition, location, and performance to evaluate the potential future demand for new hotel properties at each of the subject sites.

Economics Research Associates Project Report No. 17889 Appendix Page B-19

ERA relied upon data reported by Smith Travel Research and the Richmond Convention and Visitors Bureau to measure the likely demand patterns within the City of Richmond overall and at the two subject sites. ERA evaluated the competitiveness of the study areas with respect to location, parking, and adjacent and nearby uses.

ERA’s interview with the Director of the City of Richmond Convention and Visitors Bureau suggests that Richmond’s hospitality market is performing well within the Mid-Atlantic submarket as evidenced by the following statistics:

ƒ In 2005, nearly 54.8 million people visited Virginia, with 5.5 million people (10 percent) visiting the Richmond region.

ƒ In the Richmond Region, the 2006 average room rate of $75.55 represents a 7.3 percent increase over 2005.

ƒ 2007 hotel rates are expected to increase three to eight percent in upscale hotels and two to six percent in mid-scale hotels.

ƒ The RCVB hosted 33 conventions in 2007 (or 70 percent of potential convention weeks, excluding primary Federal holidays). The RCVB expects demand for convention center space will continue to grow in 2008 and 2009, but at a slower pace

ƒ Attendance at conventions and trade shows outpaced growth in convention center space.

ƒ Attendance increased 3.2 percent over 2005/2006.

ƒ Greater Richmond Convention Center bookings out performed predictions each year

While the Richmond Convention Center relies upon a regional supply of hotel rooms to support large conventions, Richmond’s current hotel supply has not limited the ability of the CVB to book current such meetings and achieve competitive room rates (average daily rates of $109 in Richmond as compared to $149 in the Washington metropolitan region for similar mid- to upper-scale convention hotel properties).

These statistics suggest that the Richmond convention visitor market performs well within the region (South Eastern) as evidenced by the convention center utilization rates and Richmond metropolitan area hotel vacancy rates. However, ERA does not consider hotel use as the highest

Economics Research Associates Project Report No. 17889 Appendix Page B-20

and best use for either the Boulevard or Shockoe Bottom sites. First, the Boulevard site is not a competitive location for new hotel construction. For the business/convention market, a competitive hotel location should be proximate to downtown business activity or other office concentrations) and within reach of other amenities such as evening activities, restaurants, etc.

While the Shockoe Bottom site could be an appropriate location for new hotel construction in the future, ERA has not identified sufficient evidence of demand for new hotel construction at this time.

The RCVB reports that there are approximately 2,000 hotel rooms planned or under construction within the Richmond metropolitan market, of which 500 rooms are located within the City boundaries. One of the primary goals of the Richmond Convention and Visitors Bureau is to increase annual occupancy and support average daily rate (ADR) growth among the Region’s hotels. The absorption of 2,000 rooms into the regional hotel inventory will directly impact the occupancy and room rates achieved by existing hotel properties.

Given that the current pipeline represents nearly 14 percent of existing supply (see following table), it is unlikely that a major hotel investor would identify pent-up demand for new hotel rooms within the City of Richmond until the rooms in the construction pipeline are fully absorbed into the regional supply chain.

Standards for development of new investment-grade hotel properties typically require that stabilized occupancy rates are a minimum of 65 percent and average daily rates for the mid- to upper-scale hotel class reach $120. Although healthy, the Richmond market is nor currently exceeding these standards at the present time.

Economics Research Associates Project Report No. 17889 Appendix Page B-21

Appendix Table B- 15: Metropolitan Richmond Area Hotel Room Supply, 2008 Jurisdiction Mid- Upper- Hotel Total Sleeping Properties Rooms /1 Chesterfield County 35 3,504 Hanover County 4 519 Town of Ashland 12 1,012 Henrico County 60 7,024 City of Richmond 20 3,147 Total 131 15,206

1/ Figure excludes 2,000 rooms planned or under construction Source: Richmond Metropolitan Convention and Visitors Bureau, 2008.

Instead, ERA recommends that the City of Richmond encourage future hotel development activity to focus on upgrading the existing supply of hotel properties as opposed to new construction. The Richmond Diamond site is adjacent to two hotel properties that do not appear to meet basic health/safety requirements or building code regulations. Interviews with local property owners suggested that the property be recommended for consideration by the Community Assisted Public Safety (CAPS) Task Force, Richmond’s combined police, fire, and building code violations team.

Office Demand Overview Office Performance

ERA examined available data to assess the performance of office real estate in the Richmond Metropolitan region, in the City, and in close-in submarkets near the two sites considered in this analysis. Because of the various levels of coverage by various data providers, ERA analyzed several variables to present a clearer picture of the office market, including: CoStar (data available from 2nd Quarter 2005 to 1st Quarter 2008); REIS (available from 2003 to first quarter 2008); Thalhimer’s MarketBeat report (covering 1st Quarter 2008); and interviews with area real estate professionals. All of these sources define the boundaries of the Richmond market differently, which creates variances within each data set.

CoStar lists the Richmond market as having 54 million square feet of office space, 23 million of which is in the City. At the end of 2007, the overall Richmond Market had a vacancy rate of 7.6 percent, while the City had 7.9 percent of all space vacant. These were both improved from the respective 9.3 percent and 8.7 percent vacancy rates in 2006.

Economics Research Associates Project Report No. 17889 Appendix Page B-22

Rents in the City averaged $16.08 in 2007, and were up just slightly from 2006 rates. At the end of the first quarter of 2008, the rate was up to $16.20.

The Boulevard site is a part of the Near West submarket. In this submarket, there are just over 2 million square feet of office. Over two-thirds of this space is Class C. By contrast, the Shockoe Submarket, which contains the Shockoe site, has slightly less square footage at 1.5 million, but has two-thirds of its space as Class B office space, and 142,000 in Class A, renting for $22 per square foot. In general, space there rents for a higher rate, with an overall average rental rate of $20 in this area. The Near West area space rents for $12 per square foot.

Shockoe Bottom is competitive with the CBD in terms of pricing. The Richmond CBD has nearly half of all City office space, and 20 percent of the overall market. The rents there are higher than the City overall—at $17—but are not necessarily commanding premiums for being in the center. It compares with average rates in Innsbrook ($19), Glenside/Broad Street ($18), Rt. 288 Corridor ($19), and Stony Point/Huguenot ($18).

Class A space—which comprises 42 percent of all space—does command a premium, however, at $22 per square foot. In the other cited competitive office areas, Class A space rents for: Innsbrook ($19), Glenside/Broad Street ($20), Rt. 288 Corridor ($22), and Stony Point/Huguenot ($19). Class A space in the CBD has averaged a low 4.3 percent vacancy rate from 2005 to 2007, but B space has averaged 22 percent, driving the overall vacancy rate up to 10.4 percent. Vacancies in the first quarter of 2008 were 12 percent, 2 percent above that for the same period of 2007.

The overall market has not seen an overwhelming amount of construction in the last several years. The average annual amount delivered in the Richmond Market was 773,000, 275,000 of which was in the City. The CBD saw the addition of 263,000 in 2005, but the Shockoe and Near West Submarkets had no new space on the market in the last several years.

The Shockoe and Near West submarkets experienced average negative direct net absorption. The City absorbed an average of 260,268, 36 percent of the Richmond Market’s overall average absorption of 725,000. Of those 260,000, 28 percent was in the CBD which had an average absorption of 72,000.

Economics Research Associates Project Report No. 17889 Appendix Page B-23

Appendix Table B- 16: Summary of Area Office Market Statistics, 2005-2008

Summary Data - QTD Share of Number of Share of City of Vacancy Rate Average Rental Submarket / County Total RBA /1 Richmond Buildings Richmond /2 Rate Market Near West Submarket 272 2,012,751 3.7% 8.6% 9.9% $12.22/fs Richmond CBD Submarket 92 10,825,244 19.9% 46.0% 11.1% $17.21/fs Shockhoe Submarket 35 1,529,985 2.8% 6.5% 6.6% $20.42/fs City of Richmond 924 23,512,722 43.1% 100.0% 7.9% $16.20/fs Richmond Market 2,598 54,532,695 100.0% n/a 7.5% $16.61/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 Near West Submarket 000000 Richmond CBD Submarket 263,066 0 0 87,689 0 0 Shockhoe Submarket 000000 City of Richmond 263,066 110,816 450,000 274,627 0 0 Richmond Market 408,198 1,138,754 772,576 773,176 190,813 28,380

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 Near West Submarket 15,157 (81,424) (23,506) (29,924) 13,164 34,163 Richmond CBD Submarket 104,001 150,661 (38,611) 72,017 (34,555) (176,438) Shockhoe Submarket (7,667) (56,477) 4,030 (20,038) 4,634 27,694 City of Richmond (84,563) 268,716 596,651 260,268 61,203 (7,132) Richmond Market (6,916) 577,039 1,603,848 724,657 501,018 25,936

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 Near West Submarket 6.9% 11.0% 12.1% 10.0% 10.3% 9.9% Richmond CBD Submarket 11.4% 9.8% 10.2% 10.4% 10.1% 11.1% Shockhoe Submarket 8.3% 18.6% 17.8% 14.9% 17.7% 6.6% City of Richmond 9.5% 8.7% 7.9% 8.7% 8.4% 7.9% Richmond Market 8.3% 9.3% 7.6% 8.4% 8.6% 7.5%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 Near West Submarket $12.53 $12.70 $12.25 $12.49 $12.72 $12.22 Richmond CBD Submarket $16.10 $16.63 $17.14 $16.62 $17.43 $17.21 Shockhoe Submarket $20.51 $19.48 $19.95 $19.98 $19.42 $20.42 City of Richmond $15.26 $15.83 $16.08 $15.72 $16.34 $16.20 Richmond Market $15.72 $16.02 $16.05 $15.93 $16.24 $16.61 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year.

Source: CoStar Property; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-24

Appendix Table B- 17: Class Detail of Near West Submarket Office Statistics

Summary Data - QTD RBA As % of Building Number of Average Rental Total RBA 1/ Total Vacancy Rate 2/ Class Buildings Rate Submarket A 1 12,110 0.6% 39.7% $7.50/fs B 24 673,168 33.4% 21.2% $13.43/fs C 247 1,327,473 66.0% 3.9% $10.73/fs Total 272 2,012,751 100.0% 9.9% $12.22/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 000000 B 000000 C 000000 Total 000000

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A00(12,110) (4,037) 00 B (4,735) (74,939) 17,678 (20,665) 26,292 (1,762) C 19,892 (6,485) (29,074) (5,222) (13,128) 28,617 Total 15,157 (81,424) (23,506) (29,924) 13,164 34,163

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 0.0% 0.0% 100.0% 33.3% 0.0% 39.7% B 12.5% 23.6% 21.0% 19.0% 19.7% 21.2% C 4.2% 4.7% 6.9% 5.2% 5.7% 4.7% Total 6.9% 11.0% 12.1% 10.0% 10.3% 10.4%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A n/a n/a $7.50 $7.50 n/a $7.50 B n/a $13.57 $13.42 $13.50 $13.62 $13.43 C n/a $11.29 $10.70 $11.00 $11.08 $10.72 Total $12.53 $12.70 $12.25 $12.49 $12.72 $12.27 Note: Numbers may not total due to rounding and / or classification errors in the CoStar Property database 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year.

Source: CoStar Property; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-25

Appendix Table B- 18: Class Detail of Richmond CBD Office Statistics

Summary Data - QTD RBA As % of Building Number of Average Rental Total RBA 1/ Total Vacancy Rate 2/ Class Buildings Rate Submarket A 13 4,567,683 42.2% 4.9% $22.63/fs B 38 4,503,641 41.6% 21.1% $15.92/fs C 41 1,753,920 16.2% 1.5% $13.04/fs Total 92 10,825,244 100.0% 11.1% $17.21/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 263,066 0 0 87,689 0 0 B 000000 C 000000 Total 263,066 0 0 87,689 0 0

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 239,927 88,563 39,687 122,726 (3,666) 0 B (142,015) 65,279 (78,171) (51,636) (26,269) (170,783) C 6,089 (3,181) (127) 927 (4,620) (1,371) Total 104,001 150,661 (38,611) 72,017 (34,555) (176,438)

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 5.8% 3.9% 3.0% 4.2% 4.0% 3.1% B 21.9% 20.0% 22.3% 21.4% 20.8% 27.2% C 1.3% 1.6% 1.6% 1.5% 2.0% 1.7% Total 11.4% 9.8% 10.2% 10.4% 10.1% 12.1%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A n/a $18.90 $23.43 $21.17 $22.96 $22.97 B n/a $15.83 $16.05 $15.94 $16.31 $15.91 C n/a $12.65 $13.08 $12.87 $12.85 $13.18 Total $16.10 $16.63 $17.14 $16.62 $17.43 $16.79 Note: Numbers may not total due to rounding and / or classification errors in the CoStar Property database 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year.

Source: CoStar Property; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-26

Appendix Table B- 19: Class Detail of Shockoe Submarket Office Statistics

Summary Data - QTD RBA As % of Building Number of Average Rental Total RBA 1/ Total Vacancy Rate 2/ Class Buildings Rate Submarket A 1 142,000 9.3% 32.7% $22.30/fs B 7 1,009,464 66.0% 1.0% dna C 27 404,732 26.5% 11.2% $13.97/fs Total 35 1,529,985 101.7% 6.6% $20.42/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 000000 B 000000 C 000000 Total 000000

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A0(67,334) (1,321) (22,885) 00 B (5,500) 12,000 12,400 6,300 13,500 0 C (2,167) (1,143) (7,049) (3,453) (8,866) (306) Total (7,667) (56,477) 4,030 (20,038) 4,634 27,694

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 0.0% 47.4% 48.3% 31.9% 47.4% 28.6% B 13.2% 7.0% 0.6% 6.9% 0.0% 0.6% C 9.6% 10.2% 13.5% 11.1% 14.3% 13.6% Total 8.3% 18.6% 17.8% 14.9% 17.7% 12.8%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A n/a $22.00 $22.30 $22.15 $22.00 $22.30 B n/a $13.83 $12.00 $12.92 $13.83 n/a C n/a $13.22 $13.85 $13.54 $13.77 $13.97 Total $20.51 $19.48 $19.95 $19.98 $19.42 $20.42 Note: Numbers may not total due to rounding and / or classification errors in the CoStar Property database 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year.

Source: CoStar Property; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-27

Appendix Table B- 20: Class Detail of City of Richmond Office Statistics

Summary Data - QTD RBA As % of Building Number of Average Rental Total RBA 1/ Total Vacancy Rate 2/ Class Buildings Rate Submarket A 26 6,009,137 25.6% 5.5% $21.36/fs B 179 10,405,042 44.3% 11.9% $15.66/fs C 718 7,096,024 30.2% 4.0% $11.98/fs Total 924 23,512,722 100.0% 7.9% $16.20/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 263,066 103,816 450,000 272,294 0 0 B 0 7,000 0 2,333 0 0 C 000000 Total 263,066 110,816 450,000 274,627 0 0

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 239,973 37,040 492,247 256,420 11,778 0 B (385,569) 229,972 113,402 (14,065) 65,463 (95,368) C 61,033 1,704 (8,998) 17,913 (16,038) 36,003 Total (84,563) 268,716 596,651 260,268 61,203 (7,132)

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 6.7% 7.7% 6.5% 7.0% 7.5% 5.6% B 14.4% 12.2% 11.1% 12.5% 11.5% 12.0% C 4.4% 4.4% 4.5% 4.5% 4.6% 4.0% Total 9.5% 8.7% 7.9% 8.7% 8.4% 7.9%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A n/a $19.40 $21.12 $20.26 $21.34 $21.13 B n/a $15.46 $15.71 $15.59 $15.85 $15.68 C n/a $11.19 $11.76 $11.48 $11.85 $12.14 Total $15.26 $15.83 $16.08 $15.72 $16.34 $16.05 Note: Numbers may not total due to rounding and / or classification errors in the CoStar Property database 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year. Source: CoStar Property; Economics Research Associates, July 2008

Economics Research Associates Project Report No. 17889 Appendix Page B-28

Appendix Table B- 21: Class Detail of Richmond Market Office Statistics

Summary Data - QTD RBA As % of Building Number of Average Rental Total RBA 1/ Total Vacancy Rate 2/ Class Buildings Rate Submarket A 157 19,025,535 34.9% 7.1% $19.39/fs B 889 22,742,518 41.7% 9.0% $15.62/fs C 1,545 12,728,141 23.3% 5.3% $12.58/fs Total 2,598 54,532,695 99.9% 7.5% $16.61/fs

Rentable Building Area Delivered, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 263,066 656,009 553,200 490,758 95,000 0 B 122,009 482,745 219,376 274,710 95,813 28,380 C 000000 Total 408,198 1,138,754 772,576 773,176 190,813 28,380

Direct Net Absorption, 2005-2007 Annual Totals /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 420,968 9,016 968,819 466,268 52,226 0 B (67,979) 498,018 593,606 341,215 480,382 (178,052) C 59,007 65,005 45,410 56,474 (29,568) (16,149) Total (6,916) 577,039 1,603,848 724,657 501,018 25,936

End of Year Direct Vacancy Rate, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A 6.2% 9.6% 7.1% 7.7% 9.8% 5.9% B 11.1% 10.9% 9.1% 10.4% 9.0% 10.1% C 6.5% 5.9% 5.5% 6.0% 6.2% 5.7% Total 8.3% 9.3% 7.6% 8.4% 8.6% 7.5%

End of Year Direct Rent, 2005-2007 /3 Through 1Q 2005 2006 2007 Avg Annual 2007 2008 A n/a $18.12 $18.66 $18.39 $18.64 $18.76 B n/a $15.28 $14.83 $15.06 $15.39 $15.25 C n/a $12.25 $12.35 $12.30 $12.32 $12.66 Total $15.72 $16.02 $16.05 $15.93 $16.24 $16.29 Note: Numbers may not total due to rounding and / or classification errors in the CoStar Property database 1/ Rentable Building Area 2/ Does not include Sublet Vacancy 3/ CoStar has Richmond office market data onward from 2Q 2005. Therefore, 2005 is not a complete year.

Source: CoStar Property; Economics Research Associates, July 2008

REIS covers less area in its metro market than does CoStar, but provides a longer period of time in its data. REIS’s market area extends from approximately I-95 in the east, Route 288 in the west and south, and I-295 in the north. CoStar’s boundaries extend west beyond US Highway 522, as far south as to include Petersburg and Prince George County, east to five miles east of I-295, and north to beyond Ashland.

REIS’s data on the overall metro area performance indicated that in the first quarter of 2008, there were 22.45 million square feet of office space in the metro area, with a vacancy rate of 10.3 percent,

Economics Research Associates Project Report No. 17889 Appendix Page B-29

a 0.5 percent improvement over the previous quarter. Average asking rents were $18.56, a 0.4 percent increase over the fourth quarter of 2007. Overall absorption in the metro averaged approximately 130,000 square feet annually between 2003 and 2007. Rents have steadily and modestly increased, as has inventory. The overall vacancy rate has generally hovered in the 9-11 percent range.

Office Demand Summary

The need for new workplace uses is determined by increases in employment—in other words, users of that space—and by the relative attractiveness of the area as a workplace destination, as determined by historic trends in office real estate performance and share of employment growth.

As seen in the employment projections made by the Virginia Labor Market Statistics data noted above, the greater Richmond area is expected to add approximately 83,000 jobs by 2014 (from the projections’ base year of 2004). The industry with the largest share of this growth (19 percent) is healthcare and social assistance. Twelve percent of the growth is expected to be in Professional, Scientific, and Technical services.

Because the Commonwealth does not make projections available by County/City, ERA relied upon data reported by Woods and Poole’s projections, as outlined in . Not all industries use office space equally. ERA accounts for this disparity in the analysis by applying average percentages of office users by industry to projected increases in employment. For example, FIRE, Services, and Government are particularly heavy users of office space. In the Woods and Poole projections, the City is projected to lose employment in FIRE industries but gain in Services and Government. However, these gains and losses essentially net each other out, creating little demand for new office space

In determining office space demand, it is also useful to consider the historic performance of the market as an indicator of future performance, particularly for average annual absorption of space. Over the past three years, according to data from CoStar, the City had an average annual absorption of just over 430,000 square feet. However, given the short time span covered by the data (the only full years were 2006 and 2007—counting the available period of 2005 yields an average absorption of 260,000 square feet), it is not as reliable for longer-term projections. (For example, information from REIS says that there was a total average absorption for the part of the metro area they cover of 130,000 square feet between 2003 and 2007).

Economics Research Associates Project Report No. 17889 Appendix Page B-30

Based upon the available data, as well as information from those knowledgeable in local real estate conditions, development of office in the City is likely to be limited to rehabilitation/replacement of existing office space or dependent upon the attraction of specific users. In other words, much of the space will not be speculative development, but built for pre-leased tenants or build-to-suit single tenants.

Retail Demand Overview Regional Supply and Market Performance

The majority of larger shopping centers with national tenants in the Richmond Market are located outside of the City. Of the nearly 12 million square feet of retail in Power Centers, Lifestyle Centers, and Regional and Super-Regional Malls, only 1 million are in the City (Stony Point Fashion Park and The Shops at Stratford Hills), as seen in . This means that City residents are spending the majority of their retail expenditures outside of the City. A leakage analysis of City Census Tracts suggests that the city is losing an estimated $21.5 million in retail sales to the surrounding Counties.

Figure B- 7: Regional Retail Space by Jurisdiction

Colonial Hghts Cty Petersburg 894,544 300,000 Richmond City 1,092,187

Henrico 5,189,548

Chesterfield 4,455,518

Source: CoStar; Economics Research Associates, July 2008.

Economics Research Associates Project Report No. 17889 Appendix Page B-31

Figure B- 8: Retail Sales Leakage/Surplus Comparison, City of Richmond and Henrico County

$350

$300 $285

$250

$200

$150

$100

$50

$0 Richmond Henrico Co Sales Leakage (-) /Surplus (+) (Millions) Leakage (-) /Surplus Sales ($50) ($21)

Note: Food and Beverage are not included in the analysis.

Source: University of Wisconsin-Milwaukee Employment and Training Institute, 2005 (with data from 2000 Census data, the 2002 Bureau of Labor Statistics Consumer Expenditure Survey; and the U.S. Census 2000 Place-of-Work Census Transportation Planning Package (CTPP) tabulations released in 2005); Economics Research Associates, July 2008.

Within the City boundaries, the primary retail areas are the Stony Point Fashion Park, Carytown, and West Broad Street. Stony Point Fashion Park, which as the name suggests, is apparel and accessories focused. The anchors of the 368,000 square foot center are Saks Fifth Avenue, Dicks Sporting Goods, and Dillards, with a full complement of higher end in-line fashion tenants. Carytown is a specialty shopping and dining destination, with a neighborhood-serving community center. West Broad Street is the location of the Shops at Stratford Hills, and is a traditional auto-oriented retail and service strip, located within reach of the Boulevard Site.

Outside of the City, the primary retail destinations are Short Pump, Mechanicsville, Midlothian and along Brook Road. Many properties are being redeveloped to meet additional demand, including the former Cloverleaf Mall in Chesterfield and the former Beaufont Mall. That property is planned to be redeveloped as a mixed-use project called Spring Rock Green. Another planned development is the Westchester Commons at Wakins Centre, which will also be a mixed use center with approximately one million square feet of retail. Specialty grocer Whole Foods will be entering the Richmond Market

Economics Research Associates Project Report No. 17889 Appendix Page B-32

at a development near Short Pump planned to open this fall. Overall, the market has approximately 3.5 million square feet under construction in the first quarter of 2008.

There is in all 62.5 million square feet of retail inventory in the Richmond Market in 5,209 buildings. The overall vacancy rate in the first quarter of 2008 was 6.1 percent and the average rent was $14.88 per square foot. The overall market had a negative absorption of 25,000 square feet during the same period.

The Boulevard Site is in the Near West End submarket, which has a total of 3.9 million square feet of retail. The vacancy rate in this area was a low 2.5 percent and the absorption was a positive 6,730. The average rental rate was $19.07.

A major development in the general area of the Boulevard site is the Bow Tie Theater project— known as Boulevard Square—and scheduled to open in early 2009. Construction is underway at the site at the corner of Boulevard and Leigh, and includes the redevelopment of two historic structures, a former locomotive assembly plant and former brass foundry. Plans are for the total of 57,000 square feet of renovated space to include a Bow Tie Cinema and a restaurant. Boulevard Square also features 12,000 square feet of new construction, intended for additional dining, entertainment, or specialty retail users.

The Shockoe Site is narrowly included in the East End retail submarket, which is adjacent to downtown and extends east to State Highway 158. This submarket reportedly has 3.3 million square feet of retail in 441 buildings. It also had a fairly low vacancy rate of 4.5 percent and rents of $12.75 per square foot. Nearly one million square feet of new space is currently under construction in this area. The neighboring Downtown Submarket has an inventory of nearly four million square feet in 437 buildings and slightly higher rents of $13.35.

Economics Research Associates Project Report No. 17889 Appendix Page B-33

Highest and Best Use Recommendations Shockoe Bottom Project Site

Davenport and Company tasked ERA with analyzing the potential and implications of development for the area in Shockoe Bottom extending from I-95 in the west to as far as Leigh Street in the North, including the parcels seen in . This is the area surrounding the Main Street Station. ERA based this analysis of demand potential on a program provided by the City of Richmond Office of Economic Development.

Figure B- 9: Shockoe Bottom Area of Analysis

Source: City of Richmond; ESRI; Economics Research Associates, July 2008.

The programmatic guidelines proposed by the City of Richmond for ERA’s consideration included: Civic/Cultural uses such as an 8,000-seat proposed stadium, a Slave Trail visitor center in the Seaboard Building west of the Main Street Station, and the Greater Richmond Transit bus transfer station in the train shed; retail and office space; and residences. Using these programmatic guidelines, ERA proposed a more specific program based upon our current market assessment and

Economics Research Associates Project Report No. 17889 Appendix Page B-34

previous experience in the market, shown in the table below. The potential uses for office, retail, and residential will be explained in more detail below.

Appendix Table B- 22: Shockoe Bottom Development Program

Percent of Square Feet Total

Civic / Cultural Uses Richmond Baseball Stadium (8,000 Seats) 300,000 97% Sea Board Building - Slave Trail Visitor Center 8,500 3% Total 308,500 100%

Retail Grocery/Specialty Foods 16,250 25% Restaurant / Food Service 26,000 40% Neighborhood Services / Drugstore / Other 22,750 35% Total 65,000 100%

Office Small Format Professional Office Space Users 20,000 29% Built to Suit 50,000 71% Total 70,000 100%

Multifamily Residential Units For Sale - Condos 200,000 200 Rental Units 450,000 450 Total 650,000 650

Percent of Parking Spaces Total Decked 2,255 100% Surface 0 0% Total 2,255 100%

Total Development 1,093,500 Source: Economics Research Associates, 2008.

Economics Research Associates Project Report No. 17889 Appendix Page B-35

Residential

After examining the overall market for residential product within the City (see page 18), ERA determined the potential capture rates for residential development on-site. Because of the size and breadth of the existing rental market in Richmond City, ERA estimates that only a small portion of demand can be potentially captured on site. Unlike new home buyers, who may have strong preference for a newly constructed home, renters are less likely to consider the newness of a building when searching for a unit; ERA estimates that generally 65 percent of the potential rental market will locate in an existing building.

ERA estimates that the site can potentially capture 5 to 10 percent of the potential market, dependent on tapestry segment. For rental housing this would be further reduced by 65 percent to account for persons with no general preference for newly constructed units and who would locate in an existing apartment unit in Richmond City. Capture rates, informed by ERA’s professional expertise, are derived through a careful consideration of the psychographic qualities of each market segment and of the local housing market. Capture rates are estimated to fall between 5 and 15 percent dependent on market segment.

Appendix Table B- 23: Project Capture by Tapestry Segment by Unit Type Apartments Condominiums Town Homes L1 High Society 5% 15% 5% L2 Upscale Avenues 5% 15% 5% L3 Metropolis 10% 10% 15% L4 Solo Acts 15% 10% 15% L5 Senior Styles 10% 15% 5% Scholars & L6 Patriots 5% 5% 5% L7 High Hopes 5% 5% 5% L8 Global Roots 15% 5% 5% L9 Family Portrait 10% 5% 15% Traditional L10 Living 5% 5% 15% Factories & L11 Farms 5% 5% 5% L12 American Quilt 5% 5% 5% Source: Economics Research Associates, 2008.

ERA applied these capture rates to the total demand estimates in order to estimate on-site demand. The housing preference of each tapestry segment was filtered based on the number of rooms in

Economics Research Associates Project Report No. 17889 Appendix Page B-36

rental units and market position of for-sale units. Lower-market units would be those offered below market rate and are not analyzed here. Annual on-site demand is presented as a range.

Appendix Table B- 24: Estimated On-Site Demand by Tapestry Segment by Unit Type

Annual On-Site Tapestry Segment Demand L1 L2 L3 L4 L5 L6 L7 L8 L9 L10 L11 L12 Low High Apartments 213 245 Studio 0.1 0.4 4.1 55.8 8.7 1.8 0.2 4.6 0.0 0.0 0.0 0.0 76 87 1-Bedroom 0.1 0.4 4.1 55.8 7.0 1.8 0.4 6.9 10.7 0.7 0.0 0.0 88 101 2-Bedroom 0.1 0.2 4.1 0.0 1.7 0.9 0.2 4.6 7.1 0.5 0.0 0.0 19 22 3+ Bedroom 0.0 0.0 4.1 0.0 0.0 0.0 0.4 6.9 17.8 1.2 0.1 0.0 30 35

Condominiums 19 24 Mid-Market 0.1 0.3 1.2 7.3 1.7 0.1 0.1 0.6 0.5 0.3 0.0 0.0 11 14 Upper-Market 0.4 0.9 1.2 4.9 0.7 0.1 0.0 0.1 0.1 0.1 0.0 0.0 8 10

Town Homes 22 29 Mid-Market 0.1 0.2 3.5 4.0 0.4 0.1 0.1 0.3 3.1 2.7 0.0 0.0 14 18 Upper-Market 0.4 0.5 3.5 2.7 0.2 0.1 0.1 0.1 0.8 0.7 0.0 0.0 811 Source: Economics Research Associates, 2008. Note: Figures may not add due to rounding.

On-site housing demand will be primarily for rental units, reflecting a citywide general preference toward renting (In 2007, 48 percent of housing units were rental). Rental demand is estimated at 213 to 230 units per year; studio units will account for 36 percent of demand, 1-bedrooms about 41 percent, 2-bedrooms 8.9 percent, and 3-bedrooms 14 percent. Three bedroom units are recommended primarily to accommodate persons from the family-oriented lifestyle segments who will have larger than typical space needs to accommodate growing families. Condominium demand is estimated at 19 to 24 units per year; mid-market units will account for about 60 percent of demand and upper-market units will account for the remaining 40 percent. Town home demand is estimated at 22 to 29 units annually; mid-market units will account for 64 percent of demand and upper-market unit will account for the remaining 36 percent. The development range presents on the lower end likely absorption during project ramp-up, this could include years during the development phase in which units are pre-sold and pre-leased, while the higher end of the range represents likely absorption as the project gains exposure and time on the market.

Economics Research Associates Project Report No. 17889 Appendix Page B-37

Development Program Considerations and Recommendations

ERA examined the characteristics of the local rental and for-sale housing markets in order to make recommendations on unit size and pricing. The suggested unit sizing and pricing would position the project in the upper end of the market. Unit recommendations are slightly larger than the average for existing stock, and pricing recommendations reflect a considerable new-construction premium.

Appendix Table B- 25: Unit Size and Pricing Recommendations Price/Rent Unit Size PSF Price/Rent per Unit Low High Low High Low High Apartments 1/ Studio 470 580 $1.50 $1.58 $710 $910 1-Bedroom 670 750 $1.20 $1.29 $800 $970 2-Bedroom 890 990 $1.15 $1.24 $1,020 $1,220 3+ Bedroom 1,210 1,510 $1.05 $1.16 $1,270 $1,740

Condominiums Mid-Market 850 1,060 $200 $230 $170,000 $243,800 Upper- Market 1,250 1,560 $300 $375 $375,000 $585,000

Town Homes Mid-Market 1,670 2,130 $113 $138 $187,900 $292,900 Upper- Market 2,250 2,590 $149 $182 $334,100 $470,100 Source: Economics Research Associates, 2008.

The City’s guidance on potential uses for the Shockoe Site included a high-rise residential tower. Given feasibility considerations in this type of development, ERA examined a potential “break even analysis” for a potential development, using a pro-forma analysis and several key assumptions. At initial face value, based on experience, rising costs of construction (due to the cost of steel and oil, as well as labor) make rents per square foot of at least $2 per square foot necessary to support high rise construction. High rise construction requires more earthwork, support, and more expensive materials, making construction costs more expensive. They are also typically more expensive from an operational basis, due to HVAC and other issues.

To further test the financial feasibility of a high-rise residential structure in Richmond, ERA ran a pro- forma analysis on constructing a 450-unit building, financed for 30 years at 6.5 percent interest and valued with a 10 percent capitalization rate. Assuming construction costs for a high rise apartment

Economics Research Associates Project Report No. 17889 Appendix Page B-38

building in Richmond would be approximately $228 per square foot and the high end of current market-supportable rents, the resulting internal rate of return (IRR) on the project would be percent, a value typically below the IRR needed for a developer to acquire financing.

Because of this, ERA proceeded to consider development of up to seven story projects at the Shockoe Site. Based on the demand analysis and pricing/development considerations, ERA recommends 750 multifamily rental units and 200 for-sale condominiums. Depending on configuration, the rental apartment development, at a height of approximately 6 to 7 stories would take up approximately two square blocks, with retail at the ground floor level to continue the general feel of the Shockoe Bottom neighborhood. Based upon the market performance, units would be priced between $1.05 and $1.58 per square foot depending on the size of the unit, as shown in the table above.

The condominium project of 200 units would also require approximately 1-2 square blocks at a height of six stories with ground floor retail. Based on the pricing above, to be competitive, these units should be priced between the high $100,000s and low $300,000s—or an average per square foot price of $200-$300. Based upon recent sales information in the City, ERA believes the project could achieve an average monthly absorption of 1-3 units per month.

Office

ERA’s prior office demand analysis conducted for the Main Street Station highest and best use analysis called for 120,000 square feet of office space. Based upon the above analysis of the overall office market and demand for office space in the region, ERA recommends office development in the Shockoe Bottom area focus on small format professional office space. This type of space— totaling 20,000 square feet—can be in refurbished space, such as at the Seaboard Building, or in newly built space over retail. In addition, land could also be held for the potential construction of additional space, totaling approximately 50,000 square feet, for build-to-suit tenants, or for when the speculative market for office space recovers.

Retail

The Shockoe Bottom area is emerging as a location for specialty retail and restaurant space. Along Main Street, there are several eateries including Café Gutenberg, Pearl Martini Lounge, Cobblestone Bakery and Café, Sumo San, and others.

Economics Research Associates Project Report No. 17889 Appendix Page B-39

Because of the configuration of the space and the existing surrounding uses, large scale retail would not be desirable in this location. However, neighborhood-serving retail and additional destination restaurants will reinforce the existing neighborhood retail (including the farmers’ market) as well as serve the residents and potential future visitors to the cultural/civic uses. ERA proposes that of the 60,000 square feet of proposed retail, 15,000 be devoted to a small-scale grocer/specialty food store, 15,000 to a drugstore or other neighborhood services, 21,000 to eating and drinking establishments, and 9,000 for retail/food service within the stadium.

Diamond Site Highest and Best Use Recommendations

The Boulevard Site is located in an existing light industrial area, adjacent to an exit of I-95/64, and nestled between stable, relatively affluent neighborhoods to the northeast and a transitioning former industrial area to the southwest. The site is also within access to the Downtown and to neighboring Henrico County.

Based on ERA’s assessment of the market and the site’s location and surrounding uses, ERA made a quantitative and qualitative assessment of possible uses. The site is not presently positioned for residential development. The surrounding light industrial uses are not currently compatible for on-site residential development. Furthermore, there are neighborhoods with the potential for rehabilitation of historic buildings and for smaller-scale infill residential development.

Likewise, as illustrated in the previous section, there is little demand for office space in the City of Richmond. The areas most desirable for office space are in the suburban office parks where there is ample free parking (such as Innsbrook) and in Downtown and the surrounding area. The area around the Boulevard site is unproven as an office location, and is unlikely to attract many users for a speculative office project. The one exception would be very limited service office space, in conjunction with retail (such as a real estate office, tax preparation services, or doctors’ offices).

Because of the site’s size and location, as well as the City’s desire to enhance the property’s productivity in terms of tax revenues, the site would be ideal for a retail center with room for further development later when demand presents itself. To determine if there would be market support for this use, ERA approached the question from two angles, analyzing both the demand potential within the market and the market penetration necessary to achieve an optimal mix.

To examine the demand potential for the site, ERA drew probable trade areas for two kinds of retail: convenience and comparative. The ability of any retailer or shopping center to attract customers

Economics Research Associates Project Report No. 17889 Appendix Page B-40

relies on a variety of factors including geography, competition, geographic and topographic considerations, demographics and other non-quantifiable characteristics of customer behavior. These affect the retail trade area, or the area from which most of the customers will come to a shopping center or retail area.

Convenience retail and restaurants rely on an easily accessible customer base and include stores such as supermarkets, drug stores, and limited service restaurants2. These stores benefit from proximity to their customers. For example, shoppers looking for groceries, except in special instances, will typically go to the closest store, or the one that is “on the way” from work to home. The trade area of convenience retail is often smaller than it is for comparative stores and restaurants which include department stores, apparel stores, hobby, book and music stores, full-service restaurants, etc.3 These stores need a critical mass of similar retail to be able to draw from a wider trade area. Often, many shopping centers cluster together to benefit from proximity to each others’ customers and the ability to draw customers from further distances,—such as a large regional mall with nearby power centers. These types of retailers benefit from economies of agglomeration by drawing additional customers for each other. As an example, if someone is shopping for furniture, they will go to the area where there are several furniture stores to choose from.

Convenience Trade Areas

ERA examined the geographical location of the area’s major convenience retail supply to draw a reasonable trade area for potential site customers. The closest supermarket is the Kroger at Broad and Lombardy Streets, which is approximately a three-minute drive away. Because of the distribution of supply, the Boulevard Site’s primary trade area would be a three-minute drive time around the site. The secondary trade area would be a five-minute drive (See ). In this area, there are an additional three supermarkets: the Ukrops and Kroger on West Cary Street, a Kroger and Food Lion on West Broad Street, and a Ukrops and Food Lion to the Northwest on Route 1.

2 Limited Service Restaurants are restaurants where patrons pay for their food before eating it and typically do not have table service. These include fast food restaurants and cafes. 3 Full-Service restaurants are restaurants where patrons receive table service and pay for their meal after eating it. These include white tablecloth restaurants as well as casual dining restaurants.

Economics Research Associates Project Report No. 17889 Appendix Page B-41

Figure B- 10: Boulevard Site Convenience Retail Trade Areas

ERA used ESRI household expenditure by category data and data from the Economic Census on retail category spending by store type to estimate household expenditures by store type for several store types, including Supermarkets/Grocery Stores, Drugstores, and Limited Service Restaurants. In the 3-minute drive around the Boulevard Site, there are approximately 10,000 households, and on average, they would spend $6,302 annually in these store categories. In the 3 to 5 minute drive, there are an additional 22,400 households and these households spend an average of just under $6,000 annually in these stores.

In addition to the residents of these trade areas, ERA considered employees within a half-mile of the Site. The number was estimated using the U.S. Census’s Longitudinal Employer-Household Dynamics data, which ERA rounded to 5,000 and extrapolated to 5,600 for 2012. Using data collected by the International Council of Shopping Centers on Office Worker Retail Spending Patterns, ERA estimated what typical area workers would spend by category.

Economics Research Associates Project Report No. 17889 Appendix Page B-42

Part of the retail demand analysis is deciding what a reasonable capture rate would be for each store type of the available expenditures. This capture rate is dependant on other competition, the competitiveness of the completed project, and other factors. Because of the convenience of this site, and assuming the project would offer a higher quality product than is currently available to many of the trade area customers, ERA relied upon the capture rates seen in for Convenience Retail at the Boulevard Site.

Appendix Table B- 26: Boulevard Site Retail Market Characteristics and Capture Rates

Primary Trade Secondary Employees Area Trade Area Definition Employees 3-min drive 5-min drive w/in 1/2 mi (net of 3-min) Number 5,600 10,054 22,422

Annual Convenience Stores/Restaurants Retail Spending (Per Employee or HH) $ 1,549 $ 6,302 $ 5,992

Primary Trade Secondary Capture Rates Employees Area Trade Area Food & beverage stores 15% 30% 10% Health & personal care stores 15% 30% 10% Limited Service Restaurants 25% 11% 3% Source: US Census Bureau Longitudinal Employer-Household Dynamics, 2004; ESRI, 2007; Economics Research Associates, July 2008.

Comparative Trade Areas

To determine the range of demand for comparative retail store categories, ERA mapped the major shopping centers as well as the location of major comparative retailers and drew a polygon that took into account the existence of competitive retail clusters, transportation networks, and distance. The primary market area approximates between a 5 and 10-minute drive, as shown on the map in . The secondary market area is a 10-minute drive from the subject site. Competitive retail clusters are located northwest of the site at the Shops at Stratford Square (Target, Barnes and Noble, and Others) and further out, at the cluster near Short Pump. To the northeast, there is a Wal-Mart Supercenter as well as other retail concentrated at the Virginia Center Commons. To the southwest, across the James River, there is the Stony Point Fashion Park and a Wal-Mart Supercenter and Target. The primary trade area does not intersect with any of these centers.

Economics Research Associates Project Report No. 17889 Appendix Page B-43

Figure B- 11: Boulevard Site Comparative Retail Trade Areas

Within the primary trade area, there are approximately 48,000 households, and these households spend on average $9,200 in the defined store categories. In the secondary trade area, net of the primary, there are an additional 54,000 households that spend an average of $9,600 in the same store categories.

Again, employee spending will also be considered. Employees spend an average of $1,100 annually, with the majority of that spending being on full-service restaurants for lunches and dinners. A project on the Site would also be more likely to capture more of these expenditures, as is reflected in the capture rates in . [Note that the spending of employees living within the trade areas been removed from Trade Area spending to avoid double counting. According to Census data, approximately 12 percent live within the primary comparative trade area and another 11 in the secondary comparative

Economics Research Associates Project Report No. 17889 Appendix Page B-44

trade area; 3 percent live within the primary convenience trade area and another 7 percent in the secondary convenience trade area].

Appendix Table B- 27: Boulevard Site Comparative Retail Market Characteristics and Capture Rates

Primary Trade Secondary Employees Area Trade Area Definition Employees Drawn area, 10-min drive w/in 1/2 mi approx. 5-10 net of Primary min drive TA Number 5,600 47,880 54,420

Annual Comparative Stores/Restaurants Retail Spending (Per Employee or HH) $ 1,111 $ 9,243 $ 9,634

Primary Trade Secondary Capture Rates Employees Area Trade Area Shoppers Goods 15% 24% 6% Full-Service Restaurants 25% 12% 2% Source: US Census Bureau Longitudinal Employer-Household Dynamics, 2004; ESRI, 2007; Economics Research Associates, July 2008.

Supportable Retail Space

Using the capture rates in the previous section, the Site could capture the total sales shown in the first column of . This includes $26.7 million in Convenience Stores, $114.4 million in Shoppers Goods stores, and $16.9 in restaurants.

To these captured expenditures, ERA added an inflow factor. This accounts for pass-through traffic, visitors, and shoppers who do not live within the trade areas and results in the total spending in the third column of .

Economics Research Associates Project Report No. 17889 Appendix Page B-45

Appendix Table B- 28: Boulevard Site Captured Retail Spending

2012 Captured Total Potential Spending from Inflow Captured All Markets Factor Spending Convenience Food & beverage stores $ 22,940,268 2%$ 23,399,074 Health & personal care stores $ 3,735,613 2%$ 3,810,325 $ 26,675,882 2%$ 27,209,399 Shoppers Goods $ 114,370,305 2%$ 116,657,711 General merchandise stores $ 54,298,176 2%$ 55,384,139 Clothing & clothing accessories stores $ 31,951,978 2%$ 32,591,018 Sporting goods, hobby, book, & music stores $ 7,190,842 2%$ 7,334,659 Furniture & home furnishings stores $ 7,352,925 2%$ 7,499,983 Electronics & appliance stores $ 9,587,238 2%$ 9,778,983 Miscellaneous store retailers $ 3,989,147 2%$ 4,068,930 $ 114,370,305 2%$ 116,657,711 Eating and Drinking Full-Service $ 11,437,991 2%$ 11,666,751 Limited-Service $ 5,434,387 6%$ 5,760,451 $ 16,872,379 3%$ 17,427,202 Source: Economics Research Associates, 2008

To estimate the square footage of stores supported by the captured sales, ERA used typical per square foot productivity rates (expressed as sales per square foot). The productivity rates can vary greatly by size of store, type of store and type of merchandise lines sold, and other business factors. ERA estimated these productivity rates using a combination of data published in the Urban Land Institute’s Dollars and Cents of Shopping Centers as well as specific retailers’ productivity rates as reported by the U.S. Business Reporter.

The resulting potential is for a 52,000 to 58,000 square foot supermarket, a 6,000 to 10,000 square foot drugstore, a large general merchandise store (such as Target), other “big box” and in-line shoppers goods stores totaling 200,000-250,000 square feet (such as a Bed, Bath, & Beyond, Marshalls, etc), and 33,000-39,000 square feet in restaurants. Larger national full-service restaurants are between 5,000 and 10,000 square feet (for example, the average size of a Ruby Tuesday’s is 5,000 square feet) while limited service and independent restaurants can be as small as 1,000 square feet.

Economics Research Associates Project Report No. 17889 Appendix Page B-46

Appendix Table B- 29: Boulevard Site Total Supportable Retail Square Feet by Store Type

Productivity Square Feet 2012

Total Potential Sales Low High Low High Convenience Food & beverage stores $ 23,399,074 $ 400 $ 450 52,000 58,000 Health & personal care stores $ 3,810,325 $ 400 $ 600 6,000 10,000 $ 27,209,399 $ 400 $ 469 58,000 68,000 Shoppers Goods General merchandise stores $ 55,384,139 $ 275 $ 300 185,000 201,000 Clothing & clothing accessories stores $ 32,591,018 $ 200 $ 250 130,000 163,000 Sporting goods, hobby, book, & music stores $ 7,334,659 $ 200 $ 250 29,000 37,000 Furniture & home furnishings stores $ 7,499,983 $ 275 $ 325 23,000 27,000 Electronics & appliance stores $ 9,778,983 $ 750 $ 875 11,000 13,000 Miscellaneous store retailers $ 4,068,930 $ 250 $ 300 14,000 16,000 $ 116,657,711 $ 255 $ 298 392,000 457,000 Eating and Drinking Full-Service $ 11,666,751 $ 475 $ 550 21,000 25,000 Limited-Service $ 5,760,451 $ 400 $ 500 12,000 14,000 $ 17,427,202 $ 447 $ 528 33,000 39,000 $ 161,294,312 $ 286 $ 334 483,000 564,000 Source: Economics Research Associates, 2008

Retail Center Market Penetration

Approaching the question of market supportability of a retail center at the Boulevard Site from the other direction, ERA evaluated the necessary market penetration based on a hypothetical list of specific tenants that could be tenants of the center. Using the published information on these retailers’ sales per store, ERA assumed that the comparative stores would receive 60 percent of their sales from the primary trade area and 40 percent from the secondary trade area and that the convenience stores would receive 70 percent of their sales from the primary trade area and 30 percent from the secondary trade area. (It is important to remember that these are average per-store sales: certain stores gross more and certain gross less.)

After determining the per-store sales necessary from each trade area for each store, ERA added these amounts and divided by the total area retail expenditures in the trade areas. Though the individual store’s market penetration would vary, overall, the hypothetical center would require 16 percent of primary trade area sales and 7 percent of secondary trade area sales (again, this is net of the primary trade area). This is a reasonable expectation for a center of this size.

Economics Research Associates Project Report No. 17889 Appendix Page B-47

Appendix Table B- 30: Market Penetration of Hypothetical Shopping Center Tenants

Market Avg. Avg. Per-Store Representative Retailers SF/Store Sales Primary Secondary

Comparative 60% 40% Shoppers Goods Department Store 60% 40% Target 123,720 $33,232,773 $19,939,664 $13,293,109 Apparel 60% 40% Stein Mart 37,500 $5,205,875 $3,123,525 $2,082,350 Lane Bryant 6,090 $1,550,062 $930,037 $620,025 DSW 23,716 $5,427,084 $3,256,250 $2,170,834 Kohls 75,230 $17,732,759 $10,639,655 $7,093,104 AJ Wright 25,674 $4,904,651 $2,942,791 $1,961,860 Famous Footwear 3,730 $1,436,459 $861,875 $574,584 171,940 $36,256,890 $21,754,134 $14,502,756 Sporting Goods, Hobby, Books & Music 60% 40% Dick's Sporting Goods 48,581 $8,959,497 $5,375,698 $3,583,799 Home Furnishings 60% 40% Bed Bath & Beyond 31,082 $7,259,466 $4,355,680 $2,903,786 Full-Service Restaurants 60% 40% Ruby Tuesdays5 ,000$2,051,712 $1,231,027 $820,685 California Pizza Kitchen 5,400 $3,279,191 $1,967,515 $1,311,676 Red Robin 6,226 $3,002,128 $1,801,277 $1,200,851 $4,999,819 $3,333,212

Convenience 70% 30% Food & Beverage Stores 70% 30% Harris Teeter 46,197 $20,118,292 $14,082,804 $6,035,488 Drugstore 70% 30% Walgreens 13,246 $8,964,815 $6,275,371 $2,689,445 Limited Service Restaurants 70% 30% Panera 4,600 $1,786,231 $1,250,362 $535,869 Chipolte 2,650 $1,541,259 $1,078,881 $462,378 $2,329,243 $998,247

458,642 $126,452,254 $79,112,412 $47,339,842 / Total Available Market Expenditures $505,926,879 $659,790,266 Market Penetration 16% 7% Source: U.S. Business Reporter; ESRI; Economics Research Associates, July 2008. Based on the results of the two analyses of retail potential at the Boulevard Site, ERA recommends a community shopping center of between 350,000 and 500,000 square feet, with a combination of a major general retailer/department store, a high quality supermarket, and other retailers and restaurants including apparel stores, home goods stores, restaurants, and a drug store. The design and configuration of the development should maintain the urban quality desired by the City, so that the development assists in redefining the site. This includes maintaining a delicate balance between assuring retailer visibility (particularly from I-95) and presenting a good “street face” to adjacent uses and neighborhoods. Initially, for development economics, the development will use surface parking, but be configured in such a way that the site may be redeveloped or that the parking may be redeveloped as demand for additional uses presents itself.

Economics Research Associates Project Report No. 17889 Appendix Page B-48

Appendix C: Chmura Economic Impact Report

Economics Research Associates Project Report No. 17889 Appendix Page C-1 DRAFT September 5, 2008

Economic Impact of Baseball Stadium Redevelopment on the City of Richmond

Davenport & Company, LLC One James Center Prepared 901 East Cary Street, 11th Floor

for Richmond, Virginia 23219

Table of Contents

1. Executive Summary ...... 3 2. Background ...... 5 3. Methodology ...... 7 4. Economic Impact of the Boulevard Option (Scenario A) ...... 9 4.1. One-time Economic Impact of Boulevard Site Development ...... 9 4.2. Economic Impact of Stadium Operations ...... 11 4.3. Economic Impact of Associated Development ...... 12 4.4. Summary of the Economic Impact of the Boulevard Option ...... 13 5. Economic Impact of the Shockoe Option (Scenario B) ...... 14 5.1. Economic Impact of Construction of the Shockoe Site Option ...... 14 5.2. Economic Impact of Stadium Operations ...... 16 5.3. Economic Impact of Development of the Shockoe Option ...... 16 5.4. Economic Impact Summary of the Shockoe Option ...... 18 6. Additional City Tax Revenue from the Ripple Impact ...... 19 7. Conclusion ...... 20 Appendix 1: Impact Study Glossary ...... 21

2

1. Executive Summary The announcement that the Richmond Braves will be moving to Georgia after the 2008 season presents the city of Richmond with a unique opportunity to reevaluate its relationship with baseball. This study provides the economic impact of two basic alternatives:

1. Rebuild the stadium at the current Boulevard site, or 2. Move the baseball stadium to the Shockoe area in downtown Richmond and redevelop the Boulevard site with commercial and/or residential use.1

If the stadium is rebuilt at the current Boulevard site (Scenario A), the stadium and other new development onsite can directly sustain an estimated 693 jobs and contribute $94.7 million annually to the economy of the city of Richmond. In addition, 103 jobs and $15.2 million in economic impact are expected to be generated elsewhere in the city (See Table 1.1). The ripple economic impact will bring in $0.1 million in tax revenue to the city in the forms of sales, meal, lodging, and business/professional/ occupation licenses (BPOL) taxes. If the stadium is moved to a Shockoe site (Scenario B), the direct economic impact is $195.2 million a year and 1,299 jobs, with the ripple economic impact amounting to $46.6 million and 318 additional jobs for businesses in the city. These ripple effects will bring in $0.2 million annually in tax revenue to the city in the form of sales, meal, lodging, and BPOL taxes.

Table 1.1: City of Richmond Economic Impact Summary of a New Baseball Stadium Scenario A: Scenario B: Boulevard Site Shockoe Site Direct Ripple Direct Ripple One-Time Construction Impact Spending ($Million) $173.3 $70.8 $350.8 $138.3 Employment 1,638 588 3,107 1,157 Payroll ($Million) $70.4 $28.7 $132.5 $52.3 Annual Ongoing Economic Impact Stadium Operations Spending ($Million) $2.2 $0.4 $2.2 $0.4 Employment 48 7 48 7 Payroll ($Million) $1.1 $0.2 $1.1 $0.2 Associated Development Spending ($Million) $92.5 $15.2 $195.2 $46.2 Employment 646 103 1,299 318 Payroll ($Million) $37.3 $6.1 $79.0 $18.7 Total Ongoing Impact Spending ($Million) $94.7 $15.6 $197.4 $46.6 Employment 693 110 1,347 324 Payroll ($Million) $38.4 $6.3 $80.1 $18.9 City Tax Revenue ($Million) * $0.1 * $0.2 * The direct tax revenue is estimated by Economic Research Associates (ERA) Source: Chmura Economics & Analytics

1 Under each option, several scenarios are considered in terms of parking and storm water management. Working with Davenport Company and Economic Research Associates (ERA), Chmura Economics & Analytics (Chmura) evaluated the economic impact of those options

3

In addition, the construction of the baseball stadium and associated commercial and residential properties bring a one-time boost to the city of Richmond in spending and job creation. The construction of the new stadium and other commercial buildings at the Boulevard site directly brings in $173.3 million during the construction phase with a ripple impact of $70.8 million. Job creation totals 2,226 during the construction phase including both direct and indirect impact. The construction impact is larger at the Shockoe site ($350.8 million in direct impact along with $138.3 in indirect impact) because this estimate includes the redevelopment of the Boulevard site to commercial and residential uses. An estimated 4,264 jobs are associated with the direct and indirect spending during the construction phase at the Shockoe site.

4

2. Background Baseball has a long history in Richmond, Virginia. It was introduced to the city soon after the Civil War with the first professional game in 1884.2 Over the years, many professional teams in different leagues have called Richmond home. The current professional baseball team, the Richmond Braves, moved to Richmond from Atlanta in 1966. The Richmond Braves, a Triple-A minor league baseball team, is affiliated with the Atlanta Braves.

The Richmond Braves played in Parker Fields from 1966 to 1985. A stadium was completed at that site in 1985 and was named the Richmond Diamond, where the Braves have since been playing. In January 2008, however, the Richmond Braves announced that they were relocating to Gwinnett County, Georgia (a suburb of Atlanta) after the 2008 season.

The move of the Braves to Georgia presents a unique opportunity for the city of Richmond to reevaluate its options for baseball. Currently, the Diamond is located on North Boulevard off Interstate-95. The Diamond has a capacity of about 12,000 seats.3 After more than 20 years in service, however, the Diamond is in need of an overhaul. With the recent success in other parts of the country for urban minor league team ballparks,4 proposals have been made for building a new, smaller baseball stadium in the Shockoe Bottom neighborhood of downtown Richmond. If a new stadium is relocated, then the current Boulevard site can be redeveloped for other commercial or residential use. Of course, an alternative option is to keep the baseball stadium at its current site.

The city of Richmond retained Davenport & Company, LLC (Davenport) to provide a fiscal impact analysis of the different options for the baseball stadium. To complete this project, Davenport brought together Economic Research Associates (ERA) of Washington and Chmura Economics & Analytics (Chmura) of Richmond. ERA provided alternative development plans for the Boulevard and Shockoe sites. Chmura estimated the economic impacts (direct and indirect employment and spending) of the ERA building options on the city of Richmond. Finally, Davenport performed the fiscal impact analysis of the project, including cost and tax revenue, as well as financing options.

The purpose of this report is to present the economic impacts of the various options developed by ERA. The remainder of the report is organized as follows:

• Section 3 outlines the methodology used to analyze the economic impacts, including data collection and analysis. • Section 4 provides the economic impacts of demolishing the old stadium, building a new one, and ongoing operations at the Boulevard site where the stadium is currently located.

2 Source: Baseball in Richmond, A History of Professional Game, 1884-2000, by W. Harrison Daniel and Scott P. Mayer. 3 Source: Richmond Braves Website, www.rbraves.com 4 Examples of such ballparks are Memphis, Norfolk, and Durham, North Carolina. Source: Baseball for a Better Richmond, presented by Tim Billups, Gena Boyle, John Budesky, Erin Bryant and Jeff Tiller.

5

• Section 5 analyzes the economic impact of the Shockoe option, which includes demolishing the current stadium at Boulevard, redeveloping the site for commercial and/or residential use, and rebuilding the stadium in Shockoe Bottom where ongoing operations are also be estimated. • Section 6 outlines tax revenue from ripple effects. • Section 7 offers a conclusion.

6

3. Methodology Regardless of the site chosen to locate the baseball stadium, the economic impact of the project comes primarily from the following four sources:

1. One-time economic benefits from the demolition of the old stadium and the construction of the new stadium. This also includes activities associated with construction such as the design of the stadium, infrastructure work, and parking lot development. Chmura uses construction cost estimates provided by Davenport for this analysis. 2. Ongoing operation of the baseball stadium. The economic impact comes primarily from revenue generated onsite at the stadium, including tickets, concessions, and parking. It is assumed that attendance for the stadium is the same whether it is located at Boulevard or Shockoe Bottom. As a result, ticket sales and revenues provided by the Richmond Metropolitan Authority (RMA) of the current stadium is the primary input used to estimate the ongoing operations’ economic impact. 3. Development associated with the baseball stadium. This includes retail stores and restaurants located outside the stadium, but within the development zone specified by the City. Economic development plans provided by ERA are the primary input used to estimate this economic impact. 4. Redevelopment of the Boulevard site. If the baseball stadium is relocated to the Shockoe site, the current land at the Boulevard site will be available for redevelopment. Economic development plans provided by ERA are the primary input for Chmura’s estimate of this economic impact.5

Figure 3.1: Economic Impact Analysis Framework

Boulevard Site Option Shockoe Site Option (Scenario A) (Scenario B)

Construction (One Time) Construction (One Time)

Ongoing Operation of Baseball Ongoing Operation of

Stadium Baseball Stadium

Associated Development at Associated Development at

the Boulevard Site Shockoe Site

Redevelopment at the

Boulevard Site + Ripple Economic Impact + Ripple Economic Impact = Total Economic Impact = Total Economic Impact

5 If the Boulevard site is chosen, measuring the development potential for the Shockoe site is out of the scope of this study.

7

The four components above constitute the total direct economic impact of the stadium project on the city of Richmond. The total economic impact also includes the economic ripple effects of the direct impact. Ripple effects, categorized as indirect and induced (see Appendix for definitions), measure the secondary benefits that can be generated by stadium projects under different options. These effects include the benefits for the many local businesses supporting stadium operations, such as suppliers for concession sales at the stadium. The indirect and induced effects are estimated with IMPLAN Pro6 software after the direct spending is identified.

6 IMPLAN Professional is an economic impact assessment modeling system developed by Minnesota Implan Group that is often used by economists to build economic models that estimate the impact of economic changes in local economies.

8

4. Economic Impact of the Boulevard Option (Scenario A) The economic impact of the Boulevard option, which is estimated in this section, starts with the demolition of the Diamond and the construction of a new stadium. An analysis of the construction is followed by an investigation of the impact of ongoing operations of the project—both the baseball stadium and associated development at the site near the stadium.7

4.1. One-time Economic Impact of Boulevard Site Development

The demolition of the old stadium and the construction of a new one at the Boulevard site will create jobs in construction and related industries in the city of Richmond for a short period. During the construction phase, local suppliers and construction companies will see an increase in business activity.8 In addition, area restaurants and shops will benefit as construction workers spend money at local establishments.9

The total construction cost of the Boulevard Site option is estimated to be $173.3 million (Table 4.1). The majority of the cost ($127.7 million) is for the construction of the stadium and parking structure and for the relocation of current structures on the site.10 This cost includes stadium construction ($36 million), parking ($47.7 million), infrastructure work ($5 million), as well as professional fees such as soft cost ($6 million). In addition, the construction cost for associated development onsite such as big box retail and restaurants is estimated to be $45.6 million. In estimating the economic impact of the construction phase, it is assumed that it lasts one year—in 2009.

7 The total boulevard site is 34.23 acres and the new stadium and its parking will take 21.01 acres. ERA recommends the remaining 13.22 acres be used for commercial developments near the stadium. The economic impact of that development is included in this study. 8 This is usually referred to as indirect impact. 9 This is usually referred to as induced impact. 10 Currently, the Department of Public Works/General Services is located at the Boulevard site, It is recommended that it be relocated elsewhere in the city for the re-development of the Boulevard site. Please see Section II of the report prepared by ERA for more details,

9

Table 4.1: Construction Cost of the Boulevard Site Option Sports/Civic Uses Richmond Baseball Stadium (8,000 Seats) $36.0 Arthur Ashe Sports Center $8.4 Relocation--Demolition/Site Prep $10.1 Relocation--Structure/Improvement $14.5 Infrastructure $5.0 Soft Cost (Design, testing, etc) $6.0 Parking Decked Parking $40.0 Surface Parking $7.7 Total City Cost $127.7 Retail Big Box Retail (2 Large-Format Stores) $31.2 Grocery/Specialty Foods $6.2 Restaurant / Food Service $6.8 Neighborhood Services $1.3 Total Developer Cost $45.6 Total Construction Cost $173.3 Source: ERA and Davenport Company, LLC

The construction spending is input into the IMPLAN model to estimate the job creation and ripple economic effect of the one-time construction phase. The model estimates that during the construction phase, a total of $173.3 million will be spent to construct a new stadium and associated developments at the Boulevard site, directly creating 1,638 jobs in the construction trade in the city. The indirect impact is expected to total $38.5 million and 327 jobs in industries supporting construction, such as architecture and engineering services and truck transportation. The induced impact is projected to total $32.2 million for the city of Richmond with 261 jobs created. The induced jobs, generated due to income of the construction workers, will be concentrated in consumer service-related industries such as restaurants, hospitals, and retail stores. Overall, all construction activities at the Boulevard site are expected to inject $244.1 million to area businesses and create 2,226 jobs in the city in 2009 as shown in Table 4.2.

10

Table 4.2: One-time Economic Impact of Construction Activities - Boulevard Site Option Direct Indirect Induced Total Impact Sports/Civic/Cultural Uses Spending ($MM) $80.0 $17.9 $15.1 $113.1 Employment 766 152 122 1040 Parking Spending ($MM) $47.7 $10.1 $8.9 $66.7 Employment 456 87 72 616 Retail Spending ($MM) $45.6 $10.5 $8.2 $64.3 Employment 417 88 66 571 Total Spending ($MM) $173.3 $38.5 $32.2 $244.1 Employment 1,638 327 261 2,226 Note: Numbers may not sum due to rounding. Source: IMPLAN Pro 2006 and Chmura

4.2. Economic Impact of Stadium Operations

As shown in Table 4.3, the stadium operation revenue comes mostly from sales inside the stadium. The largest amount of sales is from tickets, followed by gift shop items, parking, and food and beverages. In 2009, the annual operation revenue of the stadium is estimated to be $2.2 million. The purpose of this study is to evaluate the economic impact of locating the stadium at two sites, not to make an argument of which site is better for attracting fans. Therefore, the operation revenue of the current stadium is used throughout this report as an estimate for the operation revenue of the new stadium, regardless of site.11

Table 4.3: Stadium Operation Revenue, 2009 Onward Baseball Ticket Sales $1,440,000 Parking $216,000 Food and Beverage $180,000 Retail $360,000 Total $2,196,000 Source: RMA and ERA

The stadium operations, including ticket sales, parking sales, and food and beverage located in the stadium, will have economic ripple effects throughout the city of Richmond. Table 4.4 presents the total economic impact (direct, indirect, and induced) of stadium operations. It is estimated that the total direct operation revenue of the stadium amounts to $2.2 million after 2009, directly supporting 48 jobs. The indirect and induced impacts measure the extent to which other businesses in the region benefit from the stadium operations. The indirect impact of $0.3 million and 4 jobs represents increased spending to businesses supporting the operations of the stadium, such as local suppliers for stadium food and retail

11 This assumption was used for all three project team members: Davenport, ERA, and Chmura.

11 shops. The induced impact of $0.1 million and 3 jobs consist of increased spending by local consumers who are employed by the stadium. Beneficiary businesses to this employee spending include hospitals, doctor’s offices, and retailers and restaurants throughout the city.

Table 4.4: Annual Economic Impact of Stadium Operations (2009 Onward) Direct Indirect Induced Total Impact Spending Impact $2.2 $0.3 $0.1 $2.6 Employment Impact 48 4 3 55 Note: Numbers may not sum due to rounding. Source: IMPLAN Pro 2006 and Chmura

4.3. Economic Impact of Associated Development

ERA estimates that in addition to a new stadium, some areas of the current Boulevard site can be developed in commercial use. The site can support big box retailers, restaurants, and neighborhood service shops. However, if the stadium is located at the Boulevard site, there will be no development for offices and residential housing onsite. All together, the site can support 240,000 square feet of commercial development. Based on the sales per square feet estimates provided by ERA, the total sales of the commercial development can reach $92.5 million per year.

Table 4.5: Direct Annual Sales of Associated Development (2009 Onward) Total Square Sales per Total Sales Footage Square Ft. (Million) Big Box Retail 160,000 $350 $56.0 Grocery/Specialty Food 40,000 $500 $20.0 Restaurant/Food Service 30,000 $450 $13.5 Neighborhood Service 10,000 $300 $3.0 Total 240,000 $385 $92.5 Source: ERA

Any new businesses in the Boulevard site will have an economic ripple effect throughout the city. Take a restaurant as an example. As sales increase, the restaurant will increase its purchases from local suppliers such as grocery stores. As a result, the output of those businesses will also increase. Additionally, the restaurant will need to hire additional workers to meet rising demand. Consequently, changes in sales also have important job implications. Furthermore, as the incomes of the current grocery store workers rise, they will increase consumption, further enhancing spending effects in the area.

Table 4.6 presents the total output and employment effect of the associated developments at the Boulevard site. When all components are in operation, all businesses located in the Boulevard Site are estimated to have a direct economic output of $92.5 million and support 646 jobs.

12

Table 4.6: Ongoing Economic Impact of Development (2009 Onward) Direct Indirect Induced Total Impact Retail/Food/Services Spending ($MM) $92.5 $9.9 $5.2 $107.7 Employment 646 65 38 749 Total Spending ($MM) $92.5 $9.9 $5.2 $107.7 Employment 646 65 38 749 Note: Numbers may not sum due to rounding. Source: IMPLAN Pro 2006 and Chmura

The indirect and induced impact measure the extent to which other businesses in the city benefit from businesses located at the Boulevard site. The indirect impact of $9.9 million and 65 jobs represents increased spending to businesses supporting the operations associated with development at the Boulevard Site, such as local suppliers for retailers, local banks, as well as landscape and building services companies hired to maintain the property. The induced impact of $5.2 million and 38 jobs consists of increased spending by local consumers who are employed at the commercial developments, with beneficiary businesses including hospitals, doctor’s offices, and retailers and restaurants throughout the city.

4.4. Summary of the Economic Impact of the Boulevard Option

The total economic impact of the Boulevard site option is summarized in Table 4.7. In 2009, there will be a one-time economic impact of demolishing the Diamond and constructing the new Stadium, estimated to be $244.1 million and 2,226 jobs, including direct impact and ripple effects. The ongoing operation of the stadium and associated commercial development at the Boulevard site are estimated to generate $110.3 million in total economic impact for the city of Richmond plus as estimated 804 total jobs.

Table 4.7: Economic Impact Summary of the Boulevard Option Direct Ripple Total Impact One Time Construction Impact Spending ($Million) $173.3 $70.8 $244.1 Employment 1,638 588 2,226

Annual Ongoing Economic Impact Stadium Operations Spending ($Million) $2.2 $0.4 $2.6 Employment 48 7 55 Associated Development Spending ($Million) $92.5 $15.2 $107.7 Employment 646 103 749 Total Ongoing Impact Spending ($Million) $94.7 $15.6 $110.3 Employment 693 110 804 Source: Chmura Economics & Analytics

13

5. Economic Impact of the Shockoe Option (Scenario B) An analysis of the economic impact of building the new baseball stadium in Shockoe Bottom (Option B) starts with the impact of demolishing the Diamond on Boulevard and constructing a new stadium at the Shockoe site. This analysis is followed by the impact of the ongoing operations of the baseball stadium as well as associated development surrounding the site.

Moving the stadium to Shockoe Bottom also frees up 34.23 acres of land at the Boulevard site for commercial and residential development. Consequently, this section contains an analysis of the economic impact of the Boulevard site redevelopment.

5.1. Economic Impact of Construction of the Shockoe Site Option

The total construction cost of the project is estimated to be $350.8 million if the stadium is relocated to the Shockoe site (Table 5.1). This cost includes demolition of the current stadium and construction of the new stadium ($126.0 million). Compared with the construction cost of the new stadium at Boulevard, the total cost here includes redevelopment for Boulevard site ($102.9 million) and additional development at the Shockoe sites ($121.9 million). In estimating the economic impact, it is assumed that the construction phase lasts one year—in 2009.

14

Table 5.1: Construction Cost ($Million) Boulevard Shockoe Total Site Site Construction Sports/Civic Use Richmond Baseball Stadium (8,000 Seats) $0.0 $36.0 $36.0 Arthur Ashe Sports Center $8.4 $8.4 Sea Board Building-Slave Trail Visitor Center $0.0 $0.9 $0.9 Relocation--Demolition/Site Prep $10.1 $10.1 Relocation--Structure/Improvement $14.5 $14.5 Infrastructure $5.0 $5.0 Soft Cost (Design, testing, etc) $6.0 $6.0 Parking Decked Parking $45.1 $45.1 Total City Cost $44.0 $82.0 $126.0 Retail Big Box Retail (2 Large Format Stores) $43.9 $0.0 $43.9 Grocery/Specialty Foods $6.2 $2.5 $8.8 Restaurant / Food Service $6.8 $5.9 $12.7 Neighborhood Services $1.3 $3.0 $4.3 Office Small Format Professional Office Space Users $0.0 $2.6 $2.6 Built to Suit Office $8.1 $8.1 Residential For Sale - Condos $32.5 $32.5 Rental Units $29.9 $67.3 $97.2 Parking Decked Parking $5.0 $5.0 Surface Parking $9.8 $9.8 Total Developer Cost $102.9 $121.9 $224.8 Total Construction Cost $146.9 $203.9 $350.8 Source: ERA and Davenport Company, LLC

The construction spending is input into the IMPLAN model to estimate job creation and the ripple economic effect of the one-time economic impact. The model shows that in 2009, a total of $350.8 million will be spent to construct a new stadium and other developments at the Shockoe site and redevelopment of the Boulevard site, directly creating 3,107 jobs in the construction trade in the city. The indirect impact is expected to total $77.3 million and 663 jobs in industries supporting construction, such as architecture and engineering service and truck transportation. The induced impact is projected to total $61.0 million for the city of Richmond with 494 jobs created. The induced jobs, generated due to income of the construction workers, will be concentrated in consumer service related industries such as restaurants, hospitals, and retail stores. Overall, the construction activities are expected to inject $489.1 million and 4,263 jobs in the city in 2009.

15

Table 5.2: One-time Economic Impact of Construction Activities - Shockoe Option Direct Indirect Induced Total Impact Stadium Spending ($MM) $80.9 $18.1 $15.3 $114.3 Employment 774 153 123 1,051 Retail Spending ($MM) $69.6 $16.1 $12.5 $98.2 Employment 637 135 101 872 Office Spending ($MM) $10.7 $2.5 $1.9 $15.1 Employment 98 21 16 134 Residential Spending ($MM) $129.7 $27.9 $20.1 $177.7 Employment 1,026 245 163 1,434 Parking Spending ($MM) $59.9 $12.7 $11.2 $83.8 Employment 572 109 91 773 Total Spending ($MM) $350.8 $77.3 $61.0 $489.1 Employment 3,107 663 494 4,263 Note: Numbers may not sum due to rounding. Source: IMPLAN Pro 2006 and Chmura

5.2. Economic Impact of Stadium Operations

As mentioned before, the purpose of this study is to evaluate the economic impact of locating the stadium at two sites. It does not make an argument about which site is better for attracting fans. As a result, the operating revenue of the stadium at the Shockoe site is assumed to be the same as that at the Boulevard site. Table 5.3 presents the total economic impact (direct, indirect, and induced) of the stadium operations. It is estimated that the total direct operation revenue of the stadium amount to $2.2 million in 2009, directly supporting 48 jobs. The indirect impact of $0.3 million and 4 jobs represent increased spending to businesses supporting the operations of the stadium, such as local suppliers for stadium food and retail shops. The induced impact of $0.1 million and 3 jobs consists of increased spending by local consumers who are employed by stadium.

Table 5.3: Annual Economic Impact of Stadium Operations (2009 Onward) Direct Indirect Induced Total Impact Spending Impact $2.2 $0.3 $0.1 $2.6 Employment Impact 48 4 3 55 Note: Numbers may not sum due to rounding. Source: IMPLAN Pro 2006 and Chmura

5.3. Economic Impact of Development of the Shockoe Option

ERA estimates that in addition to a new stadium, some areas of the current Shockoe site can be developed for commercial uses. The site can have retail stores, restaurants, offices, and residential units. Altogether, the site can support 785,000 square feet of commercial development. In addition, the Boulevard site is also available for redevelopment, which can support retail, restaurant, and residential

16 units. Based on sales productivity estimates provided by ERA, the total sales of the commercial development can reach $195.2 million per year.

Table 5.4: Direct Annual Sales of Associated Development (2009 Onward) Boulevard Shockoe Total Sales Total Sales Redevelopment (SF) Development (SF) Development /SF (Million) Big Box Retail 225,000 0 225,000 350 $78.8 Grocery/Specialty Food 40,000 16,250 56,250 500 $28.1 Restaurant/Food Service 30,000 26,000 56,000 450 $25.2 Neighborhood Service 10,000 22,750 32,750 300 $9.8 Professional Offices 0 20,000 20,000 600 $12.0 Built to Suit 0 50,000 50,000 600 $30.0 For Sale-Condos 0 200,000 200,000 13 $2.6 Rental Unit 200,000 450,000 650,000 13 $8.5 Decked Parking (units) 250 0 250 800 $0.2 Surface Parking (units) 1,220 0 1,220 0 $0.0 Total 505,000 785,000 1,290,000 151 $195.2 Source: ERA

Table 5.5 presents the total output and employment effect of associated development for the Shockoe option. When all components are in operation, all businesses located in the Shockoe site are estimated to have a direct economic output of $195.2 million and support 1,299 jobs. The indirect impact of $29.7 million and 196 jobs represent increased spending to businesses supporting the commercial operations at the Shockoe and Boulevard sites. The induced impact of $16.5 million and 122 jobs consist of increased spending by local consumers who are employed by those commercial developments with beneficiary businesses including hospitals, doctors’ offices, and retailers and restaurants throughout the city.

Table 5.5: Ongoing Economic Impact of Development Direct Indirect Induced Total Impact Retail Spending ($MM) $141.9 $16.9 $9.0 $167.8 Employment 1096 112 65 1273 Office Spending ($MM) $42 $11 $7 $59 Employment 159 66 50 275 Residential Spending ($MM) 11 2 1 $14 Employment 41 17 7 65 Parking Spending ($MM) $0.2 $0.0 $0.0 $0.3 Employment 3 0 0 3 Total Spending ($MM) $195.2 $29.7 $16.5 $241.4 Employment 1,299 196 122 1,617 Note: Numbers may not sum due to rounding Source: IMPLAN Pro 2006 and Chmura

17

5.4. Economic Impact Summary of the Shockoe Option

The total economic impact of the Shockoe site option is summarized in Table 5.6. In 2009, there will be a one-time economic impact of constructing the new stadium in Shockoe Bottom and commercial redevelopments at the Boulevard site estimated to be $489.1 million and 4,263 jobs. The ongoing operation of the stadium and associated commercial development at both Boulevard and Shockoe sites are estimated to generate $244.0 million in total economic impact for the city of Richmond plus an estimated 1,671 total jobs.

Table 5.6: Economic Impact Summary of the Shockoe Option Direct Ripple Total Impact One Time Construction Impact Spending ($Million) $350.8 $138.3 $489.1 Employment 3,107 1,157 4,263

Annual Ongoing Economic Impact Stadium Operations Spending ($Million) $2.2 $0.4 $2.6 Employment 48 7 55 Associated Development Spending ($Million) $195.2 $46.2 $241.4 Employment 1,299 318 1,617 Total Ongoing Impact Spending ($Million) $197.4 $46.6 $244.0 Employment 1,347 324 1,671 Source: Chmura Economics & Analytics

18

6. Additional City Tax Revenue from the Ripple Impact The cost/benefit analysis conducted by ERA estimates the tax revenue the City of Richmond can receive from the stadium and associated developments for both scenarios. The local tax revenue estimated by ERA includes property taxes, sales taxes, and admission taxes.

The stadium operations and associated development also generate economic impact elsewhere in the city outside the stadium site. Chmura Economics & Analytics estimates the additional city tax revenue as a result of those ripple effects.

The IMPLAN model is used to estimate the tax revenue from the ripple effects of the two scenarios including the distribution into different sectors such as retail, lodging, and other services. To estimate local sales taxes from the ripple effects, Chmura uses a 1% tax rate for all impact distributed in retail sectors. The City of Richmond has a 6% meal tax and 8% lodging tax which is applied to all ripple effects distributed in food services and lodging sectors. BPOL taxes are applied to effects in various retail and professional and personal service businesses that were estimated in a similar fashion.

Table 6.1 lists the annual tax revenue from the ripple effects. Under Scenario A, the tax revenue resulting from the ripple effects are estimated to be $0.06 million per year, with meal tax and BPOL taxes as the largest revenue sources. Under Scenario B, due to more commercial development, the tax revenue resulting from the ripple effects is estimated to be $0.18 million per year.

Table 6.1: Annual City Tax Revenues from Ripple Effects ($Million, 2009 Onward) Boulevard Option Shockoe Option (Scenario A) (Scenario B) Local Sales Tax $0.01 $0.03 Meal Tax $0.02 $0.06 Lodging Tax $0.01 $0.02 BPOL $0.02 $0.07 Total $0.06 $0.18 Source: Chmura Economics & Analytics

19

7. Conclusion In summary, if the stadium is rebuilt at the current Boulevard site (Scenario A), the stadium and other development onsite can directly sustain 693 jobs and contribute a total of $94.7 million annually to the economy of the city. In addition, 110 jobs and $15.6 million in ripple effects are generated throughout the city. The ripple effects will bring in an additional $0.1 million in tax revenue to the City in the forms of sales, meal, lodging, and BPOL taxes. If the stadium is moved to a Shockoe site (Scenario B), the direct economic impact is $197.4 million per year and 1,347 jobs, with ripple effects amounting to $46.6 million and 324 additional jobs for businesses in the city. These ripple effects will bring in an additional $0.2 million tax revenue to the City in the form of sales, meal, lodging, and BPOL tax

The construction of the baseball stadium and associated commercial and residential properties also bring a one-time impact of hundreds of millions of dollars in spending and thousand jobs in the city of Richmond as summarized in Table 7.1.

Table 7.1: Economic Impact Summary of a New Baseball Stadium Scenario A: Scenario B: Boulevard Site Shockoe Site Direct Ripple Direct Ripple One Time Construction Impact Spending ($Million) $173.3 $70.8 $350.8 $138.3 Employment 1,638 588 3,107 1,157 Payroll ($Million) $70.4 $28.7 $132.5 $52.3 Annual Ongoing Economic Impact Stadium Operations Spending ($Million) $2.2 $0.4 $2.2 $0.4 Employment 48 7 48 7 Payroll ($Million) $1.1 $0.2 $1.1 $0.2 Associated Development Spending ($Million) $92.5 $15.2 $195.2 $46.2 Employment 646 103 1,299 318 Payroll ($Million) $37.3 $6.1 $79.0 $18.7 Total Ongoing Impact Spending ($Million) $94.7 $15.6 $197.4 $46.6 Employment 693 110 1,347 324 Payroll ($Million) $38.4 $6.3 $80.1 $18.9 City Tax Revenue ($Million) * $0.1 * $0.2 * The direct tax revenue is estimated by ERA. Source: Chmura Economics & Analytics

20

Appendix 1: Impact Study Glossary

IMPLAN Professional is an economic impact assessment modeling system. It allows the user to build economic models to estimate the impact of economic changes in states, counties, or communities. It was created in the 1970s by the Forestry Service and is widely used by economists to estimate the impact of specific events on the overall economy.

Input-Out Analysis—an examination of business-business and business-consumer economic relationships capturing all monetary transactions in a given period, allowing one to calculate the effects of a change in an economic activity on the entire economy (impact analysis).

Direct Impact—economic activity generated by a project or operation. For construction, this represents activity of the contractor; for operations, this represents activity by tenants of the property.

Overhead—construction inputs not provided by the contractor.

Indirect Impact—secondary economic activity that is generated by a project or operation. An example might be a new office building generating demand for parking garages.

Induced (Household) Impact—economic activity generated by household income resulting from direct and indirect impact.

Multiplier—the cumulative impact of a unit change in economic activity on the entire economy.

21