renaissance downtowns depot square phase i financial proposal; supplemental submission

AUGUST 15, 2014

Depot Square Phase I

Financial Proposal Supplemental Submission

LEXINGTON PARTNERS LLC

Renaissance Downtowns at Bristol LLC 2

TABLE OF CONTENTS

Introduction ………………………………………………………………………………………………. 3

Building A Working Document

Visualizing The Future ……………………………………………………………………………….. 5

Site Plan Comparison …………………………………………………………………………………. 6

Floor Plan Comparison ………………………………………………………………………………. 8

Unit Comparison ……………………………………………………………………………………….. 10

Finishes and Amenities ……………………………………………………………………………… 11

Façade Comparison …………………………………………………………………………………… 12

Land Take Down Comparison …………………………………………………………………….. 14

Housing Study Data …………………………………………………………………………………… 15

Existing Downtown Amenities …………………………………………………………………… 16

Potential Bonding Scenarios ………………………………………………………………………. 18

Building B Proposal

Introduction ………………………………………………………………………………………………. 21

Phasing Analysis ………………………………………………………………………………………… 22

Pro Forma Estimates ………………………………………………………………………………….. 23

Case Studies

Introduction ……………………………………………………………………………………………… 29

Roanoke, VA. ……………………………………………………………………………………………. 30

Bloomfield, NJ. ………………………………………………………………………………………….. 31

Dubuque, IA. ……………………………………………………………………………………………… 32

Glastonbury, CT. ………………………………………………………………………………………… 33

Conclusion …………………………………………………………………………………………………. 34

3

Following the April 24th, submission of the Depot

Square Phase I Financial Proposal, the development

team of Renaissance Downtowns, D’Amato Realty

and Lexington Partners (“RDL”) were asked to both

collaborate with the BDDC and the City on the

April submission details and prepare and submit a

comparative proposal that would consider the

development of Building B (the mixed-use building)

as the initial building of the approved Phase I to be

constructed. Therefore this package serves as a

supplement to the April 24th submission .

This supplemental submission contains three main

sections that describe: 1) The work done by the

RDL Team and the BDDC/City working subgroup

over the past several months to both clarify the

questions raised on the April submission and

determine next steps for the effort; 2) a

comparative proposal for starting Phase I with the

construction of Building B and; 3) a series of

additional case studies of downtown revitalization

and the process by which those revitalizations took

place.

The challenges of the cost of construction and

operation of the larger Building B, which includes a

significant retail component, is also outlined in this

submission. Current market conditions, the size of

the development and the multiple construction

typologies necessary to separate the retail and

residential components make the financial realities

Introduction

of the Building B proposal even more of a

challenge. That said there are also some creative

options of mitigating the challenges associated

with Building B.

The RDL team has also included what can

potentially be expected going forward in terms of

next steps for the project. Through continued work

with the subgroup of City parties, the RDL team

will further develop a final financial plan for the

first phase of Depot Square Development and the

revitalization of Downtown Bristol.

While the economic realities of the Bristol market

present certain challenges, Renaissance

Downtowns and its partners are committed to

seeing the beginning of the Depot Square

Revitalization becoming a reality.


Supplemental Submission

Building A Working

Document

5

Over the past several months, RDL has been working with members of the BDDC sub-group and the City of Bristol to answer ques-

tions and clarify information contained in its April 24th Depot Square Phase I Financial Proposal Submission. Since then, RDL and the

various municipal entities have participated in series of collaborative strategy sessions during which time the intent was to review

the financing options presented to date, and collectively agree upon a strategy moving forward that would provide the partnership

the best approach towards realizing the revitalization of Downtown Bristol. Following these strategy sessions it was concluded that

RDL would be given 90 days to provide the BDDC with an additional Financial Proposal Submission. The purpose of this additional

submission was for RDL to apply the finance structure for Building A to Building B, so the partnership would have as much infor-

mation as possible when rendering its decision on how best to move forward. The original 90 day time allotment was then reduced

to 60 days following the City’s determination that it may want to put this matter of municipal financing out to a public referendum,

thereby pushing up the submission date from September 15th to August 15th, 2014. The following submission provides answers to

various questions to provide clarification of the following:

Site plan modifications

Impacts to building square footage including residential, commercial and common space

Further detail with respect to interior building finishes, unit sizes and amenity space

The revised architectural treatment of the building exterior

Subdivision and shared parking modifications

Municipal Bond Financing

Depot Square today

Depot Square Showing proposed Building A

VISUALIZING THE FUTURE


At the time that the Unified Downtown Development Project (UDDP) was approved, Phase I contemplated including

approximately:

Building A - 100 units & 944 sf of retail space

Building B - 140 units & 20,000 sf of retail space

Building C - 125 Key Hotel and;

All of the associated site improvements including the public piazza.

Once the Phase I site plan began to take shape, the decision was made to move the hotel into a later phase due to both general

market conditions as well as the development of the new Double Tree Hotel. The Phase I site plan was then fully engineered to

include Buildings A, B and all of the associated site improvements, including the 110 foot x 145 foot public piazza.

This plan also included a permanent parking field behind Building A which served both buildings with handicapped accessible

parking and a portion of the new road that will run the length of the site. The remainder of the required parking was intended to

be in a temporary field west of the new road.

ORIGINAL APPROVED SITE PLAN RENDERING

7

Significant Site Plan Changes

Phase I is now proposed as two

smaller phases with Phase IA to

include; Building A - 101 units &

2,000 sf of retail space

Adjusted Parking Plan allows for the

entire Building A parking field to be

built behind the building (previously

30 spaces now 155 spaces) leaving

public parking along Main Street for

current Main Street Retailers which

is currently a concern

The Pedestrian Mews is only

partially developed until the

construction of Building B

An improved green space allows for

public events and activities to begin

to take shape with the construction

of Building A

The current Riverside Avenue curb

cut can be used to service Building

A.

The Bus Shelter can remain in its

current location until the

development of Phase I B begins

Additional on street parking and

streetscapes are constructed as

part of Phase I B

Estimated Site Cost Proposal: $3.8 mm

Estimated: $245,000 for Roads and Public Parking

$550,000 related to potential for non-compactable soils

Approximately $ 3mm in Site Costs for Building A foundation,

utilities, and associated Landscaping & Parking

Resident Parking

Temporary

Public Parking

Temporary Public Parking (Future Building B Site)

MODIFICATIONS TO THE SITE PLAN FOR BUILIDNG A OPTION

The working subgroup asked the RDL Team to provide further explanations as to the site plan changes

that occurred between the original approved Phase I site plan, and the proposal submitted in April of

2014. In addition, the group asked for a more detailed estimate of the site work contemplated for the

Building A proposal. As was explained, the site work contemplated takes into account the challenges

experienced by the new McDonalds during construction of their new facility. The demolition of the old

downtown during urban renewal was made worse by the fact that the foundations, roads and

infrastructure were largely buried by construction debris, adding to the potential cost of development

today.


Proposed Build “A” Ground Floor

Original Build “A” Ground Floor

FLOOR PLAN COMPARISONS

Proposed Build “A” Typical Upper Floor

Original Build “A” Typical Upper Floor

9

Commercial Space Increase to 2000+ sf

Increase of ground floor commercial of 40+%

Overall Increase in Common Space (55+%)

The new total of common space in the building to 10176

SF

Removal of the Pass through

Adds more leasable space to units

Feedback from equity investors indicates the desire for

Building A’s parking field to be exclusive to tenants

Increases Safety and Security to Building A Residence

Decreases Cost

24 foot increase in overall length

Allows for a more standardized and efficient unit layouts

while increasing the average unit size

Removal of front stoops and direct entrances

Increases in usable space inside individual units

Increases Safety and Security to Building A Residence

Decreases Cost

A more clearly defined elevator lobby area and corridor

configuration

Allows for more efficient circulation throughout the

building improving ease of use

Increases leasable space within the units

Less odd shaped units

Improves overall unit marketability

Allows for more common space to be available to

residents

Storage units added in the basement

Saves more desirable ground floor space to be dedicated

to living space within the units

Relocation of Commercial Space to the more prominent Main

Street corner of the building

Increases visibility to street traffic

Improves the commercial space’s viability as a leasable

space

Relocation of Egress Stairs

Allows for more corner units

Increases areas within units where window can exist

making units more desirable

Elimination of East and West Building Entrances

Shifts the focus of the building approach to the main

entrances and elevator lobby

Mailroom has been relocated

Concentration of Common spaces and service areas available to all

tenants makes for a more marketable building

Removal areas open to ground floor on upper floors

Adds leasable space

Adds 1 unit per floor

Increase in Common Storage Space

Provides more room for public use on interior corners of

corridors on the upper floors

Removal of front balconies facing the railroad tracks

Significant cost savings are realized after the

determination was made that the balconies added little

to the building from an aesthetic perspective

More efficient corridor configuration

Allows for more efficient circulation throughout the

building improving ease of use

Increases leasable space within the units

Trash, mechanical, and service areas are less visible

Necessary building services are able to be provided in a

way that does not have a significant affect on the

building’s visual appeal

The working subgroup asked the RDL Team to provide further explanations as to the typical floor plan

changes to Building A that occurred between the original approved Phase I site plan and the proposal

submitted in April of 2014. The graphics on the right, as well as the following bullets describe these

changes:


Studio Apartment Typ. 505 Sqft

165 Sqft Increase

1 Bedroom Apartment Typ. 707 Sqft

172 Sqft Increase

2 Bedroom Apartment Typ. 986 Sqft

121 Sqft Increase

Note: Average Bedroom Size

approx. 120 SQFT

UNIT COMPARISONS

The working subgroup asked the RDL Team to provide further explanations to the typical unit floor plan

changes that occurred between the original approved Phase I site plan and the proposal submitted in April

of 2014.

ORIGINAL UNIT FLOOR PLANS

MODIFIED UNIT FLOOR PLANS

11

Current Proposed Interior Finishes Include:

Vinyl Plank Flooring (Faux Wood Flooring) in Kitchens and

Living Rooms

Tile Flooring in Bathrooms

Marble Vanity in Bathroom

Carpeted Bedrooms

Granite Countertops

Pendant Lighting in Kitchens

Stainless Steel, Energy Star Appliances

Oak Cabinetry

In Unit Stacked Washers and Dryers

Image Shown during Residential LOI Campaign

Additional Building Amenities Include:

Approximately 2,000 Sqft of Common Space

Approximately 2,000 Sqft of Commercial Space

Basement Storage Units

Elevators

PROPOSED FINISHES AND AMMENITIES

The working subgroup asked the RDL Team to provide further explanations as to the consistency of the

finishes between the original approved Phase I site plan and the proposal submitted in April of 2014. In

addition, RDL was asked to further detail the anticipated building amenities associated with the latest

Building A proposal.


Above is the Building A Façade from the Unified

Downtown Development Project Special Permit

Application. It is important to note that the purpose

of the architectural renderings shown as part of that

application was to conceptually illustrate the

architectural character proposed for the

revitalization of Depot Square. While this elevation

closely resembled Building A, it was developed to

show typical conditions that could be part of the

design of a residential building on the site. Its

generic rhythms, colors, modulations, roof lines,

and key accents, such as corner conditions were

intended to be further developed on a building by

building basis. The Façade originally proposed

consisted of several materials that could be used for

this scale of residential construction. A more

durable precast masonry material would be used at

the ground level representing about 35% of the

overall façade. The skin enclosing the upper floors

would be divided between a brick material (roughly

32%) and a concrete siding or HardiPlank

(approximately 26%)

FAÇADE COMPARISON

The working subgroup asked the RDL Team to provide further explanations as to the proposed facade

changes that occurred between the original approved Phase I site plan and the proposal submitted in April

of 2014. The following pages display and describe the façade amendments as currently proposed.

The façade currently proposed is slightly larger

due to the increase in overall building length . It is

still the intention to concentrate durable materials

in areas more likely to experience wear and tear.

39% of the façade is proposed to be constructed

out of brick or other type of masonry material

such as precast concrete panels . 61% of the fa-

çade is proposed to be a HardiPlank finish, pre-

dominantly on the upper floors.

The HardPlank or concrete siding is roughly 50% of

the cost of brick on a per square foot basis when

one material is directly compared to the other.

When viewed as a single item, the cost of concrete

siding / trim / Azak, seems comparable to the cost

of brick, but the limited nature of the trim work, as

well as the increase in square footage for this wall

covering system represents a cost savings over an

all brick building.

13

As currently proposed the Building A façade has a

more traditional New England architectural look.

The modulation of the units within the building,

along with varying exterior finishes, develops a

language that is more consistent with the organic

nature of development seen in many downtowns.

The introduction of flat roofs gives the structure a

more commanding presence and establishes a

geometric dialog between Building A and the

already existing architectural fabric on Main Street.

The main entrance of the building is much more

clearly defined allowing end users to quickly

understand the structure and its most efficient use.

Architectural details, such as defined cornice lines

and classical manipulations of the façade planes

around windows and doors, give the building even

more definition. Variations in materials and colors

ensure that the building’s height and bulk are

regulated to a scale that is appropriate for the

surrounding area. The inclusion of peaks and

sloped roofs add definition to key elements at the

building’s corners and main entry point. Building

A’s architectural language will better define the

trend of development through out future phases

by beginning the connection to the existing

architecture of downtown while establishing a

more modern twist.


While the adjustment to Phase I to include a sub Phase

will require changes to the contemplated 1st property

takedown, the RD team believes that with the

subdivision process complete this will require a simple

lot line adjustment. Below are the estimated changes

to the initial land takedown.

Original Phase I projected takedown under site plan =

4.23 Acres

Proposed Phase IA Projected take down = 3.35 Acres

The parties are currently contemplating financing

options that may require the use of a ground lease

which will ultimately have an impact on the land

ownership and takedown but should have little to no

impact on the area contemplated for Phase IA

improvements.

PROPOSED LAND PURCHASE COMPARISON

The working subgroup asked the RDL Team to provide further explanations as to the proposed acreage

takedown changes for the initial construction that occurred between the original approved Phase I site

plan and the proposal submitted in April of 2014.

15

Letter Of Interest Signee Data

Zimmerman Volk Associates, the premier housing market analysts in the country provided data showing the projected price per

square foot ranges that can be reasonably expected in the Bristol Market. The chart on the left is from the original housing study

done in 2010 for the Concept Plan Submission. The Chart on the right is from the 2013 Study update which came after price and

community surveys as well as the introduction of several new downtown businesses, including the Barley Vine and the reestablish-

ment of a downtown grocer.

2010 2013

Description of steps utilized 197 Letter of Interest

- Housing 400 Q1 2012

- LOI Campaign 2013

- Price Point Resurvey Q3 2013

- Phone Survey Q2 2014

Updated Call Survey Data conducted between

5/22/14 and 6/5/14

- Called 64 people spoke with 33 of the 64 and

of those 33, 28 people still say they are still

interested in downtown living regardless of

the phasing change

- Those who are no longer interested all cite a

change in living situation as the reason.

DATA FROM HOUSING STUDIES

The working subgroup asked the RDL Team to provide further explanations as to why the RDL Team

feels that Building A can achieve rents of $1.85/sf/month, a sample space of updated Letter of Interest

survey data on folks that had originally expressed the desire to live in new apartments downtown and

why the RDL Team feels there are significant amenities that exist for new downtown residents (see page

16-17).


The key to making any downtown successful involves balancing the proper mix of uses. Every healthy downtown needs the right

mix of residential, retail, office, recreational and cultural uses in order for it to thrive and be the type of destination people want

to frequent. Although the City of Bristol has a strong supply of cultural and recreational uses, it is undersupplied when it comes to

the type of residential product needed for a successful downtown. This lack of residential contributes to Bristol’s over supply and

vacancy of retail and commercial office space, thereby creating an imbalance that has led to an underutilized downtown environ-

ment. RDL understands and acknowledges that residents of Bristol want to see a stronger downtown retail base consisting of spe-

cialty shops and high quality restaurants. However, all of the market data indicates that this problem will not be solved by build-

ing additional retail space given that there currently exists an abundance of vacant retail space in Downtown Bristol. Time and

time again in markets all over the country it has been proven that “retail follows rooftops”. In order for Bristol to attract the types

of retail businesses that it wants it must provide a new customer base to its existing downtown. By building new market rate resi-

dential units in its downtown, Bristol will have the ability to attract the patrons it so desperately needs to fill its already vacant

downtown retail space. Today, there currently exists a significant amount of vacant retail space within blocks of the Depot Square

development site. Despite the

need to bring new customers to

the downtown to eventually fill

this retail space (as well as build

additional new retail space),

Downtown Bristol currently

contains a number of conven-

ience related and other retail

options that are well suited to

serve the current population

and initial additional residents,

all within walking distance of

the Depot Square development

site. These existing businesses

would now serve as the nearby

shopping amenity for new resi-

dents and would, in turn, reap

the benefits of this new cus-

tomer base.

SUMMARY OF DOWNTOWN AMENITIES

17

Of the 75 amenities listed above, 45 of them are retail establishments, and 25 are restaurant/food service

businesses.

Please review the Downtown Amenities Map for locations and distances from the proposed Phase I A.

Current Downtown Businesses and Amenities

1. Public Green

2. Chambers of Commerce and United

Way

3. T Salon

4. Barley Vine Gastropub *

5. Bristol Cleaners

6. Webster Bank

7. Liquor Outlet

8. People’s Marketplace *

9. United Bank

10. Medical Offices

11. Bristol Hospital Downtown Campus

12. Fiddlin’ Around Music Shop

13. Bristol Public Library

14. Mafali’s Plaza

15. Walgreens Pharmacy

16. ImagineNation Museum

17. Bristol Baptist Church

18. St. Anthony’s Church

19. Brackett Park

20. Tailor Shop

21. Ice Cream Churn

22. Subway

23. CVS Pharmacy

24. Sevi’s Pizza

25. Bristol City Hall

26. Bristol Police Department and Court-

house

27. Post office

28. McDonalds Restaurant *

29. New England Carousel Museum

30. Bristol Elk’s Club

31. CT. Bicycle

32. Oak Hill School for the Blind

33. South Side Meat Market

34. ArtisTree Tea House *

35. West End Pizza

36. St. Anne’s Church

37. Immanuel Lutheran Church

38. Bristol Boys and Girls Club

39. Bristol Pizza

40. Fire Department

41. Dunkin Donuts

42. Bristol Historical Society

43. Firefly Hollow Brewing Company *

44. Razzleberries

45. Polonia Market

46. Milestone Restaurant

47. Parkside Cafe

48. LJ’s Pizza

49. First Congregational Church

50. Federal Hill Green

51. St. Joseph’s Church

52. Bristol Hospital Main Campus

53. American Legion

54. Monterey Restaurant

55. Riverside Restaurant

56. People’s Choice Pizza

57. Pequabuck River

58. Memorial Boulevard Park

59. Public Tennis Courts

60. 457 Mason Jar Cafe *

61. PC Techs 4 U

62. Rite Aid Pharmacy

63. Supernatural Market and Deli

64. Tunxis Community College Bristol

Campus

65. Burger King

66. Santander Bank

67. St. Stanislaus Church

69. First Bristol Federal Credit Union

69. Bank of America

70. American Clock and Watch Museum

71. Rockwell Park

72. Skate Park

73. Sabino’s Restaurant

74. Muzzy Field

75. McCabe Waters Little League Center

*Business developed as a result of Bristol

Rising Initiatives


OUTLINE OF POTENTIAL BONDING SCENARIOS

The working subgroup asked the RDL Team to provide further explanations as to the potential scenario

should the City choose to utilize municipal financing through a General Obligation Bond (G.O. Bond) as

relates to the proposal submitted in April of 2014.

Aggregate Debt Service

DATE

2014 Case 3:

$6.0MM

(Downtown)

Total Issue

PMT LESS

ESTIMATED

RDL TAXES

1 06/30/2016 210,000.00 88,800.00

2 06/30/2017 504,750.00 379,914.00

3 06/30/2018 494,250.00 365,668.92

4 06/30/2019 483,750.00 351,311.49

5 06/30/2020 473,250.00 336,838.33

6 06/30/2021 462,750.00 322,245.98

7 06/30/2022 452,250.00 307,530.86

8 06/30/2023 441,750.00 292,689.29

9 06/30/2024 431,250.00 277,717.47

10 06/30/2025 420,750.00 262,611.49

11 06/30/2026 410,250.00 247,367.33

12 06/30/2027 399,750.00 231,980.85

13 06/30/2028 389,250.00 216,447.78

14 06/30/2029 378,750.00 200,763.71

15 06/30/2030 368,250.00 184,924.13

16 06/30/2031 357,750.00 168,924.35

17 06/30/2032 347,250.00 152,759.58

18 06/30/2033 336,750.00 136,424.87

19 06/30/2034 326,250.00 119,915.11

20 06/30/2035 315,750.00 103,225.07

21 06/30/2036 305,250.00 86,349.32

Total $8,310,000.00 $4,834,409.93

AVG YRLY PMT $230,210.00AVG MONTHLY PMT $19,184.17

In working with the RDL Team’s Bond Council, the City

Assessor and the City Comptroller analysis was conducted to

determine the estimated cost of a $6 million G.O. Bond

issuance should the determination be made that municipal

financing will be pursued for the Building A proposal. As

described in the chart to the left, a $6 million G.O. Bond

issuance would cost approximately $8.3 million over the life

of the 20 year bond, of which close to half would be covered

by the estimated taxes paid by the building. This balance

equates to approximately $230,000/year or $19,000/month.

If the $6 million in municipal bonding were utilized as gap

financing, the remaining debt service on the bond after the

buildings contribution could amount to between $2 and $3 per

year to the average taxpayer* for the life of the bond, and, for

a homeowner in Bristol, the additional cost could be between

$6 and $8 per year for the life of the bond.

IN ADDITION THE CONSTRUCTION OF THE

INITIAL BUILDING A WILL SPARK SUBSEQUENT

DEVELOPMENT THAT WITH PROVEN RENTS WILL

LIKELY REQUIRE SIGNIFICANTLY LESS

ASSISTANCE TO NO ASSISTANCE AT ALL AND

THUS ADD SIGNIFICANT ADDITIONAL TAXES TO

FAR OUTWEIGH THE INVESTMENT IN BUILDING

A.

Note*: Average tax payer includes all tax accounts of Personal Property, Motor

Vehicle and Real Estate. Real Estate accounts are broken down in to Residential

(single family) and Commercial Real Estate accounts

WHEN YOU COMPARE THIS TO A SCENARIO THAT WOULD SUGGEST NO

DEVELOPMENT IN THE DOWNTOWN OR A DEVELOPMENT THAT IS NOT ROUTED IN

MARKET REALITIES IT BECOMES MORE EVIDENT THAT THE FUTURE SUCCESS OF

DOWNTOWN BRISTOL LIES IN TAKING THAT INITIAL CATALYTIC STEP THAT WILL

STIMULATE SUBSEQUENT MIXED-USE DEVELOPMENT FOR THE OVERALL DOWNTOWN.

THE MUNICIPALITIES IN CONNECTICUT THAT HAVE DETERMINED TO MOVE

FORWARD WITH ECONOMIC DEVELOPMENT INITIATIVES THAT ADDRESS MARKET

REALITIES ARE EXAMPLES THAT SHOULD BE LOOKED TO.

19

As stated in our previous submission the following represent just two examples municipalities that have

taken the necessary measures to stimulate economic development in their communities.

Storrs Center

Mamsfield, CT HOME OF UCONN*

Population: 15,344(CDP)

Size: 20 acre mixed use development

Total Project Cost: Penciled at $225 million

• Public Funds:

* $24+ million in public funding sources already com-

mitted for planning Storrs Road, the 660 space parking

garage, as well as project infrastructure

Private: $200 MM

Public: $25 MM

Blue Back Square

West Hartford, CT

Population: 63,268

Size: 20.7 acre mixed use development

Project Cost: Penciled at $159 million

Public Funds:

* $48.8 million non-obligation bonds (straight bonds) contributed by the City

of West Hartford to underwrite key elements of project including two parking

structures that the City would own and operate as well as improvements like

construction of a park, streetscaping, and various building improvements.

Private: $110.2 MM

Public: $48.8 MM



Building B Proposal

21

INTRODUCTION

As described earlier, following the submission by the RDL team of the Depot Square Phase I Financial Pro-

posal in April, City representatives and the RDL team agreed that the best next step was a collaborative re-

view of the current proposal in order to make a determination on how the partnership should move forward.

The partnership ultimately developed a schedule that outlined a series of steps intended to implement the De-

pot Square Development and bring about the revitalization of Downtown Bristol. These steps included:

Clarification of various components contained in the Building A proposal (outlined earlier)

Submission of a Building B supplemental proposal that analyzes the project utilizing a similar financ-

ing structure to that of Building A

Determination by the City parties as to whether a referendum would be utilized as an element in deter-

mining whether or not to move ahead with the use of municipal financing

Dissemination of all information to the public, including but not limited to explanations and input ses-

sions on the Building A proposal working document as well as the Building B proposal

Determination by the Partnership as to how best to proceed with the development

The following pages outline the current

RDL proposal for financing and developing

Building B as if it were to be the initial

building built for the approved Phase I of

the Depot Square development. As pro-

posed, Building B currently contains 138

residential units, 23,000 square feet of retail

space and a Public Piazza.


BUILDING B PHASING ANALYSIS

Phase IB is proposed for +/- 138 Residential Units & +/- 20,000 SF of Retail Space, Ample Parking, and associated site improvements

Boundary of Takedown Area

Boundary of Shared Parking Area

The RDL team was asked to look into the specifics of

the mixed-use building fronting both Main Street and

Riverside Avenue, conventionally known as Building

B. The site plan below shows Building B and the

associated site improvements that are necessary for

service of the building.

The new parking design shows a resident parking

field to the north of the buildings, with 144 parking

spaces, at least one spot per unit in this designated

field. The pad site where the future hotel is proposed

has been redesigned to include reverse angle parking

to serve Building B’s retail base .

Due to the size of the building’s retail component, as

well as the increased number of residential units,

additional parking will be needed to satisfy the total

parking requirements. Those additional spaces will

be sited in a temporary surface lot to the west of

the new road.

The site plan to the right shows how Building A

can be integrated with the site once Building B is

constructed. When additional site elements like the

pedestrian mews are realized, the resident parking

field is shifted further to the north, and additional

spaces are designated in the western temporary

field.

The varying construction typologies needed for

commercial retail space below residential,

additional residential units, and more

comprehensive site amenities all contribute to the

increase in costs for this option, thus making it the

more risky option currently being discussed at this

point.

23

Rendered Building B Main Street Elevation

Completed Phase I showing Buildings A and B


PRO FORMA ESTIMATES

The following tables illustrate the pro-forma re-

sults of the RDL Team’s current thoughts on un-

derwriting the development and construction of

Building B. The current Building B proposal con-

tains 138 residential units, 23,000 sf of retail, a

Public Piazza and the associated access road(s)

and parking facilities.

With respect to the costs and revenues associated

with this type of development, the RDL Team has

extensive experience in the local markets; with

team members currently constructing similar pro-

jects in the Central Connecticut region. That said,

the accelerated nature of having only 45-60 days

to analyze this option will require that further de-

tailed analysis be done in the future to provided a

more concrete estimate.

The total project costs for Building B are current-

ly estimated at $26.5 Million. A few reasons be-

hind the increased building construction costs

when compared to Building A, have to do with

the fact that Building B contemplates building the

residential component over the significant

amount of retail space included in the plan. These

increases are due in part to fire safety separation

requirements, construction complexities and

changes in materials. The total estimated hard

construction costs are just under $23 million,

with total soft costs of approximately $2.4 mil-

lion. For a project of this nature, soft costs typi-

cally run at approximately 10%-15% of hard

costs. Construction financing costs are estimated

to be just over $700,000 over the life of the build-

ing hold period. The estimated operating expens-

es are also based upon past experience with oper-

ation and maintenance of existing similar product

in the region. Regarding estimated revenues, the

RDL Team is utilizing a $1.85 per square foot per

month rent estimate for the residential units and a $10

per square foot per year rent estimate for the retail com-

ponent (assuming a triple net lease arrangement). Cur-

rent rents in this area of downtown generally range be-

tween $8 and $14 dollars per square foot. While newer

retail could potentially attract rents on the higher end of

this range, the current vacancy in the area poses a chal-

lenge to adding a significant amount of new retail space

to the market and, therefore, is the reason behind

RDL’s approach on the retail income side.

As described earlier the below chart outlines the esti-

mated payments for a $12 million G.O. Bond issuance.

Aggregate Debt Service

DATE

2014 Case 3:

$12.0MM

(Downtown)

Total Issue

PMT LESS

ESTIMATED

RDL TAXES

1 06/30/2016 420,000.00 298,800.00

2 06/30/2017 1,009,500.00 884,664.00

3 06/30/2018 988,500.00 859,918.92

4 06/30/2019 967,500.00 835,061.49

5 06/30/2020 946,500.00 810,088.33

6 06/30/2021 925,500.00 784,995.98

7 06/30/2022 904,500.00 759,780.86

8 06/30/2023 883,500.00 734,439.29

9 06/30/2024 862,500.00 708,967.47

10 06/30/2025 841,500.00 683,361.49

11 06/30/2026 820,500.00 657,617.33

12 06/30/2027 799,500.00 631,730.85

13 06/30/2028 778,500.00 605,697.78

14 06/30/2029 757,500.00 579,513.71

15 06/30/2030 736,500.00 553,174.13

16 06/30/2031 715,500.00 526,674.35

17 06/30/2032 694,500.00 500,009.58

18 06/30/2033 673,500.00 473,174.87

19 06/30/2034 652,500.00 446,165.11

20 06/30/2035 631,500.00 418,975.07

21 06/30/2036 610,500.00 391,599.32

Total $16,620,000.00 $13,144,409.93

AVG YRLY PMT $625,924.28AVG MONTHLY PMT $52,160.36

25

Phase IB Proforma Model

27

A mixed-use development of this type and scale in a

market like Bristol would typically require that the cash

on cash investment returns on the equity invested in the

project be in the range of 7%-10%. While the RDL

Building A proposal estimated lower returns in the 3%-

5% range, there are several reasons why lower returns

projected for Building A can possibly still attract equity

and debt financing. With respect to private sector invest-

ment appeal, a project that contains approximately 100

residential units and 2,200 square feet of retail space

falls right within an investor ‘sweet spot’ in terms of

project size. This ideal project size is attractive to private

investors, therefore a portion of the development risk is

mitigated by way of the allure of the investment profile.

These factors ultimately allow for investment communi-

ty to accept lower returns.

On the contrary, with its 37 additional units and over

20,000 square feet of additional retail space, the Build-

ing B development is approximately 40% larger on the

residential end and over 1000% larger on the retail end.

This additional building program equates to additional

initial risk to potential investors. The investment com-

munity needs to mitigate this additional risk and does so

by requiring higher more standardized minimum returns

(7%-10%). The rent values currently being achieved for

the retail space in downtown today, coupled with exist-

ing vacancy cause the need for the projected residential

rents of $1.85 per square foot per month to subsidize the

proportionally lower retail rents. This will likely im-

prove over time as development occurs, but initially will

require a cross subsidy from the residential component.

Once they are there, the new apartment residents will

help support the existing and, ultimately, the new retail

below them.

In order to provide the returns necessary for both the

private sector equity investors (7%-10%) and private

sector debt (4%-6%) gap financing is a necessity. For the

Building B proposal, the sources of funds that will make

up the total $26.5 million in costs are estimated to be $2

million dollars in new investor equity, $12.5 million in

new investor debt and $12 million in gap financing. It is

envisioned that this gap financing could potentially be

provided through municipal financing options such as

bonding. If $12 million in municipal bonding were uti-

lized as gap financing, the developer would pay a por-

tion of the debt service over the life of the bond (20 year

bond). The remaining debt service on the bond could

amount to between $6 and $8 per year to the average

taxpayer for the life of the bond, and, for a homeowner

in Bristol, the additional cost could be between $18 and

$22 per year for the life of the bond.

In summary, there are several challenges to successfully

financing Building B as the initial building to be devel-

oped. These challenges include but are not limited to:

The ability to provide investors a level of com-

fort that adding 23,000 sf of retail to a market

that contains significant retail vacancy within a 4

block radius of the Depot Square site is the ap-

propriate first step


fort that initially constructing an additional 40%

more units in the first phase of the development

is the appropriate first step and best way to kick-

start the project


fort that starting with a construction typology

that is more expensive in nature is the appropri-

ate first step

Additional methods discussed by the working group for

mitigating the size of any bond issuance included:

Potential retail rent subsides or backstopping of

increased retail rents at a higher the $10 amount

Municipal investment as equity ownership of the

project as opposed to debt

Mitigation of land valuation

Reduction in permitting costs

Considering the truncated timeframe of these working

sessions further exploration of these options will require

additional time and collaboration.



Case Studies

29

INTRODUCTION

Like most downtowns across the country, the City

of Bristol did not just wake up one morning and

find itself confronted with the problems it current-

ly faces today. There are no quick fixes, especially

when dealing with issues that have come to be

over the course of the last 50 years. To date, RDL

has demonstrated a strong willingness to explore

any and all options that would enable the imple-

mentation of the vision that has been co-created

over the past several years through its partnership

with the City of Bristol and the Bristol communi-

ty. Although there are several options still availa-

ble that could enable this vision to come to frui-

tion, they are not without their challenges. RDL is

committed to working in partnership with the vari-

ous stakeholders to come up the right solution for

the City of Bristol.

The Depot Square Phase I Financial Proposal

Submission in April provided several exam-

ples of successful completed and ongoing re-

vitalization projects throughout Connecticut.

The common theme connecting each of these

projects was that they all needed assistance in

order to get going. RDL recognizes that not all

projects need assistance in order to be success-

ful, however in certain instances the economic

realities surrounding a development oppor-

tunity warrant an initial capital infusion that

gives a revitalization effort the push it needs to

get off the ground. In recent conversations

with the BDDC working sub-group, RDL was

asked to provide additional case studies that

involve area revitalization by way of the intro-

duction of new residents. The following are

multiple case study examples of revitalization

efforts that were sparked by the addition of

new residents to a suffering downtown area.


CASE STUDIES

Roanoke Virginia — The revitalization of downtown

Roanoke Virginia began with 25 residential units

resulting in further redevelopment that has transformed

the area around Kirk Avenue into a destination

neighborhood. Developer Ed Walker’s efforts led the

way to redevelopment through the acquisition of 9

storefronts which when renovated were able to attract

new life to the neighborhood. With other developers

following suit, downtown Roanoke now boasts over

1,200 residents when not long ago only 10 residents

lived in the area. A $20 million dollar renovation of

prominent historic hotel which now houses over 130

apartments along with commercial space continued the

redevelopment trends. Since the commencement of

construction on new and renovated housing stock in

2009 over 25 new restaurants have opened in a 10

block area in downtown.

The State of Virginia has been very aggressive with tax

credit programs that allow for large scale

redevelopments to happen. In addition to the Kirk

Avenue developments, historic renovation tax credit

programs have opened the door to development

opportunities in Roanoke’s waterfront neighborhood.

Old mill buildings and department stores have been

converted into residential units, some of which

command rents at the top of market rates. Restaurants

and retail establishments continue to follow in the path

of residential developments.

While the overall number of residential units was fairly

small in the early stages of development, it led the way

Roanoke Bristol

Area Median Income $38,265 $58,814

in bringing new life into downtown Roanoke.

With the influx on new residents the culture in

and around the downtown area has shifted to

celebrate the new found vibrancy. For Roanoke

this is a huge shift in psyche with residents now

believing in downtown being a good place to live

and do business. Pride in a place is a crucial

element in fostering future development, and it is

only possible through the experiences and

successes by the pioneers in the early phases.

31

Bloomfield, New Jersey — Redevelopment in

Bloomfield, New Jersey was sparked by a four story

residential project aimed to be student housing. Since

the beginning of this project, seven other projects have

gotten underway. An 82 unit senior housing complex

is now under construction in large part due to a $15

million dollar grant from the New Jersey Housing and

Mortgage Finance Agency, further building the mass

of residents in the downtown area.

Redevelopment has focused on blighted and

economically challenged areas and has proven to be a

much needed boost in the municipal tax base. A former

abandoned factory building has undergone a $60

million renovation transforming the old industrial

space into 332 residential units each bringing in

between $1,300 and $2,200 in monthly rents. Though

much of this project was developed through private

investment, significant state assistance for the project

came in the form of historic tax credits and grants from

the Community Development Block Grant programs,.

In addition to projects already underway, a proposal

including 224 more residential units and 60,000 square

feet of new retail space is set to begin on a 3 acre

parcel, adjacent to a recently constructed structured

parking facility all sparked by the original residential

additions to downtown.

Although new residential units are the clear catalyst in

the redevelopment, the restoration of the City's train

station, reinforcing the transit connection to Manhattan

Bloomfield Bristol


has City leaders most proud. The transit connection

not only helps build demand for new residential

product, but also helps to foster local job creation as

retail and personal service industries continue to

grow in order to better serve the new residents.


CASE STUDIES

Dubuque Iowa — Through the revitalization of its

historic Millwork District Dubuque Iowa has attracted

over 1,000 new residents, along with several new

businesses into the downtown area. In the mid to late

1980’s, Dubuque saw rapid decline due the collapse of

the agricultural economy along with associated

manufacturing markets directly tied to agriculture.

Although this phenomenon has caused the people of

Dubuque to learn the hard way not to depend on a

single employer, the redevelopment of a downtown

department store for new tenant, IBM was a key

element in the city center’s turnaround.

250 new residential units then became the spark needed

to foster large scale revitalization in the Millwork

District as well as the surrounding neighborhoods,

most notably Washington Neighborhood, one of

Dubuque’s most economically distressed areas. While

significant private capital was utilized to rehab old

brick structures into new residential units, the city of

Dubuque took an active role as a partner in the

revitalization by pursuing federal grant money to

improve the city’s downtown infrastructure, replacing

century old utilities, to allow for new development.

In the 17 block area which makes up the Millwork

District new residential units, office space, retail

establishments, and civic amenities have become

common sights. The influx of new development and

new service based markets has also reversed the

impacts of the economic downturn of the 80’s.

Dubuque Bristol


Dubuque was given the distinction of being one of

the nation’s fastest growing cities boasting over

4,600 new jobs in the downtown area. Economic

development has led to job creation and it was the

first major residential development that was the

initial domino in the rebirth of Dubuque Iowa.

33

Glastonbury Connecticut — Redevelopment in

Glastonbury has been sparked by two similar

residential developments. The Addison Mill

Apartments, which were completed in 2009, offered

new housing options in a community where the

average age of a dwelling unit was between 40 and 50

years old. The new residential product reached a 95%

occupancy rate in just seven months. Developer

Martin Kenny and his Hartford Based Lexington

Partners an RDL Team member, invested over $12

million dollars in the Addison Mill project, citing

changing demographics and the desire for new rental

apartments with amenities that the aging housing

stock could not provide. Today all 55 units are full.

This success has proved to be the catalyst for the

Flannigan’s Landing project which is now underway

across town.

This $35 million dollar development will boast over

230 residential units once completed. The mix of

studio, one bedroom, and two bedroom apartments

will command rents ranging from $900 to $2,300 per

month in a market that is still underserved in terms of

new rental product. The first 30 units are slated to be

housed in an exiting industrial building on the 33 acre

site. Once proven to be successful, an additional five

buildings of new construction are proposed in phases

to complete the development.

Though the former industrial site posed significant

challenges in terms of environmental cleanup, the

demand for new housing stock and the past success at

Glastonbury Bristol


Addison’s Mill propelled development forward. New

housing stock has attracted younger working

professionals to this suburb of Hartford generating a

buzz within the local economy, driving new

businesses to the area to meet market demand

resulting from the influx of residents, increasing the

tax base and opening doors to future development.


CONCLUSION

As with most large scale revitalization projects, the initial stages often face challenges, in particular challenges

regarding project financing. Despite the challenges encountered to date, it is important to consider the success-

es of not only the partnership, but the Bristol community as well. The Bristol Rising crowd and the various

achievements it has garnered are a direct result of all parties working together towards solutions for the better-

ment of Bristol.

The RDL Team has invested significant financial and human capital over the past 4+ years in a direct effort to

not only improve downtown along the way but to realize the vision that has been co-created for the future suc-

cess of downtown Bristol.

Communities all over the country have faced these challenges and worked together to provide the resources

necessary to jumpstart the revitalization process and the majority of those communities did not have near the

history of collaboration and success that Bristol and this partnership have had in recent years.

The City of Bristol is now at a crossroad. It can elect to turn its back on all the hard work and all the accom-

plishments it has made through its partnership with RDL, or it can choose to forge ahead and continue to col-

laborate towards a solution that is truly in the best interest of the Bristol community. The City has the chance

to seize an opportunity to invest in itself, its future and to bring about change for the better. The RDL Team is

as committed as ever to figure out a way to continue to work hand in hand with the City and community to

bring this project to fruition.

To give up should not be an option. To start over should not be an option. To maintain the status quo should

not be an option. Without vision nothing meaningful happens.