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Executive Summary
The Beaufort County Comprehensive Plan, adopted December 15, 1997, states that 11Beaufort County has work deficiencies that will need to be addressed over time if it is to expand job opportunities for County residents". The Plan reconnnends strategies to create higher paying jobs in clean technology- based businesses, including expanded training and general education opportunities, including university level educational opportunity for basic education and continuing professional training.
The Plan suggests provision of support in the creation of a four-year campus, with a research facility. This step is seen as vital in building the strength in higher educational offerings to attract high technology manufacturing and service sector industries. In March 1994, South Carolina Governor Carroll A. Campbell, Jr. and University of South Carolina President, Dr. John Palms, accepted an 80-acre gift from Union Camp Corporation and initiated master planning to move toward development of a new USCB campus at this location. To date, master planning, land planning, and architecture of the first buildings have been completed, and intensive fundraising efforts are ongoing. However, in order for the campus to achieve the goals of the University and Beaufort County, additional funding is required. Beaufort County Council authorized spending County funds to evaluate the efficacy of County support for the University's plan to build a new campus.
The purpose of this report is to determine the financing needs and reconnnend financing options for the development of a four-year university in Beaufort County, South Carolina, the USC Beaufort (USCB) New River Campus and the surrounding New River Area in Southern Beaufort County.
It is proposed that development in the New River Area resulting from the proposed investment in infrastructure and education should be anticipated. As the New River Campus develops through its stages, it will generate jobs and economic activity in the connnunity. Moreover, the property tax base for the subject property will expand from its current base and begin to generate property tax revenue for the County. The consultant reconnnends that this "value added" in property tax revenue be the primary source for funding the investment in the New River Campus and the surrounding New River Area. This approach ensures that the New River Area itself contributes towards financing the costs associated with the proposed USC Beaufort New River Campus and surrounding infrastructure needs. The Consultant's report further finds that the incremental tax revenue from a defined Tax Increment Financing (TIF) District is sufficient to cover the debt associated with the proposed projects at the New River Campus.
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Employee-Owned Company USC BEAUFORT NEW RIVER CAMPUS BUSINESS PLAN TABLE OF CONTENTS
CHAPTER I INTRODUCTION
CHAPTER2 NEW RIVER CAMPUS VISION
CHAPTER3 STUDY AREA DESCRIPTION
CHAPTER4 PREREQUISITES FOR A SUCCESSFUL DEVELOPMENT
CHAPTERS ANTICIPATED DEVELOPMENT
CHAPTER6 THE CAPITAL IMPROVEMENT PROJECTS
CHAPTER7 TAX REVENUE
Appendix A: Annual TIF Revenue Less School Allocation
CHAPTERS FINANCIAL ANALYSIS
Introduction and Executive Summary
Outline of Possible Financing Structures
Appendix B: Financial Projections for Possible Financing Structures
Appendix C:Debt Service Detail for Possible Financing Structures USC BEAUFORT NEW RIVER CAMPUS BUSINESS PLAN TABLE OF CONTENTS
CHAPTERl INTRODUCTION
CHAPTER2 NEW RIVER CAMPUS VISION
CHAPTER3 STUDY AREA DESCRIPTION
CHAPTER4 PREREQUISITES FOR A SUCCESSFUL DEVELOPMENT
CHAPTERS ANTICIPATED DEVELOPMENT
CHAPTER6 THE CAPITAL IMPROVEMENT PROJECTS
CHAPTER7 TAX REVENUE
Appendix A: Annual TIF Revenue Less School Allocation
CHAPTERS FINANCIAL ANALYSIS
Introduction and Executive Summary
Outline of Possible Financing Structures
Appendix B: Financial Projections for Possible Financing Structures
Appendix C: Debt Service Detail for Possible Financing Structures CHAPTER!
INTRODUCTION USC Beaufort New River Campus Business Plan
Chapter 1 INTRODUCTION
STATEMENT OF PURPOSE
Seeking to serve the citizens of Beaufort County, Beaufort County Council authorized spending County funds to evaluate the efficacy of County fmancial support for USC Beaufort's (USCB) plan to expand its campus. This represents a significant step in the decision making process required to attain the County Council goal of adopting a financial plan to enhance higher education in the County. The evaluation authorized by the County is presented in this document. The purpose of this report is to detennine the financing needs and recommend financing options for the development of a four-year university in Beaufort County, South Carolina, the USC Beaufort (USCB) New River Campus and the surrounding New River Area in Southern Beaufort County. In March 1994, South Carolina Governor Carroll A Campbell, Jr. and University of South Carolina President, Dr. John Palms, accepted an 80-acre gift from Union Camp Corporation and initiated master planning to move toward development of a new USCB campus at this location. To date, master planning, land planning, and architecture of the first buildings have been completed, and intensive fundraising efforts are ongoing. However, in order for the campus to achieve the goals of the University and Beaufort County, additional funding is required.
The New River Area, which surrounds the New River Campus, is in the early stages of realizing its development potential. Located near the intersection of Beaufort County's two major growth corridors, U.S. 278 and SC 170, as illustrated in Exhibit 1-1 the New River Area is poised for economic growth and activity. Del Webb began development of its 8,600-home Sun City Hilton Head retirement community in the New River Area in 1995. In the first six years of development, Del Webb Corporation has built 2,185 single-family residences. Located in a previously underdeveloped portion of Beaufort County, Sun City Hilton Head has sparked development in the New River Area. Wal-Mart, Fairfeild Inn, Okatie Commerce Park and the forthcoming Okatie Center neighborhood retail/commercial development provide a glimpse into the future of the New River Area. The commercial potential of the New River Area gains significant support through public investment into the New River Campus and the surrounding infrastructure.
This report proposes that development in the New River Area resulting from the proposed investment in infrastructure and education should be anticipated. As the New River Campus develops through its stages, it will generate jobs and economic activity in the community. Moreover, the property tax base for the subject property will expand from its current base and begin to generate property tax revenue for the County. The consultant recommends that this "value added" in property tax revenue be the primary source for funding the investment in the New River Campus and the surrounding New River Area. This approach ensures that the New River Area itself contributes towards financing the costs associated with the proposed USC Beaufort New River Campus and surrounding infrastructure needs.
Wilbur Smith Associates 1-1 final Report USC Beaufort New River Campus Business Plan
APPROACH
Chapter 2 presents the USCB New River Campus vision. A brief history of the University and the vision for a four-year college at New River give way to the current educational, demographic and economic conditions of the Lowcountry region. The collected data and information provides substance to the assertion that USCB and Beaufort County are underserved in terms of space, program offerings, and state funding.
A brief description of the current conditions in the New River study area are given in Chapter 3, while an explanation of what is required for development to succeed follows in Chapter 4. These two chapters set the tone for the remainder of the report. The anticipated development in the New River Area is presented in Chapter 5. This includes descriptions of the forecasted land uses, the estimated time frame of build-out, projected square footage and acreage figures, as well as the per acre value of all potential development.
Detailed account of the capital improvement projects required to encourage development in the New River Area is given in Chapter 6. These include campus buildings and infrastructure, and public infrastructure projects.
Chapter 7 identifies the revenue streams for financing the projects presented in Chapter 6. Taking common planning functions and data gathered through analysis of the Southern Beaufort real estate market, tax revenues are projected twenty-five years into the future. This gives insight into the potential of value-added tax revenue financing mechanisms such as Tax Increment Financing (TIF).
A comparison of debt and revenue streams resulting from the Tax Increment Financing option is presented in Chapter 8, "Financial Analysis". Based on the findings of the report, recommendations to issue bonds to fmance the infrastructure needed to encourage economic development in the New River area is given in Chapter 9. It is further recommended that the service of bond debt be made by means of Tax Increment Financing.
OVERALL VISION
The long-held vision of both Beaufort County and USC Beaufort is to establish a "research institution around which the County could build the training and research capacity that might support expanded and more extensive high-tech clusters"1 to serve the citizens of the Lowcountry and address Beaufort County workforce deficiencies. The acquisition and geography of the New River Campus site is ideal for the realization of this vision. Its strategic location near the intersection of two of Beaufort County's most important thoroughfares positions the campus to provide convenient access to a broad Lowcountry constituency, while spurring County-wide economic development.
1 Beaufort County Comprehensive Plan, adopted December 15, 1997
Wilbur Smith Associates Final Report USC Beaufort New River Campus Business Plan
Exhibit 1-1 The New River Area in the Lowcountry Region
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Wilbur Smith Associates 1-3 Final Report CHAPTER2
NEW RIVER CAMPUS VISION USC Beaufort New River Campus Business Plan
Chapter 2 NEW RIVER CAMPUS VISION
INTRODUCTIONlO
The purpose of this chapter is to present the vision of the USC Beaufort New River Campus. In March 1994, South Carolina Governor Carroll A. Campbell, Jr. and University of South Carolina President Dr. John Palms accepted an 80 acre land grant gift, now known as the New River Campus site, from Union Camp Corporation and initiated master planning to move toward development of a new campus on this location. This land is located in Beaufort and Jasper Counties, south of and adjacent to Route 278 and Sun City Hilton Head. This land gift provided to the University and the County an opportunity to realize a long held vision of establishing a four-year university in Beaufort County. This would allow County residents to remain in the region to pursue their bachelor's and perhaps master's degrees, and attract the industry that will provide jobs applicable to the degrees attained. Growth in the USC Beaufort service area Beaufort, Jasper, Colleton, and Hampton Counties (see Exhibit 2-1}-has increased the demand for classroom space and programs, and a lack of a four-year post-secondary institution sets Beaufort back in terms of recruiting non-polluting, technology-based industry. The New River Campus provides Beaufort County with an opportunity to expand USC Beaufort into a dual campus, four-year, baccalaureate degree-granting institution.
Exhibit 2-1 The USC Beaufort Service Area
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Wilbur Smith Assodates 2-1 Anal Report USC Beaufort New River Campus Business Plan
HISTORY OF THE VISION
The idea to introduce four-year degree programs was conceived in February 1986 when the USC Beaufort 2001 Committee prepared "Collective Vision", a report outlining the long-term development plan for USC Beaufort. The report anticipated population growth and increase in educational needs and, in this respect, recommended the following: "By the year 2001, USC Beaufort should have achieved the status of baccalaureate degree granting institution, capable of serving its area and community with established liberal arts and professional programs." This report projected that population in Beaufort County to reach 102,800 by the year 2000. Actual growth has exceeded this estimate by more than 18,000 (actual 120,937). This report lamented insufficient state and local resource allocations for higher education in the region and urged increased support through recognition of the area's potential.
From the County perspective, the Beaufort County Comprehensive Plan, adopted December 15, 1997, states that "Beaufort County has work deficiencies that will need to be addressed over time if it is to expand job opportunities for County residents". The Plan proposes to create new jobs in the County by creating an environment conducive to attracting non-polluting technology based industry over the next 10 years. To fill many of these jobs (in light manufacturing, distribution, and assembly) with County residents requires continued, but expanded use of "pre employment" training programs and general education. Furthermore, Beaufort County Council
In this respect, the County's Economic Development Plan seeks to: • create an Education and Training Partnership to improve and insure greater support for technology-based job creation goals; • provide new USC Beaufort facilities that can support the education needs of higher technology firms; and • introduce specialized research and support programs linked to USC.
The aforementioned plan suggests provision of support in the creation of a four-year campus, with a research facility. This step is seen as vital in building the strength in higher educational offerings to attract high technology manufacturing and service sector industries.
The region itself has been developing at a high pace. Mild climate, picturesque landscapes and beaches along the coastline create favorable conditions for a burst of recreational industry. Today, Beaufort County is one of the most prosperous counties in the state of South Carolina with above average income and the State's lowest unemployment rate.
ffiSTORY OF BEAUFORT COLLEGE
Beaufort College was chartered in 1795 as one of the first colleges in the nation. From that time untill861, Beaufort and the College thrived. Beaufort was a well-populated and wealthy parish, as well as an influential region of the state. In 1861, Beaufort's economic base in cotton died with the Civil War, and populations, fortunes, and influence were greatly diminished. For over 100 years, Beaufort remained rural, poor and provincial, as residents struggled to produce crops from the rich soil and bring seafood from the teeming waters. They lived quietly - often in poverty.
Wilbur Smith Associates 2-2 Final Report USC Beaufort New River Campus Business Plan
In 1959, USC Beaufort was founded on the Beaufort College site as the first regional campus of the state's largest public university. During the 1960s, resort development flourished on Hilton Head Island and established a rapidly escalating development trend that has continued in the region. Today, as noted above, Beaufort County is one of the fastest growing counties in the state, as well as the nation.
In the 1970s, USC Beaufort began providing courses at local military sites on the Marine Corps Recruit Depot (MCRD Parris Island) and the Marine Corps Air Station (MCAS Beaufort). Later, due to regional isolation and community demand, USC Beaufort began offering Lowcountry residents access to bachelor degree programs through sister USC campuses: in Early Childhood Education (Aiken), in Interdisciplinary Studies (Columbia), and in Business Administration (Aiken).
In the 1980s, residents of the service area required course offerings at multi-sites to accommodate work schedules and reasonable commuting time to access higher education opportunities (because of indirect roadways meandering though marshes, tidal creeks, rivers and more than 300 sea islands that make up Beaufort County). The downtown Beaufort campus was not centrally located for students from the southern part of Beaufort County or those from Jasper County. After 7 years of course offerings at various sites on Hilton Head and 5-year enrollment data evidencing an 80% increase, USC Beaufort leased space in an office complex on Hilton Head Island in 1990 to accommodate the southern end of the County. In the 1990s, Bachelor degree offerings via sister campuses were expanded to include baccalaureate degrees in Nursing for Registered Nurses (Aiken) and in Hotel, Restaurant, and Tourism Management (Columbia).
At the time of this project initiation, economic councils; city and county governments; entrepreneurs; hospitals and health care providers; hospitality and tourism businesses; and school districts were seeking strong education-based partnerships in community development that were most appropriate for and can best be carried out by a four-year institution. These partnerships include:
• In it's strategic plan: Goals 2001 , Beaufort County Council included: "·Adopt a plan of action to encourage the opening of a four-year degree-granting branch of the University of South Carolina at New River." • USC Beaufort is an active member in the new Greater Beaufort-Hilton Head Economic Development Partnership and hosts the Small Business Development Center. • The National Academy's Hilton Head High School Chapter of Travel and Tourism is linked to the USC Beaufort Hotel, Restaurant and Tourism program, and the USC Beaufort faculty member who directs that program serves on the high school organization's board. • The Hilton Head Hospitality Association works in conjunction with the USC Beaufort Hilton Head Island Institute of Tourism, which has conducted research for and marketed educational programs for the local hospitality industry during the past 3 years.
Wilbur Smith Associates 2-3 Final Report USC Beaufort New River Campus Business Plan
• The Colleagues and Caring Project has worked with USC Beaufort toward meeting the National Advisory Council on Nurse Education and Practice recommendation that 66% of practicing RNs should have at least a bachelor's degree. (In 1999, only 27% of practicing RNs in the Lowcountry had a bachelor's degree). • The Penn Center/USC Beaufort At Risk Family Initiative has served over 117 minority, rural, at-risk families during the past 9 years. • Jasper County School District has partnered with USC Beaufort to implement a comprehensive school district reform project in the Jasper County schools. (JC need) • Beaufort County School District is opening a new elementary school each fall with a capacity for 500 students and has expressed an anticipated need of 350 new teachers over the next 5 years. The district has enlisted USC Beaufort's support in meeting these needs and is partnering with USC Beaufort to establish lab schools to service the region. • The Pritchards Island Center for Coastal Ecology works with area schools to provide educational opportunities in environmental studies for teachers and students at all levels. • USC Beaufort is in partnership with 13 community organizations to develop a Center for the Study of the Reconstruction Period as part of the National Park Service. • The Creative Retirement Center provides lifelong learning opportunities to over 800 area seniors. • The Arts Council of Beaufort County and USC Beaufort partnered to bring performing and visual arts to the community. • The South Carolina Department of Education's Lowcountry Regional Technical Center for providing technology training for area teachers is also a partner with USC Beaufort. • USC Beaufort brought $354,629 in grant monies to this region for 1999-2000 in support of numerous community endeavors.
The need and opportunity for a four-year university to support the aspirations and efforts of this region to provide development that improves the lives of those living, studying and working in the area are great. The capacity to respond to these needs and opportunities will be enhanced by the presence of a four-year campus ofthe University of South Carolina Beaufort.
CURRENT SITUATION AT USC BEAUFORT
Space
USC Beaufort has developed tive delivery sites around the county. The current Beaufort campus is situated on grounds bordering the historic district of the city of Beaufort. USC Beaufort also maintains office and classroom space at three military sites, Marine Corp Recruit Depot (MCRD Parris Island), Marine Corp Air Station (MCAS Beaufort) and the U.S. Naval Hospital. USC Beaufort also provides program offerings to residents of Hilton Head Island. Even with five course delivery sites throughout Beaufort County, nearly a third of USC Beaufort students still travel 22 miles round trip to attend classes.
Wilbur Smith Associates 2-4 Final Report USC Beaufort New River Campus Business Plan
The Beaufort (Downtown) Campus is an hour's drive from the Hilton Head campus and nearly a half an hour's drive from the proposed site at New River. The current location, in the historic Beaufort district, serves northern Beaufort County well and is: • convenient to Lady's and St. Helena Islands, two of the largest sea islands in this area; • convenient to other population centers such as Port Royal and Burton that make up the Great Beaufort community; • situated close to the bases for military personnel needing USC courses beyond those taught on the bases; and • an integral part of the Beaufort community through its offering of service programs, cultural and intellectual programs.
A 1994 physical plant study of USC Beaufort's Beaufort campus showed no growth potential due to the landlocked condition of the 4.5-acre site, bounded on three sides by the Historic Landmark District and on the fourth by the Beaufort River. Current facilities of 65,338 square feet of owned buildings and 13,548 square footage of leased space allow no appreciable growth. In seven years little-to-no new space has been added.
Programs
To meet regional needs, USC Beaufort currently offers local access to five USC baccalaureate programs: • B.S. Business Administration (USC Aiken) • B.A. Early Childhood Education (USC Aiken) • B.S. Hotel, Restaurant and Tourism (USC Columbia) • B.A. Interdisciplinary Studies (USC Columbia) • B.S. Nursing for Registered Nurses (USC Aiken)
USC Beaufort also provides local access to USC Graduate Degrees in Beaufort and Hilton Head: • M.Ed. Early Childhood Education • M.Ed. Elementary Education • MAT Master of Arts in Teaching • M.Ed. Education Administration • M.Ed. Counselor Education • M.Ed. Exceptional Children • APOGEE Masters in Engineering • MLS Masters of Library Science • PMBA Master Business Administration • MSW Masters in Social Work
USC Beaufort brings the following federal, state and private foundation monies to the local economy: • Opportunity Scholars Grant • NEH Grants for Symposia • Sea Grant support for USC Beaufort/public school partnerships
Wilbur Smith Associates 2-5 Final Report USC Beaufort New River Campus Business Plan
• USC Beaufort/Penn Center Early Childhood At-Risk Family Initiative • Environmental Research Grants • DHEC Coastal Ecology Education Grant • Turner Foundation Support
Enrollment
Enrollment trends at USC Beaufort showed a steady increase from 200 to 500 students from 1970-1980, from 600 to 900 students in the 1980s, and undergraduate enrollment has steadily increased from 896 students in the fall of 1990 to 1,17 5 students in the fall of 2000.
The number of out-of state students has steadily risen from 17 in 1994 to 237 in 2001. These students are primarily from neighboring Georgia and Florida, and surprisingly, a good number are from around the globe. Nearly half of the students are age 25 or older, and over 90% of the students work full or part-time. All of USC Beaufort students commute to college.
USC Beaufort admits students who show promise of academic success and seeks to provide access to higher education opportunities to a wide-range of people who are educationally at-risk. A large portion of USC Beaufort students are first-generation college students from rural areas and small towns throughout the Lowcountry and along the southernmost coastal region of the state.
With the new campus, USC Beaufort will experience increases in student body from a new population group: students from outside of the region who come to the area because of baccalaureate opportunities at USC Beaufort. The increase brought about by serving "destination" students will enable programmatic expansion. Thus, USC Beaufort is able to capitalize on its prime location to attract out-of-town students and local USC Beaufort students benefit through expanded academic opportunities.
Funding
USC Beaufort funding comes from varied sources. First, are the tuition fees from students. Although tuition fees comprise a good fraction of cash inflow, this inflow is not enough to cover all operating expenses. Thus, public universities are heavily subsidized by the state.
USC Beaufort receives an annual appropriation from the South Carolina General Assembly under the Mission Resource Requirement (MRR) checklist. Currently USC Beaufort's state appropriation is less than 50% of what the MRR calculates is needed.
THE CASE FOR A FOUR-YEAR NEW RIVER CAMPUS
The case for the New River Campus is made on three fronts-education, population demand, and economic development. There is a four-year post-secondary education void in the Lowcountry, and it trickles down to all levels of education. Beaufort County is the fastest growing county in the state; not only can it support a four-year college, its citizenry demands it. In order to attract
Wilbur Smith Associates Final Report USC Beaufort New River Campus Business Plan
non-polluting "technology-based" industry to the region an educated workforce is required-the New River Campus would provide such a labor force.
Education
The proposed campus would serve the Lowcountry, a region that does not have immediate access to a four-year degree awarding campus. Exhibit 2-2 shows the lack of 4-year post graduate educational institutions in the Lowcountry. The nearest in-state 4-year college is in Charleston, over 70 miles from the City of Beaufort and 108 miles from Hilton Head Island.
Beaufort County has comparatively strong educational traditions. Comparison of educational attainment for persons 25 years and over for the respective Lowcountry counties reveals a huge gap in their educational level. According to 1990 statistics, 83.4% of persons 25 years and older in Beaufort County were at least high school graduates, as compared to 54.5% in Jasper, 61.7% in Colleton, 58.9% in Hampton, 68.3% in South Carolina, and 75.2% nationwide. The percent of bachelor's degree, or higher, is 26.5% for Beaufort County (13,836 persons), which is much higher than the statewide percentage of 16.6% and nationwide of 20.3%. In Jasper County, individuals with bachelor's degree, or higher, comprise a poor fraction of 4.8% (450 persons); in Colleton - 9.6% (2,044 persons), Hampton- 8.8% (938 persons).
Even though the percentage of only high school graduates in Jasper, Colleton and Hampton Counties (35%) is higher than in Beaufort (27.4%), the critical mass of people with no diploma outweighs this advantage (about 40% and 16.5% respectively). Moreover, it is important to account for differences in population in the above counties and the economic development of each county. Graduates with degrees will hardly return home and face the problem of underemployment. 1
Further analysis indicates that students prefer campuses near their homes. USC statistics for fall 2000 show that out of 1,363 students originally from Beaufort, 793 persons were enrolled locally in Beaufort, 457 in Columbia campus, 99 in Aiken and 10 in Spartanburg. The Jasper students also prefer Beaufort to receive a two-year education: 46 in Beaufort, 44 in Columbia, and 25 in Aiken. The most popular USC campuses for four-year education are Columbia and Aiken.2
1 U.S. Population Census , 1990. 2 University of South Carolina Annual Report, 2000.
Wilbur Smith Associates 2-7 Final Report USC Beaufort New River Campus Business Plan
Exhibit2-2 Four-Year Baccalaureate Degree Granting Institutions
LEGEND N • Private 4-Year Institutions o Public 4-Year Institutions * Oty of Beaufort County Lines +
A new four-year degree awarding college in Beaufort would, to some extent, redirect the flow of undergraduate students from Aiken and Columbia to Beaufort. A four-year USC Beaufort will better serve the educational needs of local students and surrounding counties.
Population
Although situated adjacent to one another in the southernmost comer of South Carolina, Beaufort County and the other three counties are vastly different. Beaufort County's population is characterized by dramatic growth. In the 1990s, Beaufort County experienced the largest percentage increase in population of any county in the state. After a steady population (around 20,000) for much of the early 20th century, the county has increased its population by nearly 350% in the last half-century. This is far beyond the general 85-90% increase over the same period for the state of South Carolina and the United States. Growth has been steady over the last 50 years, never seeing a decade with less than 15% growth and generally seeing growth over
Wilbur Smith Associates 2-8 Final Report USC Beaufort New River Campus Business Plan
30% per decade. Today Beaufort County is in the top 25% of SC counties for population, inhabited by 120,937 people on 587 square miles, despite having no metropolitan areas.3
The USC Beaufort service area has experienced tremendous growth over the past 15 years, especially in Beaufort County. This intense growth has put extreme strain on space and program offerings at USC Beaufort. Physical plant studies of USC Beaufort's Beaufort Campus in 1994 showed no growth potential due to the landlocked condition of the 4.5-acre campus. Only a new campus can meet this Lowcountry demand.
Economic Need
The economic and social impact of the new campus would also spread into the neighboring counties, especially Jasper County, as well as Colleton and Hampton Counties. This four-county area is a predominately rural plain characterized by sprawling fannland, small towns, coniferous old growth forests, and barrier islands separated from the mainland by salt marshes, tidal creeks and other winding waterways. Juxtaposed against rural isolation are a burgeoning tourist trade, retirement community proliferation, and rapid coastal growth spawning new and expanding business development.
Beaufort County is the most prosperous among the four counties. The booming retirement and recreational industry has spurred the growth of human oriented service industries such as retail trade, professional and related services (health, educational services, etc.), and accommodation and foodservices industries. Over 43 % of Beaufort County's population was employed in retail trade and professional services in 1990.
Favorable mild climatic conditions and beautiful landscapes, as well as a coastline with numerous beaches, have drawn people to the area. For the last two decades Beaufort County has experienced a rapid increase in population, primarily due to net migration. Net migration between 1990 and 1997 accounts for an increase of 13,497 persons, compared to only 6, 740 persons in natural increase.
As a result of economic development, Beaufort County's population has enjoyed a steady increase in per capita personal income (by 3-5% per year, on average). Moreover, per capita personal income ($25,599) was slightly above the average nationwide figure ($25,288) and much higher of that for the state ($20,508) in 1997. In 1997, Beaufort County was ranked first in per capita personal income among all counties in South Carolina. In 1990, unemployment rate in Beaufort County was among the lowest in the state: 3.8% versus the across-state rate of 6.5%. Moreover, the county provided employment for as much as 94.6% of its residents in 1990.3
The region has been developing fast and has potential for further development (the current new construction and active real estate market are the best proof of it). To date, the retirement and recreational industries have driven development. The introduction of a four-year degree awarding institution would create favorable conditions for economic diversification of the
3 U.S. Population Census, 1990.
Wilbur Smith Associates 2-9 Final Report USC Beaufort New River Campus Business Plan
region. The University's research facilities and educated labor force would attract businesses that specialize in creating intellectual products (financial services, R&D divisions, etc.), as well as light manufacturing and assembly, which are appropriate for the delicate ecology of the region.
BENEFITS OF THE NEW CAMPUS
According to a study conducted by the business centers of three state~funded universities (Arizona, Florida, Georgia) and published in EconSouth4 (Second Quarter, 2000), universities housed in smaller cities provide some unusual benefits to their host communities. These benefits include but are not limited to strong "multiplier11 effects; intangible benefits in the form of educated workforce, access to advanced technologies and sophisticated cultural events; and infrastructure that attracts companies from outside.
The presence of the university and the potential for shared projects in research and management training attract companies from outside (e.g., Mercedes~Benz in Tuscaloosa, AL). The academic specialties of the university affect the types of businesses that locate in the area. Very often universities in small towns are one of the major employers in the area. During recession times such areas enjoy significantly lower changes in levels of unemployment than other regions.
Many universities draw significant resources from outside the region and the state. These contributions may come from out-of-state students, international students, visitors to the city, research grants, or other federal or private funds . Lifelong learning opportunities are significant to the retirement community.
Long-term impacts may be even more important for the region. In a 1995 study, the University of Alabama's Center for Business and Economic Research calculated the value a degree from the university added to the lifetime income of its graduates. A graduate with a bachelor's degree would earn $408,700 more over his/her lifetime than a graduate with a high school degree. 4
Sales taxes and income taxes collected from the faculty and staff during the period of the students' residency provides inflows to local budgets. By the same token, taxes collected as a result of "value addedu of graduates with a bachelor's degree who remain in the area would contribute to the revenues (both state and local) even more.
According to the study conducted by the Division of Research at The Darla Moore School of Business at the University of South Carolina, the economic impact of USC Beaufort on the Lowcountry Region for fiscal year 1998-1999 constitutes $19.1 million along with an employment impact of 286 jobs. The economic impact of USC Aiken, the smallest USC baccalaureate degree granting campus, is $60.6 million with 976 jobs. In this study the multiplier impacts were calculated using the IMPLAN model widely used across the U.S.
4 Econ South, "Higher Education Translates Into Big Business." Federal Reserve Bank of Atlanta, Second Quarter 2000.
Wilbur Smith Associates 2~ 10 Final Report USC Beaufort New River Campus Business Plan
As noted before, the primary goal of USC Beaufort is to service the four-county area in the region without a baccalaureate degree granting university, including Lowcountry residents tied to the region by work, family, and property. The new campus would help the Lowcountry achieve: • greater economic development without environmental destruction by attracting non· polluting industry to the region; • greater economic independence for its residents because a college graduate earns over $400,000 more in a lifetime than a high school graduate; • greater variety of lifelong learning opportunities by providing the resources and faculty for such programs and courses; • enhanced quality of life because music, art, literature, drama, and learning enrich lives and encourage people and communities to be more thoughtful and wise; and • greater regional access to higher education stronger graduate programs, science laboratories, academic success center, full service library, networked campus, classrooms, community lecture hall.
The 80-acre tract of land donated by Union Camp Corporation to USC Beaufort in the New River Area is contiguous to Dell Webb's Sun City Hilton Head development. Obviously, this is prime real estate. This gift affords incredible potential "market" advantages to USC Beaufort: • a campus on this site would improve access for Jasper County residents, a part of the USC Beaufort service area very under-represented among its student body at present; • the projected site is located in the future epicenter of the Lowcountry's population; and • the projected campus site would open USC Beaufort to a wider market, both in- and out-of-state.
PROGRAM NEEDS
Funding
So far, USC Beaufort has been offering the baccalaureate degree programs through its sister campuses while classes, support services, and labs have been provided by USC Beaufort. As a result, students attending classes at USC Beaufort, but enrolled in Columbia or Aiken, are counted in the enrollment of Columbia and Aiken, not in the enrollment of USC Beaufort. The introduction of local degree programs will solve this problem. Enrollment numbers will immediately increase, subsequently increasing the state appropriation that is allocated to USC Beaufort based on enrollment. The four-year status will also provide access to a broader range of financial aid, scholarship and other grant programs.
Programs
As it has been previously mentioned , the primary objective of the new four-year college is to service the higher education needs of the Lowcountry. Schoolteachers and nurses are two immediate needs.
Beaufort County School District has expressed an anticipated need of 350 new teachers over the next 5 years, enlisting USC Beaufort's support to supply new teachers to serve the region. Jasper
Wilbur Smith Associates 2-11 Final Report USC Beaufort New River Campus Business Plan
County School District has partnered with USC Beaufort to implement a comprehensive school district reform project in the Jasper County schools. The Colleagues and Caring Project has worked with USC Beaufort toward meeting the National Advisory Council on Nurse Education and Practice recommendation that 66% of practicing RNs should have at least a bachelor's degree. (In 1999, only 27% of practicing RNs in the Lowcountry had a bachelor's degree). Moreover, given the growth in the retiree community, increased demand for health services, especially qualified nursing is inevitable. In this respect, there is a high demand for local education and nursing bachelor degree programs at USC Beaufort. With Hilton Head as a world class tourism destination, USC Beaufort should also offer Hospitality Management, Sports Management and Business Administration degree programs. All degrees should be offered by USC Beaufort to quicken responses to community needs, to improve services to students and to bring state funding to this region rather than sending that funding to Columbia or Aiken as happens presently.
USC Beaufort has the necessary academic support to continue the baccalaureate programs presently offered at USC Beaufort by other USC campuses: • Hospitality Management (HRTM degree program was started in 1996 with 4 students taking courses, today over 80 take courses in this discipline) ~ • Business Administration (USC Beaufort also established full membership in the new Greater Beaufort-Hilton Head Economic Development Partnership)~ • Nursing~ • Early childhood education (to serve local community)~ and • Bachelor of Arts in Interdisciplinary Studies (BAIS) Once these programs are approved, USC Beaufort will seek to broaden degree opportunities for area residents.
CONCLUSION
In conclusion, the expansion of USC Beaufort to a four-year dual-campus institution at the proposed New River campus and at the existing Beaufort campus is not merely viable, but demanded. There is a long history of post-secondary education in Beaufort County. However, during the last century this tradition did not grow with the community. The current state of education, population, and economic development in the region more than adequately supports the development of baccalaureate degree opportunities. Furthermore, the lack of adequate classroom space, the high demand for additional programs, and the need for more complete funding work together to bring this issue to the forefront for the people of Beaufort County. The remainder of this report addresses how to fmance the basic infrastructure needed to make this vision a reality.
Wilbur Smith Associates 2-12 Final Report CHAPTER3
STUDY AREA DESCRIPTION USC Beaufort New River Campus Business Plan
Chapter3 STUDY AREA DESCRIPTION
INTRODUCTION
The proposed USC Beaufort New River Campus would exist within the New River Area of southern Beaufort County. An understanding of this area provides a frame of reference for campus development. Furthermore, in order to appropriately project the use of land in the New River Area, the current conditions in the New River Area must first be understood. The purpose of this chapter is to familiarize the reader with the study area. This is accomplished with a brief description of the location of each study area development zone, the present status and condition of the land and a recent photograph of each development zone. A brief explanation of property tax computation and then the estimated existing tax base in each proposed development zone follow this description.
THE NEW RIVER AREA DEVELOPMENT ZONES
For purposes of this study, the study area is broken down into ten development zones. These development zones represent unique groups of parcels that are intended for development, or are under development. It is important to note that these development zones do not represent the full extent of existing development in and around the New River Area. The existing successful Del Webb retirement development has over 2,185 completed homes, with an average value of $200,000 that generated over $4,000,000 in property taxes in 2000. The ten development zones identified in this study are located around the Del Webb development.
Analysis of the New River Study Area and interviews with developers and landowners therein reveals ten distinct development zones. These development zones are specified based on the continuity of geography and ownership of parcels, and in terms of existing and proposed adjacent uses, accessibility and zoning. They serve as a valuable tool for forecasting development uses and staging. The Consultant specifies ten specific development zones as shown in Exhibit 3-1. Each parcels zoning is shown in Exhibit 3-2.
Wilbur Smith Associates 3-1 Final Report USC Beaufort New River Campus Business Plan
Exhibit 3-1 New River Area
Exhibit 3-2 New River Area Zoning .ZOning.... _ Districts....
-
~ 0.5 •t 2:....
Wilbur Smith Associates 3-2 Final Report USC Beaufort New River Campus Business Plan
New River Campus Site
The campus property is 80 acres straddled across the Beaufort County-Jasper County line on the site shown in Exhibit 3-3 and is zoned Research and Development. 1 The Beaufort County portion consists of 66 acres south of and adjacent to U.S. 278. Del Webb's Sun City Hilton Head serves as the eastern boundary of the campus site. The property was given to the university by Union Camp Corporation and includes an ultimatum on the progress of development. The university has completed much of the campus's preliminary design. In addition, nearly $12,000,000 in contributions has been committed to USCB for the development of this campus. Ten buildings comprising 245,000 square feet are proposed for construction over the next ten years. Thus, development of the campus is virtually certain. Exhibit 3-3
1 Resarch and Development districts are "intended to provide for offices, laboratories, test plants, and other research facilities" in a "high-quality", "campus-style manner" "such that the district serves as a catalyst for technically oriented employment to be located in the County." Beaufort County Zoning and Development Standards.
Wilbur Smith Associates 3-3 Final Report USC Beaufort New River Campus Business Plan
Western Portion
The properties adjacent to the New River Campus site to the south and west are designated by the Consultant as the "Western Portion,. and encompass 285.28 acres. The Western Portion is bound on the south by Sun City, the north by U.S. 278 and the west by the Jasper County line. According to the Beaufort County Tax Assessor, SP Forests LLC owns the two westernmost parcels that are predominantly covered in timber, despite often being referred to as the Argent Tract. The largest parcel is currently owned by Del Webb Communities, Inc., and is nearly 20% wetland. The final parcel is owned by Seaboard Commercial, and contains some wetlands. Seaboard Commercial, however, is currently marketing all parcels in the Western Portion, as illustrated in Exhibit 3-4. Some of these parcels are part of the Del Webb Planned Unit Development, while others are zoned suburban.
Exhibit 3-4 The Western Portion Marketed by Seaboard Commercial
Wilbur Smith Associates 3-4 Final Report USC Beaufort New River Campus Business Plan
Sun City
Sun City is adjacent to the south of the Western Portion and is part of the Del Webb Planned Unit Development. These 583 .9 acres are part of Del Webb's Sun City Hilton Head retirement community. Originally, this land was to be developed by Del Webb Communities, Inc. for mid income single-family residences, valued between $175,000 and $250,000, like the rest of Sun City. This type of development is currently taking place in certain sections of the zone, as depicted in Exhibit 3-5. Market forces, however, have changed the future plans of this development zone, and Del Webb has sold this parcel. Future phases of this land will now be developed for upper-income single-family residences valued between $325,000 and $500,000.
Exhibit 3-5 Construction in the Sun City Development Zone
Wilbur Smith Associates 3-5 Final Report USC Beaufort New River Campus Business Plan
Del Webb North
Adjacent to the north side of U.S. 278, Del Webb North is located to the west of the campus site. While part of the Del Webb Planned Unit Development, there is currently no public access to these 77.53 acres. Access is only available via a U.S. 278 overpass within the Del Webb property, as shown in Exhibit 3-6. Del Webb Communities, Inc., owns the two larger parcels in this zone. The Charleston-Atlantic Presbytery, according to the County Tax Assessor's Database, currently owns the smaller parcel, while it is part of Del Webb's plat.
Exhibit 3-6 - ~~!_'Ye~!?-~Q~~~ _fr_()m_ !~~ . !J!t~!l-~1- ~_ rh!g_~
Wilbur Smith Associates 3-6 Final Report USC Beaufort New River Campus Business Plan
Okatie Center
Okatie Center fronts both the north and south sides of U.S. 278 along the west side of SC 170, and is part of the Del Webb Planned Unit Development. The northern boundary is the Jasper County line, while Sun City borders to the south. A small portion of Okatie Center fronts the east side of SC 170 just north of U.S. 278. According to the Beaufort County Tax Assessors Database, Crescent Resources, Inc currently owns most of Okatie Center. They have been able to sell a few parcels to organizations seeking to build-Branigar Organization, Inc. and HG Beaufort Land LC own a few parcels, while the rest are owned on a parcel-by-parcel basis-one by a convenient store, one by a bank, another by a restaurant, and some others by developers. Some development has already occurred in Okatie Center, as illustrated in Exhibit 3-7. South Carolina Health Services has built the Bluffton Okatie Outpatient Medical Center. Okatie Business Developers owns one commercial office building and Okatie Hotel Zone LLC has built a Fairfield Inn that fronts SC 170.
Exhibit 3-7 Okatie Center ~----~------~--
Blumon Okatie Outpatient Medical Center
Fairfield Inn Okatie Commerce Park
Wilbur Sm ith Associates 3-7 Final Report USC Beaufort New River Campus Business Plan
Carter Tract
The two parcels that make up the Carter Tract are zoned research and development and front the east side of SC 170 just south of U.S. 278. The northern parcel is 125 acres of timberland and swamp owned by DJL Associates LP. Dennis Beach Realty is currently marketing it, as shown in Exhibit 3-7. Mary Kent Augustine owns the southern parcel. This 130.75 acres of timberland is the current home of the Pope Hunting Club, also shown in Exhibit 3-8.
Exhibit 3-8 Carter Tract
Northern Parcel For Sale Sign
Wilbur Smith Associates 3-8 Final Report USC Beaufort New River Campus Business Plan
River Bend
Part of the Sun City Hilton Head Planned Unit Development, River Bend is a gated Del Webb community. Located just north of Okatie Center along the eastern front of SC 170, the development encompasses over 150 acres. There are roughly 310 half-acre lots valued at an average of $20,000. Ninety (90) homes have been built, averaging a value of $250,000, leaving 220 lots left to be developed. Exhibit 3-9 shows an example of River Bend development.
Exhibit 3-9 River Bend
Wilbur Smith Associates 3-9 Final Report USC Beaufort New River Campus Business Plan
Oldfield
Located approximately lmile north of US 278 on the east side of the SC 170 bend, Oldfield is a 927 acre Planned Unit Development. Crescent Resources has 456 residential lots slated for development, along with 33 commercial acres. This property is currently in the clearing, grubbing and infrastructure development phase as depicted in Exhibit 3-10.
Exhibit 3-10 Oldfield
Wilbur Smith Associates 3-10 Final Report USC Beaufort New River Campus Business Plan
Graves Property
The Graves Property encompasses 105 acres over seven (7) parcels. Zoned rural, this land fronts the north of US 278 and runs along the eastern bank of the Okatie River. This property is currently under consideration for re-zoning, yet there are no current development plans.
sc 170
South Carolina Route 170 runs north-south and connects the towns of Beaufort and Port Royal, two key urban areas in northern Beaufort County, with the southern areas of the county. And because it connects these two communities with the 278 corridor, the SC 170 is fast becoming a major growth corridor for commercial and residential development. Those properties that front SC 170 north of US 278, are not part of a previously identified development zone, and do not consist of significant wetlands or have existing development, make up the SC 170 Development Zone. This Zone encompasses 22 parcels over nearly 970 acres. Five of these parcels are located north of Okatie Center and south of River Bend, nine can be found between Oldfield and River Bend, two are surrounded by Oldfield and the final 6 are east of Oldfield. These parcels are under varied ownership, and no development is currently planned.
CURRENT PROPERTY TAX REVENUE
The next step is to determine the tax base of the existing development. Computing property tax in South Carolina is a three-step process. First, the taxing authority, in this case Beaufort County, appraises the fair market value of each individual parcel of land. Fair market value is the sum of raw land value and any improvements (ie: buildings, docks, etc.). Secondly, an assessment rate based on land use is set by the state, and applied to the appraised fair market value to determine each parcels' assessed value. Primary residential property is assessed at 4%, while commercial property and non-primary residential property are assessed at 6%. Finally, a millage is applied to the assessed value of the property. The millage is calculated in mills, which means one one-thousandth (111000); thus, one mill is equal to $1 in property tax for every $1 ,000 in assessed value. The millage is often given as a rate; in such cases 1 mill is equal to a millage rate of 0.001. Each taxing entity (ie: county, city, school district, special districts) applies its own millage which is summed with the others to determine the property tax on any parcel of land.
New River Development Zone
The first step in forecasting what tax revenue value will be added to the New River Area is determining the actual current property tax dollars paid by the parcels in the New River Area. An estimate of current property tax revenue is made based upon current appraised fair market values gathered directly from the Tax Assessor's records. An assessment rate was applied to these values per South Carolina statute at 4% for all primary residences and 6% for all commercial property and non-primary residences. Finally, the full millage rate levied upon all properties in Beaufort County tax District 600, in which the entirety of the New River Area exists, was 0.1985. Establishment of the property taxes currently being generated by the study area will provide the base number for the value-added tax revenue, use of which the Consultant
Wilbur Smith Associates 3-11 Final Report USC Beaufort New River Campus Business Plan
recommends to finance infrastructure investment. Based on these figures, the New River Area currently generates an estimated $426,893 in tax revenue. Exhibit 3-11 below gives a breakdown of tax revenue generation.
Exhibit 3-11 Current New River Area Tax Revenue Zone Acres Current Tax Revenue Sun City 584 $29,909 Western Portion 285 $8,159 Del Webb North of 278 78 $14,715 Okatie Cntr 230 $188 586 Carter Tract 256 $24,074 sc 170 766 $86,600 Graves 105 $18 234 River Bend 240 $21 107 Old Field 927 $35,511 Total 3,470 $426,893
Wilbur Smith Associates 3-12 Final Report CHAPTER4
PREREQUISITES FOR A SUCCESSFUL DEVELOPMENT USC Beaufort New River Campus Business Plan
Chapter 4 PREREQUISITES FOR A SUCCESSFUL DEVELOPMENT
INTRODUCTION
The overall thrust of this report is that development in the New River area is likely to continue. The state's population increased 15.1% to 4 million, according to Census 2000 data. It was the 15th fastest-growing state in the country. However, Beaufort County, which includes the resorts and retirement communities of Hilton Head Island, posted the largest percentage increase. It grew by 39.9% from 86,425 to 120,937, and neighboring Jasper County by 33.5%.1 Successful development is reasonable, due to the economic potential and increased quality of life the region has to offer. However, the planned development must recognize the need for historic preservation, conform to the regional architecture and heritage, and compliment the development and role of Hilton Head Island. This chapter summarizes some key pre-requisites that Beaufort County must orchestrate in order to have a successful venture, as a preface to the next chapter, which discusses the possible extent of development for the New River area. These pre-requisites provide a framework of critical steps that must be addressed by Beaufort County. DEVELOPMENT PATTERNS
One of the key prerequisites for the success of this plan to finance the New River Campus is the continuation of existing and future development patterns. There are three key elements to the development pattern in this area that form the basis for this study. These three key development patterns are: growth along the US 278 Corridor, growth of existing approved developments along the SC 170 Corridor, and the continued development of the Del Webb Retirement Communities. These development patterns must continue for the forecasts herein to be realized.
The U.S. 278 Corridor
The U.S. 278 highway corridor is key to the success of this area. U.S. 278 is the lifeline that connects the burgeoning Hilton Head Island resort community to Interstate 95. As a result, as developable land on the island has been absorbed, development has begun to spread westward along the corridor toward 1-95. This spread of development includes commercial and retail centers (i.e.: Hilton Head Factory Stores I and II, Moss Creek Village, and the Bridge Center) catering to island and county residents, and to travelers along the corridor, as well as several single-family residential developments. Almost halfway along the corridor is where U.S. 278 intersects with SC 170.
The SC 170 Corridor
South Carolina Route 170 runs north-south and connects the unincorporated areas along SC 170, the towns of Beaufort and Port Royal, two key urban areas in northern Beaufort County, with the southern areas of the county. And because it connects these two communities with the 278
1 U.S. Population Census, 2000
Wilbur Smith Associates 4-1 Final Report USC Beaufort New River Campus Business Plan corridor, the 170 corridor is fast becoming a major growth corridor for commercial and residential development (ie: River Bend and Oldfield).
The Del Webb Retirement Communities
The other major development trend that must continue is the success of existing retirement development at the intersection of U.S. 278 and SC 170. As stated earlier, the Del Webb retirement development has sold over 2,185 retirement homes and is developing 6,440 more homes. These existing residences, and the ones planned for development, are the economic engine for the New River Area, and therefore, must continue to succeed as a prerequisite for the forecasts introduced herein.
FINANCE INFRASTRUCTURE
Beaufort County must find an alternative means of funding tor the development of the basic infrastructure. There are several avenues for Beaufort County to pursue including revenue proceeds from real estate transfer fees, developer fees, County beer and wine permit fees, property tax revenues, and partnerships with the private sector. However, the most adequate tool for funding these improvements at this time is the use of a Tax Increment Financing (TIF) District. The revenue stream from a TIF District is reliable and sufficient for the necessary infrastructure development. A further discussion will be provided in Chapter 7 - Tax Revenue.
NEW RIVER DEVELOPMENT STANDARDS
Beaufort County should continue to coordinate with other local Planning Departments to maintain a consistent vision for the New River area development. Beaufort County must continue to strive to implement existing standards that are consistent with the local heritage and image. In addition, Public Works Standards for roadways, utilities, and other infrastructure must continue to be adhered to in the design and construction of the facilities. Development of the New River Campus must be consistent with the Beaufort County Development Standards ordinance, and other development requirements. These standards require the development of the New River Campus as a high-quality, campus-style development capable of serving as a catalyst for technically oriented employment to be located in the County.
KEY ANCHOR TENANT (S)
Based on interviews with traditional neighborhood developers, reputable designers, architects, academics in the field, and conventional real estate developers locally and nationally, the success of the New River Development hinges heavily on Beaufort County's ability to facilitate growth and development that is consistent with existing development standards, that will support and be consistent with the strong tourism industry, provide job growth in retaiVtourism businesses, and higher paying service and non-polluting technology based firms. Anchor tenants are important in that they not only provide employment and services, but they also attract, or create, related spin-off tenants. Developing this critical mass of development is essential to the success of any conventional development.
Wilbur Smith Associates 4-2 Final Report USC Beaufort New River Campus Business Plan
A key anchor tenant tor stimulating targeted development and growth for the New River area is the University of South Carolina--Beaufort. The proposed USC Beaufort 4-year campus has received significant financial support. Union Camp donated 80 acres of land valued today at $4.5 million, which is identified in Exhibit 4-1, cash contributions have totaled $10 million plus; and several million dollars in in-kind services have been offered.
Exhibit 4-1 New River Area
......
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In addition to the financial support, there is a strong need for an increased presence by USC Beaufort. In a six county area-- Beaufort, Jasper, Charleston, Dorchester, Colleton, and Hampton-there are approximately 151,471 people under the age of 18 and 175,352 people who are 25 and over without college degrees, a tremendous market for a 4-year campus.
To sustain high standards for economic independence, environmental quality, quality of life, and conservation of the community's abundant natural resources, economic growth and development must be targeted. In order to attract the clean, technology-based firms, the educational and research and development infrastructure must be in place to support such industries.
The development of the USC Beaufort campus must also recognize the need for historic preservation, conform to the regional architecture and heritage, and compliment the development and role of Hilton Head Island. Exhibit 4-2 illustrates the layout and design of the USC campus.
Wilbur Smith Associates 4-3 Final Report USC Beaufort New River Campus Business Plan
Exhibit 4-2 New River Campus Rendering
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~~--/110 .11.\.11 """"* a.u»>I """'"""" .3 POWI'Mifll.AlA -4'0CIIr.lm'AIIJ s ·· ~laiii..AZA •· ...... ,..II'MIIt. ?...,....., .....
·l ·l .....-afYHt.'la\lt-eiO~ ~~ CMfUI fii.Al&) ----...------r---, ..------, ·.j•. .------ep:l:='~~~~ SUMMARY The success of the New River area development lies largely in the hands of Beaufort County. Accelerated population growth coupled with increased demands on infrastructure and natural resources, places Beaufort County in a position to plan and manage the kind of growth that is consistent with the vision of the region and local communities. The key to successfully directing the development opportunity is for Beaufort County to charter the course by defining the New River development image, developing the basic infrastructure and supporting the development of the USC Beaufort campus at New River. Once Beaufort County has done its part, the market will ultimately define the outcome. Wilbur Smith Associates 4-4 Final Report CHAPTERS ANTICIPATED DEVELOPMENT USC Beaufort New River Campus Business Plan Chapter 5 ANTICIPATED DEVELOPMENT INTRODUCTION The purpose of this chapter is to define the possible extent of development for the USC Beaufort New River Campus and the surrounding New River Area. The estimates developed in this report are designed specifically for planning purposes and are not forecasts. The approach used to develop these estimates includes the proposed square foot (structural) build out for the study area. THE EXPECTED SQUARE FOOT BUILD-OUT Two types of developments are proposed to take place within the TIF district. The projects that take place on the USCB New River Campus and those of other surrounding private developments are considered in this section. USCB New River Campus Based upon analysis of the layout of the USCB New River Campus, an estimated 80 acres of land can be developed, with an option to purchase and develop an additional 100 acres. This analysis takes into consideration land set aside for right-of-way, roadways, public space, and a corridor for the storm-water drainage system. Using data given by USCB and their associated building and landscape architects, the proposed build out of the land is presented in Exhibit 5-1. Campus development is broken down into two phases. The first phase entails development of a multi-use building capable of standing on its own. As the new campus stimulated growth for the University, phase two will be implemented to meet the increasing demand for educational programs and facilities. Exhibit 5-1 New River Campus Building SF Phase Description Square Feet 1 Multi-Use Building 57,000 2 Library I Performing Arts/Auditorium 48,000 2 Science I Math /Technology Building 17,500 2 Education Building 17,500 Total 140,000 New River Area Development According to the Beaufort County Assessors Department maps, the New River Area, which surrounds the USCB New River Campus, has an estimated 3,000 acres of developable land. Interviews with owners and developers of these respective properties provide the foundation from which development is projected. These parcels will include a mix of residential and non residential development. Local market trends and existing development on comparable regional Wilbur Smith Associates 5-1 Final Report USC Beaufort New River Campus Business Plan properties are also considered to estimate build-out. Exhibit 5-2 shows development potential in each respective development zone in the New River Area Exhibit 5-2 N ew River A rea D eve Iopmen tPo t enf 1aI Potential Potential Non- Total Structures Development Zone Acres Residential Residential (SF) Structures {SF) Structures (SF) Sun City 584 1,544,311 - 1,544,311 Western Portion 285 657,892 866,637 1,524,528 Del Webb North 78 205,053 - 205,053 Okatie Cntr 230 - 2,086,048 2,086,048 Carter Tract 256 470,481 1,090,020 1,560,501 sc 170 766 - - - Graves 105 - - - River Bend 240 634,757 - 634,757 Old Field 927 724,681 299,251 1,023,932 Total 3,470 4,237,174 4,341 955 8,579,130 Sun City-- These 584 acres are part ofDel Webb's Sun City Hilton Head retirement community. This land will be developed for upper-income single-family residences valued between $325,000 and $500,000. This is expected to result in roughly 1,500,000 residential square feet. Western portion-- Various uses are projected in this Zone: 175 acres is expected to consist of 460,000 square feet of single-family residences, 14 acres is expected to consist of 190,000 square feet multi-family residences and 96 acres is expected to consist of 865,000 square feet of commercial space. Development is projected to begin in 2005 and take 12 years to complete. Del Webb North-- Due to a lack of public accessibility and plans, development is not projected to begin until 2007. The existence of the internal overpass, makes it reasonable to estimate the development of single-family residential housing within this Zone. Such development would yield over 200,000 residential square feet. Okatie Center- A mix of commercial development called ..Okatie Center" is planned by Crescent Resources, Inc. for these 230 acres. The parcels south of U.S. 278 are advertised as a "grocery anchored neighborhood center." The Bluffton Okatie Outpatient Medical Center already exists in this portion of Okatie Center. Thus, it is reasonable to project medical office development in this section along with neighborhood commerciaL A Fairfield Inn currently exists on one of the parcels to the north of U.S. 278. Another parcel is owned by Circle K Stores, making it reasonable to project business travel-type development in this section. Finally, the portion to the east of SC 170 is being marketed as "Okatie Commerce Park." A 27,336 square foot office building already exists, and similar office commercial development is projected in this section of Okatie Center. Altogether, Okatie Center is projected to develop nearly 2,000,000 commercial square feet. Wilbur Smith Associates 5-2 Final Report USC Beaufort New River Campus Business Plan Carter Tract- These 255 acres are projected for mixed development. The 125 acres on the northern parcel are projected for 330,000 square feet of single-family residential development. Ten acres on the southern parcel are projected to develop as 140,000 square feet multi-family residential, with the remaining 120 southern parcel acres projected for nearly 1.1 million square feet of commercial development. River Bend-- As part of Del Webb's Sun City Hilton Head PUD, these 240 acres are being developed for single-family residences. This gated community has already begun development of mid-to-upper income homes valued over $200,000. Upon build-out, nearly 635,000 residential square feet are expected. Oldfield-- Oldfield is a mixed-use Planned Unit Development. Planned residential development is very low in density and surrounded by recreational space-only 274 of the 927 acres are slated for residential use. Under this plan, Oldfield would contribute 725,000 residential square feet to the New River Area. Other development includes 33 commercial acres, which are expected to produce 300,000 commercial square feet. Graves- Current zoning and uncertainty do not allow for reasonable projections of future development on these properties at this time. Only limited development can be expected under existing circumstances. SC 170-- Current zoning and fragmented parcel ownership do not allow for reasonable projections of future development on these properties at this time. Only limited development can be expected under existing circumstances. The performance of the Southern Beaufort real estate market over the past five years shows that the projected development potential is reasonable and conservative. Analysis of building permit data collected and reported by Coastal Market Research over the past five years shows that the Southern Beaufort market absorbs over 3,700,000 square feet of residential and non-residential development annually. As shown in Exhibit 5-3, the New River area is projected to build less than 350,000 square feet of residential and non-residential space annually over the next 25 years. Wilbur Smith Associates 5-3 Final Report USC Beaufort New River Campus Business Plan Exhibit 5-3 Comparison of Square Footage Average 1996-2000 S. Beaufort Co. Average 2002-2026 Potential New River Non-Residential Sq. Ft.Near Non-Residential Sq. Ft. Development These ten development zones provide the necessary diversity that includes a four-year college campus, single-family homes, multi-family housing, neighborhood commercial, and office to sustain economic downturns and at the same time compliment each other from a use standpoint. Exhibit 5-4 illustrates this mix of uses. Wilbur Smith Associates 5-4 Final Report USC Beaufort New River Campus Business Plan Exhibit 5-4 Future New River Area Land Uses I DSingle Fam Res l!l Multi Fam Res l!l Commercial I 100% .-.-~r===,.-.====T==T====-..r~~--~==~==~~~--,-~ 80% 60% 40% 20% Sun City Western Del Webb Okatie Cntr Carter Tract River Bend Old Field Portion North of 278 Group The majority of the New River Area land is designated for single-family residential-all of Sun City, Del Webb North and River Bend and most of the Western Portion, the Carter Tract and Oldfield. This is consistent with surrounding development trends and community flavor. Commercial development, concentrated in Okatie Center and the Western Portion, provide needed neighborhood goods and services to support the residential development. Multi-family housing will represent only a small portion of the development in the New River Area, but provides a necessary residential element for growth, especially upon the completion of the New River Campus. Wilbur Smith Associates 5-5 Final Report USC Beaufort New River Campus Business Plan Exhibit 5-5 shows that Sun City, which is 100% single-family residential, and Oldfield are twice the size of all other development zones. Development in Sun City and Oldfield is already occurring, while development in all other development zones is somewhat speculative. The fact that this less-speculative development comprises the majority of the New River Study Area increases the possibility of realizing projected development. Exhibit 5-5 Acreage By Development Zone 700 600 ,....---- ,....---- 500 - 1---- 400 - 1--- tn ~ <( 300 t-- - - ,....---- ,....---- ,....---- 200 t--- - 100 1--- 1---- 0 n Sun City Western Del Webb Okatie Cntr Carter Tract River Bend Old Field Portion North of 278 Group Wilbur Smith Associates 5-6 Final Report USC Beaufort New River Campus Business Plan It is assumed that all of the projected development in the New River Area will begin between 2002 and 2007 and be completed between 2010 and 2017. Development in Sun City and Okatie Center, which occur early in the build-out scenario, will further encourage development in the more speculative portions of the New River Area, such as the Carter Tract, the southern part of the Western Portion and Del Webb North. Exhibit 5-6 gives the start and complete years for each development zone. Exhibit 5-6 ProJec . t ed B Ul•td - 0 u t D a t es Zone Start Complete Sun City 2002 2010 Western Portion 2005 2017 Del Webb North of 278 2007 2017 Okatie Cntr 2002 2012 Carter Tract 2005 2015 sc 170 Limited Development Limited Development Graves Limited Development Limited Develo_Q_ment Oldfield 2002 2026 River Bend 2002 2013 SUMMARY In summary, development in the New River Area is projected to be diverse enough to withstand economic uncertainty, while consistent with local trends and markets. The varied build-out dates reflect the complementary nature of the development. These projections are based upon interviews with the owners and developers of these lands, as well as analysis of the local market. Wilbur Smith Associates 5-7 Final Report CHAPTER6 THE CAPITAL IMPROVEMENT PROJECTS USC Beaufort New River campus Business Plan Chapter6 THE CAPITAL IMPROVEMENT PROJECTS INTRODUCTION In the preceding chapters~ the development potential of the New River Area has been identified and evaluated from a variety of perspectives. The purpose of this chapter is to present the Capital Improvement Projects that are necessary to support the development and continued growth described thus far. TOTALPROJECTSSUN.mdARY In establishing an environment conducive to economic growth in the New River Area certain investments are necessary to attract new businesses, investment and people. While Del Webb's Sun City Hilton Head retirement community represents significant investment in this area, the expected spin-off growth from this development is still in its infancy. Okatie Center is an example of the early growth from Sun City Hilton Head. Three areas of investment are necessary to provide a foundation and support systems for growth in the area. First, the citizens attracted to Sun City, while valuable to the community, do not provide an adequate work force to attract non-polluting, clean, technology-based industry to the area. Such industry is looking for well-educated, tech-savvy, enthusiastic young personnel. Thus, it is recommended that the county invest in the USCB New River Campus in order to establish a 4-year baccalaureate degree-granting institution. The land for the campus has been donated. However, much local political and monetary support and investment are required to make a 4-year campus a reality. Second, improved partnerships and communication between local technical and liberal arts educational institutions are imperative to develop the necessary programs that have the greatest contribution to the community. Investment in the Technical College of the Low Country would provide a valuable link between USC Beaufort and technical education, further adding to the New River Area's attractiveness to ''new economy" industry. Finally, in order to support the development of the USC Beaufort campus at New River and attract commercial development to the area, the necessary public infrastructure must be provided. The Beaufort Jasper Water Sewer Authority (BJWSA) can currently accommodate the USCB New River Campus and has future plans for expansion in that area that will allow the campus to fully develop. For sewer~ there is a sewage pump station across 278 from the campus site and a deep, 12" gravity sewer line extended from the pump station to the property line of the proposed New River campus site. There is adequate diameter and depth to serve the campus from this main. For water, there is an existing 12" water main that extends from 278, along the abandoned RR bed along the East property line. This main is looped to a main in Sun City and is connected to Wilbur Smith Associates 6-1 Final Report USC Beaufort New River Campus Business Plan an existing 20" water main across 278 from the site. There are plans for a future water tank in the immediate area and the extension of a 20" main along 278. CAPITAL IMPROVEMENT PROJECTS In this section, a description of the capital improvement projects necessary to establish an environment conducive to economic growth is provided. The descriptions are divided into two parts: (I) detailed descriptions; and (2) an opinion of project costs. New River Campus Projects The focus of capital investment for the USCB New River Campus is to establish USC Beaufort as a 4-year baccalaureate degree-granting institution. The existence of such an institution will take Beaufort County to the next level-providing previously unavailable educational opportunities to its citizenry, and producing a labor force capable of attracting non-polluting, clean, technology-based industry. Investment into the New River Campus should assist in the establishment of a 4-year school and provide for the growth of such an institution. USC Beaufort currently holds classes at four separate locations throughout Beaufort County Downtown Beaufort, Parris Island, Marine Corp Air Station, and Hilton Head Island. All of these facilities are presently at capacity, without the option of contiguous expansion. Thus, regardless of whether or not USC Beaufort is granted 4-year status, facilities expansion is necessary to continue to provide post-secondary liberal arts education to an ever-increasing population in Beaufort County. The USCB New River Campus has received tremendous support from the citizens and governments of Beaufort and Jasper Counties. Union Camp donated 80 acres of land, cash donations, funding support from Beaufort and Jasper Counties and in-kind service contributions have totaled over $12 million to date, and greater donations to the development of this campus are expected. USC Beaufort has taken the necessary steps to provide for this expansion-receiving land in the New River Area and commissioning the design and development stages for the Hargray multi use building on this property. This multi-use building has been designed to provide all necessary university functions prior to the attainment of 4-year status, should it not occur right away, and accommodate subsequent growth. Thus, the construction of this building is paramount in the drive to establish USC Beaufort as a 4-year institution, and to provide for the required classroom space to adequately serve the University's service area. Furthermore, it will show the progress required to meet Union Camp Corporation's land grant stipulation that a campus be developed on the land. For these reasons it is advised that the County provide the necessary capital investment to assure this first building come to fruition. KRA Architects Inc. of Hilton Head Island has designed the 57,000 square foot Hargray multi use facility, while Charleston's Liollio Architecture has generated cost estimates for this facility. It is estimated that the total construction cost for this facility will be $150.00 per square foot, for a total cost of $8,550,000. Exhibit 6-1 is an architectural rendering of the Hargray multi-use Wilbur Smith Associates 6-2 Final Report USC Beaufort New River Campus Business Plan facility provided by KRA Architects Inc. Exhibit 6-2 shows the build out of the campus for a total cost of $26.55 million. In addition to the multiuse building, the others are core to the university campus. Exhibit 6-2 USCNew Ri ver C ampus Item Description Units Unit Cost Quanity Total Cost 1 Multi-Use Building SF $150 57000 $_8 550 000 2 Library I Performing Arts/Auditorium SF $150 48000 $7200 000 3 Science I Math I Technoloav Bllildlna SF $200 17 500 $3 500 000 4 Education BuildLng SF $145 17 500 $2537500 5 Nursing Bulldina SF $86 17500 $1505 000 6 H~itality Buildjng_ SF $0 17 500 $0 7 Business Buildina SF $0 17500 ~0 8 Research and Enviromental Sciences SF _SO 17500 $0 9 Humanities Buildina SF $0 17 500 $0 10 Educational PartnershiPS Buildina SF Paid by CHEIUSC 17500 Not County Funded 11 Phase I - Site Work/Entrance/278 Intersection LS $0 1 $0 12 Fumishinas I Fixtures LS $0 1 $0 13 Purchase of 100 Acre "Option" Property AC $0 100 $0 Subtotal $23 300 000 Continaencv (13.5".4) $3145 500 Grand Total $26,500 000 Note: Costs provided by USC and reviewed and increased by WSA. Total building square footage= 245,000 The costs of construction for each building will occur over two year periods. The multiuse building is the first building, which will be constructed in 2002-2003. The second building, library/performing arts/auditorium. begins construction in 2004, and each subsequent building starts the following year. In summary, the 4 buildings will be constructed over a five-year period from 2002-206. Wilbur Smith Associates 6-3 Final Report USC Beaufort New River Campus Business Plan Technical College of the Lowcountry Exhibit 6-3 Technical College Of The Lowcountry Item Description Units Quantity Unit Cost Total Cost 1 Multi -Use I Science I Classroom Buildin~ SF 21 000 $295 $6 200000 2 Land Costs I Site Work Costs LS 1 $800000 $800 000 Grand Total $7,000,000 Note: Costs prov1ded by Techmcal College of the Lowcountry. The Technical College of the Lowcountry will co-locate some of its programs with the USCB New River Campus. The associated costs described in Exhibit 6-3 will begin in 2002 to coincide with the USC Beaufort New River Campus and will be completed in 2003. Public Infrastructure Other public infrastructure projects critical to the success of the development include improvements identified in Exhibit 6-4. These projects would begin in 2003 and be completed by2004. Exhibit 6-4 Public Infrastructure Item Description Units Quantity Unit Cost Total Cost 1 Public Infrastructure LS 1 $1 500 000 $1 500 000 Grand Total $1,500,000 SUMMARY With the completion of the USC Beaufort New River Campus, people who live and work in the New River Area, along with the entire commlUlity, will experience benefits of an enhanced quality of life. However, to achieve this objective is relatively expensive. It requires a substantial investment and financial commitment of $35 million over a 10-year period as displayed in Exhibit 6-5. However, over the long run, the return of investment to the community will be substantial. Exhibit 6-5 USC-New River Business Plan Project Cost USC New River Campus $26,500,000 Technical College of the Lowcountrv $7,000,000 Public Infrastructure $1,500,000 Total Opinion of Project Costs $35,000,000 Wilbur Smith Associates 6-4 Final Report CHAPTER 7 TAX REVENUE USC Beaufort New River Campus Business Plan Chapter 7 TAX REVENUE INTRODUCTION One of the prerequisites for successful New River Area development is the provlSlon of infrastructure basics, in this case, campus buildings and infrastructure, and public infrastructure. These infrastructure basics must be financed, the sources of which will be a mix of revenue to Beaufort County and USC Beaufort from monetary and gift-in-kind gifts, as well as from other external funding sources, including revenue based financing. This chapter reveals the potential tax revenues available to pay for the development of the infrastructure basics to accommodate the extent of possible development defined earlier in this report. APPRAISED FAIR MARKET VALUE Comparable Properties Computing property tax in South Carolina is a three-step process. First, the taxing authority, in this case Beaufort County, appraises the fair market value of each individual parcel of land. Fair market value is the sum of raw land value and any improvements (ie: buildings, docks, etc.). Secondly, an assessment rate based on land use is set by the state, and applied to the appraised fair market value to determine each parcels' assessed value. Primary residential property is assessed at 4%, while commercial property and non-primary residential property are assessed at 6%. Finally, a millage is applied to the assessed value of the property. The millage is calculated in mills, which means one one-thousandth (1/1000); thus, one mill is equal to $1 in property tax for every $1,000 in assessed value. The millage is often given as a rate; in such cases 1 mill is equal to a millage rate of 0.001. Each taxing entity (ie: county, city, school district, special districts) applies its own millage which is summed with the others to determine the property tax on any parcel of land. In order to project the fair market value of the development expected to occur in the New River Area, a sampling of comparable properties was taken during the first half of calendar year 2001. This sampling provides a basis from which expected per acre values were determined. A per acre value was calculated for each expected land use in the New River Area, as are shown in Exhibit 7-1. Right-of-ways, common areas, recreational areas and wetlands are taken into consideration in determining these per acre values. Exhibit 7-1 Per Acre Value of Varied Land Uses Land Use Per Acre Value Single-Family Residential $240 000 Multi-Family Residential $637 500 Commercial (retaiL_ office_._ restaurant etc.) $567 000 Hotel/Motel $1 30Q._OOO Campus $566,250 Wilbur Smith Associates 7-1 Final Report USC Beaufort New River campus Business Plan Existing single-family residential development at Del Webb's Sun City Hilton Head, Rose Hill Plantation, and Moss Creek Plantation are deemed reasonably comparable to the projected development in the New River Area Homes in these developments are appraised by the County Assessor to have a fair market value ranging from $200,000 in Sun City to $225,000 in Moss Creek and $375,000 in Rose Hill. Sun City, however, has an average per acre appraised fair market value of $837,183, while Moss Creek averages $682,291 and Rose Hill averages $118,207. This large discrepancy in per acre value is due to the differences in lot sizes. Lots in Sun City and Moss Creek are only between 0.25 acres and 0.33 acres, while Rose Hill lots average over 3 acres in size. Lots in single-family residential development in the New River Area are expected to be between 0.33 acres and 0.67 acres. Compared with existing similar development in the region the single-family residential per acre value planning function used by the consultant is conservative, as shown in Exhibit 7-2. Exhibit 7-2 Comparable Single-Family Residential Pro__p_erty Per Acre Value Lot Size Sun City Hilton Head $827 183 0.25 Rose Hill Plantation $118 207 3.18 Moss Creek Plantation $682 291 0.33 Average of Above Three $599 792 1.01 Projected New River Area $240,000 0.4 Exhibit 7-3 Comparable Properties ;:: ·\ ·' . "',0:.. :~ ., D 0.5 1 -· Wilbur Smith Associates 7-2 Final Report USC Beaufort New River Campus Business Plan Old South Apartments is comparable to the projected multi-family residential development in the New River Area. This complex is currently valued at over $850,000 per acre, making the planning function, $637,500, quite conservative. Understanding that much of the commercial development in the New River Area will occur in Okatie Center, a diverse commercial development, including office, retail, and service space for various commercial developments throughout the area were considered. Bridge Center I, Moss Creek Village, Towne Commons and Plantation Business Park average a per acre value of $502,492. The $567,000 planning function is, thus, reasonable. Furthermore, all projected per acre values are present day real values applied to future development, increasing the conservatism of the planning functions used. Projected Appraised Value of New River Area Parcels These projected per acre values are applied to each of the parcels in the New River Area as an estimation of the value at which the properties will be appraised at build-out. Furthermore, a natural annual growth rate of 0.6% is a common planning function for healthy coastal economies, such as Beaufort County, and was applied each year for the next 25 years. This will provide a conservative multiplier for increases in real estate market values independent from land improvements. Based on these applications, the appraised market value of the properties in the New River Area will be nearly $845,000,000 in 2026. This is equivalent to nearly $305,000 per acre in value. Compared with the aforementioned similar regional development, shown below in Exhibit 7-4, this is quite reasonable. These figures are further supported by the fact that comparable per acre values are present values, compared with the New River values, which are projections of value 25 years into the future. In order to determine the potential tax revenue generated by these properties, however, appropriate assessment and millage rates must be applied. Exhibit 7-4 Comparable Value Per Acre Cll :I ~- $400 -Ill ::11l oc• ca "'":; ~ $300 ID.I! e"""u.E :.~ - $200 $100 $0 New River -Year 2027 Commercial Comps - Residential Comps - Current (Weighted Average) Current Wilbur Smith Associates 7-3 Final Report USC Beaufort New River Campus Business Plan ASSESSED VALUE South Carolina statute sets assessment rates for various land uses. The only uses pertinent to this study are primary residential, non-primary residential and commercial. Primary residences are assessed at 4% of the appraised value of land plus all improvements, while non-primary residences and commercial properties are assessed at 6%. Applying the assessment rate to commercial properties is straightforward. However, many non-primary residents characterize the residential real estate market in southern Beaufort County. Many southern Beaufort residences serve as second homes and vacation rental units. Thus, in order to appropriately apply the South Carolina assessment rate an effective assessment rate must be determined based on the ratio of non-primary to primary residences. Historically, the majority of residential property in Southern Beaufort County has been non primary residences, however, this is beginning to change. In 1980, non-primary residences represented 60% of the local residential real estate market; by 1995 that percentage shrunk to 51%. In 2001 the primary residential share exceeds the non-primary share, claiming 51.9% of the market. This shift to primary residences is expected to continue well into the future. While the shift will certainly continue, it will decelerate as the percentage of primary residences increases. Exhibit 7-5 gives a snapshot of the primary and non-primary share of residential property and the effective assessment rate for 2001 through 2030. This shift toward primary residences impacts the effective assessment rate, from 6% toward 4%. The 2001 effective assessment rate is 5%, and is expected to drop to 4.8% by 2020. This reduction in assessment rate reduces the effective assessed value, and hence the property tax revenue. Based on these assumptions the assessed value of the properties in the New River Area will be nearly $44,000,000 in year 2027. Wilbur Smith Associates 7-4 Final Report USC Beaufort New River Campus Business Plan Exhibit 7-5 Annual Visitor-to-Resident Ratio and Assessment Rate 80% ~------...,.- 0.060 i11i!i1 Share visitors (left) j D Share Residents (left) . I- Effective Residential Assessement Rate (right)l 60% +------~~~4 I- 1- t- ~ 1- f- 0.055 cv iii 0:: -ccv E 0.050 j j 20% 0.045 01 03 05 07 09 11 13 15 17 19 21 23 25 27 29 Exhibit 7-6 Effective Residential Assessment Rate 2001 2010 2020 Non-Primary Share 48.1% 43.8% 40.0% Primary Share 51.9% 56.2% 60.0% Effective Assessment Rate 5.0% 4.9% 4.8o/o Effective State Rebate $156.68 $169.72 $181.32 TAX REVENUE The current millage rate in Beaufort County Tax District 600, in which the entirety of the New River Area is located, is 0.1985. This means that for every $1,000 in assessed value $198.50 in taxes is collected. This 0.1985 millage rate includes all school operations and debt retirement revenues. The current millage rate was applied in each of the next 25 years to project future tax revenues. While the actual millage will fluctuate with the county budget through the years, 0.1985 is an historically average and conservative estimate of the future millage. One other factor must be considered when calculating the potential tax revenue of the New River Area-state refunds. In order to encourage homeownership, the state of South Carolina issues a $302 rebate to all primary single-family residences valued over $100,000. The method used to determine the effective state primary residential assessment rate was used to establish an effective state rebate. Snapshots of the rebate value are given in Exhibit 7-6 above. Based on a Wilbur Smith Associates 7-5 Final Report USC Beaufort New River Campus Business Plan millage rate of 0.1985 and the effective state rebate, the New River Area is projected to generate nearly $8.3 million in tax revenue in the year 2026. This is equal to nearly $3,000 per acre; once again quite conservative compared to similar present value of local property at full build out (see Exhibit 7-7). Exhibit 7-7 Comparable Tax Revenue Per Acre e $s,ooo :l... :. $4,000 +------1 Cll ::Ic Cll ~ $3,000 ~ ~ nl ,_ $2,000 $1,000 $0 New River -Year 2027 Commercial Comps - Residential Comps - (Weighted Average) Current Current INCREMENTAL TAX REVENUE South Carolina statute provides ways in which future development in an area can pay for current infrastructure needs, as is recommended by the Consultant. Tax Increment Financing (fiF), according to the Tax Increment Financing Act for Counties, allows bonds to be issued for the development of infrastructure needs in an area. Bond issuance is enacted at the establishment of a TIF District, at which time the current tax revenues will serve as a base from which incremental increases are calculated. These bonds will then be repaid over a period not exceeding 30 years with the incremental increases in tax revenues generated within the specified TIF District, and resulting from the furnished infrastructure needs. The current tax revenue stated in Chapter 3 and future tax revenue figures given above establish the tax increment potential for the New River Area. It is estimated that through the year 2026 a TIF District established in the New River Area would cumulatively generate nearly $143,000,000 in incremental tax revenue. This averages nearly $5.5 million annually over the life of the TIF, reaching nearly $8 million in 2026. Wilbur Smith Associates 7-6 Final Report USC Beaufort New River Campus Business Plan INCREMENTAL TAX REVENUE LESS SCHOOL ALLOCATION State statute mandates that if residential development occurs within a Redevelopment Area an amount of the annual incremental tax revenue be allocated to the school district to cover the cost of added pupils. The school district allocation of incremental tax revenue is equal to the average property tax collected per pupil in the district, multiplied by the estimated increased enrollment. The average property tax collected per pupil is equal to the portion of the school district's general fund revenue received from property taxes divided by the total student enrollment. In order to generate this per pupil allotment historical property tax and enrollment figures were reviewed. Historically, the property tax revenue per pupil does not vary significantly over time, because millage rates are set based on annual need and there are constant pressures to keep per pupil costs down. A conservative estimate of $3,700 per pupil was projected and applied for all 25 years ofthe TIF. The estimated increased enrollment is equal to the projected number of dwelling units added with the Redevelopment Area, times a pupil dwelling function. Calculation of the number of dwelling units added was handled differently for "plantation development" (ie: Oldfield) than for all other residential development. For "plantation development" the exact number of dwellings is known, and a common build-out scenario for such development was gathered through interviews with local realtors--25 homes per year up to 80% of build-out at which time, development slows to 5 homes per year until build-out. Based on analysis of comparable existing properties, all other residential development was calculated to add units at a rate of 1.33 units per acre. Finally, a 0.11 pupil per dwelling unit function was used. This figure was taken from a previous study of development in the area. Analysis of the entire Southern Beaufort off-island housing market was performed. Pupil per dwelling data was collected from a wide array of housing types. This data was combined to derive a weighted average of pupils per dwelling for the entire market area. Oldfield and Carter Tract are the only development zones that will add students to the school district. All other residential development within the study area will take place within Del Webb developments, which have a minimum age requirement of 55 for purchase and do not allow school-age permanent residents. A pupil per dwelling unit function of 0 was applied to these development zones. Based on these assumptions, the Redevelopment Area is projected to add 78 students to the Beaufort County School District over the next 25 years. This will allocate nearly $5 million in TIF revenues to the School District over the life of the TIF to support the students added by the redevelopment projects. Each year this school allocation will be given to the School District from TIF proceeds. Thus, the increment available for the service of redevelopment project debt will be the annual incremental tax revenue described on page 4-6 less this school allocation. It is estimated that the New River Area would generate revenues available for bond debt service in excess of $145 million. This averages over $5.5 million annually over the life of the TIF. However, in the initial stages of development in the New River Area, significant incremental increases will not be Wilbur Smith Associates 7-7 Final Report USC Beaufort New River Campus Business Plan realized. As shown in Exhibit 7-8 and Exhibit 7-9, the incremental increases will grow over time, reaching nearly $8 million in year 2026. Exhibit 7-8 New River TIF Revenue Over Time Ill $6 c .2 i .5 * $4 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Year Wilbur Smith Associates 7-8 Final Report USC Beaufort New River Campus Business Plan Exhibit 7-9 New River TIF Revenue by Zone DRiver Bend DOidfield $1 0 • Graves DSC 170 1!1 Del Webb North of 278 $8 Iii Western Portion Iii Carter Tract OSun City II Okatie Cntr II) $6 c ~ i ·4l't= $4 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Fiscal Periods Wilbur Smith Associates 7-9 Final Report APPENDIX A: ANNUAL TIF REVENUE LESS SCHOOL ALLOCATION INCREMENTAL TAX REVENUE LESS SCHOOL ALLOCATION 01 02 03 04 05 06 07 08 09 10 11 12 13 Sun City $0.000 $0.128 $0.288 $0.448 $0.610 $0.773 $0.937 $1 .102 $1 .269 $1.273 $1 .279 $1 .284 $1 .290 Western Portion $0.000 $0.000 $0.000 $0.000 $0.087 $0.183 $0.280 $0.378 $0.477 $0.577 $0.678 $0.780 $0.883 Del Webb North $0.000 $0.000 $0.000 $0 .000 $0.000 $0.000 $0.010 $0.022 $0.038 $0 .054 $0.072 $0.090 $0.108 Okatie Cntr $0.000 $0.065 $0.188 $0.315 $0.447 $0.583 $0.720 $0.859 $1 .000 $1 .143 $1 .287 $1 .295 $1 .304 Carter Tract $0.000 $0.000 $0.000 $0.000 $0.082 $0.189 $0.298 $0.408 $0.519 $0.631 $0.745 $0.860 $0.977 sc 170 $0.000 $0.020 $0 .021 $0.022 $0.023 $0.023 $0.024 $0.025 $0.026 $0.027 $0.028 $0.029 $0 .030 Graves $0.000 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 Oldfield $0.000 $0.106 $0.212 $0.317 $0.422 $0.526 $0.630 $0 .733 $0.836 $0.938 $1 .040 $1 .142 $1 .243 River Bend $0.000 $0.062 $0.123 $0.184 $0.245 $0.306 $0.366 $0.426 $0.486 $0.497 $0.509 $0.520 $0.531 Total $0.000 $0.383 $0.833 $1.288 $1.917 t2.585 j3.267 $3.956 $4.652 $5.143 $5.639 $6.002 $6.367 *All values in Millions 14 15 16 17 18 19 20 21 22 23 24 25 26 Sun City $1.295 $1.301 $1 .306 $1.312 $1.317 $1.323 $1 .329 $1.334 $1 .340 $1.346 $1 .352 $1.357 $1 .364 Western Portion $0.987 $1.093 $1 .199 $1.206 $1.212 $1.218 $1 .225 $1.231 $1.238 $1.244 $1 .251 $1.258 $1.265 Del Webb North $0.126 $0 .144 $0.163 $0.163 $0.164 $0 .165 $0.166 $0 .166 $0.167 $0.168 $0.169 $0.169 $0.170 Okatie Cntr $1.312 $1.320 $1 .329 $1 .337 $1.346 $1.354 $1 .363 $1 .372 $1.380 $1.389 $1.398 $1 .407 $1.416 Carter Tract $1 .095 $1 .102 $1.108 $1 .115 $1.122 $1.129 $1 .136 $1 .143 $1.150 $1.157 $1 .164 $1 .171 $1.179 sc 170 $0.031 $0.032 $0.032 $0.033 $0.034 $0.035 $0.036 $0.037 $0.038 $0.039 $0.040 $0.041 $0.042 Graves $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.002 $0.003 $0.003 $0.003 $0.003 $0.003 $0.003 Oldfield $1 .343 $1 .444 $1 .544 $1 .561 $1.578 $1 .595 $1 .612 $1 .629 $1.646 $1.663 $1 .680 $1.696 $1 .714 River Bend $0.530 $0.529 $0.529 $0.528 $0.527 $0.526 $0.525 $0 .524 $0.524 $0.523 $0.522 $0.521 $0.520 Total $6.722 $6.967 $7.212 $7.258 $7.303 $7.349 $7.394 $7.440 $7.486 $7.532 $7.578 $7.624 $7.672 i *All values in Millions CHAPTERS FINANCIAL ANALYSIS Chapter 8 - Financial Analysis Tax Increment Financing Bonds (New River Project) Introduction and Executive Summary Based on the revenue assumptions provided by Wilbur Smith Associates and contained in this report, UBS PaineWebber assessed the debt issuing capacity for the proposed New River TIF District (the "District"). The District has yet to be created by the County and therefore nearly all of the growth is projected to occur over time. As a result, no revenue is currently available to pledge to TIF Bonds issued for improvements in the District. Our goal was to provide a structure that funds no less than $35 million in projects at closing on the TIF bonds in calendar year 2002. As explained in detail below, a financing structure that includes a pledge/dedication ofanother revenue/tax stream (i.e. FILOT, sales tax, hospitality tax, accommodations tax, etc.) or a "moral obligation" ofthe County will result in the most successful TIF financing for the County. This will also ensure that TIF Bonds are issued during the first five year period as required by Statute. While we have discussed the following proposed structures with the County's bond counsel (Parker Poe Adams & Bernstein, LLP), it will be necessary for counsel to complete a thorough review ofthe proposed structures before any final decisions are made by the County. This applies particularly to any dedication ofsales tax revenues by the County to the TIF bonds. As explained in Scenario #4, if a significant portion of the annual revenue associated with a 1% sales tax revenue stream (or similar stable revenue source) is dedicated to provide security for the TIF projects and an estimated $50 million of road projects, at least one bond insurer has indicated a willingness to consider insuring the TIF bonds ("AAA" insured bond rating). Under this scenario, and assuming Parker Poe consent regarding the sales tax dedication, approximately $4.5 million ofthe estimated $12 million annually in 1% sales tax revenue can be dedicated to secure the TIF Bonds (at 1.25x coverage): $35 million in TIF projects and $50 million of road projects can be funded in TIF bonds without any draws on sales tax revenues annually for debt service associated with TIF projects (100% of the debt service associated with the $50 million road projects would be paid from sales tax revenue and not from any TIF revenues). Sales tax revenues only serve to provide security for TIF projects and would not be used for debt service on any portion of the bonds. The above example also applies to any other tax/revenue source available to the County in approximately the same amounts that can be dedicated/pledged to the TIF Bonds. *UBSIPaineWebber . Development Considerations for the Financing Structure Developing the optimal issuance structure for the TIF Bonds involved discussions with Standard & Poor's and Moody's Investors Service and several bond insurers. These discussions were critical since annual revenue sufficient to cover debt service on any TIF Bonds at one times coverage (l.Ox) is not projected to occur for several years. Many of the projects, particularly the USC projects, require funding as quickly as possible. Successful issuance of the TIF bonds (if not issued as general obligation bonds or paid for in cash) will require municipal bond insurance. Additionally, the TIF bonds should be able to achieve "A" underlying ratings given the excellent management and fiscal operation of the County and the County's strong economic and demographics factors. Underlying Bond Ratings: Underlying bond ratings can help achieve lower borrowing costs to issuers with bond insurance since a published underlying rating signifies to investors the stand-alone credit strength of the issuer. Published ratings are sought provided they are in the "A" category. The use of a Fitch rating may also be useful in both lowering interest borrowing costs and achieving a higher general obligation and underlying rating. Please note that these underlying ratings would be assigned to the TIF bond issues in addition to the "AAA Insured" ratings assigned for having obtained bond insurance. The underlying ratings are generally determined, in part, by the general obligation bond ratings of the County. Municipal Bond Insurance: Bond Insurance tor an issue is purchased to strengthen the credit rating of a transaction and thereby achieve lower interest rates than would otherwise be obtainable on an uninsured basis. Credit enhancement generally makes sense for more complex transactions or for issuers whose "stand-alone" credit rating for a given transaction would be in the At/A+ category or lower since a "AAA-Insured" transaction will trade in the range of a AA- to AA bond issue. Though an upfront/one time premium is paid to obtain the insurance, the total cost of an insured transaction will be lower than an uninsured transaction as a result of the lower interest rates achievable and thus lower overall interest expense that is paid out. The common insurance cost range is SO to 100 basis points for a transaction of the nature contemplated by the County and is calculated relative to the total repayment amount of principal and interest. Debt Service Reserve Fund: Debt service reserve funds (DSRF) are typically required for TIF transactions as a means of further security. Typically, the DSRF is sized to equal the maximum annual debt service on the TIF bonds. The rating agencies and bond insurers will be the parties responsible for requiring the County to include this feature in the financing structure. t$UBSI~bber Within the past year, issuers with general obligation ratings of "AA" and higher have been able to eliminate the reserve requirement for similar bond issues. Although TIFs generally require a DSRF, it may be possible to eliminate this requirement if Scenario #3 and #4 (other tax or revenue dedication/pledge) are implemented. Based on discussions with the bond insurers and rating agencies, a reserve fund may not be required for the TIF bonds if adequate coverage and decreased reliance on one taxpayer (30%) is possible. If a reserve fund is required, a method for decreasing the size and potentially lowering the costs of the issue is the purchase of a Surety Bond from a surety provider as a substitute for cash funding a reserve fund. The County might also be able to utilize a half-maximum annual debt service reserve fund instead of a full ''max-annual" reserve in light of the additional back-up credit support. Although a cash funded reserve generally pays for itself, reducing the amount by half will lower the par amount ofbonds issued thus lessening the potential burden on the general fund. In the event the insurers/rating agencies want a max annual reserve fund, the County may be able to negotiate that halfof the reserve be funded from bondproceeds and the remaining funded from excess TIF revenues over some predetermined period oftime. This approach has been utilized by UBS PaineWebber for debt service reserves as well as "coverage reserves" for TIFfinancings. Assumptions and Goals Structuring the TIF Bonds in a manner that enables the County to issue as much of the bonds at one time is a primary goal. Several scenarios were developed with input from the rating agencies and bond insurers. The goals and assumptions were the same for each scenario: • County's TIF Bonds receive underlying ratings in "A" category • "AAA" Bond Insurance used to secure bonds (either MBIA, AMBAC, FSA or XL Capital Assurance) • Rating Agency required coverage to be in "A" category 1.20x to 2. Ox depending on security pledge • Bond Insurer coverage 1.20x to 1.50x (or possibly less based on further review of credit and site visit) • Bond Sizing Assumptions (New River Project): • Approximately $38.5 million • 25 year amortization 4' UBSIPaine\Xebber • Funds $35.0 million projects (net funded at 3%) at closing • Current Interest Rates (5.15% with Capital Appreciation Bonds - CABs- 21 basis points additional interest expense). Capitalized Interest covering first 2 Y:z years debt service-used to minimize debt service in the early years. Essentially "funds" the first 2 Yz years of interest on the TIF bonds with proceeds from the sale of the TIF bonds. • CABs in years 2015 through and including 2022 to reduce interest cost in early years. CABs delay the payment of any interest expense until maturity of the principal amount. This assists in the structuring of any bond issue were revenues grow over time. The use of CABs is market driven and a price is determined the time of sale of the bonds. We have assumed the general cost of0.21% or 21 basis points for this analysis. • $250,000 Cost of Issuance expenses for County • Bond Insurance Cost of 75 basis points • Debt service reserve fund requirement (Surety or bond proceeds) Structuring Considerations: The primary structuring issue for the rating agencies and bond insurers centers around the lack of sufficient revenues in the early years to cover debt service in the first year at a coverage level of 1.15x to 1.25x level. Additionally, because no revenues are currently being generated within the District and virtually all of the growth is projected to occur in the future, the Wilbur Smith forecast provides the only indication of future revenues. Based on a review of similar TIF financings completed within South Carolina and across the country, several structuring scenarios were examined. Based on discussions with the rating agencies and bond insurers, achieving "A" underlying ratings and bond insurance will require some form of dedication or "pledge" of another existing revenue or tax stream. Of the following scenarios, only Scenarios #2, #3 and #4 are available to the County for consideration. Scenario #1 will not result in either "A" underlying ratings or bond insurance - virtually eliminating the ability to sell the TIF bonds. Reference is made in the Scenarios below to ''open" and "closed" systems. A ''closed" system refers only to the fact the excess revenues derived from the District annually may not be released to the County. These revenues must be retained to cover any debt service shortfalls in future years. Correspondingly, "open" systems release any annual TIF revenues not needed annually to pay debt service on the TIF bond(s). *UBSIPaine~ber Additionally, Scenario #2 is based on the assumption that the County provides collateral security for the TIF bonds in the form of a "moral obligation" or similar structure. All three scenarios assume the creation of a debt service reserve fund (DSRF) at closing on the bonds (although we will strive to eliminate the DSRF requirement for the TIF bonds). A DSRF represents approximately one years' debt service in the TIF bonds and provides security to bondholders in the event revenues are not sufficient to cover debt service annually. Basically, a "moral obligation" pledge by the County represents the intent, but not requirement, of the County to replenish the DSRF with cash in the event it is ever used to make a debt service payment. Outline ofPossible Financing Structures for the Proposed TIF Bonds Outlined below are three possible scenarios that outline the primary structures available to the County. Variations of these structures are always an option and only serve to provide a guide to any requirements necessary for the financing(s) to be successfully completed. Additionally, UBS PaineWebber and Parker Poe have also discussed the possibility of issuing the TIF bonds through the Beaufort Jasper Higher Education Commission (BJHEC) or through the use ofa multi county business park. Although the concepts a not explained in detail in this report, both present unique funding opportunities for the County. The BmEC is ofparticular interest since nearly all ofthe projects to be funded by the first TIF bond are education related. Both should give access to the revenues created by the TIF District creation. Bonds issued through the BJHEC might also provide the best framework to structure the moral obligation bonds ofthe County. Although additional legal review by the County's bond counsel will be necessary regarding the proposed structures, the concepts are proven and have been implemented for other similar fmancings. The proposed structures can be summarized as follows: Scenario 1: Closed System (TIF Revenues not Released to County) and No Additional Collateral Pledge Scenario2: Moral Obligation ofCounty Scenario3: Pledge/Dedication ofAdditional Revenue/Tax ofCounty *UBSIPaine~bber SCENARIO 1-Closed System (TIF Revenues not Released to County) and No Additional Collateral Pledge: • Issuing TIF Bonds without sufficient initial annual TIF revenue to cover debt service • "Closed" System • Retain all excess TIF revenues annually • Continue retaining TIF revenues until annual TIF revenues from TIF District provides 1.50x coverage (MBIA) • Possibly dedicate cash balance (pledge or negative lien) to provide 1.50x {or higher) coverage at closing (MBIA) • Release of Excess TIF Revenues to County {"Open" System) and any dedicated cash balances once: • Revenues from TIF District provide 1.50x coverage annually • No single taxpayer more than 30% {MBIA) of annual TIF revenues • Outcome ofDiscussions: • Tough sell for both Rating Agencies and Bond Insurers • None of the bond insurers would likely participate • MBIA would likely consider providing insurance if coverage in year 1 was LOx maximum annual debt service - growing to 1.35x by year 3 and 1.50x by year 5 {coverage based only on annual TIF revenues and not accumulated TIF revenues or cash pledge at closing). This growth is not projected in the Wilbur Smith report. • Conclusion: Structure not feasible *UBSIPaineWebbcr. SCENARIO 2-Moral Obligation ofCounty: • Issuing TIF Bonds without sufficient initial annual TIF revenue to cover debt service and secured by moral obligation of County • "Closed" System Initially • Retain all excess T.W revenues annually • Continue retaining TIF revenues until annual TIF revenues from TIF District provides: • 1.50x coverage (MBIA) • No single taxpayer more than 30% • Possibly begin releasing portion of excess annual revenues over 1.50x once TIF revenues reach certain minimum coverage of 1.15x (MBIA) • Release of Excess TIF Revenues to County ("Open.. System) when: • Revenues from TIF District provide 1.50x coverage annually • No single taxpayer more than 30% (MBIA) of annual revenues • Additional pledge of either: • Pledge Title to USC facility while bonds are outstanding • A second cash funded debt service reserve fund equal to maximum annual debt service (approximately $3.4 million) • Outcome of Discussions: • MBIA could likely provide insurance if above conditions are met • Could likely achieve "A" underlying ratings • Conclusion: Structure feasible ifterms agreeable to County *UBSIPaineWebber SCENARIO 3 -Pledge/Dedication ofAdditional Revenue/Tax ofCounty: • Issuing TIF Bonds without sufficient initial annual TIF revenue to cover debt service and secured by dedication/pledge of additional "stable'' tax/revenue stream of County • "Open" System Initially • Dedication or pledge of "stable" revenue source • 1.20x to 1.35x coverage annually (possibly 1.20x with utility system excess revenue pledge or 1% sales tax dedication) of any future maximum annual debt service • Coverage of Dedicated/Pledged revenue source plus annual TIF revenues of at least 1.50x • "Stable" revenue would be any revenue/tax source with stable history or considered relatively stable/substantial by nature • Examples: sales tax, franchise fee revenue, net surplus revenues ofwater/sewer system, etc. • Release ofDedication!Pledge of revenue stream when: • Revenues from TIF District provide 1.50x coverage annually • No single taxpayer more than 30% (MBIA) of annual TIF revenues • Outcome ofDiscussions: • MBIA could likely provide insurance if above conditions are met • Could achieve "A" underlying ratings • Conclusion: Structure feasible ifterms agreeable to County $ UBSIPaine~ber Outline ofProposed Terms and Conditions for the TIF Bonds 1£!:m. Approximately 25 to 30 Years ~ Based on County requirement for repayment and needs for future flexibility. In general, the term of a financing should (i) not exceed the expected life of the asset(s) being financed, (ii) result in annual principal and interest payments consistent with the amount of funds projected to be available for such payments, (iii) be coordinated with current or anticipated capital funding repayment schedules to prevent over-burdening the District revenues in any future year or potentially inhibiting additional capital funding and, (iv) consider the slope of the municipal market yield curve to determine if the term can be "stretched-out" without a significant increase in interest rates or total cost of borrowing. The term will also be based upon analysis by the rating agencies and insurance providers who will evaluate the risks of repayment and establish the maximum term beyond which credit concerns negatively impact the rating or bond insurance. There is flexibility regarding term and as such, it should be evaluated during the course of the financing process. Repayment Scenario. Semi-annual interest, level annual debt service, and serial maturities. The general repayment scenario detailed above has historically proven to be most efficient for local government borrowers because it simplifies and maximizes their funds management while producing the lowest interest rates for a standard transaction. Repayment Sources. TIF District revenues and/or other revenue/tax sources The County plans to pay debt service on the TIF bonds with revenues generated from the District. Based on our analysis, a security pledge/dedication from another source will be necessary to issue the bonds. The TIF bonds can be structured in such a manner as to prevent and/or limit the need to use the pledge/dedicated source to pay the debt service annually. Interest Rate Mode. Fixed Rate ~ Recommended. Explore use of variable rate bond with Cap/Collar or SWAP Given the fact that market rates are at their lowest levels since the mid 1960 's, we would recommend a fixed rate transaction. .$ UBS/Paine~bber. Reserve Fund. Typically Required. Explore possibility to eliminate or possibly reduce to one-half reserve fund requirement. In the event the insurers/rating agencies want a max annual reserve fund, the County may be able to negotiate that half of the reserve be funded from bond proceeds and the remaining funded from excess TIF revenues over some predetermined period of time. This approach has been utilized by UBS PaineWebber for debt service reserves as well as "coverage reserves, for TIF fmancings. Capitalized Interest and Deferred Principal. Necessary. The interest expense on the deal that is due during the construction period is often financed and included in the issue, although this is not required. The principal amount that is due during this period may be deferred as well. This so-called capitalization of interest and deferral ofprincipal eliminates the need to "budget" for interest and principal payments from County or other sources during the construction period and for up to an additional six months beyond this period. Based on the fact that the District will be newly created with limited revenues available to pay debt service, it will likely be necessary to defer principal 4 to 5 years and capitalize interest for at least 2 Y2 years. Net Funded Project Fund. - Recommended. It is common for local governments to fund for construction at some level below actual requirements and to use investment earnings generated by these funds to achieve the total amount needed. Net funding will reduce the total amount financed by the anticipated investment earnings and the proportionate costs of issuance tied to the issue amount. Offering Method. Negotiated Public offering to broadest investment community. The County nor its proposed TIF project reflects the conditions identifiable with a private placement and so a public offering is the favored approach that should be pursued to achieve the lowest cost ofborrowing. $ UBS!Pctin~er APPENDIXB: FINANCIAL PROJECTIONS FOR POSSIBLE FINANCING STRUCTURES Scenario #1~ Closed System and No Additional Collateral Pledge Cumulative -EJ.OeuRI:venue Period Pl'Opoood Pl'Opo ..dDeht Capitalbed RoveJllle Annual Unuoed DebiServ +CUrrent Year's -Rev. Avallable for =Money Remalnlng Net Debl Senlce Balance of Ex.... DSCR JloSinnlng Balance Transferred to -Debt S.nice DSCR' Ending Prlm:ipal S.nko Intonot Comtnlnts Rovmucs Coverage Rovmue DebtS.nke After Debt S.rvlce Revenues County)' 6/30/2002 835,336.98 (835,336.98) 193,077.08 193,077.08 i 193,077.08 0.00 193,077.08 193,077.08 193,077.08 6/30/2003 1,432,006.26 (1,432,006.26) 475,457.47 475,457.47 ! 668,534.55 193,077.08 475, 457.47 668,534.55 668,534.55 6/30/2004 1,432,006.26 (1,432,006.26) 763,069.70 763,069.70 1,431,604.25 668,534.55 763,069.70 1,431,604.25 1,431,604.25 613012005 1,432,006.26 1,432,006.26 1,237,088.53 (99,908.97) 0.93 1,331,695.28 1.86 1,431,604.25 1,237,088.53 2,668,692.78 1,432,006.26 1.86 1,236,686.52 6/30/2006 300,000.00 I, 732,006.26 I, 732,006.26 1,750,803.47 113,805.97 1.07 1,445,501.25 1.78 1,236,686.52 ( 43,520.96) 1,750,803.47 3,031,010.96 I, 732,006.26 1.75 1,299,004.70 6/3012007 600,000.00 2,022,406.26 2,022,406.26 2,279,445.10 354,297.60 1.18 1,799,798.85 1.84 1,299,004.70 40,073.68 2,279,445.10 3,538,376.12 2,022,406.26 (.75 1,515,969.86 6/3012008 1,000,000.00 2,392,406.26 2,392,406.26 2,815,299.81 513,852.31 1.22 2,313,65!.16 1.93 1,515,969.86 144,558.71 2,815,299.81 4,186,710.96 2,392,406.26 1.75 1,794,304.70 6/30/2009 1,500,000.00 2,842,406.26 2,842,406.26 3,359,748.67 597,801.17 1.22 2,911,452.33 2.00 I, 794,304.70 179,842.41 3,359,748.67 4,974,210.96 2,842,406.26 1.75 2,131,804.70 6/30/2010 I, 750,000.00 3,032,406.26 3,032,406.26 3,747,556.17 794,858.67 1.27 3, 706,311.00 2.20 2,131,804.70 572,649.91 3,747,556.17 5,306,710.96 3,032,406.26 1.75 2,274,304. 70 6130/2011 2,190,000.00 3,402,406.26 3,402,406.26 4,141,310.99 777,738.49 1.23 4,484,049.49 2.31 2,274,304.70 461,404.73 4,141,310.99 5,954,210.96 3,402,406.26 1.75 2,551,804. 70 6/3012012 2,280,000.00 3,404,806.26 3,404,806.26 4,401,614.48 1,039,025.98 1.31 5,523,075.47 2.61 2,551,804.70 995,008.22 4,401,614.48 5,958,410.96 3,404,806.26 1.15 2,553,604.70 6/3012013 2,405,000.00 3,407,256.26 3,407,256.26 4,664,563.46 1,299,414.96 1.39 6,822,490.43 2.99 2,553,604.70 1,255,469.70 4,664,563.46 5,962,698.46 3,407,256.26 !.75 2,555,442.20 6/3012014 2,530,000.00 3,402,987.50 3,402,987.50 4,930,179.34 1,564,816.84 1.46 8,387,307.27 3.45 2,555,442.20 1,530,393.41 4,930,179.34 5,955,228.13 3,402,987.50 1.75 2,552,240.63 6/3012015 1,305,736.80 3,407,000.00 3,407,000.00 5,074,436.53 1,7l1,436.53 LSI 10,098,743.80 3.95 2,552,240.63 2,516,177.16 5,074,436.53 5,110,500.00 3,o407,000.00 1.50 1,703,500.00 6/30/2016 1,238,265.90 3,407,000.00 3,407,000.00 5,220,040.49 1,857,040.49 1.55 11,955,784.29 4.50 1, 703,500.00 1,813,040.49 5,220,040.49 5,!l0,500.00 3,407,000.00 1.50 1,703,500.00 6/30/2017 1,242,698.10 3,407,000.00 3,407,000.00 5,248,047.03 1,885,047.03 1.56 13,840,831.32 5.05 1, 703,500.00 1,841,047.03 5,248,047.03 5,110,500.00 3,407,000.00 1.50 1,703,500.00 6130/2018 I, 182,810.00 3,407,000.00 3,407,000.00 5,276,205.69 1,913,205.69 1.57 15,754,037.01 5.61 1,703,500.00 1,869,205.69 5,276,205.69 5,110,500.00 3,407,000.00 !.SO 1,703,500.00 6/30/2019 1,125,832.20 3,407,000.00 3,407,000.00 5,304,517.21 1,941,517.21 1.58 17,695,554.22 6.18 1,703,500.00 1,897,517.21 5,304,517.21 5,110,500.00 3,407,000.00 1.50 I,703,500.00 613012020 1,071,577.80 3,407,000.00 3,407,000.00 5,332,982.37 1,969,982.37 1.59 19,665,536.59 6.76 1,703,500.00 1,925,982.37 5,332,982.37 5,110,500.00 3,407,000.00 1.50 I,703,500.00 613012021 1,019,940.00 3,407,000.00 3,407,000.00 5,361,601.95 1,998,601.95 1.59 21,664,138.54 7.35 I, 703,500.00 1,954,601.95 5,361,601.95 5,110,500.00 3,407,000.00 1.50 1, 703,500.00 6/3012022 970,785.30 3,407,000.00 3,407,000.00 5,390,372.30 2,027,372.30 1.60 23,691,510.84 7.94 I, 703,500.00 1,983,372.30 5,390,372.30 5,110,500.00 3,407,000.00 1.50 1,703,500.00 6130/2023 2,670,000.00 3,407,000.00 3,407,000.00 5,419,297.04 2,056,297.04 1.61 25,747,807.88 8.54 1,703,500.00 2,012,297.04 5,419,297.04 5,110,500.00 3,407,000.00 1.50 1,703,500.00 6/30/2024 2,800,000.00 3,403,500.00 3,403,500.00 5,448,376.99 2,087,126.99 1.62 27,834,934.87 9.17 1,703,500.00 2,046,626.99 5,448,376.99 5,105,250.00 3,403,500.00 1.50 1,701,750.00 6130/2025 2,940,000.00 3,403,500.00 3,403,500.00 5,477,612.98 2,l14,612.98 1.63 29,949,547.85 9.79 1,701,750.00 2,074,112.98 5,477,612.98 5,105,250.00 3,403,500.00 1.50 I, 701,750.00 613012026 3,090,000.00 3,406,500.00 3,406,500.00 5,507,005.85 2,144,255.85 1.64 32,093,803.70 10.41 1,701,750.00 2,099,005.85 5,507,005.85 5,109,750.00 3,406,500.00 1.50 1, 703,250.00 6/3012027 3,240,000.00 3,402,000.00 3,402,000.00 5,536,556.45 2,171,306.45 1.65 34,265,110.15 11.06 1, 703,250.00 2,136,806.45 5,536,556.45 5,103,000.00 3,402,000.00 1.50 1,701,000.00 NOTES; 1- Exooss Rovonu.,. to bo used by County for Additional Bonds and other purposes. Transfer only after onnuol debt services requirements have been met. 2- Coventge Test Maintain 1.75x Coverage with Cash Balances until: a) I.SOx Coverage based on actual Annual Tax R Scenario #2- Moral Obligation ofCounty eurm.Jatlve Period Propooed Capitalized Rev..- Annual Un1110d Debt Serv -EmuTronsfernd Revenue to +OJrrent Year'a -R<>v. Available lor Propotod Dellt J Balllll NOTES: 1- EXJ:.. s RcvenUC!lo be used by Coonty fur Additional Boods and o1her purpooes. Transte< only a !lor coriain testJ have been meL 2- Oosed syalm! Wlti1: a) !.SOx Covorqo bucd on acrual Annual Tax Revenues II b) No sinsle taxpayer in TIF Oi.!lrict ia gJCater than 30% RovenUC! c) Possibly begin releasing cxceos revenueo ooco T!F ""'""""" produce 1.1 5x minimum covorago for m.> consecutive yearo II II II Scenario #4- Dedication ofSales Tax Revenue I sctNARto a.1• SCENARIO 4.2• $58,000,000 Road Project $67,000,000 Third TIF Prvject SaletTax Sales Tax Remaining Salet ExcenTIF TIFRevenua Remaining Sales Net Debt Service TIF Revenues Sales Tax Remailling Salet Total Revenue' Salea Tax Revenue DSCRon Sale• Tu Net Debt Service Revenue~ used t4i Remaining TIF Revenue• Tax Revenus for Rn-enuet Available Rema1ntn1 TIF Sales Tax Revenue Date Available to Pay Tax Revenues on SSO Million U•ed to Pay Deb Revenues used to Tax Revenues Not Available to Pay TIF Debt Service Used to Pay TIF OtherTIF Reveaue. on S35Mill TIF payTIFDebt Revenue.. Dedicated to Pay Other TIF Debt for other Debt Revenues Balance DIS Not Dedicated Road Project Service Pay Debt Service Dedicated Debt Service Debt Service projects Service Debt Service Service Service 6/112002 $12,000,000 $0 193,077.08 0 $193,077.08 $10,997,596 $1,386,371 $0 $1,386,371 $1,663,645.48 $9,333,950.15 $9,333,950 Sl93,077 $9,527,027 $1,438,168 $0 $1 ,245,091 $8,088,859 6.49 IINAME? $12,000,000 so 475,457.47 0 $475,457.47 $10,281,592 $2,376,636 $0 $2,376,636 $2,851,963.68 $7,429,628.81 $7,429,629 $475,457 $7,905,086 $2,465,431 so $1,989,974 $5,439,655 3.01 #NAME? $12,000,000 $0 763,069.70 0 $763,069.70 $10,281,592 $3,546,636 so $3,546,636 $4,255,963.68 $6,025,628.81 $6,025,629 $568,152 $6,593,781 $5,020,431 $0 $4,452,280 $1,573,349 1.20 #NAME? $12,000,000 $1,432,006 1,237,088.53 0 ($194,917.73) $10,281,592 $3,545,686 so $3,545,686 $4,254,823.68 $6,026,768.81 $6,026,769 $0 $6,026,769 $5,021,006 $0 $5,021,006 $1,005,763 1.20 IINAME? $12,000,000 $1,732,006 1,750,803.47 0 $18,797.21 $9,921,592 $3,544,386 $0 $3,544,386 $4,253,263.68 $5,668,328.81 $5,668,329 S18,797 $5,687,126 $4,721,656 $0 $4,702,859 $965,470 1.20 IINAME'I $12,000,000 $2,022,406 2,279,445.10 0 $257,038.84 $9,573,112 $3,544,546 $0 $3,544,546 $4,253,455.68 $5,319,656.81 $5,319,657 $257,039 $5,576,696 $4,429,056 so $4,172,017 $1,147,639 1.20 #NAME? $12,000,000 $2,392,406 2,815,299.81 0 $422,893.55 $9,129,112 $3,545,296 so $3,545,296 $4,254,355.68 $4,874,756.81 $4,874,757 $422,894 $5,297,650 $4,058,556 $0 $3,635,663 $1,239,094 1.20 IINAME? $12,000,000 $2,842,406 3,359,748.67 0 $517,342.41 $8,589,1!2 $3,547,796 $0 $3,547,796 $4,257,355.68 $4,331,756.81 $4,331,757 $517,342 $4,849,099 $3,606,056 so $3,088,714 $1,243,043 1.20 IINAME? $12,000,000 $3,032,406 3,747,556.17 0 $715,149.91 $8,361,112 $3,545,996 $0 $3,545,996 $4,255,195.68 $4,105,916.81 $4,105,917 $715,150 $4,821,067 $3,417,256 $0 $2,702,106 $1,403,810 1.20 IINAME? $12,000,000 $3,402,406 4,141 ,310.99 0 $738,904.73 $7,917,112 $3,546,996 so $3,546,996 $4,256,395.68 $3,660,716.81 $3,660,717 $738,905 $4,399,622 $3,048,456 so $2,309,552 $1,351,165 1.20 IINAME? $12,000,000 $3,404,806 4,401,614.48 0 $996,808.22 $7,914,232 $3,545,596 $0 $3,545,596 $4,254,715.68 $3,659,516.81 $3,659,517 $996,808 $4,656,325 $3,047,056 so $2,050,248 $1,609,269 1.20 IINAME? $12,000,000 $3,407,256 4,664,563.46 0 $1 ,257,307.20 $7,911,292 $3,544,865 so $3,544,865 $4,253,838.17 $3,657,454.32 $3,657,454 $1 ,257,307 $4,914,762 $3,047,288 so $1,789,980 $1,867,474 1.20 IINAME? $ 12,000,000 $3,402,988 4,930,179.34 0 $1,527,191.84 $7,916,415 $3,544,565 $0 $3,544,565 $4,253,478.17 $3,662,936.83 $3,662,937 $1,527,192 $5,190,129 $3,049,025 $0 $1,521,833 $2,141,104 1.20 IINAME? $12,000,000 $3,407,000 5,074,436.53 0 $1,667,436.53 $7,.911,600 $3,544,428 so $3,544,428 $4,253,313.17 $3,658,286.83 $7,746,687 $1,667,437 $9,414,123 $6,452,000 $0 $4,784,563 $2,962,123 1.20 IINAME? $ 12,000,000 $3,407,000 5,220,040.49 0 $1,813,040.49 $7,911,600 $3,549,184 $0 $3,549,184 $4,259,020.611 s> ,6.~1.579 n $7,740,979 $1,813,040 $9,554,020 $6,447,000 so $4,633,960 $3,107,020 1.20 #NAME? $12,000,000 $3,407,000 5,248,047.03 0 $1,841,047.03 $7,911,600 $3,547,577 $0 $3,547,577 $4,257,092.82 $3,654,507.18 $7,742,907 $1 ,841,047 $9,583,954 $6,452,000 so $4,610,953 $3,131,954 1.20 IINAME? $12,000,000 $3,407,000 5,276,205.69 0 $1,869,205.69 $7,911,600 $3,547,486 $0 $3,547,486 $4,256,983.73 $3,654,616.27 $7,743,016 $1,869,206 $9,612,222 S6,452,000 $0 $4,582,794 $3,160,222 1.20 IINAME? $12,000,000 $3,407,000 5,304,517.21 0 $1 ,897,517.21 $7,911,600 $3,547,668 $0 $3,547,668 $4,257,201.89 $3,654,398.11 $7,742,798 $1 ,897,517 $9,640,315 $6,452,000 $0 $4,554,483 $3,188,315 1.20 IINAME? $12,000,000 $3 ,407,000 5,332,982.37 0 $1,925,982.37 $7,911,600 $3,547,850 so $3,547,850 $4,257,420.04 $3,654,179.96 $7,742,580 $1,925,982 $9,668,562 $6,452,000 so $4,526,018 $3,216,562 1.20 IINAME? $12,000,000 $3,407,000 5,361,601.95 0 $1,954,601.95 $7,9Il,600 $3,547,759 $0 $3,547,759 $4,257,310.98 $3,654,289.02 $7,742,689 $1,954,602 $9,697,291 $6,452,000 $0 $4,497,398 $3,245,291 1.20 II NAME? s1 2,000,000 $3,407,000 5,390,372.30 0 s 1,983,372.30 $7,911,600 $3,548,941 $0 $3,548,941 $4,258,728.97 $3,652,871.03 $7,741,271 $1,983,372 $9,724,643 $6,447,000 $0 $4,463,628 $3,277,643 1.20 IINAME? $12,000,000 $3,407,000 5,419,297.04 0 $2,012,297.04 $7,911,600 $3,547,750 $0 $3,547,750 $4,257,300.00 $3,654,300.00 $7,742,700 $2,012,297 $9,754,997 $6,451,500 $0 $4,439,203 $3,303,497 1.20 IINAME? $12,000,000 $3,403,500 5,448,376. 99 0 $2,044,876.99 $7,915,800 $3,548,750 $0 $3,548,750 $4,258,500.00 $3,657,300.00 $7,741,500 $2,044,877 $9,786,377 $6,448,750 so $4,403,873 $3,337,627 1.20 IINAME? $12,000,000 $3,403,500 5,477,612.98 0 $2,074, II2. 98 $7,915,800 $3,547,750 so $3,547,750 $4,257,300.00 $3,658,500.00 $7,742,700 $2,074,113 $9,816,813 $6,448,500 $0 $4,374,387 $3,368,313 1.20 #NAME? s12, 000,000 $3,406,500 5,507,005.85 0 $2,100,505.85 $7,912,200 $3,544,500 $0 $3,544,500 $4,253,400.00 $3,658,800.00 $7,746,600 $2,100,506 $9,847,106 $6,455,000 $0 $4,354,494 $3,392,106 1.20 II NAME? $12,000,000 $3,402,000 5,536,556.45 0 $2,134,556.45 $7,917,600 $3,543,750 $0 $3,543,750 $4,252,500.00 $3,665,100.00 $7,747,500 $2,134,556 $9,882,056 $6,452,250 $0 $4,317,694 $3 ,429,806 1.20 Notes: Bond Issues Sized at 1.20x coverage of Sales Tax Revenues APPENDIXC: DEBT SERVICE DETAIL FOR POSSIBLE FINANCING STRUCTURES TABLE OF CONTENTS Beaufort County. SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Report Page Sources and Uses of Funds Bond Summary Statistics 2 Bond Pricing 3 Bond Debt Service 4 Net Debt Service 6 Bond Debt Service 7 Bond Solution 8 Project Fund 9 Reserve Fund 10 Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. SOURCES AND USES OF FUNDS Beaufort Cotmty, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Sources: Bond Proceeds: ParAmount 38,452,646.10 Accrued Interest 139,222.83 Original Issue Discount -491 ,667.90 Premium 707,180.30 38,807,381.33 Uses: Project Fund Deposits: Project Fund #I 33,950,080.01 Other Fund Deposits: Capitalized Interest Fund 3,543,424.22 Delivery Date Expenses: Cost of Issuance 250,000.00 Underwriter's Discount 363,394.84 Bond Insurance (75 Basis Points) 562,867.08 Surety For DSRF (4%) 136,290.25 1,312,552.17 Other Uses of Funds: Available for Project Fund 1,324.93 38,807,381.33 Note: Capitalized Interest Fund includes deposit of 139,222.83 of bond accrued interest. Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. Page 1 BOND SUMMARY STATISTICS Beaufort County, SC Tax Increment Financing, Series 2002 New River Project ('Project Costs: $35 Million) PRELEMINARY Dated Date 11101/2001 Delivery Date 12/06/2001 Last Maturity 06/0l/2027 Arbitrage Yield 5.063900% True Interest Cost (TIC) 5.147953% All-In TIC 5.233886% Average Life (years) 16.703 Duration of Issue (years) 12.077 Par Amount 38,452,646.10 Bond Proceeds 38,807,381.33 Total Interest 24,393,943.34 Net Interest 24,541,825.78 Total Debt Service 75,048,943.34 Maximmn Annual Debt Service 3,407,256.26 Average Annual Debt Service 2,939,236.99 Underwriter's Fees (per $1000) Average Takedown 5.500000 Management Fee 2.000000 Other Fee 1.950451 Total Underwriter's Discount 9.450451 Bid Price 99.615417 Par Average Average Bond Component Value Price Coupon Life Serial Bonds 14,555,000.00 104.737 4.871% 9.694 Capital Appreciation Bonds 9,157,646.10 97.784 16.767 Term Bonds 14,740,000.00 98.161 5.000% 23.583 38,452,646.10 16.703 All-In Arbitrage TIC TIC Yield Par Value 38,452,646.10 38,452,646.10 38,452,646.10 + Accrued Interest 139,222.83 139,222.83 139,222.83 + Premimn (DiscolDlt) 215,512.40 215,512.40 215,512.40 - Underwriter's Discount -363,394.84 -363,394.84 -Cost of Issuance Expense -250,000.00 - Other Amounts -562,867.08 -699,157.33 -562,867.08 Target Value 37,881,119.41 37,494,829.16 38,244,514.25 Target Date 12/06/2001 12/06/2001 12/06/2001 Yield 5.147953% 5.233886% 5.063900% Oct 18, 2001 6:00pm Prepared by UBS PaineWebber Inc. Page2 BOND PRICING Beaufort County, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Principal Maturity per$5,000 Premium Bond Component Date AmoWlt Rate Yield Price at Maturity (-Discount) Serial Donds: 06/01/2006 300,000.00 3.200% 3.250% 99.792000 -624.00 06/0112007 600,000.00 5.000% 3.550% 107.170000 43,020.00 06/01/2008 1,000,000.00 5.000% 3.770% 107.018000 70,180.00 06/0112009 1,500,000.00 4.000% 3.910% 100.578000 8,670.00 06/0112010 1,750,000.00 4.000% 4.000% 100.000000 06/0l/2011 2,190,000.00 4.000% 4.100% 99.220000 -17,082.00 06/01/2012 2,280,000.00 5.375% 4.230% 109.247000 c 210,831.60 06/0l/2013 2,405,000.00 5.375% 4.360% 108.146000 c 195,911.30 06/01/2014 2.530,000.00 5.375% 4.490% 107.058000 c 178,567.40 14,555,000.00 689,474.30 Capital Appreciation Bonds: 06/01/2015 1 ,305,736.80 5.375% 5.620% 96.834615 2,445.20 -41,331.60 06/01/2016 1,238,265.90 5.375% 5.720% 95.254113 2,318.85 -58,766.70 06/01/2017 1,242,698.10 5.000% 5.090% 98.648562 2,327.15 -16,794.30 06/01/2018 1,182,810.00 5.000% 5.090% 98.564334 2,215.00 -16,981.20 06/01/2019 1'125,832.20 5.000% 5.090% 98.475075 2,108.30 -17,168.10 06/0112020 1,071,577.80 5.000% 5.090% 98.390392 2,006.70 -17,248.20 06/0112021 1,019,940.00 5.000% 5.090% 98.303665 1,910.00 -17,301.60 06/01/2022 970,785.30 5.000% 5.090% 98.2 17773 1,817.95 -17,301.60 9,157,646.10 -202,893.30 TennBonds: 06/01/2023 2,670,000.00 5.000% 5.130% 98.161000 -49,101.30 06/01/2024 2,800,000.00 5.000% 5.130% 98.161000 -51,492.00 06/01/2025 2,940,000.00 5.000% 5.130% 98.161000 -54,066.60 06/01/2026 3,090,000.00 5.000% 5.130% 98.161000 -56,825.10 06/0 112027 3,240,000.00 5.000% 5.130% 98.161000 -59,583.60 14,740,000.00 -271,068.60 38,452,646.10 215,512.40 Dated Date 11/01/2001 Delivery Date 12/06/2001 First Coupon 06/01/2002 Par Amount 38,452,646.10 Premium 215,512.40 Production 38,668,158.50 100.560462% Underwriter's Discount -363,394.84 -0.945045% Purchase Price 38,304,763.66 99.615417% Accrued Interest 139,222.83 Net Proceeds 38,443,986.49 Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. Page3 BOND DEBT SERVICE Beaufort Coilllty, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Period Compounded Annual Ending Principal Coupon Interest Interest Debt Service Debt Service 12/06/2001 06/0112002 835,336.98 835,336.98 06/30/2002 835,336.98 12/0l/2002 716,003.13 716,003.13 06/01/2003 716,003.13 716,003.13 06/30/2003 1,432,006.26 12/01/2003 716,003.13 716,003.13 06/01/2004 716,003.13 716,003.13 06/30/2004 1,432,00626 12/0112004 716,003.13 716,003.13 06/01/2005 716,003.13 716,003.13 06/30/2005 1,432,006 .26 12/01/2005 716,003.13 716,003.13 06/01/2006 300,000.00 3.200% 716,003.13 1,016,003.13 06/30/2006 1' 732,006.26 12/0l/2006 711,203.13 711,203.13 06/01/2007 600,000.00 5.000% 711,203.13 1,311,203.13 06/30/2007 2,022,406.26 12/01/2007 696,203.13 696,203.13 06/01/2008 1,000,000.00 5.000% 696,203.13 I ,696,203.13 06/30/2008 2,392,406.26 12/0112008 671,203.13 671,203.13 06/01/2009 1,500,000.00 4.000% 671,203.13 2,171,203.13 06/30/2009 2,842,406.26 12/01/2009 641,203.13 641,203.13 06/01/2010 1,750,000.00 4.000% 641,203.13 2,391,203.13 06/30/2010 3,032,406.26 12/0112010 606,203.1 3 606,203.13 06/01/2011 2,190,000.00 4.000% 606,203.13 2, 796,203.13 06/30/2011 3,402,406.26 12/0112011 562,403.13 562,403.13 06/01/2012 2,280,000.00 5.375% 562,403.13 2,842,403.13 06/30/2012 3,404,806.26 12/01/2012 501,128.13 501,128.13 06/01/2013 2,405,000.00 5.375% 501,128.13 2,906,128.13 06/30/2013 3,407,256.26 12/01/2013 436,493.75 436,493.75 06/0112014 2,530,000.00 5.375% 436,493.75 2,966,493.75 06/30/2014 3,402,987.50 12/01/2014 368,500.00 368,500.00 06/01/2015 1,305,736.80 5.375% 368,500.00 1,364,263.20 3,038,500.00 06/30/2015 3,407,000.00 12/01/2015 368,500.00 368,500.00 06/01/2016 1,238,265.90 5.375% 368,500.00 1,431,734.10 3,038,500.00 06/30/2016 3,407,000.00 12/01/2016 368,500.00 368,500.00 06/01/2017 1,242,698.10 5.000% 368,500.00 1,427,301.90 3,038,500.00 06/30/2017 3,407,000.00 12/01/2017 368,500.00 368,500.00 06/01/2018 1,182,810.00 5.000% 368,500.00 1,487,190.00 3,038,500.00 06/30/2018 3,407,000.00 12/01/2018 368,500.00 368,500.00 Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. Page4 BOND DEBT SERVICE Beaufort County, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Period Compounded Annual Ending Principal Coupon Interest Interest Debt Service Debt Service 06/01/2019 1,125,832.20 5.000% 368,500.00 1,544,167.80 3,038,500.00 06/30/2019 3,407,000.00 12/01/2019 368,500.00 368,500.00 06/01/2020 1,071,577.80 5.000% 368,500.00 1,598,422.20 3,038,500.00 06/30/2020 3,407,000.00 12/01/2020 368,500.00 368,500.00 06/01/2021 1,019,940.00 5.000% 368,500.00 1,650,060.00 3,038,500.00 06/30/2021 3,407,000.00 12/01/2021 368,500.00 368,500.00 06/01/2022 970,785.30 5.000% 368,500.00 1,699,214.70 3,038,500.00 06/30/2022 3,407,000.00 12/01/2022 368,500.00 368,500.00 06/01/2023 2,670,000.00 5.000% 368,500.00 3,038,500.00 06/30/2023 3,407,000.00 12/01/2023 301,750.00 301,750.00 06/0112024 2,800,000.00 5.000% 301,750.00 3,101 ,750.00 06/30/2024 3,403,500.00 12/0112024 231,750.00 231,750.00 06/01/2025 2,940,000.00 5.000% 231,750.00 3,171,750.00 06/30/2025 3,403,500.00 12/0112025 158,250.00 158,250.00 06/0112026 3,090,000.00 5.000% 158,250.00 3,248,250.00 06/30/2026 3,406,500.00 12/01/2026 81,000.00 81,000.00 06/0112027 3,240, 000. 00 5.000% 81 ,000.00 3,321,000.00 06/30/2027 3,402,000.00 38,452,646.10 24,393,943.34 12,202,353.90 75,048,943.34 75,048,943.34 Oct 18, 2001 6:00pm Prepared by UBS Paine Webber Inc. Page 5 NET DEBT SERVICE Beaufort County, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Period Total Capitalized Net Ending Debt Service Interest Fund Debt Service 06/30/2002 835,336.98 835,336.98 06/3012003 1,432,006.26 1,432,006.26 06/3012004 1,432,006.26 1,432,006.26 06/3012005 1,432,006.26 1,432,00626 06/3012006 1,732,006 .26 1,732,006.26 06/30/2007 2,022,406.26 2,022,406.26 06/30/2008 2,392,406.26 2,392,406.26 06/30/2009 2,842,406.26 2,842,406.26 06/3012010 3,032,406.26 3,032,40626 06/3012011 3,402,406.26 3,402,406.26 06/30/2012 3,404,806.26 3,404,806.26 06/30/2013 3,407,256.26 3,407,256.26 06/3012014 3,402,987.50 3,402,987.50 06/30/2015 3,407,000.00 3,407,000.00 06/3012016 3,407,000.00 3,407,000.00 06/3012017 3,407,000.00 3,407,000.00 06/3012018 3,407,000.00 3,407,000.00 06/30/2019 3,407,000.00 3,407,000.00 06/30/2020 3,407,000.00 3,407,000.00 06/30/2021 3,407,000.00 3,407,000.00 06/30/2022 3,407,000.00 3,407,000.00 06/3012023 3,407,000.00 3,407,000.00 06/3012024 3,403,500.00 3,403,500.00 06/30/2025 3,403,500.00 3,403,500.00 06/30/2026 3,406,500.00 3,406,500.00 06/3012027 3,402,000.00 3,402,000.00 75,048,943.34 3,699,349.50 71,349,593.84 Oct 18,2001 6:00pm Prepared by UBS PaineWe bber Inc. Page 6 BOND DEBT SERVICE Beaufort CoWlty, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Period CompoliDded Ending Principal Coupon Interest Interest Debt SCIVice 06/30/2002 835,336.98 835,336.98 06/30/2003 1,432,006.26 1,432,006.26 06/30/2004 1,432,006.26 1,432,006.26 06/30/2005 1,432,006.26 1,432,006.26 06/30/2006 300,000.00 3.200% 1,432,006.26 1,732,006.26 06/30/2007 600,000.00 5.000% 1,422,406.26 2,022,406.26 06130/2008 1,000,000.00 5.000% 1,392,406.26 2,392,406.26 06/30/2009 1,500,000.00 4.000% 1,342,406.26 2,842,406.26 06/30/2010 1,750,000.00 4.0000/0 1,282,406.26 3,032,406.26 06130/2011 2,190,000.00 4.000% 1,212,406.26 3,402,406.26 06130/2012 2,280,000.00 5.375% 1,124,806.26 3,404,806.26 06130/2013 2,405,000.00 5.375% 1,002,256.26 3,107,256.26 06/30/2014 2,530,000.00 5.375% 872,987.50 3,402,987.50 06/30/2015 1,3 05, 736.80 5.375% 737,000.00 1,364,263.20 3,407,000.00 06/30/2016 1,238,265.90 5.375% 737,000.00 1,431,734.10 3,407,000.00 06130/2017 1,242,698.10 5.000% 737,000.00 1,427,301.90 3,407,000.00 06/30/2018 1,182,810.00 5.000% 737,000.00 1,487,190.00 3,407,000.00 06/30/2019 1,125,832.20 5.000% 737,000.00 1,544,167.80 3,407,000.00 06/3 0/2020 1,071,577.80 5.000% 737,000.00 1,598,422.20 3,407,000.00 06/30/2021 1,019,940.00 5.000% 737,000.00 1,650,060.00 3,407,000.00 06130/2022 970,785.30 5.000% 737,000.00 1,699,214.70 3,407,000.00 06130/2023 2,670,000.00 5.000% 737,000.00 3,407,000.00 06/30/2024 2,800,000.00 5.000% 603,500.00 3,403,500.00 06/30/2025 2,940,000.00 5.000% 463,500.00 3,403,500.00 06/30/2026 3,090,000.00 5.000% 316,500.00 3,406,500.00 06/30/2027 3,240,000.00 5.000% 162,000.00 3,402,000.00 38,452,646.10 24,393,943.34 12,202,353.90 75,048,943.34 Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. Page7 BOND SOLUTION Beaufort CoWity, SC Tax Increment Financing, Series 2002 New River Project {Project Costs: $35 Million) PRELEMINARY Period Proposed Proposed Debt Service Total Adj Revenue Unused Debt Serv Ending Principal Debt Service Adjustments Debt Service Constraints Revenues Coverage 06/30/2002 835,337 -974,560 -139,223 193,077 332,300 06/30/2003 1,432,006 -1 ,432,006 475,457 475,457 06/30/2004 1,432,006 -1 ,432,006 763,070 763,070 06/30/2005 1,432,006 1,432,006 1,237,089 -194,918 86.38849% 06/30/2006 300,000 1,732,006 1,732,006 1,750,803 18,797 101.08529% 06/30/2007 600,000 2,022,406 2,022,406 2,279,445 257,039 112.70956% 06/30/2008 1,000,000 2,392,406 2,392,406 2,815,300 422,894 117.67649% 06130/2009 1,500,000 2,842,406 2,842,406 3,359,749 517,342 118.20086% 06/30/2010 1,750,000 3,032,406 3,032,406 3,747,556 715,150 123.58358% 06/30/2011 2,190,000 3,402,406 3,402,406 4,141,311 738,905 121.71712% 06/30/2012 2,280,000 3,404,806 3,404,806 4,401,614 996,808 129.27650% 06/30/2013 2,405,000 3,407,256 3,407,256 4,664,563 1,257,307 136.90087% 06/30/2014 2,530,000 3,402,988 3,402,988 4,930,179 1,527,192 144.87797% 06/30/2015 1,305,737 3,407,000 3,407,000 5,074,437 1,667,437 148.94149% 06/30/2016 1,238,266 3,407,000 3,407,000 5,220,040 1,813,040 153.21516% 06/30/2017 1,242,698 3,407,000 3,407,000 5,248,047 1,841,047 154.03719% 06130/2018 1,182,810 3,407,000 3,407,000 5,276,206 1,869,206 154.86368% 06/30/2019 1,125,832 3,407,000 3,407,000 5,304,517 1,897,517 155.69466% 06/30/2020 1,071,578 3,407,000 3,407,000 5,332,982 1,925,982 156.53015% 06/30/2021 1,019,940 3,407,000 3,407,000 5,361,602 1,954,602 157.37018% 06/30/2022 970,785 3,407,000 3,407,000 5,390,3 72 1,983,372 158.21463% 06/30/2023 2,670,000 3,407,000 3,407,000 5,419,297 2,012,297 159.06361% 06/30/2024 2,800,000 3,403,500 3,403,500 5,448,377 2,044,877 160.08159% 06/30/2025 2,940,000 3,403,500 3,403,500 5,477,613 2,074,11 3 160.94059% 06/30/2026 3,090,000 3,406,500 3,406,500 5,507,006 2,100,506 161.66170% 06/30/2027 3,240,000 3,402,000 3,402,000 5,536,556 2,134,556 162.74416% 38,452,646 75,048,943 -3,838,572 71,210,371 I 04,356,267 33,145,896 Oct 18,2001 6:00pm Prepared by UBS PaineWebber Inc. Page 8 PROJECT FUND Beaufort County, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Project Fund #1 (PROD Interest Scheduled Date Deposit @3% Principal Draws Balance 12/06/2001 33,950,080.01 33,950,080.01 01/0112002 70,276.75 1,388,056.58 1,458,333.33 32,562,023.43 02/01/2002 80,900.89 1,377,432.44 1,458,333.33 31,184,590.99 03/0l/2002 77,478.64 1,380,854.69 1,458,333.33 29,803,736.30 04/0112002 74,047.88 1,384,285.45 1,458,333.33 28,419,450.85 05/01/2002 70,608.60 1,387,724.73 1,458,333.33 27,031,726.12 06/0112002 67,160.78 1,391,172.55 1,458,333.33 25,640,553.57 07/01/2002 63,704.38 1,394,628.95 1,458,333.33 24,245,924.62 08/0112002 60,239.41 1,398,093.92 1,458,333.33 22,847,830.70 09/01/2002 56,765.82 1,401,567.51 1,458,333.33 21,446,263.19 10/01/2002 53,283.60 1,405,049.73 1,458,333.33 20,041,213.46 11/01/2002 49,792.73 1,408,540.60 1,458,333.33 18,632,672.86 12/01/2002 46,293.19 1,412,040.14 1,458,333.33 17,220,632.72 01/01/2003 42,784.95 1,415,548.38 1,458,333.33 15,805,084.34 02/0112003 39,268.00 1,419,065.33 1,458,333.33 14,386,019.01 03/01/2003 35,742.30 I ,422,591.03 1,458,333.33 12,963,427.98 04/01/2003 32,207.85 1,426,125.48 1,458,333.33 11,537,302.50 05/01/2003 28,664.62 1,429,668.71 1,458,333.33 10,107,633.79 06/01/2003 25,112.59 1,433,220.74 1,458,333.33 8,674,413.05 07/0112003 21,551.72 1,436,781.61 1,458,333.33 7,237,631.44 08/01/2003 17,982.02 1,440,351.31 1,458,333.33 5,797,280.13 09/01/2003 14,403.44 1,443,929.89 1,458,333.33 4,353,350.24 10/01/2003 10,815.97 1,447,517.36 1,458,333.33 2,905,832.88 11/01/2003 7,219.59 1,451,113.74 1,458,333.33 1,454,719.14 12/01/2003 3,614.27 1,454,719.14 1,458,333.41 33,950,080.01 1,049,919.99 33,950,080.01 35,000,000.00 Oct 18, 2001 6:00pm Prepared by UBS PaineWebber Inc. Page9 RESERVE FUND Beaufort County, SC Tax Increment Financing, Series 2002 New River Project (Project Costs: $35 Million) PRELEMINARY Capitalized Interest Fund (CAPD Interest Scheduled Date Deposit @3% Principal Draws Balance 12/06/2001 3,543,424.22 3,543,424.22 06/0112002 51,664.23 783,672.75 835,336.98 2,759,751.47 12/01/2002 41,396.27 674,606.86 716,003.13 2,085,144.61 06/01/2003 31,277.17 684,725.96 716,003.13 1,400,418.65 12/01/2003 21,006.28 694,996.85 716,003.13 705,421.80 06/01/2004 10,581.33 705,421.80 716,003.13 3,543,424.22 155,925.28 3,543,424.22 3,699,349.50 Oct 18, 2001 6:00pm Prepared by UBS Paine Webber Inc. Page 10 ~ .. I r r r r r I [ J I. L [ J. ' j r J J J I I