CDFA/International Council of Shopping Centers Tax Increment Finance Course November 1,2007 Washington, DC

Transcription

1 CDFA/International Council of Shopping Centers Tax Increment Finance Course November 1,2007 Washington, DC

2 Keenan Rice President MuniCap, Inc. Introductions Tim Pula Senior Development Director Struever Bros. Eccles & Rouse, Inc.

3 Outline I. City of Baltimore TIF process II. Case Study Clipper Mill III. City of Baltimore Policies and Principles IV. Baltimore Development Corporation - Mission and Review V. Developer s Perspective VI. Q & A

4 I. City of Baltimore - TIF - History of Redevelopment - Opportunities - Review Process

5 City of Baltimore Harbor Point Existing Conditions Future Development

6 City of Baltimore Westport Location

7 City of Baltimore Westport Proposed Development

8 City of Baltimore Charles Village

9 City of Baltimore Charles Village

10 City of Baltimore Technology Park at Johns Hopkins

11 II. Case Study: Clipper Mill Overview of Project with Images History of Clipper Mill Site Plan Aerial Photograph (prior to construction) Before and After Pictures

12 Historic Clipper Mill

13 Clipper Mill Site Plan Ryland Homes Foundry Building Poole & Hunt Building Stables Building Millrace Building Phase II Clipper Overlook Tractor Building Assembly Building

14 Clipper Mill Aerial Prior to Construction Clipper Overlook (Phase II) Stables Building Ryland Homes (Not SBER) Tractor Building Assembly Building Pool Foundry Building Millrace Building Poole & Hunt Building

15 Infrastructure

16 Infrastructure

17 Poole & Hunt Building Before and After

18 Poole & Hunt Building After

19 Poole & Hunt Building After

20 Millrace Before and After

21 Millrace Before and After

22 Millrace Model Home

23 Assembly Before and After

24 Assembly Before and After

25 Assembly Before and After

26 Assembly Before and After

27 Foundry Before and After

28 Artists at the Foundry

29 Hangspot at the Foundry

30 Stables Building Before and After

31 Tractor Building Before

32 Ryland Homes

33 Clipper Overlook Rendering

34 III. City of Baltimore Policies and Principles Public Policy Questions Is public assistance appropriate for this project? But For test -Do current conditions impair proposed development? -Is there some other reason the market acting alone will not produce the development? How much assistance is appropriate? What is the sponsoring government agency receiving in return for the TIF? (TIF is both a financial and land use development tool.)

35 City of Baltimore Policies and Principles (continued) Public Policy Questions What is the amount of private investment (is the public investment adequately leveraging private investment)? Will there be sufficient surplus tax revenues to cover costs of public services required for the project? Is the proposed TIF economically efficient (i.e., more tax revenues or benefits than the No-TIF alternative)? Are there clear linkages between the properties in the TIF area and the TIF plan? What are the risks associated with the TIF plan, and have the risks been addressed?

36 IV. Baltimore Development Corporation Mission and Review BDC: Who We Are Created in 1992 as a non-profit 501(c)3 corporation under contract with the City ( quasi-public ) to provide economic development services Our Mission: retain and attract businesses, create jobs, expand the tax base, strengthen Main Streets and neighborhood shopping districts, support cultural assets Operating budget of approximately $4.3 million; staff of approximately 45 people

37 Baltimore Development Corporation Mission and Review BDC: What We Are Responsible For Negotiating and underwriting financing for major public private real estate partnerships including Tax Increment Financing Property acquisition (by eminent domain, if necessary) and disposition for economic development purposes Acting as developer and project manager for strategic economic development related capital projects

38 Baltimore Development Corporation Mission and Review City Goals of Public Private Partnerships: Achieve a Public Purpose Minimize the City s Investment Maximize the City s Return on Investment Determine that the project would not happen without the City investment Allow the Developer a Reasonable, but not Excessive, return on Investment

39 Baltimore Development Corporation Mission and Review Why public private partnerships in real estate? But/For: The projected revenues from a real estate development (such as housing, hotel, office, parking and retail) are insufficient to pay the expenses and debt on the development and provide the equity investor with a reasonable return. Other public purpose: City identifies a need that cannot be supported by the private market; private sector is best able to produce the produce with public support.

40 Baltimore Development Corporation Mission and Review Cost Benefit Analysis answers two questions: What is the City s investment? What is the City s return on investment, measured as an increase in jobs, taxes and intangible spin-off benefits?

41 Baltimore Development Corporation Mission and Review What are the City s returns? Construction Phase Jobs Piggy-back Payroll Taxes Transfer Taxes Permit Fees Recordation Fees Spin-off Benefits Ongoing Operations Jobs Piggy-back Payroll Taxes Real Property Taxes Personal Property Taxes Utility Taxes Parking Taxes Hotel Taxes Admissions Taxes Incremental Revenue (PILOT payments, Rent, Loan Payments, etc.) Spin-Off Benefits

42 Baltimore Development Corporation Mission and Review Tools Computer Modeling Market Research Consultants Review and Approval Process Levels of Analysis Estimate City Investment and Incremental Revenues Estimate Incremental State Revenues Estimate Returns to the Developer

43 Baltimore Development Corporation Mission and Review Proceed or Not Proceed City returns must be greater than investment City must achieve minimum hurdle rates Developer returns must be reasonable (not excessive) Other economic development objectives and criteria

44 Baltimore Development Corporation Mission and Review Overview of TIF Process Developer submission of TIF request package Staff review ( but-for ) and negotiation of TIF amount BDC Board recommendation Board of Finance concept approval City Council bill introduction and approval Board of Estimates approval Mail PLOM, price bonds and close

45 V. TIF Issues SBER s Perspective -Determining what was TIF Eligible and what was not -Perception of Developers -BDC s Response -Difficult Inspections -Underground Obstructions and Tight Site Constraints

46 Underground Obstructions

47 Underground Obstructions

48 Tight Site Constraints

49 TIF Issues SBER s Perspective -Program Changes After Underwriting: Millrace Switched from 86 apartments to 62 condos Changed ownership Changed lenders -ADA Tractor Building and Developable Land Switched to new entity Switched lenders Sold 34 TH lots to Ryland Homes rather than building homes ourselves

50 VI. Q & A