Terraced Streetscape District Our Team

TERRACED STREETSCAPE DISTRICT OUR TEAM

Luke Derda Dave Eilenberger Lillian Luu Rick McDonald Jason Miller Work Experience Work Experience Work Experience Work Experience Work Experience . Active Duty Army . Healthcare system . Environmental . Auditing and . Finance and Aviation Officer management engineer regulatory strategy in the non- . Company Command . Account Academic Background compliance of profit sector . Project management . Bachelor of Science government health . Experience working Management-Area . Procurement and in Environmental care programs for with government Development Contracting Science the private sector affairs executives in . Acquisitions/Procure Experience . Bachelor of Science, . Resident of State Washington DC ment/Contracting Academic Background Environmental College area for 6 Academic Background Academic Background . BA, History Engineering years while . BA Economics, . Bachelor of Science, . MBA, Supply Chain Technology attending school Politics Foreign Language Management and . Master of Academic Background . MBA, Supply Chain . MBA, Supply Chain Finance Landscape . MBA, Finance and Management and Management and Concentrations Architecture (May Strategic Leadership Finance (May 2015) Finance (May 2015) (May 2015) 2015) (May 2015) OUR TEAM’S GOAL

The objective of this project is to Penn State Golf create a redevelopment strategy Courses that is consistent with the Township’s vision for the District West Side Nittany and that is financially attractive to Stadium Minit Mart the District’s property owners.

West College Street Central to this effort will be Calder Way Site under The Original Harley Alley development

identification of the uses/types of Waffle Street

businesses that would be most Shop Street Buckhout Hoy Street Hoy successful in this area and Ferguson TownshipStreet Butz boundary Osmond State College Borough boundary determining the right mix of uses Corl Street Elementary that would optimize the economic School vitality of the corridor. OUR RESEARCH PROCESS

1 2 3 4 5 Conducted Communicate Researched Engaged Benchmarked Financial Feasibility of the TSD Stakeholders Communities Analysis TSD Vision

Key Deliverables

. A revised master plan for the TSD

. An analysis of financially viable development opportunities

. Recommendations to encourage development A REALISTIC VISION FOR THE TSD

OUR VISION FOR THE TSD

FINANCIAL ANALYSIS OF PROPERTY VALUES AND BEST LAND USES

NEXT STEPS FOR THE COMMUNITY

QUESTIONS A REALISTIC VISION FOR THE TSD

OUR VISION FOR THE TSD

FINANCIAL ANALYSIS OF PROPERTY VALUES AND BEST LAND USES

NEXT STEPS FOR THE COMMUNITY

QUESTIONS TERRACED STREETSCAPE DISTRICT

Penn State Golf Courses White Course Apartments . Existing: single family, garages, commercial . Establish a pedestrian-oriented district, mixed use development West Side Stadium

West College Avenue

Calder Way Site under Harley Alley development

The Original Street

Waffle Shop

Butz Street Butz

Hoy Street Hoy

Buckhout Street Buckhout Osmond

Corl Street Elementary School TERRACED STREETSCAPE DISTRICT – TSD I

Penn State Golf Courses White Course Apartments

. Retail in a building up to 6,000 square feet of gross floor area on the ground

floor West Side Stadium . 1,400 LF of frontage on West College Ave TSD I

West College Avenue

Calder Way Site under Harley Alley development

The Original Street

Waffle Shop

Butz Street Butz

Hoy Street Hoy

Buckhout Street Buckhout Osmond

Corl Street Elementary School TERRACED STREETSCAPE DISTRICT – TSD II

Penn State Golf Courses White Course Apartments . Retail in a building w/ minimum to 6,000 square feet of gross floor area on the ground floor West Side . 2,180 LF of frontage on West College Stadium Ave TSD II

West College Avenue

Calder Way Site under Harley Alley development

The Original Street

Waffle Shop

Butz Street Butz

Hoy Street Hoy

Buckhout Street Buckhout Osmond

Corl Street Elementary School EXISTING PROPERTY OWNERS – PSU & STATE COLLEGE BOROUGH

Penn State Golf Courses White Course Apartments . PSU (approx. 9 acres) . Private Property Owners (approx. 32 acres) West Side Stadium . State College Borough (approx. 2 acres) PSU

PSU PSU PSU PSU West College Avenue

Calder Way Site under Harley Alley development

The Original Street

Waffle Shop State Butz Street Butz College Street Hoy

Borough Street Buckhout Osmond

Corl Street Elementary School POTENTIAL PEDESTRIAN CONNECTIONS – STREETS

Penn State Golf Courses White Whit Course e Apartments Penn State Golf Cour Courses se Apar Wes tme t nts Side Stad ium Calder Way West College Avenue Harley Alley Calder Site under The WayHarley Orig devel Alley opm

inal Corl ent

Street

Butz Butz Street

Street

Street Street

Waf Stre Hoy

Buckhou Street t Street

fle et Osmond Hoy Street Hoy Sho Ele Butz p men

tary Osmond Sch Buckhout ool POTENTIAL PEDESTRIAN CONNECTIONS - NEIGHBORHOOD

Penn State Golf Courses White Course Apartments

CalderCalder Way Way Harley Alley

Corl Street Street Elementary

School

Buckhout Street Buckhout Buckhout

Westerly Parkway POTENTIAL PEDESTRIAN CONNECTIONS – RR CORRIDOR

Whit e Penn State Golf Cour Courses se Apar Wes tme t nts Side Stad ium Calder Way West College Avenue Harley Alley Calder Site under The WayHarley Orig devel Alley opm

inal Corl ent

Street

Butz Butz Street

Street

Street Street

Waf Stre Hoy

Buckhou Street t Street

fle et Osmond Hoy Street Hoy Sho Ele Butz p men

tary Osmond Sch Buckhout ool

Westerly Parkway A REALISTIC VISION, GROUNDED IN THE FORMER RAILROAD

Penn State Golf Courses . RR was established in 1882 (over 100 years) . helped to build Penn State . now part of Nittany and Bald Eagle Railroad, but is mostly converted in rails to trails

Source: Bellefonte Central Map. Bellefonte.com A REALISTIC VISION, GROUNDED IN THE FORMER RAILROAD

Penn State Golf Courses White Course Apartments

West Side Stadium

West College Avenue

Calder Way Site under Harley Alley development

The Original Street

Waffle Shop

Butz Street Butz

Hoy Street Hoy

Buckhout Street Buckhout Osmond Corl Street Elementary School MASTER PLAN: A REALISTIC VISION

PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

Bus Stop West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley

The Original

Buckhout Street Buckhout Hoy Street Hoy Waffle Shop Street Butz

Mixed State Residential/ Street Osmond College Residential/Townhouses Retail/Office Townhouses Mixed Borough Public Retail/Office Corl Street Lawn Elementary Mixed Retail/ Garage School Office/Residential Shared Parking MASTER PLAN: A REALISTIC VISION - MIXED COMMERCIAL

. Ground floor area: 340,000 sq ft PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley

The Original

Buckhout Street Buckhout Hoy Street Hoy Waffle Shop Street Butz

Mixed State Residential/ Street Osmond College Residential/Townhouses Retail/Office Townhouses Mixed Borough Public Corl Street Retail/Office Lawn Elementary Mixed Retail/ Garage School Office/Residential Shared Parking MASTER PLAN: A REALISTIC VISION – RESIDENTIAL/OFFICE

PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley

The Original

Buckhout Street Buckhout Hoy Street Hoy Waffle Shop Street Butz

Total floor area: 390,000 sq ft PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley Street Street

The Original

Buckhout Hoy Street Hoy Waffle Shop Butz

Total floor area: 1,636,000 sq ft PSU Golf Courses PSU White Course Apartments

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley Street Street

The Original

Buckhout Hoy Street Hoy Waffle Shop Butz

Total floor area: 174,000 sq ft PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley Street Street

The Original

Buckhout Hoy Street Hoy Waffle Shop Butz

Total number of parking spaces: 574 PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley Street Street

The Original

Buckhout Hoy Street Hoy Waffle Shop Butz

PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential Bus Stop, Plaza

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley Street Street

The Original

Buckhout Hoy Street Hoy Waffle Shop Butz

PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Stadium

(PSU) (PSU) (PSU) (PSU) West College Avenue

Calder Way

Harley Alley

The Original

Buckhout Street Buckhout Hoy Street Hoy Waffle Shop Street Butz

State Street Osmond College Borough Corl Street Elementary School MASTER PLAN: A REALISTIC VISION (PROPOSED)

PSU Golf Courses PSU White Course Apartments Penn State Golf Courses

West Side Parking Courtyard Mixed Retail/ Gas Station Stadium Garage Residential (18 parking Bus Stop, (180 spaces) Plaza spaces)

Gateway Bus Stop (PSU) (PSU) Bus Stop (PSU) Bus Stop (PSU) West College Avenue

Calder Way

Harley Alley

The Original

Buckhout Street Buckhout Hoy Street Hoy Waffle Shop Street Butz

Mixed Mixed State Residential/ Street Osmond College Residential/Townhouses Retail/Office Retail/Office Townhouses 28 parking Borough Public (24 parking spaces) Garage Corl Street spaces) Mixed Retail/ Lawn Elementary (120 spaces) School Office/Residential (15 parking spaces) Shared Parking (80 spaces) POTENTIAL LAND DEVELOPMENT OPPORTUNITIES

West College Ave Calder Way Harley Alley Use Area (gsf) Floor occupancy Green Roof 174,000 gsf Roof Residential 1,636,000 gsf 3-7 Office 390,000 gsf 2 Commercial/Retail/Restaurant 487,000 gsf 1 Parking 574 spaces 1-7 garage + surface lot A REALISTIC VISION FOR THE TSD

OUR VISION FOR THE TSD

FINANCIAL ANALYSIS OF PROPERTY VALUES AND BEST LAND USES

NEXT STEPS FOR THE COMMUNITY

QUESTIONS MARKET DATA IN STATE COLLEGE SUGGESTS OPPORTUNITY

RESTAURANTS RETAIL/OFFICE HOTELS RESIDENTIAL HOUSING

Summary of Analysis

. College Avenue is a gateway into downtown State College as well as home to many current businesses and residents in need of amenities which are lacking in the close proximity.

. TSD requires businesses that can be self sufficient and complimentary as well.

. State College attracts visitors year round who can benefit from the TSD’s location to events. MARKET COMPARISONS ILLUSTRATE POTENTIAL LAND VALUES

Land Cost Improvement Cost Per Acre Land Per Acre Per Acre Sq Ft Cost (sq ft) (sq ft) Cost Improvement Cost Total Cost Lowest $36.19 $10.86 $25.33 $472,941 $1,103,529 $1,576,470 Average $45.01 $13.50 $31.51 $588,200 $1,372,467 $1,960,667 Highest $55.18 $16.56 $38.63 $721,153 $1,682,692 $2,403,846

Summary of Analysis

. Assumptions: Removed statistical outliers, extrapolated improvement costs as acreage increased

. Land improvement valuations in the TSD can be misleading due to the significant departure in zoning ordinances and design standards from the current TSD properties

. Per-acre valuations are linearly consistent throughout the analysis. However, developers interested in larger lots due to flexibility in opportunities. More developers competing for land, can be attractive for property owners

Source: "Ferguson Township Tax Assessment," WebIA, accessed April 8, 2015, http://webia.co.centre.pa.us. OVERVIEW OF BEST LAND USES

Range of Land Valuations (Per Acre) Based on Best Use Observed Low Realistic Expectation Observed High $ 63,973 $1,344,660 $2,954,699

Summary of Analysis

. Assumptions: Sufficient demand exists for the development of the TSD due to proximity to State College.

. Feasibility of land costs varies widely across different types of industries which increase monetary risk to the developer.

. Due to the current construction costs, some businesses are not able to absorb these costs and will have to be incorporated into a mixed use building as a complimentary revenue generator. A REALISTIC VISION FOR THE TSD

OUR VISION FOR THE TSD

FINANCIAL ANALYSIS OF PROPERTY VALUES AND BEST LAND USES

NEXT STEPS FOR THE COMMUNITY

QUESTIONS NEXT STEPS FOR THE COMMUNITY

1 2 3 Understand Partner to Open Dialogue Barriers to Overcome Barriers Development

Ferguson Township has taken the Generate alignment regarding Work together to overcome these first step in revisiting the dialogue barriers to development barriers using collective resources PUTTING THE PIECES OF THE PUZZLE TOGETHER

Property Developers Owners

Ferguson Township EXISTING BARRIERS TO TSD DEVELOPMENT

Surety Costs State Funding Initiatives Especially for smaller parcels, surety costs can Have received $800k grant for TSD I be significant percentage of development costs

Land Improvements Land Improvement Allowances Existing buildings do not align with TSD vision Allowances for retrofitting existing and & ordinances, rendering buildings less valuable historically significant buildings in the area

Property Sizes Plot Consolidation Fragmented ownership of small property Property owners can secure greater returns parcels with plot consolidation with neighbors

Uncertainty Transparent Communication Developers hesitant to commit significant Greater certainty regarding future uses of land upfront costs given TSD uncertainty in the TSD and confidence in approval process ALTERNATIVE SOURCES OF FUNDING

Neighborhood Assistance, Building PA Business in Our Sites Loans Enterprise Zone Tax Credit

For Real estate Attract businesses by Provides tax credits to development in small to helping them build an private companies mid-sized PA communities. inventory of ready sites. investing in rehabilitating, Industrial, commercial and Available to municipalities expanding, or improving multi-use projects. Interest and private developers. No buildings or land resulting rate is Tied to 1st Mortgage repayment until property is in jobs created or retained. Rate w/Floor of 5%. sold or leased or 5 years Credits received and not from the date of closing. used may be carried interest rate is 2% or 3% forward for up to five depending on county years. Credits may be sold unemployment rate. or transferred.

Source: www.portal.state.pa, www.newpa.com, www.toomey.senate.gov, www.dced.state.pa SUSTAINING PEDESTRIAN ACTIVITY IN THE TSD

Establishing an online presence to market opportunities for potential retailers

Wayfinding Sign Program

Art in Public Spaces Program

Incentive Program for Landlords

Take advantage of the diverse cultures present at PSU A REALISTIC VISION FOR THE TSD

OUR VISION FOR THE TSD

FINANCIAL ANALYSIS OF PROPERTY VALUES AND BEST LAND USES

NEXT STEPS FOR THE COMMUNITY

QUESTIONS APPENDIX DOCUMENTS

Ferguson Township: Terraced Streetscape District APPENDIX: TABLE OF CONTENTS

Project Authors Executive Summary Luke Derda

David Eilenberger Current Status of the TSD

Lillian Luu

Rick McDonald Vision for the TSD

Jason Miller Financial Valuations and Sensitivity Analysis

Viable Solutions and Benchmarking Comparisons EXECUTIVE SUMMARY

Our research indicates that mixed-use and pedestrian-oriented development is possible in the Terraced Streetscape District, and includes the following conclusions:

Three distinct development zones centered on a historical feature: The railroad grade through the heart of the TSD serves as a centerpiece for our TSD vision. By using this as a central feature that ties the three zones together, the district can maintain its cultural history, while providing the community the services that it needs.

Mixed-use spaces are the most financially attractive, given development costs: To redevelop the TSD requires significant land and construction costs. To help offset these upfront capital costs, many parcels require mixed- use spaces that can be rented to multiple tenants. As a result, dense, mixed-use spaces are the most financially viable property uses within the current TSD vision and proposed ordinances.

Open partnerships between stakeholders is necessary for TSD success: There are several stakeholders in this corridor that hold significant power in the future development, or stagnation, of this project. As one of the main remaining re-development areas in close proximity to the heart of State College, there is a great opportunity in the TSD.

Land-use can be maximized when properties are consolidated: Mixed-use spaces can be realized and maximized when land sizes are larger. The current parcel sizes of the TSD are not conducive to commercial development. To be more attractive to mixed-use developers, property owners should consider (and the Township should be open to) parcel consolidation so that more developers will have the financial capability to develop mixed-use commercial space in the TSD.

State funding opportunities can help mitigate significant development costs for public improvements: We recommend pursuing state and federal funds to pursue the re-development of this space. This has already been a demonstrated success in TSD I, and we believe that there is an opportunity to build on this success with additional grant awards.

Pedestrian-oriented development can be sustained through strategic programs: Similar communities have sustained pedestrian redevelopment zones by sponsoring community events in their new districts. APPENDIX: THE CURRENT STATUS OF THE TSD

The following section The Current Terraced Streetscape District (TSD) provides a summary of the current state of the Terraced Streetscape District, including several key factors Current Land Use in the TSD that make the area attractive for developers.

Environmental Considerations in the TSD

Existing Road Conditions Along West College Avenue

Points of Interest: Key Employers in the Area

Major Events That Impact the State College Economy

State College Area Income Profiles and Age Distributions

Penn State Student Enrollment Growth Expected to Continue THE CURRENT TERRACED STREETSCAPE DISTRICT

The Terrace Streetscape District (TSD) is approximately 47 acres and was zoned to create an Penn State Golf Courses environmentally friendly mixed-used, pedestrian- oriented district that is financially attractive to the district’s property owners to improve the quality of life West Side Nittany Minit for residents of the Stadium Mart Township, TSD, and neighboring communities. Located on West College Avenue (State Road 26) with West College Street varying widths of right-of- way, the District also shares on its eastern border Calder Way portions of its boundary with Site under Harley Alley development State College Borough. The Original Waffle Shop

Current land use within the Buckhout Street Buckhout

District consists of single- Street family residential, heavy Street Butz commercial, office space, Street Hoy Ferguson Township boundary State College Borough boundary restaurants. East of the Osmond district is single-family homes with an elementary Corl Street Elementary school. To the north and School west are wooded environmentally sensitive areas. CURRENT LAND USE IN THE TSD

TSD is approximately 47 acres, with approximately 70% of the district impervious. There is no Total area street parking along W. 76,076 sf College Avenue. Current (1.75 acres) commercial distribution scattered along the perimeter with single family residential in the center. The structures are widely spaced out with parking lot sizes exceeding their needed capacity. This is prime opportunity for infill and Total area reduce parking surfaces and 79,300 sf reorganize them to the (1.8 acres) perimeter of TSD. Tree canopy makes up about 11% of the District and is scattered throughout the District as residential trees or part of the floodplain. The Minit Mart property is Planting trees can connect active in the DEP wildlife habitat in the Northcentral office land floodplains that border the recycling program for TSD. In addition to providing gasoline spill. Current wildlife habitat, strategic monitoring and pumping placement of trees can wells are in place but are reduce energy savings in not anticipated to stifle buildings, manage development. Stormwater stormwater, and increase infiltration is not overall air quality. recommended for this area. Phytoremediation can be considered for soil cleanup, which will also add aesthetic and wildlife value. ENVIRONMENTAL CONSIDERATIONS IN THE TSD

The drainage area is approximately 183 acres. Stormwater drains towards the center of TSD and towards the floodplains. Current surface runoff is directed to existing storm drains. The streets and topography divide the HP 1198..5 + drainage area into smaller LP 1152..1 + drainage areas, where stormwater can be captured by best management + HP 1190..5 practices. There are also existing private stormwater LP 1158..2 + management facilities that must be considered and left undisturbed. Care must taken to keep disturbance at a minimum of 50 feet away from the floodplain.

The dolomite geology and HP 1222.5+ surrounding karst topography can form sinkholes when they are exposed to concentrated levels of water. Infiltration is not recommended without geotechnical inspection. EXISTING ROAD CONDITIONS ALONG WEST COLLEGE AVENUE

sidewalk

overhead utilities

50’ 50’ ROW

70’ 70’ ROW

60’ 60’ ROW

80’ 80’ ROW

Hoy St Hoy St Butz

Blue Course Dr BlueCourse

utility pole utility

utility pole utility utility pole utility

80’ ROW Section 60’ ROW Section

utility pole utility utility pole utility

70’ ROW Section 50’ ROW Section POINTS OF INTEREST: KEY EMPLOYERS IN THE AREA

Fifteen out of the Centre County’s top 25 employers are within a 5 mile radius; 8 are within a 3 mile radius. This adds value to potential TSD development, since residents benefit from accessibility to employment, flexible modes of transportation, and being in 01. Pennsylvania State University close proximity to 02. Mount Nittany Health 03. State government community amenities and 04. State College Area School District 05. Glenn O. Hawbaker Inc essential services. 06. Wal-Mart Associates Inc. 07. Weis Markets Inc. 08. Centre County government State Route 26 continues 09. The Meadows/Universal Community Behavioral Health south, but land use is 10. HRI Inc. 11. Wegmans Food Markets Inc. agriculture or undeveloped. 12. Bellefonte Area School District 13. YMCA of Centre County Therefore, TSD would be a 14. Geisinger Medical Group potential gateway to State 15. Federal government 16. Shaner Operating Corp. College from the west. 17. Philipsburg-Osceola Area School District 18. Minitab Inc. 19. AccuWeather Inc. 20. Restek Corp. 21. Bald Eagle Area School District 22. McDonald’s Restaurants of Pennsylvania Inc. 23. Giant Food Stores LLC 24. Hotel State College & Co. 25. Brookline ______Employer = within 3 mi radius Employer = within 5 mi radius Employer = within Centre County MAJOR EVENTS THAT IMPACT THE STATE COLLEGE ECONOMY

Calendar events bring in as many as 100,000 visitors. This suggests a great need for restaurants, retail, and lodging services that could alleviate crowdedness from downtown State College. TSD provides opportunity for stable businesses that provide year round service. Less than 2 miles away, TSD is a straight path from downtown and PSU that is convenient for walking. Game lands and streams attract outdoor sportsmen into the area that could also contribute to TSD economy. Residents adjacent to TSD can benefit from services by walking without traveling over 2 miles to other shopping areas. Balance is necessary to ensure that quality of life is maintained while supporting tourist economy. INCOME PROFILE DATA DOES NOT PROPERLY REFLECT SPENDING HABITS IN THE TSD AREA

Population 1 Mile Radius Income Profile > 55 It appears that most of the 30.0% 14% < 20 population in the TSD lives in 15% 25.0% 45 - 54 poverty, but that segment 20.0% 6% reflects a very large student 13% 15% population without an active 15.0% 6% income. The income profile 10.0% 35 - 44 does not capture money 5.0% 7% 6% 2014 2019 received from parents and 0.0% part time jobs of which 55% 15% 45% goes into the local economy. 20 - 24 Since the initial plan focused 42% on young professionals, that 25 - 34 demographic alone will not 16% be enough to attract 2014 2019 businesses and we cannot ignore the student Student Spending population. The best options would be mixed use business. 19%

40% 55%

26% 15%

Room and Board Tuition Discretionary Other Source: U.S. Census Bureau, Census 2010 Summary File. Esri forecasts for 2014 and 2019. STATE COLLEGE AREA INCOME PROFILES AND AGE DISTRIBUTIONS

5 Mile Radius As we move away from the TSD and downtown State College, we can see a decrease in the student age population and a rise in Income Profile Population young families. This decreases the amount of 25.0% >55 discretionary spending as 20.0% young families tend to save 18% < 20 more, presenting less 15.0% 23% opportunity in those areas. 10.0% 45 - 54 16% 5.0% 6% 23% 0.0% 7% 2014 2019 35 - 44 7% 7% 13% 34%

20 - 24 2014 2019 25 - 34 32% 14%

Source: U.S. Census Bureau, Census 2010 Summary File. Esri forecasts for 2014 and 2019. PENN STATE STUDENT ENROLLMENT GROWTH EXPECTED TO CONTINUE

Student enrollment at University Park has University Park Campus Enrollment increased at a slow, but stead place since 2000. The growth in student enrollment, 1.0%, is under 48 the modern history compound annual growth 47 rate of 3.46% (since 1944). Under the current trends, 46 the Centre region can expect an additional 8,000 students 45 to be enrolled in 2030. Assuming that students live 44

in groups of two to four per IN THOUSANDS IN unit, and assuming that , 43 traditional occupancy rates of 90% hold consistent, 42 there will be a need for

2,000 to 4,000 additional STUDENTS units in the State College 41 area by 2030. 1% compound annual growth rate (CAGR) 40 of student enrollment over the past 15 These units will have to be years the result of either private 39 developers, or on-campus Penn State development. In 38 either case, the TSD represents a logical area to expand. 37 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: http://www.budget.psu.edu/factbook/StudentDynamic/HistoricalComparisonOfEnrollment.aspx?YearCode=2014&FBPlusIndc=N APPENDIX: A VISION FOR THE TSD

A Thoughtful Transition Between Multiple Spatial Zones

The Railroad Corridor and Plaza: Mixed-Use Space

TSD I: Mixed-Use Retail/Office/Residential

TSD II: Mixed-Use Retail/Office/Residential APPENDIX: A THOUGHTFUL TRANSITION BETWEEN MULTIPLE SPATIAL ZONES

Plaza TSD II TSD I APPENDIX: PLAZA RENDERING

View of lawn at the railroad shopping plaza

Existing 7-story mixed West Side Bike Trail use on trail Stadium

Section from bike path towards West College Ave. APPENDIX: A THOUGHTFUL TRANSITION BETWEEN MULTIPLE SPATIAL ZONES

View from bike path towards the plaza Source: Renderings derived from the following sources: Columbia Pike, Arlington, VA. Greaterplaces.com, Beacon of Groveton. Beaconofgroveton.com, Downtown Crown, Bizjournals.com APPENDIX: TSD I, MIXED RETAIL/OFFICE/RESIDENTIAL

7-story West 7- story mixed College mixed use Ave use

Section of West College Avenue View on West College Avenue towards State College

Source: Renderings derived from the following sources: Columbia Pike, Arlington, VA. Greaterplaces.com, Beacon of Groveton. Beaconofgroveton.com, Downtown Crown, Bizjournals.com TSD I: MIXED RETAIL/OFFICE/RESIDENTIAL . Maximum of 7 floor mixed use on West College Avenue . Smaller building footprint . Shorter building height on Butz and Beaver provides transition to State College and to residential areas . Yards provide social gathering spaces

West 7-story Courtyard Calder 3- story Harley Existing College mixed Way townhouse Alley residential Avenue use TSD II: MIXES RETAIL/OFFICE/RESIDENTIAL

West College Avenue Existing W. Golf College 7-story Existing single Ash Course Ave mixed use family residential Street

. Transitions towards other businesses on West College Ave . Larger footprint GATEWAY RENDERING

West College Avenue

View on West College Avenue and Blue Course Drive towards State College Source: Renderings derived from the following sources: Columbia Pike, Arlington, VA. Greaterplaces.com, Beacon of Groveton. Beaconofgroveton.com, Downtown Crown, Bizjournals.com APPENDIX: RAILROAD CORRIDOR AND PLAZA: MIXED USE SPACE

Concentration of retail, restaurants, offices, hotel, and residential. Lawn and plazas provide social gathering spaces Ample parking available

West 7-story Ped.7-story College hotel path mixed Avenue use APPENDIX: A VISION FOR THE TSD

7-story Access West 7-story Pedestrian 7-story Lawn Ped. mixed road College hotel path mixed use path Avenue use APPENDIX: FINANCIAL VALUATIONS AND SENSITIVITY ANALYSIS

This section includes details Valuation Approaches Used in Our Analysis about the financial analysis that was conducted on potential uses within the Terraced Streetscape Historical Market Transactions District. The methodologies used in this section are not meant to Financial Valuation: Stand-Alone Restaurant be appraisals of any specific piece of land in the TSD, and merely meant to represent Financial Valuation: Stand-Alone Retail Strip the potential value that a developer might place on the land. Financial Valuation: Apartment Building These valuations are based on multiple methods and offer a range of valuations that a property owner may Financial Valuation: Mixed-Use Apartment/Retail consider.

Financial Valuation: Mixed-Use Hotel/Restaurant/Retail VALUATION APPROACHES USED IN OUR ANALYSIS

Market Transactions Real Estate Income Approach

Market Comparison (Sales between 2010 and 2015) Capitalization Rates

25-30% Land Value . Rate of Return on Real Estate

70-75% Land Improvements Construction Costs (RS Means)

. National average

Soft Costs

. Various location specific fees

Surety Costs

. Public works improvements (sidewalks, furniture, etc.)

. Façade improvements (offset by grants) HISTORICAL MARKET TRANSACTIONS

Based on local research, land Improvement Per Acre Land Per Acre Per Acre Total costs are about 25-30% of Address Sold Price Size Sq Ft Cost Land Cost improved lots. Land Cost Cost Improvement Cost Cost averaging anywhere from $10-$25 per square foot for the area. 3490 W College Ave 12/12 $ 510,000.00 3.00 $ 3.90 $ 1.17 $ 2.73 $ 51,000.00 $ 119,000.00 $ 170,000.00 Ferguson Township and 1703 W College Ave 03/10 $ 3,350,000.00 18.48 $ 4.16 $ 1.25 $ 2.91 $ 54,383.12 $ 126,893.94 $ 181,277.06 State College as a whole 3510 W College Ave 02/13 $ 825,000.00 3.04 $ 6.23 $ 1.87 $ 4.36 $ 81,414.47 $ 189,967.11 $ 271,381.58 historically carries high 1316 W College Ave 03/10 $ 155,000.00 0.46 $ 7.74 $ 2.32 $ 5.41 $ 101,086.96 $ 235,869.57 $ 336,956.52 property prices for land that already includes 1310 W College Ave 02/10 $ 700,000.00 1.47 $ 10.93 $ 3.28 $ 7.65 $ 142,857.14 $ 333,333.33 $ 476,190.48 improvements which 1500 W College Ave 02/10 $ 290,000.00 0.43 $ 15.48 $ 4.64 $ 10.84 $ 202,325.58 $ 472,093.02 $ 674,418.60 consequently make it 3280 W College Ave 02/10 $ 2,100,000.00 2.87 $ 16.80 $ 5.04 $ 11.76 $ 219,512.20 $ 512,195.12 $ 731,707.32 expensive for developers to 1105 W College Ave 09/11 $ 465,000.00 0.46 $ 23.21 $ 6.96 $ 16.24 $ 303,260.87 $ 707,608.70 $ 1,010,869.57 invest in the area. 1200 W College Ave 06/10 $ 268,000.00 0.17 $ 36.19 $ 10.86 $ 25.33 $ 472,941.18 $ 1,103,529.41 $ 1,576,470.59 Dedicating 30% of sale price 1015 W College Ave 11/13 $ 640,000.00 0.34 $ 43.21 $ 12.96 $ 30.25 $ 564,705.88 $ 1,317,647.06 $ 1,882,352.94 to land and 70% to improvements we can see 2766 W College Ave 10/14 $ 237,600.00 0.12 $ 45.45 $ 13.64 $ 31.82 $ 594,000.00 $ 1,386,000.00 $ 1,980,000.00 that there is a high premium 1006 W College Ave 12/12 $ 1,250,000.00 0.52 $ 55.18 $ 16.56 $ 38.63 $ 721,153.85 $ 1,682,692.31 $ 2,403,846.15 on improvement costs in this 2790 W College Ave 02/15 $ 1,300,000.00 0.12 $ 248.70 $ 74.61 $ 174.09 $ 3,250,000.00 $ 7,583,333.33 $ 10,833,333.33 area averaging about an extra $31. Average 0.29 $ 45.01 $ 13.50 $ 31.51 $ 588,200.23 $ 1,372,467.19 $ 1,960,667.42

Discounting the statistical outliers, we can see there is a high premium in the area on improvements to land which makes investment expensive.

Source: "Ferguson Township Tax Assessment," WebIA, accessed April 8, 2015, http://webia.co.centre.pa.us. COST AND FINANCIAL ANALYSIS: STAND-ALONE RESTAURANT (NEW CONSTRUCTION)

This valuation shows that it Stand Alone Restaurant Estimation would not be financially feasible for a developer to Square Footage 2,000 want to purchase land in this Rent NNN $ 18.00 area in order to open a new Cap Rate 9% construction restaurant. Construction Cost $ 268.05 Valuations are based on Cost to Finish $ 129.95 rents which range from $12- $20 for this area, and cap Custom Finish $ 302.85 rates which could range Surety $ 218,041.29 from 7-10%. Escrow $ 4,400.00 Construction costs were Soft Costs 7% taken from the RS Means database which averages national construction costs. NOI $ 36,000.00 Surety and escrow have Value $ 400,000.00 been calculated based on a Construction $ 536,100.00 current assessment of a corner lot. Soft Costs $ 37,527.00 Surety $ 218,041.29 Escrow $ 4,400.00 Land Value $ (396,068.29) Based on a 2,000 Square Foot Restaurant requiring parking

Source: RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. COST AND FINANCIAL ANALYSIS: STAND-ALONE RESTAURANT SENSITIVITY ANALYSIS

First sensitivity analysis Rent compares rental rates and cap rates to calculate a #### $ 16.00 $ 17.00 $ 18.00 $ 19.00 $ 20.00 $ 30.00 developers will to pay for land. 7% $ (338,925.43) $ (310,354.00) $ (281,782.57) $ (253,211.15) $ (224,639.72) $ 61,074.57 8% $ (396,068.29) $ (371,068.29) $ (346,068.29) $ (321,068.29) $ (296,068.29) $ (46,068.29) Second sensitivity analysis compares soft costs which 9% $ (440,512.73) $ (418,290.51) $ (396,068.29) $ (373,846.07) $ (351,623.84) $ (129,401.62) could be reduced through Cap Rate certain programs by the 10% $ (476,068.29) $ (456,068.29) $ (436,068.29) $ (416,068.29) $ (396,068.29) $ (196,068.29) Township as well as surety 11% $ (505,159.20) $ (486,977.38) $ (468,795.56) $ (450,613.74) $ (432,431.92) $ (250,613.74) cost reduction introduced by state development grants. Soft Cost Based on the current ######### 5% 6% 7% 8% 9% analysis, it is not feasible for 150,000.00 $ (317,305.00) $ (322,666.00) $ (328,027.00) $ (333,388.00) $ (338,749.00) a stand alone new construction restaurant to 175,000.00 $ (342,305.00) $ (347,666.00) $ (353,027.00) $ (358,388.00) $ (363,749.00) be developed in this area unless the developer is able Cost Surety 200,000.00 $ (367,305.00) $ (372,666.00) $ (378,027.00) $ (383,388.00) $ (388,749.00) to charge really high rent which is not the norm for State College. Recommendation: Incorporate restaurants into a multi use building.

This valuation shows that it Stand Alone Retail Estimation would not be financially feasible for a developer to Square Footage 4,500 want to purchase land for Rent NNN $ 18.00 the sole purpose of a small Cap Rate 7.5% strip mall. Vacancy 10% Valuations are based on Construction Cost $ 152.35 rents which range from $12- Cost to Finish $ 63.60 $20 for this area, and cap rates which could range Custom Finish $ 221.15 from 7-10%. Surety $ 218,041.29 Construction costs were Escrow $ 4,400.00 taken from the RS Means Soft Costs 7% database which averages national construction costs. Surety and escrow have PGI $ 81,000.00 been calculated based on a Vacancy $ 8,100.00 current assessment of a corner lot. NOI $ 72,900.00 Value $ 972,000.00 Construction $ 685,575.00 Soft Costs $ 47,990.25 Surety $ 218,041.29 Escrow $ 4,400.00 Land Value $ 15,993.46 Based on a 4,500 Square Foot Space requiring parking

First sensitivity analysis Rent compares rental rates and cap rates to calculate a #### $ 16.00 $ 17.00 $ 18.00 $ 19.00 $ 20.00 $ 30.00 developers will to pay for 7% $ (30,292.25) $ 27,564.89 $ 85,422.03 $ 143,279.18 $ 201,136.32 $ 779,707.75 land. 8% $ (146,006.54) $ (95,381.54) $ (44,756.54) $ 5,868.46 $ 56,493.46 $ 562,743.46 The second sensitivity 9% $ (236,006.54) $ (191,006.54) $ (146,006.54) $ (101,006.54) $ (56,006.54) $ 393,993.46

analysis compares size of a Cap Rate retail space with that of 10% $ (308,006.54) $ (267,506.54) $ (227,006.54) $ (186,506.54) $ (146,006.54) $ 258,993.46 vacancy to show how size 11% $ (366,915.63) $ (330,097.45) $ (293,279.27) $ (256,461.08) $ (219,642.90) $ 148,538.92 and demand can affect a developers will to build. Based on the current analysis, it is not feasible for Square Footage a stand alone strip mall in #### 10,000 15,000 20,000 25,000 30,000 40,000 this area unless the developer can build up and 5% $ 427,413.71 $ 752,341.21 $ 1,077,268.71 $ 1,402,196.21 $ 1,727,123.71 $ 2,376,978.71 possibly use the space for 6% $ 403,413.71 $ 716,341.21 $ 1,029,268.71 $ 1,342,196.21 $ 1,655,123.71 $ 2,280,978.71 office or possibly a mini mall. 7% $ 379,413.71 $ 680,341.21 $ 981,268.71 $ 1,282,196.21 $ 1,583,123.71 $ 2,184,978.71

It is our conclusion that Vacancy 8% $ 355,413.71 $ 644,341.21 $ 933,268.71 $ 1,222,196.21 $ 1,511,123.71 $ 2,088,978.71 vertical construction opportunities for mix use 9% $ 331,413.71 $ 608,341.21 $ 885,268.71 $ 1,162,196.21 $ 1,439,123.71 $ 1,992,978.71 space would provide upside 10% $ 307,413.71 $ 572,341.21 $ 837,268.71 $ 1,102,196.21 $ 1,367,123.71 $ 1,896,978.71 potential to potential developers.

Source: RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. COST AND FINANCIAL ANALYSIS: APARTMENT BUILDING (NEW CONSTRUCTION)

Parking: it is assumed that there will be a charge for Apartment Building PGI $ 1,152,000.00 parking on a per unit basis. Square Footage 56,000 Vacancy $ 23,040.00 Average parking fees in State College are Rent NNN $ 1,800.00 EGI $ 1,128,960.00 $100/month (Other Units 53 Other Income $ 64,000.00 Income). Parking Cost $ 100 NOI $ 1,192,960.00 Based on the national Number of Spots 53 average rate of rent Value $ 15,906,133.33 increase, it can be expected Cap Rate 7.5% Construction $ 14,243,600.00 that rents will increase at an Vacancy 2% average rate of 4.5% where Soft Costs $ 997,052.00 Construction Cost $ 179.40 as operating costs will Surety $ 218,041.29 increase at an average of Cost to Finish $ 74.95 2%. Escrow $ 4,400.00 Custom Finish $ 213.15 Land Value $ 443,040.05 It is important to generate at Surety $ 218,041.29 least a 2.5% spread between revenues and operating Escrow $ 4,400.00 costs in order to generate Soft Costs 7% debt capacity. Apartment Building requiring minimal parking for tenants

First sensitivity analysis Rent compares rental rates and cap rates to calculate a $ 443,040.05 $ 1,500.00 $ 1,600.00 $ 1,700.00 $ 1,800.00 $ 1,900.00 $ 2,000.00 developers will to pay for 6.5% $ (4,631.75) $ 960,291.33 $ 1,925,214.40 $ 2,890,137.48 $ 3,855,060.56 $ 4,819,983.64 land. 7.0% $ (1,108,807.57) $ (212,807.57) $ 683,192.43 $ 1,579,192.43 $ 2,475,192.43 $ 3,371,192.43 Second sensitivity analysis 7.5% $ (2,065,759.95) $ (1,229,493.29) $ (393,226.62) $ 443,040.05 $ 1,279,306.71 $ 2,115,573.38 compares the size of the building to vacancy rates to Cap Rate 8.0% $ (2,903,093.29) $ (2,119,093.29) $ (1,335,093.29) $ (551,093.29) $ 232,906.71 $ 1,016,906.71 illustrate how vertical 8.5% $ (3,641,916.82) $ (2,904,034.46) $ (2,166,152.11) $ (1,428,269.76) $ (690,387.41) $ 47,494.95 construction creates potential for development. Based on the current analysis, vertical Square Footage development is required in $ 443,040.05 24,000 32,000 40,000 48,000 56,000 64,000 order to entice developers into the area. State College 2% $ 62,765.00 $ 157,833.76 $ 252,902.52 $ 347,971.28 $ 443,040.05 $ 538,108.81 has high rental rates which 3% $ (3,063.57) $ 70,062.33 $ 143,188.24 $ 216,314.14 $ 289,440.05 $ 362,565.95 make it attractive for 4% $ (68,892.15) $ (17,709.10) $ 33,473.95 $ 84,657.00 $ 135,840.05 $ 187,023.09 developers, but construction costs are fairly high for this Vacancy 5% $ (134,720.72) $ (105,480.53) $ (76,240.34) $ (47,000.15) $ (17,759.95) $ 11,480.24 type of structure. 7% $ (266,377.86) $ (281,023.38) $ (295,668.91) $ (310,314.43) $ (324,959.95) $ (339,605.48) It is our recommendation to 10% $ (463,863.57) $ (544,337.67) $ (624,811.76) $ (705,285.86) $ (785,759.95) $ (866,234.05) allow for max vertical capacity with possible exception to policy.

Source: RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. COST AND FINANCIAL ANALYSIS: HOTEL (NEW CONSTRUCTION)

On average, mid-tier hotels produce an average revenue Hotel PGI $ 3,001,320.00 per room of approximately Square Footage 72,500 Vacancy $ 750,330.00 $79. Given the seasonal RevPAR $ 79.40 nature of hotel use, our EGI $ 2,250,990.00 analysis incorporates an Units 105 Other Income $ 450,198.00 additional vacancy rate into Cap Rate 9.0% our financial analysis. NOI $ 2,701,188.00 Vacancy 25% Value $ 30,013,200.00 Hotels are also known for Construction Cost $ 190.90 generating additional Construction $ 22,797,625.00 revenues from spaces like Cost to Finish $ 123.55 conference rooms which Custom Finish $ 237.20 Soft Costs $ 1,595,833.75 would be ideal for a business Surety $ 218,041.29 focused university town. Surety $ 218,041.29 Escrow $ 4,400.00 Escrow $ 4,400.00 This hotel option is based on Soft Costs 7% a five-story hotel, with 105 Land Value $ 5,397,299.96 rooms, which is consistent with several mid-tier hotel franchises.

Source: RevPAR: http://csimarket.com/stocks/operatingstat_single.php?code=HOT&statistika=stat9; RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. COST AND FINANCIAL ANALYSIS: HOTEL SENSITIVITY ANALYSIS

The first sensitivity analysis RevPAR compares revenue per available room and cap rates ##### $ 65.00 $ 70.00 $ 75.00 $ 80.00 $ 85.00 $ 90.00 to calculate a developers will 7.0% $ 6,974,099.96 $ 9,404,099.96 $ 11,834,099.96 $ 14,264,099.96 $ 16,694,099.96 $ 19,124,099.96 to pay for land. 8.0% $ 3,025,349.96 $ 5,151,599.96 $ 7,277,849.96 $ 9,404,099.96 $ 11,530,349.96 $ 13,656,599.96 The second table compares revenue per available room 9.0% $ (45,900.04) $ 1,844,099.96 $ 3,734,099.96 $ 5,624,099.96 $ 7,514,099.96 $ 9,404,099.96 with vacancy rates which Cap Rate 10.0% $ (2,502,900.04) $ (801,900.04) $ 899,099.96 $ 2,600,099.96 $ 4,301,099.96 $ 6,002,099.96 could fluctuate throughout the year depending on the 11.0% $ (4,513,172.77) $ (2,966,809.13) $ (1,420,445.49) $ 125,918.14 $ 1,672,281.78 $ 3,218,645.42 season. Based on the current analysis, a hotel would be one of the most profitable RevPAR businesses for this area ##### $ 65.00 $ 70.00 $ 75.00 $ 80.00 $ 85.00 $ 90.00 which could attract a new 20% $ 1,592,099.96 $ 3,608,099.96 $ 5,624,099.96 $ 7,640,099.96 $ 9,656,099.96 $ 11,672,099.96 professionals that come to visit State College for 25% $ (45,900.04) $ 1,844,099.96 $ 3,734,099.96 $ 5,624,099.96 $ 7,514,099.96 $ 9,404,099.96 business. Hotels also need a 30% $ (1,683,900.04) $ 80,099.96 $ 1,844,099.96 $ 3,608,099.96 $ 5,372,099.96 $ 7,136,099.96

significantly larger space for Vacancy the footprint of the building 35% $ (3,321,900.04) $ (1,683,900.04) $ (45,900.04) $ 1,592,099.96 $ 3,230,099.96 $ 4,868,099.96 and for parking. 40% $ (4,959,900.04) $ (3,447,900.04) $ (1,935,900.04) $ (423,900.04) $ 1,088,099.96 $ 2,600,099.96 To ensure that a hotel is sustainable, it is our recommendation to incorporate a floor of restaurant and retail space in to a hotel concept.

Source: RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. COST AND FINANCIAL ANALYSIS: MIXED USE APARTMENTS/RETAIL (NEW CONSTRUCTION)

As we compare Apartment Mixed Residential and Retail building with a mixed use PGI Housing $ 987,428.57 concept, we see that retail Square Footage Housing 48,000 Vacancy $ 19,748.57 and office space could Rent NNN $ 1,800.00 generate additional income PGI Retail $ 126,000.00 which increases the Units 45.71 Vacancy $ 2,520.00 profitability of the space and Parking Cost $ 100 EGI $ 1,091,160.00 maximizes best use. Number of Spots 46 Other Income $ 54,857.14 Square Footage Retail 7,000 NOI $ 1,146,017.14 Rent NNN $ 18 Value $ 15,280,228.57 Cap Rate 7.5% Construction $ 12,208,800.00 Vacancy 2% Soft Costs $ 854,616.00 Construction Cost Housing $ 179.40 Surety $ 218,041.29 Cost to Finish $ 74.95 Escrow $ 4,400.00 Custom Finish $ 213.15 Land Value $ 1,994,371.28 Constructin Cost Retail $ 152.35 Surety $ 218,041.29 Escrow $ 4,400.00 Soft Costs 7%

First sensitivity analysis Rent Housing compares rental rates and cap rates to calculate a ##### $ 1,500.00 $ 1,600.00 $ 1,700.00 $ 1,800.00 $ 1,900.00 $ 2,000.00 developers will to pay for 6.5% $ 1,863,944.91 $ 2,691,021.83 $ 3,518,098.76 $ 4,345,175.68 $ 5,172,252.60 $ 5,999,329.53 land. 7.0% $ 781,816.18 $ 1,549,816.18 $ 2,317,816.18 $ 3,085,816.18 $ 3,853,816.18 $ 4,621,816.18 Second analysis compares 7.5% $ (156,028.72) $ 560,771.28 $ 1,277,571.28 $ 1,994,371.28 $ 2,711,171.28 $ 3,427,971.28

rental rates with vacancy Cap Rate rates of the retail space. 8.0% $ (976,643.00) $ (304,643.00) $ 367,357.00 $ 1,039,357.00 $ 1,711,357.00 $ 2,383,357.00 8.5% $ (1,700,714.43) $ (1,068,243.84) $ (435,773.25) $ 196,697.33 $ 829,167.92 $ 1,461,638.51 Based on the current analysis, mixed use buildings generate more revenue and reduce risk for developers. Rent Retail One aspect that needs to be considered is not all ##### $ 16.00 $ 17.00 $ 18.00 $ 19.00 $ 20.00 $ 21.00 buildings can have retail 5% $ 1,371,666.52 $ 1,460,333.19 $ 1,548,999.85 $ 1,637,666.52 $ 1,726,333.19 $ 1,814,999.85 space due to demand. 6% $ 1,225,076.05 $ 1,312,809.38 $ 1,400,542.71 $ 1,488,276.05 $ 1,576,009.38 $ 1,663,742.71 It is our recommendation to 7% $ 1,078,485.57 $ 1,165,285.57 $ 1,252,085.57 $ 1,338,885.57 $ 1,425,685.57 $ 1,512,485.57 emphasize mixed use buildings into the TSD. Vacancy 8% $ 931,895.09 $ 1,017,761.76 $ 1,103,628.43 $ 1,189,495.09 $ 1,275,361.76 $ 1,361,228.43 9% $ 785,304.62 $ 870,237.95 $ 955,171.28 $ 1,040,104.62 $ 1,125,037.95 $ 1,209,971.28 10% $ 638,714.14 $ 722,714.14 $ 806,714.14 $ 890,714.14 $ 974,714.14 $ 1,058,714.14

Including restaurants in a Hotel with Restaurant and/or Retail Space hotel helps generate PGI Housing $ 2,858,400.00 additional revenue for the Square Footage Housing 72,500 Vacancy $ 714,600.00 hotel as well as allows RevPAR $ 79.40 complimentary business for PGI Retail $ 126,000.00 its guest who seek such Units 100 Vacancy $ 12,600.00 amenities when vacationing Square Footage Retail/Restaurant 7,000 as well as allow for these EGI $ 2,257,200.00 businesses to profit Rent NNN $ 18 Other Income $ 571,680.00 individually. Cap Rate 8.0% NOI $ 2,828,880.00 Vacancy Retail 10% Value $ 35,361,000.00 Vacancy Hotel 25% Construction $ 22,797,625.00 Construction Cost Hotel $ 190.90 Soft Costs $ 1,595,833.75 Cost to Finish $ 123.55 Surety $ 218,041.29 Custom Finish $ 237.20 Escrow $ 4,400.00 Constructin Cost Retail $ 152.35 Land Value $ 10,745,099.96 Surety $ 218,041.29 Escrow $ 4,400.00 Soft Costs 7%

First sensitivity analysis compares revenue per RevPAR available room and cap rates #### $ 60.00 $ 65.00 $ 70.00 $ 75.00 $ 80.00 $ 85.00 to calculate a developers will to pay for land. 7.0% $ 6,318,385.68 $ 8,761,242.82 $ 11,204,099.96 $ 13,646,957.10 $ 16,089,814.25 $ 18,532,671.39 8.0% $ 2,451,599.96 $ 4,589,099.96 $ 6,726,599.96 $ 8,864,099.96 $ 11,001,599.96 $ 13,139,099.96 Second valuation compares retail rental rates and 9.0% $ (555,900.04) $ 1,344,099.96 $ 3,244,099.96 $ 5,144,099.96 $ 7,044,099.96 $ 8,944,099.96 vacancies to illustrate their Cap Rate 10.0% $ (2,961,900.04) $ (1,251,900.04) $ 458,099.96 $ 2,168,099.96 $ 3,878,099.96 $ 5,588,099.96 importance on a developers decision to invest. 11.0% $ (4,930,445.49) $ (3,375,900.04) $ (1,821,354.58) $ (266,809.13) $ 1,287,736.33 $ 2,842,281.78 Based on the current analysis, retail and/or restaurant incorporated into a hotel makes sense since Rent Retail the businesses complement #### $ 16.00 $ 17.00 $ 18.00 $ 19.00 $ 20.00 $ 21.00 each other as well as increase revenues. 5% $ 10,657,599.96 $ 10,740,724.96 $ 10,823,849.96 $ 10,906,974.96 $ 10,990,099.96 $ 11,073,224.96 6% $ 10,643,599.96 $ 10,725,849.96 $ 10,808,099.96 $ 10,890,349.96 $ 10,972,599.96 $ 11,054,849.96 Recommendation: Incorporate restaurants into 7% $ 10,629,599.96 $ 10,710,974.96 $ 10,792,349.96 $ 10,873,724.96 $ 10,955,099.96 $ 11,036,474.96 a multi use building. Vacancy 8% $ 10,615,599.96 $ 10,696,099.96 $ 10,776,599.96 $ 10,857,099.96 $ 10,937,599.96 $ 11,018,099.96 9% $ 10,601,599.96 $ 10,681,224.96 $ 10,760,849.96 $ 10,840,474.96 $ 10,920,099.96 $ 10,999,724.96 10% $ 10,587,599.96 $ 10,666,349.96 $ 10,745,099.96 $ 10,823,849.96 $ 10,902,599.96 $ 10,981,349.96

Source: RSMeans, Square Foot Costs 2015 36th Annual Edition, Edited by Marilyn Phelan. Norwell: Construction Publishers & Consultants, 2014. APPENDIX: VIABLE SOLUTIONS AND BENCHMARKING COMPARISONS

During the course of our Risks and Township Influence research, we identified a number of solutions that other communities used to facilitate development. State Funding Programs that Potentially Align with the TSD Corridor The following slides include a summary of our research. Community Engagement Opportunities

Redevelopment Example: “Downtown” Champaign, Illinois

Redevelopment Example: “Midtown” Champaign, Illinois

Redevelopment Example: Bloomington Thompson-Walnut TIF

Redevelopment Example: East Lansing, Michigan Corridor Improvement APPENDIX: RISKS AND TOWNSHIP INFLUENCE

Over the course of our Risk Description Township Influence Impact on TSD Success research, we developed an understanding of a number of potential risks related to Members in the community are concerned about the development of the Community Concern the potential impact on their quality of life and the MEDIUM LOW Terraced Streetscape emergence of a second “Beaver Canyon.” District. It is important for the Current property owners in the TSD have high Township to focus on the Expectations of Current expectations for the property values – some which areas that have high impact Property Owners MEDIUM HIGH on the TSD, and where the may be prohibitive for developers to meet. Township has the opportunity to influence the situation. Smaller, fragmented parcel sizes make it difficult for Parcel Sizes a large-scale developer to acquire the land MEDIUM HIGH necessary for scaled development.

Borough stakeholders, as well as Penn State Adjacent Stakeholders stakeholders play an influential role in wider LOW HIGH development in the State College area.

Developers have expressed uneasiness about the Ordinance & Design ordinance and design standards that currently exist Standards HIGH HIGH in the TSD.

Individuals and developers do not have a clear Vision Marketing understanding of the vision for the TSD and how it HIGH HIGH will be accomplished.

Source: APPENDIX: VIABLE SOLUTIONS AND BENCHMARKING COMPARISONS

Our team identified a handful of communities that possesses characteristics State College, similar to State College. Our Bloomington, IN West Lafayette, IN Champaign, IL East Lansing, MI research yielded a number Pennsylvania of conversations with a handful of communities that possess similar town populations and college influences. Square Miles 4.5 23 7 22 13 These conversations yielded a number of uses and cases that other communities Town 155k 175k 182k 231k 48k were able to successfully Population implement. Over the course of the next several pages, we will detail the projects College that these communities 45k 46k 39k 45k 50k undertook, and will seek to Population identify the “animating action” as well as any Lisa Abbot, City of TJ Blakeman, City specific outcomes that we Anne Messner & Jason Kildea, The Bloomington; of Champaign; identified. Point(s) of Meagan Tuttle, Chandler Poole, Gillespie Group; Andy Patterson, Samantha Rice, Contact Borough of State City of Lafayette Tricia Foster, Gentry The Atkins Group College CBME Group Construction

Source: Smeal APEX Primary Research STATE FUNDING PROGRAMS THAT POTENTIALLY ALIGN WITH THE TSD CORRIDOR

Funding programs, grants, loans, tax credits and other incentives to help businesses, communities, and municipalities succeed Neighborhood Assistance, in Pennsylvania. Building PA Business in Our Sites Loans Enterprise Zone Tax Credit The Single Application for Assistance allows the applicant to apply for various programs using one For Real estate development in Attract businesses by helping them Provides tax credits to private form while capturing specific small to mid-sized PA communities. build an inventory of ready sites. companies investing in program information needed to evaluate the Industrial, commercial and multi- Available to municipalities and rehabilitating, expanding, or project for possible funding. use projects. Interest rate is Tied to private developers. No repayment improving buildings or land We have identified 20 state 1st Mortgage Rate w/Floor of 5% until property is sold or leased or 5 resulting in jobs created or programs that could years from the date of closing. retained. Credits received and not potentially be used by Ferguson Township for interest rate is 2% or 3% depending used may be carried forward for up development needs. on county unemployment rate. to five years. Credits may be sold or transferred.

Source: www.portal.state.pa, www.newpa.com, www.toomey.senate.gov, www.dced.state.pa COMMUNITY ENGAGEMENT OPPORTUNITIES

The diverse cultures at PSU provide a unique opportunity to provide services (restaurant, retail, etc.) that would be targeted Surveys towards meeting the needs of students who may be far from their cultural home. Furthermore, this unique spots will be a draw for local residents wanting to Neighborhood Resource Team experience cultures beyond their borders. An incentive program for landlords is being established in West Incentive programs for landlords Lafayette as well as other communities. Information regarding the success of these programs can be made available. The ITGA is the resource The International Town and Gown Association point for common issues between higher learning institutions and the communities in which they are located. It assists civic leaders, residents and students in collaboration on services and programs to increase quality of life for all. REDEVELOPMENT EXAMPLE: “DOWNTOWN” CHAMPAIGN, ILLINOIS

The city of Champaign, Illinois has had very good success redeveloping INVESTMENT commercial properties into residential properties.

The redevelopment $4M granted since 1996 incentive program for “downtown” Champaign (indicated in red) began in 1996, and was broadened in 2004. They incented residential development by allocating a higher percentage of grants if ACTIVITY residential development was pursued. Incentives sought to increase residential properties The maximum grant in the area, by converting commercial properties amounts were $100k for developers and could not exceed 20% of the project’s total cost. In total, $4M has been granted since 1996. Overall, the ROI has been 27 million dollars, and the RESULT community has added 60 residential units, including a 2005 mixed-use The local municipality has seen the equalized redevelopment project that assessed value for the district increase to $31M. added 25 condos, as well as ground retail and office space.

Source: Smeal APEX Primary Research, Image Courtesy of the City of Champaign, Illinois. REDEVELOPMENT EXAMPLE: “MIDTOWN” CHAMPAIGN, ILLINOIS

The city of Champaign, Illinois has had very good success redeveloping commercial properties into residential properties. The redevelopment incentive program for Midtown (indicated here in green) began at the same time as the redevelopment project for Downtown. However, over 80% of the grants went to downtown. There was significant pressure to develop the space, but concerns because of a floodplain that existed in the area. It wasn’t until TIF funds were used to encourage development. In addition, they work to market through a membership-driven business association. Still, development has not been as successful in the downtown area because of the aforementioned environmental risks.

Source: Smeal APEX Primary Research. Image Courtesy of the City of Champaign, Illinois. REDEVELOPMENT EXAMPLE: BLOOMINGTON THOMPSON-WALNUT TIF

The Thomson-Walnut TIF development space has similar characteristics to the SIZE TSD, because of its adjacency to the historic downtown area. The local The space is 3 miles long and has a similar proximity municipality has catalyzed to the traditional downtown area as the TSD is to development through State College façade and art grants throughout the corridor in an effort to help forge a vision and culture for an otherwise bleak space. They haven’t had to incentivize retail spaces, because their INCENTIVES incentives for residential communities have helped they usually incentivize the façade to create attract retail. development pressure, create opportunity (developers building residential and Local developers leveraged trends in student tastes that suggest higher value on quality features and new construction, which helped ensure that spaces would be filled. COMMUNITY Cultural restaurant There is strong community support by way of a association helps to pull-in cultural restaurant association that seeks to bring in people from outside the of community members from outside of the designated the immediate Thomson-Walnut corridor. neighborhood.

Source: Smeal APEX Primary Research. Image Courtesy of the City of Bloomington, Indiana. REDEVELOPMENT EXAMPLE: EAST LANSING, MICHIGAN CORRIDOR IMPROVEMENT

In East Lansing, Michigan, the community has had success by helping to meet FOCUS developers where they are. They have sought to partner The focus in this case is on developers – they want to with developers to ensure ensure that developers have the easiest path to re- that their needs are being development, while also ensuring that they stay met. within the standards of the In particular, the community has streamlined the development process and has helped to create a “developer toolbox” that provides developers with the information, resources, and points of contact to pursue real estate TOOLBOX development in the corridor.

The local municipality works There is strong community support by way of a closely with the Realtor and cultural restaurant association that seeks to bring in brokerage community to identify qualified community members from outside of the designated developers. Thomson-Walnut corridor.

Source: Smeal APEX Primary Research, Image Courtesy of the City of Lansing, Michigan.