Kentucky Transpark Development Strategy

Transcription

1 CIVIC MANAGEMENT SERVICES Kentucky Transpark Development Strategy Bowling Green, Kentucky Marc Elliott, AICP & CEcD 7/3/2012 A Case Study elliott.marc@gmail.com

2 INTRODUCTION KENTUCKY TRANSPARK DEVELOPMENT STRATEGY This report is an overview of a development strategy for the Kentucky Transpark in Bowling Green, Kentucky. The Kentucky Transpark is the primary source of credible development sites in the region. The planned industrial park project will comprise 1,200 acres. The project was initiated by Warren County government and later the City of Bowling Green joined the development effort. The project is governed by a 14 member board appointed by the city and county. As originally conceived an airport would be developed adjacent to the property. The report is in a question and answer format to help focus the attention of the reader on the key issues related to the property. The objective of the report is to present a workable plan for development of this industrial park. Maps and plans are exhibited at the end of the report. BACKGROUND INFORMATION Where is the Kentucky Transpark - The Kentucky Transpark is located on the north side of Bowling Green, Warren County, Kentucky. - The industrial park is located at the intersection of US 31 W and US The industrial park is approximate 4 miles from I A new connector road will bring the property to within 1 mile of I A CSX rail track is located adjacent to the industrial park with a spur running into the property. Exhibit 1 is an aerial map showing the location of the Kentucky Transpark. 1

3 Why develop the Transpark? - primary inventory of quality sites - ability to compete for new jobs - ability to generate new tax base What is the Transpark product? - green business park - large tracts of land under common public ownership - credible, ready to use sites - reasonable land costs - high-quality existing infrastructure - industrial zoning in place - economic asset to region What are the most desirable features of the Transpark? - business park setting - high environmental standards - high quality sites and buildings - high quality road and utility infrastructure - training resources in park - proximity to planned I-65 connector road - potential dual service electric - rail spur - multiple fiber communication sources What are some significant Transpark accomplishments? - $100,000,000 annual economic spin-off (TVA Analysis) - location of 4 businesses in Transpark - location of 3 educational facilities in Transpark - construction of speculative buildings in Transpark What development standards apply to the Transpark? - Zoning Ordinance and Binding Elements (City) - Deed Restrictions and Protective Covenants (ITA) What key Transpark plans and reports currently exist? - Kentucky Transpark Master Site Plan (G-11) - ITA Business & Finance Plan (January 2001) - Phase 1 Environmental Assessment (September 2001) - Phase 1 Archeological Assessment, Warren Water (June 2009) - Environmental Impact Statement (I-65 to US 31 Connector Road) 2

4 The Kentucky Transpark Master Plan (Light Green Phase 1, Dark Green Phase 2) is shown below. Who are the key Transpark development partners? - City & County governments - Bowling Green Area Chamber of Commerce - ITA & BGAEDA - Kentucky Cabinet for Economic Development - BRADD - local utilities - TVA - WKU, BGTC - CSX - site selectors / Realtors 3

5 What is the public sector role in the Transpark development? - visualization, catalyst, collaboration (ITA, City, County) - development planning (ITA, Planning Commission) - infrastructure construction (ITA) - property maintenance (ITA, City) - code enforcement (ITA, City) - bond payments (ITA, City, County) - grants & appropriations (State, Federal) - development planning (ITA) - real estate owner (ITA) What is the private sector role in the Transpark development? - marketing (Chamber, Realtors, Site Consultants) - business investment in land, building, equipment, labor, materials, taxes - financing business investment (lenders) - engineering & architecture - construction - private utilities services - sale of land to Transpark - review & oversight How can Transpark development results be measured? - amount of new investment - amount of new building space - amount of new jobs - amount of new payroll - amount of new tax base - amount of new tax revenue - amount of economic spin-off What Transpark development results are not so measurable? - business attraction magnet for other properties - outside perception of community - increased community pride - community collaboration and cooperation What other quality industrial sites exist in Bowling Green? - 44 acres of BGAEDA industrial zoned land in the SCKIP Industrial Park - 75 acres of private industrial zoned sites in the SCKIP Industrial Park - 50 acres in Scotty s Industrial Park 4

6 FINANCE CONSIDERATIONS What key source and use of funds estimates were made by the 2001 Business and Finance Plan? - The project would support regional economic growth. - Project goal was to develop a business park and airport. - The total project cost was estimated to be $71,932,500. $34,500 Bonds $18,350 State & Federal Grants $17,390 Sale of Old Airport - Total use of funds was also estimated to be $71,932,500. $28,477,500 Airport Development $43,455,000 Business Park Development (1,200 acres) What are some key financial challenges facing the Transpark? - funding to construct additional roads and utilities - funding to remove buried waste rock - funding to purchase additional land - funding to retire outstanding bonds What public investment has been made in the Transpark to date? - $27,000,000 bond issue - $4,500,000 railroad track development grant What public investment is needed to complete Phase 1 Infrastructure according to MSE Engineers? - Technology Way: $2,025,427 - Technology Way Cul-De-Sac: $1,455,355 - Commonwealth Boulevard: $5,838,000 - Technology Way Connector to US 68: $900,000 - Total: $9,768,782 What public investment is needed to complete Phase 2 land acquisition and Infrastructure? - land acquisition: 434 acres $21,430/ac $9,300,620 - infrastructure 434 acres $26,837/ac $11,647,258 - design / legal: 434 acres $8,643/ac $3,751,062 - total: $24,689,940 (2001 Audit Report) Who could pay for the Kentucky Transpark? - city & county taxpayers - state taxpayers - federal taxpayers - Transpark businesses - Transpark workers - combination of payers 5

7 What must occur to generate sufficient Transpark funds for bond payments target? - sale of 45 acres per year to businesses that create 5 new jobs per acre - investment in additional site development and improvements - investment in additional road and utility construction - investment in additional land acquisition What would occur if further investment in sites & infrastructure is not made? - wall could be hit after existing 235 acres of ready sites are used - bond payments will not be generated from Transpark after wall is hit - new jobs and new investment would be very limited after wall is hit What are possible sources of funds for investment needed to create more sites? - federal and state appropriations - federal and state grants - city and county appropriations - land sale proceeds (if permitted) What is holding back attraction of more federal dollars for the Transpark? - expenditure of money in pipeline for I-65 connector road construction - lawsuit delaying the I-65 connector road EIS approval - legislators now voice opposition to earmarks Who is working to find funds for future Transpark development? - Bowling Green Area Chamber of Commerce / ITA - city, county, regional, state & federal officials What Transpark financing model has the best chance of working? - bond retirement by city & county from wage assessment and general funds - future infrastructure investment from land sales proceeds - future land acquisition from state & federal appropriations - use overall tax revenue as a primary measure of success rather than cash flow Business Plan Projections and Experience (BKD-2001) What land development has occurred in the Kentucky Transpark? - land acquired: 900 acres - land sold: 234 acres - public right of way: 32 acres - land remaining for sale: 634 acres 6

8 What businesses and institutions have located in the Kentucky Transpark? Company Jobs Acres Sector American Howa Kentucky automotive Bowling Green Metal forming automotive Cannon Automotive Solutions automotive Shiloh Industries automotive Total Manufacturing 882 Bowling Green Technical College education Green River Regional Cooperative education Warren County Tech Center 11 7 education Total Education Grand Total What job and price per acre forecast was made by the 2001 BKD Business Plan? Year Job/Ac. Goal Land Price Goal Prior 10 yrs. 4.8 (average/yr.) $25, $25, $40, $50, $55, $60, $65, $70,000 Achieved 3.9 $20,000 (average) What land sale projections were made by the 2001 BKD Business Plan? Prior 10 yrs. 65 ac./yr. auto acres 133 acres auto acres none cares acres auto, education acres acres auto, education acres acres auto acres none acres 10.2 acres auto acres auto, spec building site acres none Total 510 acres acres 7

9 What do market studies in support of the bond issue say about the Transpark s projected development rate? - potential absorption of 45 acres per year - potential absorption of 845 acres over next 30 years - potential employment of 5 workers per acre - potential employment of 10,025 workers over next 30 years What has been the experience of the Transpark relative to business plan projections? - land sales lag behind projection - acres sold lag behind projections - jobs per acre lag behind projections - land sale price per acre lag behind projections economic downtown has adversely affected meeting projections Overall Economic Benefit of Kentucky Transpark - economic benefit has been positive according to the Bowling Green Area Chamber of Commerce - economic benefit outweighs the development cash flow sluggish experience - economic benefit was mostly in Warren County Annual General Benefits Based on 884 Employees Direct Salaries $40,000,000 Indirect Salaries $13,000,000 Household Spending $47,000,000 Annual Direct Revenues Based on 884 Employees Occupational Tax $750,000 Wage Assessment $610,000 Business Property Taxes $178,000 Utility Taxes (schools) $116,000 Residential Property Taxes $404,000 Total Direct Revenues $2,058, Regional Indirect Real Property Tax Allen County $16,443 Barren County $12,353 Butler County $4,257 Edmonson County $16,630 Logan County $10,484 Simpson County $10,458 Warren County $524,275 8

10 Total Revenue $594,899 Total Jobs 1,291 Marketing Considerations What sites are currently ready to use in the Transpark? - Parcel 3 (47 acres) - Parcel 6 (100 acres) (CSX Certified Select Site) - Parcel 15A (25 acres) - Parcel 15B (29 acres) - Parcel 1A, 1B, 2H (16 acres) (Completed Technology Way Spec Building) - Parcel 10 (18 acres) - Total Acres: Years of Supply: 5 ac./yr. absorption rate A conceptual development plan for Parcel 6 is shown below. Parce 6 is a 100 acre site served by rail and all utilities. The site has been designated by CSX as a shovel ready Select Site. 9

11 Ready to use sites are shown cross-hatched below. What primary markets have been targeted for the Transpark over time? - food processing (secondary) - food packaging & distribution - food processing equipment - distribution & logistics - fabricated metals - plastic products - auto parts & suppliers - green building products (wood) (Source: Chabin December 2010) 10

12 - auto-related products - advanced logistics & distribution - plastics & rubber products - information distribution & process industries (Source: Chabin ) - metal products & processing manufacturers - manufacturers of plastics products - administrative office operations & call centers (Source: Wadley-Donavan Group December 1999) What are possible emerging markets for the Transpark? - renewable energy (Hemlock spinoff) - cyber defense (WKU spinoff) (Source: Chabin, December 2010) Who are the most probable users of the Transpark? - user needing quick building space (spec building) - user needing 20 to 50 acres of land - user seeking business park setting - user desiring high environmental standards - user desiring multiple fiber communications sources - user needing I-65 transportation corridor - user needing rail spur Rail spur from Parcel 6 Select Site to CSX main line is shown below. 11

13 Who are likely competitors of the Transpark? - Portland, Tennessee (may be asset rather than competitor) - Elizabethtown, Kentucky - Clarksville, Tennessee - Nashville Region What is the current underlying Transpark marketing strategy? - attract businesses seeking green business park environment - attract out-of-state businesses to qualify for wage assessment revenue - concentrate marketing effort on target industries - offer credible sites and speculative shell buildings at reasonable prices - use Chamber web site to promote property - use site selectors, state, and TVA, to help market the property - make prospect visits to market the property - pay bond debt from real estate sales and wage assessments What has been the most effective Transpark marketing tools? - development of speculative shell buildings - provision of site assessments & documentation to prospects - high quality product focus What strategies could be included in an updated Transpark marketing plan? - encourage Transpark businesses to expand - concentrate limited resources on target markets - market the most ready-to-use sites first to reduce site improvement costs - provide prospects independent site, workforce, & broadband certifications - provide site plan service to prospects (TVA) - provide higher incentives to higher benefit businesses - enhance green image with demonstration projects - have a spec building available for sale or lease at all times (example success Shiloh & Cannon) - market the product we have and not the product we wish we had What could enhance Transpark marketing effort? - better product documentation - more ready to use sites - stronger code enforcement - improved property maintenance - completion of I-65 to US 31 connector road - geothermal demonstration projects (energy savings, image) What incentives might help attract businesses to the Transpark? - lower land price for greater number of jobs - lower land price for higher paying jobs - lower land price for higher technology jobs - lower land price for geothermal / solar utilization 12

14 - lower land price for landscaping beyond requirements - lower land price for LEED certified building - payment for site plan / detailed development plan - payment for storm-water filtration equipment - payment for road median crossover construction - payment for installation of broadband cable to property line - payment for landscaping costs - expedited permit service PUBLIC PERCEPTION What is missing from the Transpark s positive public perception? - understanding of the Transpark benefit - confident public perception of Transpark - long-term, big picture, realistic perspective - understanding that public benefit requires public investment, not free of cost - understanding that economic development is expensive and beneficial - understanding that more funds are needed to generate new jobs and tax base What would be key Transpark public confidence boosters? - expansion of Transpark businesses - location of a major new employers in Transpark - occupancy of new spec buildings - completion of I-65 to US 31 connector road What would be key Transpark public confidence killers? - extended time period with no new land sales / jobs - lack of funds for bond payments & needed infrastructure - bad publicity from businesses not meeting development standards - more law suits; loss of law suits What could be done to strengthen the public image of the Transpark? - maintain current, outside, independent analysis of fiscal benefit - maintain current, outside independent analysis of economic spin-off - maintain, current, outside independent analysis of environmental quality - use the analysis of fiscal, economic, & environment benefit in communications - maintain strong enforcement of deed restrictions and protective covenants - provide high quality Transpark grounds maintenance - conduct environmental quality & energy efficiency demonstration projects - low profile may be best until current connector road lawsuit is resolved 13

15 KENTUCKY TRANSPARK 10-YEAR DEVELOPMENT STRATEGY What role does the Transpark play in the overall economic development strategy? - The Transpark is the primary source of sites for new industrial development in Warren Co. - The Transpark is a resource of large tracts of land under common public ownership. - The Transpark is a resource for businesses seeking green business environment. - The Transpark is a resource for businesses seeking multi-source broadband internet resources - The Transpark is a resource for attracting businesses to other properties in the region What realistic assumptions apply to the future development plans for the Transpark? - The ITA owns 5 to 8 years supply of ready-to-use land. - The demand for buildings will exceed the demand for land. - Bond retirement cost will exceed revenue from land sales and wage assessments - Local government will not have resources beyond existing bond payments to fund infrastructure. - More long-term investment will be needed to expand the supply of ready-to-use land. - Future funding for land and infrastructure will need to come from state and federal resources. - The positive economic and fiscal impact of the Transpark will exceed its development cost. - The most cost effective means for management of the Transpark is to contract for services. - Out-of-state businesses must be attracted to qualify for wage assessment revenue. What is the best short-term strategy for Transpark development? - Assist existing businesses in the Transpark expand their operations. - Concentrate efforts on developing ready-to-use sites in terms of infrastructure and site conditions. - Continue developing speculative shell buildings. - Continue preparing site assessments and concept plans to document land potential. - Continue working with the state on constructing the I-65 connector road and widening of US 31W. What information can be used to document site credibility? - boundary and topographic - phase 1 environmental assessment - phase 1 archeological assessment - preliminary geotechnicsl report - preliminary geotechnical report - waste rock evaluation - rail service potential - conceptual development plan 14

16 A photo of the new Technology Way Speculative Building is shown below (completed 2012). What would be the most efficient use of Transpark sites and infrastructure? - Use the Transpark for businesses needing larger sites to reduce new infrastructure cost. - Concentrate marketing effort on most ready to use sites since infrastructure funds are limited (Parcels 15A, 15B, 6, 6A 3, 10) - Target Parcel 6 and Parcel 10 for rail users to capitalize on rail investment. - Focus on the 5 year inventory of land that is ready to use. What can be done to provide marketable buildings in the Transpark? - Utilize BGAEDA to develop speculative shell buildings to create a marketable building product. - Create Detailed Development Plan for next spec building while constructing a current spec building - Create virtual shell buildings as visualization tool of future Transpark building products - Consider Parcel 15C (29 Acres) and Parcel 15D (25 acres) as next speculative shell building site 15

17 Concept plan for 2 future building on Parcel 15 (US 68 & Cosma Way). What could be done to improve the financial capacity of the Transpark? - Continue seeking state and federal funds for new infrastructure. - Continue city and county assistance with funding of bond payments. - Keep reminding public officials that more land and infrastructure funds will be needed. - Create strategy to retain lands sale proceeds for sites and infrastructure. - Create property owners association to gradually fund common area maintenance. - Concentrate limited marketing resources on target industries. What would enhance the marketability of the Transpark? - Continue working to create more marketable ready-to-use sites and buildings. - Provide prospects with site assessments and concept plans to document site credibility. - Ensure strong code enforcement and property maintenance. - Promote the green business park image. - Assist businesses to expand and export. - Construction of connector road between I-65 & US 31W 16

18 Concept plan for Parcel 3 building & site determined through site assessment process. What would be the most effective structure to market and manage the Transpark? - Avoid duplication of services that are available effectively from others. - Contract with Bowling Green Chamber to provide marketing and management services. - Include Transpark in Chamber economic development marketing plan. - Work through Chamber to obtain State, CSX, & TVA assistance in marketing the Transpark. What are key tools to market the Transpark? - Promote business expansion in the Transpark. - Concentrate marketing effort on target industries. - Offer credible sites and speculative shell buildings at reasonable prices. - Promote Transpark sites and buildings on the southcentralky.com property database. - Promote Transpark on TVA, WRECC, and KCED property databases. - Promote the Transpark through visits with TVA, KCED, and CSX. - Promote the Transpark through visits to site selectors and industrial Realtors. 17

19 What additional items would be included in the 10-year Transpark development strategy? - Complete Phase 1 infrastructure improvements: Technology Way: $2,025,427 Technology Way Cul-De-Sac: $1,455,355 Commonwealth Boulevard: $5,838,000 - Improve more owned land for development before buying more real estate. - Acquire additional land for new development sites after creating sites on owned land. - Construct a connector road from Technology Way to Glasgow Road: $800,000. What strategy can be pursued to improve the public perception of the Transpark? - Use successful projects to demonstrate value of more public investments in Transpark. - Keep quantifying and reminding the public of the Transpark s economic benefits. - Use overall tax revenue and economic spin-off as primary measures of success. - Maintain strong enforcement of deed restrictions and protective covenants. - Provide high quality Transpark grounds maintenance. What perspective should be maintained during the Transpark development process? - The Transpark project will be a moving target. - The issues are more complex than this summary analysis communicates. - The issues do not lend themselves to simple, quick, bottom line solutions. - The bullet points shown herein will require updating as knowledge and circumstances evolve. - A long-term, big picture, realistic perspective must be maintained about the Transpark. - There must be a flexible vision for the Transpark and a tolerance for uncertainty as recent national economic circumstances demonstrate. 18