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Home My WebLink About111808 Town CenterTown Center Proposed Phase IV Updated from March 2008 November 18, 2008 City Council’s Strategy* City Council’s Strategy* Goal 2 -Grow and Diversify the Local Economy Top Five Objectives for the Year: –Business Retention and growth –Attract new businesses to diversify our economy –Develop Burton Station as a major business center Expand Town Center – –Expand military presence and military-related businesses *Council Retreat August 22 & 23, 2008 Town Center Development Recap Town Center Development Recap •Phase I –Office Tower (Block 4) –Towne Bank (Block 5) –Hilton Garden Inn (Block 5 –176 rooms) •Phase II –342-unit Cosmopolitan Apartments (Block 10) –Dick’s Sporting Goods (Block 12) –2-story retail/entertainment (Block 8 –Bravo!, Comedy Club, Ruth’s Chris Steak House) –Restaurants (Block 3 –Cheesecake Factory, Keegan’s) •Phase III –37-story Westin Hotel/condominium tower (Block 7) •236-room full service hotel (Floors 5 –15) •119 condos (Floors 16 –36) + penthouse/common area •32,000 sq. ft. retail –56 condominiums, 14,000 sq. ft. ground floor retail (Block 6) –Office Building, 116,000 sq. ft. (Block 5) Town Center Master Plan Town Center Master Plan Summary of Actions Summary of Actions •Phase I –12/9/99 –Memorandum of Understanding –3/6/00 –First Development Agreement –12/12/02 –Purchased Block 4 Garage •Phase II –11/30/01 –Phase II Memorandum of Understanding –6/17/03 –Second Development Agreement –1/25/05 –Purchased Block 12 garage –12/29/05 –Purchased Block 10 garage •Phase III –12/07/04 –Term Sheet –9/15/05 –Third Development Agreement –12/21/07 –Purchased Block 7 garage •Phase IV –March 4, 2008 –public briefing and approval of Term Sheet –Contingent on Beacon acquisition –Phase IV Term Sheet –updating in progress Phase IV was previously presented to Council March 4, 2008 Phase IV was previously presented to Council March 4, 2008 Block 2 Only (in millions) PublicPrivate Block 2 Office Tower (332,134 sq ft)$72 - $82 Parking Garage (800 spaces)$22.7 - $28.9 Streetscapes0.65 to 0.85 Public/Private Investment Ratio1 to 3.0 Phase IV has been expanded to include Block 9, consisting of a 162 room Westin Aloft hotel and 195 apartments Block 9 Looking Northeast from Columbus Street There is also 27,000 SF of retail on the 1floor st -Anthropologie–10,000sf Block 9 also includes a conference center expansion that doubles the available meeting space Block 9 Looking Northwest from Elevation from Plaza Looking South Columbus Street nd 2Floor Conference Space –Block 9 nd 2Floor Conference Space –Block 9 Block 2 contains a 20-story office tower with 332,134 SF, 32,632 SF of retail, and a 601-space, 5-Level Garage View looking North from Sandler Plaza Site of New Hotel, Conf. Ctr., Apts. Site of New Tower Private Sector Components in Phase IV include… Private Sector Components in Phase IV include… A 20-story office tower on Block 2 • –Office area: 332,134 SF –Ground floor retail: 32,632 SF A 15-story building on Block 9 which includes: • –Aloft Hotel (162 rooms) –Apartments (195 apartments) –Ground floor retail (27,000 SF) Public Sector Components in Phase IV include….. Public Sector Components in Phase IV include….. A 601-space parking garage on Block 2 • A conference center expansion on Block 9 • Streetscapes • City will master lease 2 floors in new 20-story office tower in Block 2 • Summary of Private and Public Investments Summary of Private and Public Investments Phase IV Phase IV (millions) (millions) Private Investment Office Tower (332k sf), Retail (33k sf) $85.5 Aloft Hotel (162 rooms), Apartments (195), & Retail (27k sf)72.9 $158.4 Total Private Investment Public Investment Parking Garage (601 spaces)36.3 Conference Center18.6 Streetscapes1.5 $56.4 Total Public Investment GRAND TOTAL$214.8 Public: Private Ratio for Phase IV 1 to 2.8 Phase IV is different than previous phases… Phase IV is different than previous phases… City investment includes all land and platform costs to be • repaid over 20 years. •In addition to the basic TIF of incremental real estate taxes, additional revenues are necessary to support costs: (1)Hotel taxes from the core area (excluding TGIF and TAP) will be added to the TIF (2)Guaranteed developer payments will be added to the TIF •Armada Hofflerwill repay $12.5 million of the land and platform costs with guaranteed payments for 20 years: -Conference center rent payments $450,000 per year -Conference center profit sharing of $1.4 million over 20 years -Guaranteed Lease of 60-70 parking spaces in Block 2 for $80,000 •Payments continue after land and platform costs recovered Why Invest in Phase IV? •Town Center has become an economic engine and community icon •Town Center is a vertical office park that has become an urban growth area, created with the City’s partner •Corporate headquarters –Gateway/Bank of Hampton Roads and “Product”for Future Company Headquarters •Opportunity for high paying jobs •New Retailers –including Anthropologie •Economic climate requires more investment to ensure continuation of economic growth for Virginia Beach •Location is strategic for City’s future transportation plans •Creates additional economic and fiscal impacts. For example, non- real estate taxes in core area were $5.2 million in FY-08 Summary of Financial Principles Summary of Financial Principles 1.Project pays for itself with revenues generated by the project –Real estate tax incremental revenues 2.Hotel room taxes used to pay for Conference Center from Town Center hotels –Dedicated hotel tax in core area (excluding TGIF and TAP portions) from Hilton Garden Inn, Westin, and Westin Aloft –these are estimated to be $500,000 in FY10 and $765,408 per year in FY11-FY32 –allocation to TIF sunsets in 2025 3.Developer repays land and platform costs ($12.5 m) by a guarantee payment of $600,000 in annual revenues (conf ctrrent and profit sharing, and parking) 4.$2 million of EDIP Funding for conference center 5.$1.5 million of EDIP for streetscapes 6.Available revenues support debt service on costs financed Town Center Phase IV Financing Process Town Center Phase IV Financing Process 1.Match debt service to available revenues in TIF –real estate taxes, hotel, and developer payments 2.Issue 2-yr Bond Anticipation Note (BAN) in 2010 •Does not increase overall interest costs •Reduces risk of shortfalls 3.Issue 20-year Public Facility Revenue bond in 2012 to retire the BAN 4.Projections indicate healthy fund balances in the TIF Fund, with lowest balance at $1.0 -$2.6 million in 2023 Proposed Use of Bond Anticipation Notes for Phase IV of the Town Center Projectand its affect on the TIF Fund Balance 1 $70.0 $60.0 $50.0 $40.0 Millions $30.0 $20.0 $10.0 $0.0 2010* 2012** 201120132014201520162017201820192020202120222023202420252026202720282029203020312032 Principal Issued (left axis)Cumulative TIF Surplus / (Deficit) 1 Assumes $53.65 m BAN and $56.6 m Public Facility Revenue Bond (PFRB) to retire BAN *Bond Anticipation Notes Issued **Bond Anticipation Notes Repaid; Public Facility Revenue Bonds Issued Financing of Phase IV Financing of Phase IV (millions) (millions) Proposed Project Cost$56.4 EDIP Cash Financing -Conference Center-2.0 -Streetscapes-1.5 Public Costs Financed$52.9 BAN Issuance Costs, Legal, Consultants0.7 FY10 Principal Amount of BAN $53.6 (short term financing) Interest on BAN for 2 years @ 2.75%2.8 Public Facility Revenue Bonds Issuance Costs0.2 FY12 Principal Amount of PFRB $56.6 (permanent financing) Summary of the Town Center Project Financial Plan Phase I, PhaseII, Summary of the Town Center Project Financial Plan Phase I, PhaseII, Phase III, and Phase IV (projected) Phase III, and Phase IV (projected) (millions of dollars) (millions of dollars) Phase IV Phase IPhase IIPhase III(Projected)Total Public Investment Public Parking Garages$22.5$18.1$ 16.9$ 36.3*$ 93.8 Meeting Space, Connector, Plaza0.509.918.6*29.0 Infrastructure –CIP/EDIP Funded6.37.71.71.517.2 Total Garage and Infrastructure –Public$29.3$25.8$ 28.5$ 56.4$140.0 Total Private Investment:$ 95$ 97$200$158.4$550.4 Public Private Ratio1:3.21:3.81:7.01:2.81:3.9 Completion Date:Fall 2003Winter 2005Fall 2007FY-11 *Includes Land & Platform Costs Phase IV Phase IV •Garage acquisition and operation will mirror existing garages at Town Center •Phase IV is contingent on the completion of Beacon land exchange •Capital maintenance of $150,000/yr for additional conference space, as in original Westin conference space •City will master lease 2 floors Block 2 Next Steps Next Steps 1.VBDA to acquire Beacon Building (Block 2) 2.Consider Phase IV Development Agreement – th December 9meeting by City Council th 3. VBDA Consideration December 16meeting 4.Construction of improvements -Completion estimated approximately 2 years after acquisition of Block 2 and Block 9