Development of Public Properties Downtown. June 4, 2013

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1 Development of Public Properties Downtown June 4, 2013

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3 Feasibility Criteria Analyzed all available properties in the downtown Property ownership (City or Successor Agency) Redevelopment Dissolution/Legal Issues Financing issues Criteria for Consideration Property has to be City-owned o Successor Agency owned properties are restricted Encumbrances, leases, debt instruments, covenants on properties that prevent them from being sold/transferred o Parking structures under COP s o Lease obligations 3

4 Best Development Options The best available options for development are: Parking Structure at 3 rd and Broadway YMCA building on Civic Center Drive and Sycamore Street City owned No lease restriction No debt 4

5 3 rd and Broadway Parking Garage 3-level, 440-space parking garage Constructed in ,243 square foot lot 146,055 square feet of building area 5

6 3 rd and Broadway Parking Garage Background Constructed with tax-exempt bonds and assessments on property owners within a defined district Functionally obsolete: Blocks vehicle / pedestrian mobility in the downtown Visual impacts No street level activity Technical Issues: Design Drainage Structural improvements Not structurally sound to build on top of 6

7 3 rd and Broadway Parking Garage Rehabilitation Functional issues cannot be resolved without demolition Technical issues can be fixed Estimated cost for repairs: $8.6million o Electrical, mechanical, drainage improvements o Structural improvements o Parking Control, Security, Way Finding o Design/construction engineering costs Source: City of Santa Ana Public Works Agency 7

8 3 rd and Broadway Parking Garage Replacement Existing parking required to meet demands in the Downtown Any development proposal would have to replace the parking in addition to its parking requirements Estimated all in cost to replace parking is $30,000 per space $30,000 per space x 440 spaces = $13.2 million Source: Keyser Marston

9 3 rd and Broadway Parking Garage Land Value Analysis Sales data compiled within 1-mile Land value per square foot Commercial - $37 Residential - $19 $37 per sq. ft. x 61,243 sq. ft. = $2.25 million Source: Keyser Marston

10 3 rd and Broadway Parking Garage Development Scenario $2,250,000 Supportable Land Value for Commercial Development $13,300,000 Replacement Parking & Demolition Costs (Effective Land Costs) -$11,050,000 Financial Gap $8,644,000 Rehabilitation Costs for existing public parking garage Provision to replace parking spaces creates sizable barrier to development Estimated cost to demolish existing structure $100k Height limit in downtown is 10-stories Concrete/steel construction for both the structure and new development above 10

11 YMCA 27,331 square foot lot 44,468 square feet of building area Secondary building 1,250 square feet 150 parking spaces leased in the adjacent parking structure ($15,000/month) 15-years remaining on 25- year lease with two 10- year extension options 11

12 YMCA Background Listed on National Register of Historic Places Limits exterior physical modifications Building does not meet current Building Codes Seismic Retrofit Asbestos/Lead abatement Exiting Requirements Accessibility Ventilation Fire Suppression Electrical/Plumbing Substantial improvements required Shoring New flooring/roofing New exits New Electrical / Plumbing No on-site parking 12

13 YMCA Rehabilitation 2006 study on renovation costs by Majestic Development, Inc. Shell, core and landscaping = $3.79 million Interior improvements = $3.11 million o Developer improvements = $1.6 million o Tenant improvements = $1.51 million Indirect costs = $491,000 Total renovation costs = $7.3 million Source: Keyser Marston

14 YMCA Building Value Analysis Average sales price for Class C office buildings is $122 per sq. ft. of building area Average sales price for housing $115,700 per unit (41-units proposed) Average sales price for hotel $60,000 per room Office Housing Hotel $122 per sq. ft. $115,700 per unit $60,000 per room x 45,718 sq. ft. x 41-units x 78 rooms $5,580,000 $4,740,000 $ 4,680,000 Source: Keyser Marston

15 YMCA Development Scenarios Office Housing Hotel Value $5,580,000 $4,740,000 $4,680,000 Development Costs $7,300,000 $7,870,000 $6,680,000 Financial Gap -$1,720,000 -$3,130,000 -$2,000,000 Any structural damage since 2006 study would result in increased development costs 15

16 YMCA/3 rd and Broadway Participation and Financing Options Charter City Authority (e.g. Economic Development Ordinance) Transient Occupancy Tax (TOT) Rebate Sales Tax Rebate Property Tax Rebate General or Limited Obligation Bonds Backed by City s General Fund Revenue Bonds Secured by TOT and/or Sales Tax Pledge Community Facilities and Assessment Districts Land Value as Collateral New Market Tax Credits Issued by the Federal Government to CDFI s Affordable Housing Tax Exempt Multifamily Bonds Low Income Housing Tax Credits Section 8 Housing Assistance Mental Health Services Act Funds 16

17 YMCA / 3 rd and Broadway Options 3 rd and Broadway Garage: Rehab parking structure to address technical deficiencies Prepare RFP/RFQ for development proposals YMCA Building: Prepare RFP/RFQ for development proposals 17

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19 YMCA / 3 rd and Broadway Questions Direction from the Committee regarding the type of project wanted at each location: Residential Commercial Office Hospitality Must have components of the YMCA (Pool, interior design, rooms)?

20 Parking Structure Costs Detail Description Cost Electrical Improvements $480,000 Drainage Improvements $63,000 Mechanical Improvements $39,000 Parking Control $274,000 Security & Aesthetics & Way Finding $1,275,000 Structural Improvements $3,831,000 Design Engineering $596,000 Contingency $1,192,000 Construction Engineering $894,000