2018-07-10 44 douglas tif app narrative reviseddavid k. fanslau director the attached resolution...
TRANSCRIPT
City of Omaha Jean Stothert, Mayor
Honorable President
September 25, 2018
and Members of the City Council,
Planning Department
Omaha/Douglas Civic Center 1819 Farnam Street, Suite 1100
Omaha, Nebraska 68183 (402) 444-5150
Telefax (402) 444-6140
David K. Fanslau
Director
The attached Resolution transmits the 44 Douglas Student Housing Tax Increment Financing (TIF) Redevelopment Project Plan, for a redevelopment project site located at 4412-4418 Douglas Street and 114-120 South 44th Street. The project site requires replatting of six single family residential lots, of which all six existing single family homes have been demolished. The redevelopment project plan proposes the new construction of 120 studio-style efficiency apartment units contained in an L-shaped five story building. The project aims to provide quality affordable housing for students of the University of Nebraska Medical Center (UNMC). The proposed apartment units range from 400 to 550 square feet and will rent for $750 to $795 per month. A surface parking lot with 33 spaces will be located behind the building, on the north side of the site. There will also be 6 additional on-street parking spaces added, adjacent to the project site. The developers are moving forward to lease another 87 parking spaces from UNMC in the parking structure across the street, to the southeast of the site. The project is another joint venture between Clarity Development and GreenSlate Development.
TheThe Planning Board recommended the approval of this redevelopment project plan at the September 5, 2018 public hearing.
The Redevelopment Project Plan authorizes the City's participation in the redevelopment of this project site through the allocation of TIF in an amount up to $2,173,800.00, plus accrued interest. TIF will be used to offset eligible expenses such as acquisition, environmental and geotechnical studies, site work, architectural and engineering fees, and other public improvements as required. The total estimated project costs are $12,534.000.00, but are subject to change as final costs come in.
Your favorable consideration of triis Resolution will be appreciated.
Respectfully submitted,
David K. Fanslau� // Pianning Direct� f!1...
Approved:
O�uJ� Stephen B. C urtts s
�t Fir.-a:nce Director "fl-
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Cj- 13-/8 Date
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Referred to City Council for Consideration:
2720 rmf Notice of Publication and Public Hearing: September 27, 2018 and October 4, 2018 Public Hearing: October 16, 2018
RESOLUTION NO.__________
CITY OF OMAHA LEGISLATIVE CHAMBER
Omaha, Nebraska
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, the primary objectives of the City of Omaha's Master Plan and Community Development Program are to encourage additional private investment and infill development within inner-city neighborhoods; and to eliminate conditions which are detrimental to public health, safety and welfare, by developing vacant or underutilized property within these neighborhoods; and,
WHEREAS, the approximately 0.75 acre redevelopment project site located at 4412-4418 Douglas Street and 114-120 South 44th Street, legally described in Exhibit “A”, which is attached hereto and herein incorporated by reference, is within a designated community redevelopment area, as the area meets the definition of blight and substandard per the Community Development Law and is in need of redevelopment; and,
WHEREAS, Section 18-2108 of the Nebraska Revised Statutes requires the City of Omaha to adopt a redevelopment plan before taking an active part in a redevelopment project; including the division of ad valorem taxes for a period not to exceed fifteen years under Sections 18-2147 through 18-2150, Revised Statutes of Nebraska; and,
WHEREAS, the 44 Douglas Student Housing Tax Increment Financing (TIF) Redevelopment Project Plan (“Plan”) for the redevelopment project site proposes the new construction of 120 studio-style efficiency apartment units contained in a five-story building, a surface parking lot with 33 spaces, 6 additional on-street parking spaces adjacent to the project site, and 87 leased parking spaces from UNMC in the parking structure across the street, as described in Exhibit "B", attached hereto and herein incorporated by reference, with the use of TIF as authorized by Section 18-2147 of the Nebraska Revised Statues; and,
WHEREAS, the Plan conforms to the City of Omaha’s Master Plan and the legislative declarations and determinations of the Community Development Law, as the redevelopment project would not be economically feasible and would not occur at the redevelopment project site without the use of TIF; and,
WHEREAS, the costs and benefits of the redevelopment project, including their impact on other political subdivisions, have been analyzed and found to be in the long-term best interest of the community and the local economy, and the redevelopment project will satisfy an identified demand for the public and private services it will provide; and,
WHEREAS, the Plan for the redevelopment project site was approved by the TIF Committee and subsequently by the City of Omaha Planning Board at the September 5, 2018 meeting; and,
City Clerk Office Use Only:
Publication Date (if applicable): _____________
Agenda Date: ___________________________
Department: ____________________________
Submitter: ______________________________
RESOLUTION NO. ___ _
WHEREAS, this Resolution seeks approval of 44 Douglas Student Housing Tax Increment Financing (TIF) Redevelopment Project Plan and authorizes the City's participation through the allocation of TIF in an amount up to $2,173,800.00, plus accrued interest, to offset TIF eligible expenses, including, but not limited to acquisition, environmental and geotechnical studies, site work, architectural and engineering fees, and any public improvements, as may be required, for a project with total estimated costs of $12,534,000.00; and,
WHEREAS, the Plan presents a project based on estimated figures and projections that are subject to change as project costs are finalized, and is required to comply with all Planning Department requirements and Planning Board recommendations.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
THAT, the attached 44 Douglas Student Housing Tax Increment Financing (TIF) Redevelopment Project Plan for the redevelopment project site located at 4412-4418 Douglas Street and 114-120 South 44th Street, which proposes the new construction of 120 studio-style efficiency apartment units contained in a five-story building, a surface parking lot with 33 spaces, 6 additional on-street parking spaces adjacent to the project site, and 87 leased parking spaces from UNMC in the parking structure across the street, authorizes the City's participation through the allocation of TIF in an amount up to $2,173,800.00, plus accrued interest, to offset TIF eligible expenses including, but not limited to acquisition, environmental and geotechnical studies, site work, architectural and engineering fees, and any public improvements, as may be required, containing a provision for the division of ad valorem taxes under Section 18-2147 through 18-2150, Revised Statutes of Nebraska, as analyzed and determined to be in conformance with the Community Development Law and as recommended by the City Planning Department, be and hereby is approved.
2720 rmf APPROVED AS TO FORM:
Cs2T�ORNEY
Adopted:
Attest: City Clerk
Approved: Mayor
EXHIBIT "A"
Legal Description, Alta Survey, Topographical Survey, etc. – see following page(s)
EXHIBIT B
44 DOUGLAS TIF REDEVELOPMENT PROJECT PLAN
4412-4418 Douglas Street, and 114-120 South 44th Street
SEPTEMBER 2018
Jean Stothert, Mayor City of Omaha David K. Fanslau, Director
Planning Department Omaha/Douglas Civic Center
1819 Farnam Street, Ste. 1111 Omaha, Nebraska 68183
OMAHAPLANNING
DS
City of Omaha Planning Department Planning Board Memo
To: Chairman and Members of the Planning Board
From: David K. Fanslau Planning Director
Date: August 29, 2018
Subject: 44 Douglas TIF Redevelopment Project Plan 4412-4418 Douglas Street and 114-120 South 44th Street Case #C3-18-147
Project Description Background
This project is a joint-venture between Clarity Development and GreenSlate Development, developers who have completed, and are working, on a number of redevelopment projects in the general area of Midtown and the Blackstone District.
The project site assembles six single family residential lots which will be replatted for a proposed apartment project. All six existing single family homes have been demolished. The site is on the same block as the Midtown Hotel at Saddle Creek and Dodge, an earlier TIF project presently under construction. The project site is also near the University of Nebraska Medical Center, and is intended to serve as a student housing facility of UNMC.
Proposal The proposed project will have 120 studio-style efficiency apartment units, contained in an L-shaped five story building. The project aims to provide quality affordable housing for students of the University of Nebraska Medical Center (UNMC), at a location that is close to the campus and classrooms, well served by public transit, and within convenient walking distance to the Blackstone District, with its nightlife and entertainment options. The proposed apartment units range from 400 to 550 square feet and will rent for $750 to $795 per month. A surface parking lot with 33 spaces will be located behind the building, on the north side of the site. There will also be 6 additional on-street parking spaces added, adjacent to the project site. The developers are moving forward to lease another 87 parking spaces from UNMC in the parking structure across the street, to the southeast of the site. The project includes a TIF request of $2,173,800.
Analysis The project site is located within a Community Redevelopment Area, meets the requirements of Nebraska Community Development Law and qualifies for the submission of an application for the utilization of Tax Increment Financing to cover costs associated with project development as submitted for approval through the Tax Increment Financing process. The project is or will be in compliance with the Master Plan, appropriate Ordinances and development regulations of the City.
Case Number: C3-18-158 Page 2
DS
The project is in compliance with the City’s Master Plan and furthers its goals by providing high quality housing options in a mix of patterns, types, and styles. The project is located within the study area boundary of the Destination Midtown Plan, which calls for ensuring “a diverse mix of housing options, particularly for employees of major institutions,” including UNMC. The Destination Midtown Plan also depicts higher density development on the block where this project is located, and it recommends “optimizing the provision of parking on an area-wide basis as opposed to a property-by-property basis.” By using shared parking with UNMC, the project would further that goal.
No Building Permit will be issued based on a site plan that does not comply with the provisions of the Zoning Ordinance.
RECOMMENDATION: Approval
ATTACHMENTS: General Vicinity Map Project Plan
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SUBJECT AREA IS SHADED - SEPTEMBER 2018
GI-ACI-2(50)
GC-ACI-1(PL)
GI-ACI-2(50)
GO-ACI-1(PL)
R8-ACI-1(PL)
GC-ACI-2(50)
GCGI-ACI-2(50)GI-ACI-2(50)
GI-ACI-2(50) GC-ACI-2(50)
R7
R8-ACI-1(PL)
GC-ACI-1(PL)
GC-ACI-2(50)
CC-ACI-1(PL)
GO-ACI-2(PL)
CC-ACI-2(PL)
CC-ACI-2(PL)
R7-PK-ACI-2(50)CC-MCC
CC-ACI-2(50)
GI-ACI-2(50)
CC-ACI-2(50)-PUR
CC-ACI-2(50)
GI-ACI-2(PL)
S Saddle Creek Rd
Farnam St
Dodge St
N 43
rd Av
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N 44
th St
N SaddleCreek Rd
Douglas St
S 44th
St
±0 400Feet
11CASE: C3-18-158APPLICANT: Planning Department on behalf of the City of OmahaREQUEST: Approval of the 44 DOUGLAS STUDENT HOUSING TIF REDEVELOPMENT PROJECTPLANLOCATION: Northwest of 44th and Douglas Streets
INTER-OFFICE COMMUNICATION
Date: July 13, 2018 To: TIF Committee:
David Fanslau, Stephen Curtiss, AL Herink, Paul Kratz, Robert Stubbe, Todd Pfitzer, Troy Anderson
From: Don Seten - City Planning Applicant: City of Omaha Planning Department Project Name: 44 Douglas Student Housing TIF Redevelopment Project Plan Location: Six single family lots at the northwest corner of Douglas and 44th Street Request: The TIF request is for up to $2,173,800, at a bank interest rate of 5.25 percent, inclusive of capitalized interest. Using the levy rate of 2.24872 percent and other assumptions of the TIF calculation spreadsheets, the TIF request is supported using estimated cost and estimated market approaches. TIF Fee Schedule: $500 application fee paid; the processing fee of $3,000 will be collected; $24,238 in administrative fees will be collected. Total fees will be $27,738. TIF Justification: The project site is located within a Community Redevelopment Area, meets the requirements of Nebraska Community Development Law and qualifies for the submission of an application for the utilization of Tax Increment Financing to cover costs associated with project development as submitted for approval through the Tax Increment Financing process. The project will be in compliance with the Master Plan, appropriate Ordinances and development regulations of the City. This infill redevelopment project requires the demolition of existing single family residential structures, and some significant grading and site preparation, due to the area’s topography. Ultimately, this project plan will enhance the tax base for various taxing jurisdictions within Omaha and the state. The project would not be feasible without the assistance of the TIF Program. The project is in compliance with the City’s Master Plan and furthers its goals by providing high quality housing options in a mix of patterns, types, and styles. The project is located within the study area boundary of the Destination Midtown Plan, which calls for ensuring “a diverse mix of housing options, particularly for employees of major institutions,” including UNMC. The Destination Midtown Plan also depicts higher density development on the block where this project is located, and it recommends “optimizing the provision of parking on an area-wide basis as opposed to a property-by-property basis.” By using shared parking with UNMC, the project would further that goal. While there are many TIF eligible costs include acquisition, grading and site preparation, utility work, architectural and engineering services, and public improvements. The total estimated project costs are $12,534,000. Total TIF eligible costs utilized for this project are $2,245,100. The applicant has budgeted a voluntary TIF contribution of $11,680 toward the Midtown Public Improvement fund.
TIF Eligible Costs Public Improvements 75,000 Acquisition (Less Current Tax Assessed Value) 1,008,100 Utility Extensions, Site Work, Geopiers and Special Foundations 740,000 Architecture and Engineering 334,000 Studies (Env., geotech, surveying, appraisal) 48,000 Subtotal 2,205,100 TIF Fees 40,000 Total TIF Eligible Costs $2,245,100
Itemized Public Improvements (In above line items) Landscaping 25,000 Sidewalks 25,000 Curb Improvements and On Street Parking 25,000 Total $75,000
The TIF is 17.3% of the total project costs.
Recommendation: Approval.
Project Description
Background
This project represents another joint-venture project between Clarity Development and GreenSlate Development, which have completed and/or are working on a number of redevelopment projects in the general area of Midtown and the Blackstone District. The 44 Douglas housing LLC is comprised of investors including Clarity Development and GreenSlate Development. The project site assembles six single family residential lots, which will be replatted for proposed apartment project. Three of the homes have been demolished. The remaining homes will also be removed in the near future. The site is on the same block as the Midtown Hotel at Saddle Creek and Dodge, an earlier TIF project presently under construction. The project site is also near the University of Nebraska Medical Center, and is intended to serve primarily as a student housing facility of UNMC.
Proposal
The proposed project includes a 120 studio-style efficiency apartment units. The project intends to provide quality affordable housing for students of the University of Nebraska Medical Center (UNMC), at a location close to the campus and classrooms, well served by public transit, and within convenient walking distance to the Blackstone District, with its nightlife and entertainment options. The studio apartment units will range from 400 to 550 square fee, and rent for $750 to $795 per month. A surface parking lot with 35 spaces will be located behind the building, on the north side of the site. There will also be 6 additional on-street parking spaces added, adjacent to the project site, with a total of 14 on-street spaces improved and and available.
Employment Information
Job Creation & Retention: Permanent Full-Time Jobs Created 2 Part-Time Jobs Created 0 Total Jobs Created 2
Est. Annual Payroll (Avg. Per Employee) $40,000 Job Types Include: Property Manager/Leasing Agent Maintenance Technician
Est. Total Construction Payroll: $1,000,000 The applicant anticipates construction completion by the end of July, 2019.
Project Finance Summary - Sources & Uses
Sources of Funds Owner Equity 1,904,000 Construction Loan 8,398,000 TIF Loan 2,232,000 Total Sources of Funds $12,534,000 Uses of Funds Site Acquisition 1,350,000 Exterior Signage & FF&E Allowance 100,000 Hard Costs 8,700,000 Contingency 435,000 OPPD/CenturyLink Direct 90,000 Architecture & Engineering 334,000 Appraisal 5,000 Environmental Testing 8,000 Geotech Testing 10,000 Civil & Surveying 25,000 Entitlements 15,000 Legal 60,000 Other Professional Services 15,000 TIF Application & Contribution 40,000 Title & Recording 25,000 Tap/Capital Facilities Allowance 25,000 Grading/Foundation/Building Permit 25,000 Builder's Risk 38,000 Construction Loan(s) Origination 54,000 Construction Loan(s) Interest 427,000
Taxes During Construction 18,000 Branding/Marketing 75,000 Soft Cost Contingency 60,000 Developer Fee 600,000 Total Uses of Funds $12,534,000
Final Valuation Discussion
The applicant estimates the most probable final valuation to be $10,800,000, based on comparable properties and their research of competitive properties in the market.
Land Use and Zoning The current zoning is R8-ACI-1(PL). The applicants are working with City Urban Design staff and with the Planning Department’s Current Planning staff to achieve compliance with design standards, and to apply for a PUR rezoning and/or zoning waivers for parking and density. Approval of the project as eligible for TIF financing does not relieve the project from the necessity of complying with all applicable zoning, design and related land us
Utilities and Public Improvements Standard utilities (electrical, water, sewer) exist at the site; some utility connections will be necessary. The public improvements included in the proposal are landscaping, sidewalks, curb improvments and the creation of on-street parking.
Transportation No transportation issues noted.
Historical Status Not applicable.
Evaluation Criteria: Mandatory Criteria – from the TIF application
A. The project is located within a Community Redevelopment Area (CRA) and therefore satisfies this mandatory criterion.
B. There will be no loss of tax revenue to the City or any other taxing jurisdictions resulting
from the use of TIF. None of the current taxes collected from the base value will be lost or used towards TIF. Only the tax revenues generated by the improvements being constructed on the site will be used towards TIF.
C. The development team has demonstrated the economics of the deal and the need for TIF
in Section V of this application. Without TIF, ROI would be unacceptably low, the project would not be able to attract investor equity, and the project would not occur. Utilizing TIF dramatically improves the rate of return, increasing it to an attractive level for investors and making the project financially feasible.
There are currently no comparable alternatives to the proposed project site. Omaha’s downtown and midtown markets have experienced a surge of urban infill development over the past decade, and as a result, the number of sites available for future redevelopment has been significantly reduced, making the 44 Douglas Student Housing
project a unique opportunity. Furthermore, the outstanding location of the project and its proximity to UNMC is necessary to its success, and no other similar sites exist.
D. The 44 Douglas Student Housing project furthers the objectives of the City’s Master Plan
in the following ways:
i. Increasing densification of the urban core and the Midtown Omaha market.
ii. Redeveloping a severely blighted and substandard parcel of land. iii. Implementation of Urban Design elements – The 44 Douglas Student
Housing project iv. Job creation – The project will require at least 1 full-time property
manager/leasing agent and at least 1 full-time maintenance technician.
Cost – Benefit Analysis– from the TIF application
A. No tax shifts were identified for this project. B. This project will not create any additional community public service needs and
TIF will be used to cover the cost of necessary public improvements. C. The 44 Douglas Student Housing project will create a large number of
construction jobs and at least 2 permanent full-time management positions. D. Owners of the small businesses in the Blackstone District will benefit from the
permanent addition of 120 students in the 44 Douglas Student Housing project. ATTACHMENTS: TIF Calculation Spreadsheet TIF Application
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44 Douglas Student Housing 120 student-housing living units serving
the University of Nebraska Medical Center NW Corner of 44th & Douglas Streets
Application for Tax Increment Financing 44 Douglas Housing, LLC
June 11, 2018
A joint-venture sponsored by:
Clarity Development &
GreenSlate Development
Contact: Ryan Spellman Project Manager
[email protected] 402.980.7752
2
Project Name: 44 Douglas Student Housing
Project Address: Please see table on following page Project Legal Description: Please see table on following page
Property Owner/Applicant Name: 44 Douglas Housing, LLC Owner/Applicant Address: c/o Clarity Development/GreenSlate Development
3814 Farnam Street, Suite 201 Omaha, NE 68131
Estimated Total Project Cost: $12,534,000 TIF Request: $2,232,000
Rehabilitation or New Construction?: New Construction
LIHTC Project: No Market-Rate Project: Yes Historic Tax Credit Project: No
Total Apartment Units: 120 Building Gross SF: Approximately 72,230 # Acres: Approximately 0.75 (sum of all six existing parcels) Lot/Parcel Size (SF): 32,670
Current Use: Unimproved land and vacant, dilapidated homes (currently being demolished)
Proposed Use: 120 studio-style student housing apartment units
Current Zoning: R8-ACI-1(PL) Proposed Zoning: Same as above, with addition of a PUR, pending
City of Omaha Planning Department’s feedback
Current Annual Real Estate Taxes (2017 Year): $11,569 (sum of all six existing parcels) Current Assessed Tax Valuation (2018 Year): Land: $ 55,200
Improvements: $ 286,700 Total: $ 341,900
Requested Base Year: 2018 Requested Division Date Year: 01-01-2019
3
Project Address & Legal Description Guide Table:
Lot # Address Legal Description 1 114 S 44th Street BRIGGS PLACE LOT 38 BLOCK 6 1/2 VAC ALLEY ADJ & N 42 FT LTS 37 & 38 49.5 X 100 2 116 S 44th Street BRIGGS PLACE LOT 38 BLOCK 6 S 44.5 N 86.5 FT LOTS 37 & 44.5 X 100 3 120 S 44th Street BRIGGS PLACE LOT 38 BLOCK 6 S 42 FT LTS 37 & 42 X 100 4 4412 Douglas Street BRIGGS PLACE LOT 36 BLOCK 6 50 X 128.5 5 4414 Douglas Street BRIGGS PLACE LOT 35 BLOCK 6 50 X 128.5 6 4420 Douglas Street BRIGGS PLACE LOT 34 BLOCK 6 50 X 128.5
* The six existing parcels will ultimately be replatted into a single parcel with new address andlegal description
4
Table of Contents Project Narrative
Detailed Project Description ............................................................................................. 5 Land Use Plan ................................................................................................................... 7 Zoning – Current and Proposed ........................................................................................ 7 Public Improvements ........................................................................................................ 7 Historical Status ................................................................................................................ 7
Development Financing Plan – Sources & Uses/Total Project Costs...................................... 8
Construction Budget, Itemized Public Improvement Costs, TIF Eligible Expenses, and Project Timeline
Construction Budget ......................................................................................................... 9 Itemized Public Improvements ......................................................................................... 9 TIF Eligible Expenses ....................................................................................................... 9 Project Timeline ................................................................................................................ 10
3-Year Pro Forma – Profit & Loss and Cash Flow Statements ................................................ 10
Statement of Need and ROI Analysis (with and without TIF) .................................................. 11
Evaluation Criteria: Mandatory Criteria ................................................................................... 11
Cost-Benefit Analysis .................................................................................................................... 12
Employment Information ............................................................................................................. 12
Residential Unit Information ....................................................................................................... 13
Preliminary Financing Letters ..................................................................................................... A
Floor Plans & Elevations .............................................................................................................. B
ALTA Survey & Legal Descriptions ............................................................................................ C
Documentation of Site Control ..................................................................................................... D
Organization Documentation ........................................................................................................ E
Audited Financial Statements ....................................................................................................... F
5
I) Narrative
A. Detailed Project Description
The University of Nebraska Medical Center (UNMC) enrolled 3,908 students for the fall of 2017 in a multitude of graduate and professional colleges. Students studying medicine, dentistry, nursing, pharmacy, physical therapy, and other healthcare-related programs invest countless hours and thousands of dollars into their educations to one day serve as caretakers and leaders of the Omaha community.
The development team of the 44 Douglas Student Housing project seeks to provide a convenient, high-quality, and affordable housing option for these students through the creation of 120 studio-style apartment units. A shared parking agreement with UNMC will allow many of the project’s residents to have safe, secure, covered parking in UNMC’s parking garage at the SE corner of 44th & Douglas. Flexible leases will accommodate students that are visiting UNMC for temporary programs, and options for fully furnished units will make the transition into their new lives seamless.
Furthermore, the 44 Douglas Student Housing project will foster a community of like-minded peers with shared common areas perfect for burning the midnight oil. Convenient access to public transportation, including the Metro ORBT bus system and the anticipated Modern Streetcar on Farnam, will reduce dependency on automobiles and make travel for these students effortless. Finally, the 44 Douglas Student Housing project will offer the greatest amenity of all: location. Practically on the UNMC campus, students will be only steps from their classrooms and laboratories, and just a short walk to the nightlife and entertainment of the thriving Blackstone District.
Background & Existing Conditions
The development team acquired the project site in 2017 and has been holding it while formulating their redevelopment plan. A portion of the land is currently being used to accommodate construction staging for the Hilton Home2 Suites hotel under construction to the west of the project site, at the corner of Saddle Creek & Douglas. The three (3) remaining single family homes along 44th Street are currently being deconstructed and demolished, with materials being donated to Habitat for Humanity.
Voluntary TIF Contribution
The project will make a voluntary TIF contribution of $11,680.
6
The Development Team
The 44 Douglas Student Housing project will be the eighth joint-venture project between Clarity Development and GreenSlate Development, the companies responsible for the tremendous revitalization of the Blackstone District. Over the past five years, the companies have developed over $100 million worth of commercial, residential, and mixed-use real estate projects together, including both historic renovations and new construction. Most recently, Clarity and GreenSlate utilized both state and federal historic tax credits to successfully complete the historic renovation of the Colonial Hotel – also located on Omaha’s “original Main Street”, Farnam Street – into thirty-nine luxury apartment units and a basement speakeasy-style lounge.
Clarity
Clarity Development’s principals have been involved in the development of over $200 million in multifamily real estate nationwide. They bring depth and experience from inception to completion and stabilization of the project. Clarity has wide-ranging experience with Tax Increment Financing (TIF), Historic Tax Credits (HTC) – both state and federal – and New Market Tax Credits (NMTC). The principals of Clarity have completed multiple historic tax credit projects and are consequently well versed in SHPO and NPS approval processes and the master lease structure.
GreenSlate
The principals of GreenSlate Development, Matt Dwyer and Jay Lund, have been the visionaries of the Blackstone District since its inception in 2012. Over $100 million of new investment has flowed into the area from GreenSlate and others during the past 5 years resulting in 14 new businesses. Almost every building along the primary corridor of the District has been newly redeveloped or is slated for re-development. The City of Omaha has offered unprecedented assistance to GreenSlate to further this transformation by reconfiguring Farnam Street from one-way to two-way, adding new lighting and landscaping and rezoning parcels for continued denser development in the District. The result has been a truly urban, walkable, high-density, ‘live-work-play’ district in the shadow of the State of Nebraska’s largest hospital system, largest insurance company, and largest construction company.
Architect: Alley Poyner Macchietto Architects Eric Westman 1516 Cuming Street Omaha, NE 68102
MEP Engineer: Engineering Technologies, Inc.
7
Justin Veik 1111 N 13th Street Omaha, NE 68102
Civil Engineer: Ehrhart Griffin & Associates Dan Dolezal 3552 Farnam Street Omaha, NE 68131
B. Land Use Plan
Current Use: Unimproved land and vacant, dilapidated homes (currently being demolished)
Proposed Use: 120 studio-style student housing apartment units
The development team will advance the goals of the City of Omaha by increasing density in the Midtown Omaha market, providing creative parking solutions to reduce surface parking lots in an urban area, and promoting the use of public transportation. Furthermore, by redeveloping this severely blighted and underutilized land, the development team will be creating high-quality housing at an affordable price for students at UNMC. C. Zoning – Current and Proposed The proposed use is acceptable within the current zoning of R8-ACI-1(PL), however the development team does anticipate the need for an additional PUR overlay or the need to obtain waivers for density and parking, pending feedback from the Omaha Planning Department. D. Public Improvements The public improvements associated with this project include landscaping, sidewalks, curb improvements, and the creation of on-street parking.
E. Historical Status Not Applicable.
8
II) Development Financing Plan – Sources & Uses/Total Project Costs
Uses of Funds Amount ($) Site Acquisition 1,350,000 Exterior Signage & FF&E Allowance 100,000 Hard Costs 8,700,000 Contingency 435,000 OPPD/CenturyLink Direct 90,000 Architecture & Engineering 334,000 Appraisal 5,000 Environmental Testing 8,000 Geotech Testing 10,000 Civil & Surveying 25,000 Entitlements 15,000 Legal 60,000 Other Professional Services 15,000 TIF Application & Contribution 40,000 Title & Recording 25,000 Tap/Capital Facilities Allowance 25,000 Grading/Foundation/Building Permit 25,000 Builder's Risk 38,000 Construction Loan(s) Origination 54,000 Construction Loan(s) Interest 427,000 Taxes During Construction 18,000 Branding/Marketing 75,000 Soft Cost Contingency 60,000 Developer Fee 600,000 Total Uses of Funds 12,534,000
Sources of Funds Amount ($) Owner Equity 1,904,000 Construction Loan 8,398,000 TIF Loan 2,232,000 Total Sources of Funds 12,534,000
Upon project completion, based on the development team’s research of competitive properties in the market, the most probable final valuation is $10,800,000.
9
III) Construction Budget, Itemized Public Improvement Costs, TIF Eligible Expenses, and ProjectTimeline
Construction Budget Amount ($) General Requirements 600,000 Sitework 400,000Concrete 800,000Masonry 600,000Steel 150,000Woods & Plastics 1,800,000 Thermal & Moisture 400,000 Doors & Windows 400,000 Finishes 1,000,000Misc. Specialties 100,000 Equipment 200,000Furnishings 100,000Conveying Systems 150,000 Mechanical 1,200,000Electrical 800,000Construction Budget Total 8,700,000
Itemized Public Improvement Costs Amount ($) Landscaping 25,000Sidewalks 25,000Curb Improvements & On-Street Parking 25,000 Total Public Improvement Costs 75,000
TIF Eligible Expenses Amount ($) Public Improvements 75,000 Acquisition (Less Current Tax Value) 1,008,100 Sitework (Including Demolition) 400,000 Special Foundations (Allowance for Geopiers) 250,000 Utility Extensions, Hookups, and Relocations 90,000 Architecture & Engineering Costs 334,000 Appraisal 5,000Environmental Testing 8,000 Geotech Testing 10,000 Civil & Surveying 25,000 TIF Application & Contribution 40,000 Total TIF Eligible Expenses 2,245,100
10
Project Timeline Date TIF App Submission Jun 11 TIF Committee Jul 18 TIF Planning Board Aug 01 Submit for Permit Aug 17 TIF City Council #1 Sep 04 TIF City Council #2 & Approval Sep 18 Construction Start Oct 01 Construction Completion Jul 31, 2019
IV) 3-Year Pro Forma – Profit & Loss and Cash Flow Statements
Stabilized Year 1 2 3 Rental Income: Apartment GPR 1,144,800 1,167,696 1,191,050 Surface Parking 31,500 31,815 32,133 Other Income 66,240 67,385 68,552 Total GPR 1,242,540 1,266,896 1,291,736
Residential Vacancy Loss (62,127) (63,345) (64,587) EGI 1,180,413 1,203,551 1,227,149
Operating Expenses: RE Taxes (242,862) (246,505) (250,202) Insurance (27,000) (27,675) (28,367) Maintenance, Contracted Services, & Turnover (54,000) (55,350) (56,734) Salary, Benefits, & Personnel (54,000) (55,350) (56,734) Administrative & Marketing (15,000) (15,375) (15,759) Utilities (21,000) (21,525) (22,063) Management Fees (47,217) (48,142) (49,086) Replacement Reserve (18,000) (18,180) (18,362) Total Operating Expenses (479,078) (488,102) (497,307)
NOI 701,335 715,449 729,842
Debt Service (563,000) (563,000) (563,000) Cash Flow 138,335 152,449 166,842
11
V) Statement of Need and ROI Analysis (with and without TIF)
ROI Analysis (Stabilized Year 1 Figures) With TIF Without TIF
Sources of Funds: Owner Equity 1,904,000 4,136,000 Construction Loan 8,398,000 8,398,000 TIF Loan 2,232,000 0 Total Sources of Funds 12,534,000 12,534,000
Cash Flow 138,335 138,335 Return on Investment 7.3% 3.3%
As demonstrated, the Return on Investment is severely diminished if TIF is removed from the capital structure. Without TIF, the development team would be unable to raise the necessary equity capital and the project would be unable to proceed. Furthermore, the challenges of developing dense urban infill projects on small amounts of land results in large sitework and special foundations costs which TIF helps to offset and promote this type of development. The project site also features specific challenges such as existing vacant homes that must be demolished, utilities that must be relocated, and topographic challenges that will require extraordinary grading and earth work to prepare the project site.
VI) Evaluation Criteria: Mandatory Criteria
A. The project is located within a Community Redevelopment Area (CRA) and thereforesatisfies this mandatory criterion.
B. There will be no loss of tax revenue to the City or any other taxing jurisdictions resultingfrom the use of TIF. None of the current taxes collected from the base value will be lostor used towards TIF. Only the tax revenues generated by the improvements beingconstructed on the site will be used towards TIF.
C. The development team has demonstrated the economics of the deal and the need for TIFin Section V of this application. Without TIF, ROI would be unacceptably low, theproject would not be able to attract investor equity, and the project would not occur.Utilizing TIF dramatically improves the rate of return, increasing it to an attractive levelfor investors and making the project financially feasible.
There are currently no comparable alternatives to the proposed project site. Omaha’sdowntown and midtown markets have experienced a surge of urban infill developmentover the past decade, and as a result, the number of sites available for future
12
redevelopment has been significantly reduced, making the 44 Douglas Student Housing project a unique opportunity. Furthermore, the outstanding location of the project and its proximity to UNMC is necessary to its success, and no other similar sites exist.
D. The 44 Douglas Student Housing project furthers the objectives of the City’s Master Planin the following ways:
i. Increasing densification of the urban core and the Midtown Omahamarket.
ii. Redeveloping a severely blighted and substandard parcel of land.
iii. Implementation of Urban Design elements – The 44 Douglas StudentHousing project
iv. Job creation – The project will require at least 1 full-time propertymanager/leasing agent and at least 1 full-time maintenance technician.
VII) Cost-Benefit Analysis
A. No tax shifts were identified for this project.
B. This project will not create any additional community public service needs and TIF willbe used to cover the cost of necessary public improvements.
C. The 44 Douglas Student Housing project will create a large number of construction jobsand at least 2 permanent full-time management positions.
D. Owners of the small businesses in the Blackstone District will benefit from the permanentaddition of 120 students in the 44 Douglas Student Housing project.
Employment Information
Job Creation & Retention: Permanent Full-Time Jobs Created 2 Part-Time Jobs Created 0 Total Jobs Created 2
Est. Annual Payroll (Avg. Per Employee) $40,000
13
Job Types Include: Property Manager/Leasing Agent Maintenance Technician
Est. Total Construction Payroll: $1,000,000
Residential Unit Information
The 44 Douglas Student Housing project will consist of approximately 120 studio-style efficiency units, each ranging between 400-550 SF and renting for $750-$795 per month.
Attachment B: Floor Plans & Elevations
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Attachment C: ALTA Survey & Legal Description
Attachment D: Documentation of Site Control