MIXED-USE DEVELOPMENT MARKET STUDY Proposed Lebanon Mixed-Use Entertainment District LEBANON, INDIANA SUBMITTED TO: EXISTING PREPARED BY: Ben Bontrager HVS Convention, Sports & Entertainment Director of Planning Facilities Consulting [email protected] 205 West Randolph (P) 765-482-8845 Suite 1650 (C) 765-891-8933 Chicago, Illinois 60606 +1 (312) 587-9900 April 24, 2020 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois April 24, 2020 Ben Bontrager 205 West Randolph Director of Planning Suite 1650 [email protected] Chicago, Illinois 60606 (P) 765-482-8845 +1 312-587-9900 (C) 765-891-8933 +1 312-488-3631 FAX www.hvs.com Re: Proposed Lebanon Mixed-Use Entertainment District Lebanon, Indiana Dear Mr. Bontrager: Attached you will find our Mixed-Use Development Market Study of a Proposed Lebanon Mixed-Use Entertainment District in Lebanon, Indiana. We certify that we have no undisclosed interest in the property, and our employment and compensation are not contingent upon our findings. This study is subject to the comments made throughout this report and to all assumptions and limiting conditions set forth herein. It has been a pleasure working with you. We look forward to hearing your comments. Sincerely, HVS Convention, Sports & Entertainment Facilities Consulting Thomas A. Hazinski, MPP Managing Director Brian Harris Senior Director Anthony Davis, MPP Project Manager Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois Table of Contents SECTION TITLE 1. Introduction and Executive Summary 2. Market Area Overview 3. Water Park Hotel Analysis 4. Ice Facility Analysis 5. Indoor Mountain Bike Park Analysis 6. Economic Impact 7. Statement of Assumptions and Limiting Conditions 8. Certification Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois 1. Introduction and Executive Summary Nature of the The City of Lebanon, IN Redevelopment Commission engaged HVS Convention, Assignment Sports & Entertainment Facilities Consulting (“HVS”) to conduct a Mixed-Use Development Market Study in Lebanon, Indiana. The Mixed-Use Entertainment District could enhance the demand potential of Lebanon for transient business, provide opportunities to Lebanon residents under 21, and encourage further economic development in Northwest Indianapolis. Ownership and The proposed site of the Mixed-Use Entertainment District is strategically located Management at SR 39 and I-65 in Lebanon, Indiana. The City of Lebanon currently owns one portion of the site, with options to gain ownership of the remaining portions of the site. The ownership and management of the proposed Mixed-Use Entertainment District varies depending on which proposed land use the City of Lebanon, IN Redevelopment Commission pursues. Methodology In accordance with the Scope of Services, HVS performed the following tasks: 1. Thomas A. Hazinski, MPP, Anthony Davis, MPP, and Brian Harris from HVS travelled to Lebanon, Indiana on December 11 and 12, 2019 for a site visit and client meeting. During this visit, we visited the prospective site of the Mixed-Use Entertainment District, met with other key industry participants, and gathered relevant data. 2. Analyzed the economic and demographic data that indicate whether, and the extent to which, the local market area supports the Mixed-Use Entertainment District. 3. Reviewed the 2019 Community Foundation of Boone County Community Needs Assessment to identify the type of venue that best services the local and regional communities. 4. Performed a preliminary land use evaluation, which ranked potential redevelopment options based on how well they met or exceeded the goals of improvement identified by HVS. 5. Identified three key land uses—Waterpark Hotel, Ice Facility, and Indoor Mountain Bike Park—to further study for feasibility at the site. 6. For each of the three land uses: April 24, 2020 Introduction and Executive Summary Mixed-Use Development Market Study 1-1 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois a. Compiled data on competitive and comparable venues to inform and test the reasonableness of the building program recommendations. b. Recommended individual facility land uses based on the above steps. c. Prepared event demand and attendance forecasts based on the implementation of the program recommendations. d. Prepared a financial forecast for the proposed land use operations. 7. For the Proposed Hotel Waterpark, we prepared a hotel market analysis and conducted an industry trends analysis for the hotel waterpark industry. 8. Prepared an economic and fiscal impact analysis for the proposed Mixed- Use Entertainment District. HVS collected and analyzed all information contained in this report. HVS sought out reliable sources and deemed information obtained from third parties to be accurate. Market Area Analysis Due to its proximity to Indianapolis, the Lebanon, Indiana market benefits from a variety of tourist and leisure attractions in the area. The peak season for tourism in this area is from May to September. During other times of the year, weekend demand comprises travelers passing through in route to other destinations, sporting events, and other similar weekend demand generators. Due to its central Midwest location, Indianapolis has emerged as a premier youth and amateur sports destination, as evidenced by the opening of the $45-million Grand Park sports campus in nearby Westfield in the spring of 2014. The 400-acre sports mega-park features 26 diamonds for baseball and softball; 31 multipurpose fields for soccer, lacrosse, football, rugby and field hockey; 2 large indoor facilities to accommodate off-season play and training; and more than ten miles of paved trails. Moreover, the complex added an indoor soccer and basketball/volleyball facility in January 2016. According to Hamilton County Tourism Inc., Grand Park is expected to attract 1.5 million visitors annually and account for up to 40,000 hotel room nights per year once it is established. Since 2014, the Indianapolis International Airport has experience year-to-year increases in its passenger statistics—most recently reaching 9.4 million passengers in 2018. Major employment sectors in Boone County include the Retail Trade, State and Local Government, and Construction Sectors. The Boone County Economic April 24, 2020 Introduction and Executive Summary Mixed-Use Development Market Study 1-2 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois Development Corporation identifies Witham Health Services, XPO, and CNH America as the three largest employers in Boone County. Economic development outside of Indianapolis has largely been concentrated in North and Northeast Indianapolis around Carmel and Fishers; however, future development seems to trend toward growth in the Northwest Indianapolis area, which would bode well for the growth of tourism to and around Lebanon. COVID-19 Impact COVID-19 (a strain of the coronavirus) was identified in China in December 2019. It has since spread to a substantial number of countries around the globe. As of this writing, the impact of the virus in the United States has been felt throughout most of the nation. Federal, state and local governments, individual corporations. and institutions have imposed travel restrictions and other safety measures. The number of states with reported virus cases is rapidly escalating; currently, there is limited insight in terms of how it can be contained, how long it will take for the infection rate to start decreasing, and when a vaccine will be ready. In addition to the cost of human life, the broader impact of the spread of COVID-19 has been that realized by supply chains and the potential to exacerbate an economic slowdown or trigger an economic recession, where the negative effects are likely to be longer lived than that of the virus itself. At the moment, limited evidence is available in terms of the impact that the virus has already had on the hospitality industry in the United States given the speed of its diffusion; performance data covering the affected areas had yet to be released at the time of this report. As of early March 2020, many large conferences and events have been canceled on account of COVID-19, and travel is being severely restricted by a number of companies as a precautionary measure. While is it undeniable that the impact on the hotel industry will be substantial, we have no visibility as to how long restrictions on travel or on large gatherings of people are likely to remain in place. It is also difficult to assess the specific impact on cash flows for individual properties given the lack of evidence at this early stage. This will become more evident and easier to forecast once more time has elapsed, thus allowing us to more accurately "measure" the pandemic's impact on hotels across the United States. Ultimately, the impact of COVID-19 on the hospitality industry will depend on the course of the pandemic, the extent and duration of travel restrictions, as well as to the public’s responses to these events. However, it is important to highlight that, despite the short-term impact, the fundamentals for the U.S. lodging industry in the longer term remain strong and, as such, our views on capitalization rates reflect this long-term perspective. April 24, 2020 Introduction and Executive Summary Mixed-Use Development Market Study 1-3 Convention, Sports & Entertainment Facilities Consulting Chicago, Illinois The time-frame of the projections in this study are beyond