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HomeMy WebLinkAboutStudy Session Agenda 03-18-13STUDY SESSION AGENDA CITY COUNCIL MEETING CITY OF WHEAT RIDGE, COLORADO 7500 W. 29th Ave. Wheat Ridge CO March 18, 2013 6:30p.m. Individuals with disabilities are encouraged to participate in all public meetings sponsored by the City of Wheat Ridge. Call Heather Geyer. Administrative Services Director at 303-235-2826 at least one week in advance of a meeting if you are interested in participating and need inclusion assistance. PUBLIC COMMENT ON AGENDA ITEMS APPROVAL OF AGENDA ~ Staff Report(s) a. Modification of 381h Ave . Corridor Redevelopment Plan 2 . 2012 Year-end budget review and potential revenue enhancements 3. City vehicle replacement policy discussion 4. Air Quality, Every Trip Counts, participation in 2014 ~ Elected Officials' Report(s) --r-~e r11 I a --· ~ . ~ ...... # ~ City of • ... ~Wheat&_dge ~OFFICE OF THE CllY MANAGER Memorandum TO: Mayor and City Council THROUGH: Patrick Goff, City Manager/Urban Renewal Executive Director FROM: Steve Art, Urban Renewal Manager DATE: March 18,2013 SUBJECT: Third Modification to the 38th Avenue Corridor Redevelopment Plan Issue In late 2012, the City received a Tax Increment Financing (TIF) agreement application from Richard Oneslager, the principal ofCrosswire Investments, for the Perrin's Row Townhome development of up to 29 townhomes in the 38th Avenue Corridor Redevelopment Plan (the Plan) area at 5760 W. 38th Avenue. Should the City Council consider approving a third modification to the Plan allowing for Renewal Wheat Ridge (R WR) to enter into a TIF agreement with Crosswire Investments, Inc.? Proposed Project The Townhome project contemplates up to 35,000 sq. ft. of new construction. The project will consist of26 one and two bedroom units varying in size from 1166 sq. ft. to 1479 sq. ft. with each unit having its own garage and visitor parking. The units are anticipated to sell in the low to mid $200,000 range. The first units would be available for occupancy in the second quarter of 2013 with the final unit occupied some time in 2016. These proposed townhomes, to be constructed by a merchant builder, are modeled after the successful Central Park Row Homes in Stapleton. The architecture includes a contemporary blend of brick, stucco and siding along with prominent architectural metal for decks and awnings. The townhomes will be built to Energy Star standards. Background The site for the future Perrin's Row development has been vacant for over 14-years and was previously the location of a gas station. At some undetermined time the gas station ceased operations and in 1990 the underground fuel tanks were removed. Contamination was found in the soil which was remediated by ground pumping and open soil remediation and the site has been determined to be clean of contamination. The site was rezoned to Mixed-Use Neighborhood (MU-N) as part of the City-initiated rezoning of the 38th Avenue corridor, effective November 25, 2012. Study Session-Perrin's Row Memo March I X. 2013 Page 2 The parcel is located within the 3R 111 A \·cnue Conidor Redevelopment Plan area. The Plan has stated ohjcctiH~S which arc to strengthen the identity of38111 A\·cnuc as the City's "Main Street: to promote mixed-usc development that includes a balanced mix of residential. retail and serYicc businesses: to improve pedestrian and vehicular circulation and safety: to minimize pedestrian and vehicular conflicts: encourage retention and enhancement of existing businesses while creating opportunities f(x new complimentary uses and: to encourage new development and redevelopment that is compatible in scale and design \\·ith the exiting character of the redevelopment area. The Plan authorizes RWR to participate in rede\·clopmcnt activities including demolition. public impnn·cmcnts. land acquisition. redevelopment and rehabilitation and relocation . Completion of these activities may he financed in \\·hole or part hy R \VR using Tlf. Development Incentive Package Request At the No\·cmher (1. 2012 R \VR meeting. Richard Ones lager presented to R WR the proposed Perrin's Row project and his justification for the TIF request. Mr. Oneslagcr provided the following items as hanicrs to an adequate internal rate of return (IRR) to make the project fcasihlc : I. Current City charter restrictions do not allo\\ t(x adequate densities to make the pwjcct financially viable. The site suffers from its adjacency to aging residential and retail. 3 . The downturn in the national development market as well as the local market conditions in Wheat Ridge. 4. The \·al uc of property in this part of the Denver metro area is S20 to S30 per square-foot less than areas in West Highlands. 5. Wheat Ridge development standards drive up development wsts. Upon re\·icw of the request. R WR recommended forwarding the item to Cit y Council t(x its re\·icw and authorization to proceed with an independent analysis of the project's pw forma and financial statements. A consensus was reached hy Council at the December 3, 2012 study session to direct staff to mo\·e forward \\'ith the analysis. A contract was awarded to Gruen Gruen + Associates to pro\'ide an independent analysis of the project's pro fonna. Gruen's analysis \\'as completed in early February, 2013. The review and repo11 indicated that for this project to proceed successfully. the usc ofTIF was necessary. The Gruen report is attached. Since that time. staff has negotiated terms of a TIF agreement between Crosswirc and R WR wherein a pcmion of property tax generated hy the project would he n;hated hack to Crosswirc over a period of 20 years . This is not the first use ofTlF in the Plan area. but is the tirst use for nc\\' construction. To authorize the use ofTIF for a particular project. the Council must adopt a resolution amending the Plan. As pa11 of the amendment procedure. the Council must make a determination regarding \\·hethcr the amendment will "substantially change the Plan in land area. Study Session-Perrin's Row Memo March I X. 2013 Page 3 land usc. design. building requirements. timing. or procedure." C.R.S. ~ 31-25-1 07(7). If the Council finds that the proposed amendment docs constitute a substantial modification. additional notice and hearing requirements must be fulfilled. Statl and legal counsel arc of the opinion that the usc of TIF in this instance docs not constitute a substantial modification. The TlF request is for one single parcel in the Plan area and under the provisions of the corridor's redc\'clopment plan. all property in the area has been approved for the usc ofTIF. In the time since the Plan was adopted, RWR has proposed to usc TIF for two projects: the Wal~:-rrecns and the Wheat Ridge Cyclcry Projects. The Walgrccns project was deemed by legal counsel to be a substantial modification to the Plan. which required additional procedural measures. including Planning Commission review, rcfeiTal to the County Commissioners. additional notice and public hearings. That TIF was initially enacted but was subsequently rescinded after the development plans were not acted upon. The Wheat Ridge Cyclery project was not \'iewcd as a substantial modification and therefore only required the adoption of a resolution similar to the one being requested this evening. At its March 5. 2013 meeting. RWR adopted a resolution to forward the third modification to Council. At that same meeting. RWR Board \'oted 5-2 to enter into a TIF agreement with Crosswirc that provides for the following: • Crosswirc would receive SO~·o of the TIF t(Jr years 1-7: • Crosswire would recei\'c 55% of the TIF for years 8-20: • The maximum amount ofTIF would be capped at S467.000. Council Considerations Consideration Should the City Council appro\'e a third Modification to the 38 111 A\'enue Corridor Redc\·elopment Plan'? Staff recommends mo\'ing forward with the modification f(n the following reasons: I. The project will add new market-rate. residential units for sale along 38 111 A venue. This is the first new dc\'elopment along this corridor in a very long time: ' The new residents will create additional sales tax tor the City of Wheat Ridge: 3. The project may act as a catalyst for future de\·clopmcnt and redevelopment of sites along the 38th A venue corridor: 4 . The project will create additional propc1ty tax over time for R WR. the City and other taxing entities: and 5. The project will remove blight. an objective ofRWR 's mission. Attachments I. Third Modification to the 3 8111 A venue Corridor Redevelopment Plan 2. Gruen Gruen+ Associates Analysis of Pen-in's Row Townhomc Project EXHIBIT B THIRD AMENDMENT TO THE 38n1 A \'ENllE CORRIDOR REDEVELOPMENT PLAN Section 5 of the 38 111 A\'cnuc Con·idor Redevelopment Plan ("Plan ") is hereby amended to read as follo\\'s: 5.0 PROJECT FINANCING Urban renewal projects may be financed in whole or in part by the Authority under the tax increment financing ("TIF") provisions of C.R.S * 31-:25-1 07(l})(a) of the Urban Renewal Law. or by any other a\'ailable source of financing authorized to be undertaken by the Authority under C.R.S. * 31-25-105 of the Urban Renewal Law. 5.1 Financing Methods The Authority is authorized to finance urban renewal projects within the Rede\·elopment Area with revenues from property and sales tax increments. interest income. federal loans or grants. or any other available source of rc\·enues. The Authority is authorized to issue bonds and incur other obligations contemplated hy the Urban Renewal Law in an amount sufficient to finance all or any pm1 of an urban renewal project within the Rede\'clopment Area. The Authority is authorized to borrow funds and create indebtedness in any authorized form in carrying out this Corridor Rede\'clopmcnt Plan in the manner contemplated hy the Urban Renewal Law . Any principal and interest on such indebtedness ma y be paid hom propc1iy and sales tax increments, or any other funds. ren!nues. assets or properties legally available to the Authority. 5.2 Potential Utilization of Tax Increment Financing (TI F) After the date of tina! adoption of this Corridor Redc\'elopment Plan. as described in the Resolution appro\'ing the Plan. the City may authorize the utilization of TIF pursuant to C.R.S. * 3 1-25-107(9) ofthe Urban Renewal Law at such time or times that a rcde\·clopment project or projects is. <1re initiated under the provisions of this Corridor Redevelopment Plan within the Rede\·elopment Area. Such TIF may be utilized in the entire Redevelopment Area or po1iions of the Redevelopment Area. The utilization ofTIF pursuant to this section \~,-·ill necessitate a modification oL or to. this Corridor Rcdc\·clopment Plan. in accordance with the pro\'i s ions of C.R.S. * 3 I -25-1 07(7) of the Colorado Urban Renewal Law governing such modifications. Such an amendment shall be accomplished by the procedure set f011h in Section 5.3. below. The details of this utilization of TIF may also he pn)\'ided for by agreement between the City and the Authority. 5.3 L1tilization of Property and Sales TIF Attachment 1 Consistent ,,·ith the 1\.)regoing pnwisions of this Section 5.0 regarding TIF. there is hereby adopted the utilizatitm of property and sales tax increment for the properties described in the attached Appendix A. The prope11ies and projects. t\.w which a tax increment shall be utilized. along with a legal description fix the properties. the date upon ,,·hich the utilization of the tax increment shall take effect. and the tenns of the tax increment applicable to each property. shall be as set fm1h in Appendix A. APPENDIX A I. Cornerstone Property a. Date TIF implcmcnted: October 27. 2003 b. Council Resolution: No. 26. Series 2003 (October 27. 2003) c. Legal Description: A tract of land in the Nm1heast I A of Section 25. Township 3 South. Range 69 West of the 6th Principal Meridian and also being a part of Block I. Pearson-Woodside Addition as recorded in Book 6, Page X of the ofticial records of the County of Jefferson. State of Colorado. and being more particularly described as follows: Commencing at the Northeast corner of said Northeast I i 4 thence S 00 ° 15' 49" E along the East line of said Nor1heast 114. said line also being the centerline of Sheridan Boulevard. 65.00 feet: thence S 89° 59' 58" W. 30.00 feet to a point on the East line of said Block I and the West line of Sheridan Boulevard. said point being the POINT OF BEGINNING: thence N 45° 07'56'' W along the Southerly line of that tract of land described at Reception Number 9 I 056588, said line also being the Southerly line of West 38th A\·enue. 28.35 feet: thence continuing along said Southerly lineS 89 ° 50' 58" W. 115.45 feet: thence N 00° 15' 49" W along said Southerly line, 5.00 feet to a point on the Not1h line of said Block I, said point also being a point on the Southerly line of West 38'11 A venue: thence S 89 ° 59' SW' W along said Northerly line of Block I. 135.45 feet to the North\\'CSt corner of said Block I: thence S 00° 15 · 49'' E along the West line of said Block 1.217.20 feet to the beginning of a curve: thence Southerly along a curve to the left and along the West line of said Block I. 38.84 feet. which curve has a radius of 523.00 feet. a central angle of 4° 15' IT and whose chord hears S 2° 2J · 2W' E. 38.83 feet. to the Southwesterly comer of Lot 21 of said Block I: thence N l'\9° 50' 58" E along the Southerly line of said Lot 21. 134.0 I feet to the Southeast corner of said Lot 21: thence N 00° 15 · 49" W along the East line of said Lot 21, 25.00 feet: thence N 89 ° 59' 58" E along a line parallel to the North line of said Block I, 135.45 feet to a point on the East line of said Block I and the West line of Sheridan Boulevard: thence N 00° 15' 49" W along said East line ofsaid Block I and the West line of Sheridan Boule\'ard. 206.00 feet to the POINT OF BEGINNING. County of J cfferson. State of Colorado. Said parcel contains 1.403 7 acres more or less. (the "Project Area") d. TIF tem1s: 1. Proper1v Tax Increment. Om: hundred percent (I 00°o) of the property tax payahlc to the Authority under C.R.S. ~ 31-25-1 07(9) shall he allocated to. and when collected. paid into a special fund of the Authority, and may he iJTe\·oeahly pledged hy the Authority f(w the payment of the p1incipal o[ premium. if any, and interest on any honds. loans or ad\ances. or indehtedness (whether funded. refunded. assumed. or otherwise) incurred by the Authority to finance or refinance. in whole or in part. urhan n.:newal projects. and to pay all financial ohligations and dehts of the Authority. ii. Sales Tax Increment. One hundred percent ( 100°o) of the sales tax payable to the Autht)rity under C.R.S. ~ 31-25-1 07(9) shall he allocated to. and when collected. paid into a special fund of the Authority. and may he iiTC\'Ocahly pledged hy the Authority for the payment of the principal oL premium. if any. and interest on any honds. loans t~r a<.h ances. or indehtedness (whether funded. refunded. assumed. or otherwise) incurred hy the Authority to finance or rctinancc. in whole or in part. urban rene\\·al projects. and to pay all financial obligations and dehts ofthe Authority. 111. Expiration of Sales and PropertY Tax Increments. When such honds. loans. ad\'ances and indebtedness. and all financial obligations and dehts of the Authority: if any. including interest thereon and any premiums due in connection therewith. ha\·c been paid. but in no event later than twenty-fi\·e (25) years following the date the sales and prope11y tax TIF is implemented as set forth in subsection (a) aho\"C (which implementation date is Octo her 27. 202S) all property tax rc\·enues upon the taxable property and the total municipal sales tax re\·enue collections in the Project Area shall be paid into the funds of the respectin: public bodies . 2. Wheat Ridge Cyclery Property a. Date TIF implemented: Decemher I I. 2006. b . Council Resolution: No. 55. Series 2006 (December II. 200(1) c. Legal Description: Parcel I The South 163 feet of Lot I. Craig Subdivision. City of Wheat Ridge. County of Jefferson. State of Colorado. Parcel 2 Lot I, EXCEPT the South 163 teet thereof and the South 6 feet of Lot 2. Craig Subdivision. City of Wheat Ridge. County of Jctterson. State of Colorado. Also described as: Commencing at the southeast corner of Section 23. Township 3 South. Range 69 West of the 6 111 Principal Meridian: thence S89"36 '23"\V a distance of 30.00 teet to the southeast corner of Lot I. Craig Subdivision and the Point of Beginning: thence along tht: southerly and westerly lines of said Lot I and the \\'t:stcrly line of said Lot 2. the following 3 courses: I) S~N"38'23"W a distance of 104.97 feet to a point of curvature: 2) along the arc of a cun·e to the right having a radius of 15.00 feet through a ct:ntral angle of 90"07' 36" and having an arc length of 23.00 feet. a chord bearing N45"1 7'49"W and a chord kngth of 21.24 teet to a point oftangency: 3) NOO"I4'0l"W a distance of210.97 teet to the northwest corner of tht: south 6 feet of said Lot 2: Thence N89"3~'23"E a distance of 120.00 feet along the north line ofthc south 6 fed of said Lot 2: thence S00''14'0J"E a distance of 226.00 feet along the cast line of said Lot I and said Lot 2 to tht: Point of Beginning. Containing 27.070 square feet or 0.621 acres more or less. d. TIF tcnns: i. Property Tax Increment. One hundred percent (I 00%) of the property tax payable to the Authority under C.R.S. ~ 31-25-1 07(9) shall he allocated to. and \\·hen collectt:d. paid into a special fund of the Authority. and may be iiTen>cably pledged by the Authority tor the payment of the p1incipal of. premium. if any. and interest on any bonds. loans or advances. or indebtedness (whether funded. refunded. assumed. or otherwise) incuiTed by the Authority to finance or refinance, in whole or in part. urban renewal projects. and to pay all financial obligations and debts of the Authoritv. ii. Sales Tax Increment. One hundred percent (I 00°·o) of the sales tax payable to the Authority under C. R.S. ~ 31-25-1 07(9) shall be allocated tu. and \\ ht:n collected. paid into a spt:cial tund of the Authority, and may be irrenH:ably plcdgcu by the Authority for the payment of the principal of premium. if any. and interest on any hnnds. loans or advances. or indebtedness (whether funded. refunded . assumed. or otherwise) incurred hy the Authority to finance or n.:financc, in whole or in part. urban renc\\'al projects. and to pay all financial obligations and dchts of the Autho1ity. 111. Expiration of Sales and Property Tax Increments. When such bonds. loans. a<h'ances and indebtedness. and all financial obligations and dchts of the Authority: if any. including interest thereon and any premiums due in connection there\\'ith. ha,·c hccn paid. hut in no c\·cnt later than twcnty-fi,·e (:~5) years h11lowing the date the sales and property tax TIF is implemented as set f(Jrth in subsection (a) above (which implementation date is December II. 2006) all property tax revenues upon the taxable property and the total municipal sales tax revenue collections in the Project Area shall he paid into the funds of the respect in: pub] ic bodies . 3. Crosswirc Investments, LLC a. Date TIF implemented: . 2013. h. Council Resolution : l'\o .. Series 2013 ( . 2013) c. Lel!.al Description: LOTS I THROUGH 13 PERRI!'\'S ROW SUBDIVISION A RESL'BDIVISIOI'\ OF LOT I. BLOCK I. BAL\1AR CO)'.;SOLIDATION PLAT SITUATED I!\ THE NE I -l OF SECTIO~ 25. T.3S .. R.69W .. OF THE 6 111 P.M. CITY OF WHEAT RIDGE. COUNTY OF .JEFFERSO:'\. STATE OF COLORADO d. TIF tcm1s: 1. Property Tax Increment. One hundred percent (I 00° o) of the property tax payable to the Authority under C.R.S. ~ 31-25-1 07(9) shall he allocated to. and \\'hen collected. paid into a special fund of the Authority. and may he innocably pledged hy the Authority for the payment of the principal oL premium. if any. and interest <ln any bonds. loans or ad,·anccs. or i ndehtcdncss (whether funded. refunded. assumed. or othen,·ise) incumxl by the Authority to finance or refinance. in whole or in part. urban renewal projeds. and to pay all financial obligations and dchts of the Authoritv ii. Expiration of Sales and Property Tax Increments. When such bonds. loans. ad\'ances and indebtedness, and all financial obligations and debts of the Authority: if any. including interest thereon and any premiums due in connection therewith. have been paid. but in no e\·ent later than tv:enty-fi,·e (25) years following the date the sales and propc11y tax TIF is implemented as set fo11h in subsection (a) abo\'c (which implementation date is . 2013) all property tax re\·enucs upon the taxable prope11y and the total municipal sales tax revenue collections in the Project Area shall be paid into the funds of the respecti,·e public bodies. ANALYSIS OF PROPOSED PERRIN'S ROW TOWNHOME PROJECT AND EVALUATION OF REQUEST FOR SUBSIDY To CITY OF WHEAT RIDGE AND RENEWAL WHEAT RIDGE From GRUEN GRUEN+ ASSOCIATES [ 'rban naJilO!lli.rl.r, ,\larkt'l Stml~~i.rl.r c..:., Land [ 'Jr/ Public /)olii:JIA11a!Jsts DRAFT January 2013 C1351 Attachment 2 ANALYSIS OF PROPOSED PERRIN'S ROW TOWNHOME PROJECT AND EVALUATION OF REQUEST FOR SUBSIDY To CITY OF WHEAT RIDGE AND RENEWAL WHEAT RIDGE From GRUEN GRUEN+ ASSOCIATES l 'rl'a" I :mno111i.rl.r .. \farlcd Slralt:w:.-t.r c:~ Land l ·.re/ PH/Jii( Poli~T .·1nalr.rl.r DRAFT .January 2013 Cl351 TABLE OF CONTENTS Chapter Page I INTRODUCTION AND FINDINGS AND CONCLUSIONS ........................................ 1 INTRODUCTION ...................................................................................................................... 1 OVERVIEW AND APPROACH ............................................................................................. 1 KEY FINDINGS AND CONCLUSIONS ............................................................................. 2 POUCY IMPLICATIONS AND RECOMMENDATION ................................................ 5 II REAL ESTATE ECONOMIC ANALYSIS BASED ON DEVELOPER- AND BUILDER-SPECIFIED COST AND REVENUE ASSUMPTIONS .................... 6 PROPOSED DEVELOPMENT PROGRAM ....................................................................... 6 REVENUE PARAMETERS OF PROPOSED DEVELOPMENT .................................. 6 DEVELOPMENT COST ESTIMATES ................................................................................. 7 FINANCING AND INVESTMENT PARAMETERS ........................................................ 9 RESULTS OF REAL ESTATE ECONOMIC ANALYSIS ................................................. 9 III SENSITIVITY ANALYSIS, REVIEW OF RESIDENTIAL MARKET CONDITIONS AND PROPERTY TAX INCREMENT ESTIMATE .......................... 12 LAND VALUE SENSITIVITY TO UNIT SALE PRICE EXPECT A TIONS .............. 12 SALE PRICE UNCERTAINTY AND RESIDENTIAL MARKET CONDITIONS .. 12 ESTIMATED PRESENT VALUE OF PROPERTY TAX INCREMENT REVENUE .................................................................... 15 LIST OFT ABLES T \ BJ .!-'. I I 1: Jlll\ ~1c:1l Par:1mct n~ of Propo~cd Dc\-clopmcnt ................................................... . .............................. ................ .............. . (> T\BI .J: II 3: hni:-lll'd l.<>t PaYment :-;chL"duk ....................................................... .. T .\1~1 .1 ·. II -L l .:1nd Dc,dopmL·nt ( :oq 1 -:~tim:ttl· .... . T\1~1.1-'. II~: \'ntic:d lkn·1optnL'!lt r :mt 1'.:-timatL ' ...................................................................... H T\BI.F I l (,: 1-ini ~hnl J..,t \'aluL · L:-timarc ............ . <) T\BI.I-'.11 -: 1::-tim:lll' <>flZL·:-idu :d !.:1nd \':t!uL· and \:L·t <:;t:-h 1·1,,,,._ .................. Jt I ·1 \BI .F II H: \:L·t C:a~h 1·1<,,,. and lntl'rnal Rate of Return RL·,ulting !·rom !.and DL·\·ci<>J1111L'!lt tf( h\'llLT 1' l<> lw ( :rnlitcd ~(,_'111_11(111 "f l .:tnd I·.L]llit\ ........................................... II 1\BI.I ·.lll I: l.:md\':t!uvScnmi\it\·t.,SakPnn· ............... . T.\Bl.l : Ill "· RL'CL '!ll To,\'Jlh()tnL ' S:tk:-\:L ·:n thL· Site in \\.lw:tt Ridge T\BI.F Ill) 1\ccmt S:t!L> \:L·:tr the Site in \\·v,t llighbmb ........ 1:2 ........... 1) and IkrkL·IL ·\ '\vighb<n·h••od-, ,,f]km·n .................................................................................... II 1.\BI .I'.III ·t Pr••iL'Ctl<lll ,,fPropl'rt\ l,t:-..lnnL·nll'nt Rc\l'!lllL' .................................................. . . .. I~ Analysis of Proposed Perrin 's Row Townhome Project and Evaluation of Request for Subsidy DRAFT CHAPTER I INTRODUCTION AND FINDINGS AND CONCLUSIONS INTRODUCTION The owner of a vacant parcel of land located at the southwest comer of 38th Avenue and Depew Street in Wheat Ridge (the "site") has requested a rebate of incremental property taxes resulting from development. Consisting of approximately 1.4 acres of land, the site is located within the 38th Avenue Urban Renewal Area. A for-sale residential development consisting of 26 townhome units has been proposed for the site. The current land owner (the "applicant") has indicated that the development of the site for the proposed use will be infeasible in the absence of a 20-year incremental property tax rebate. The applicant plans to entide the site for the proposed use, complete the necessary sitework and infrastructure improvements, and then sell finished lots to a townhome builder. New Town Builders has been identified as the townhome builder. New Town plans to build the same townhome product type it has successfully built and sold in Stapleton. The City of Wheat Ridge and its Urban Renewal Authority, Renewal Wheat Ridge , have asked Gruen Gruen + Associates ("GG+ A'') to complete an analysis of the proposed development and property tax rebate request. This report presents the results and implications of the analysis completed. OVERVIEW AND APPROACH GG+ A analyzed the real estate economics of the proposed development program to evaluate the need for a property tax rebate. The real estate economic analysis yields a key output: the residual land vallle. A residual land value represents the amount of money a developer can afford to pay for raw land needed to site a development, given: • Land development costs; • Townhome development costs; GRUEN GRUEN+ ASSOCIATES PAGE 1 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT • Obtainable unit sale prices and rate of absorption; and • The rate of return reyuired to make inYestment in the project feasible (often referred to as the "hurdle rate"). :\ project is feasible if a de\Tloper can achien.· a return on eyuiry that meets a hurdle rate commensurate with the risk associated with the project. \\'e use an annual internal rate of return (lRR) as the financial yardstick to identify the land ,·alue that ,,·ould be supported b~· the inn:wnent returns of the forecast n.'Yenucs and costs associated with the proposed dC\·clopment. This pennits reaching judgments on the project's feasibility and the amount of land purchase (or write down) the proposed deH·lopment could support. Because, in this case, the land den·lop<.:r already owns the site, the residual land nlue estimate is made and then compared to the land 0\\'n<.:r/ deY eloper's rescrYation price. . \ reserYation price refers to the minimum price for which the owner would be willing to sell its property. The land 0\Yner/ deYcloper has indicated a n:serntion price of S650,()()() for the 1 A -acre site or S10.90 per syuare foot of land. The owner reports ha,·ing owned and carried the property for approximately 1 f) years. The owner also indicated that the property had pre,·iously been assessed at a market nlue of approximately S650.000. No subsidy or tax rebate is warranted if the residual land Yalue supported by the townhome dcn·lopment alternati,·e exceeds the 5650,000 rcsen·ation price. ConYcrscly. if tht· 5(>50,000 resen·ation price exceeds the residual land Yaluc support<:d by the project, a subsidY is needed in order for the land 0\Yner /applicant to contribute its land to dcYelopment and fi>r the project to mmT fonvard at this time. In other words. if the present market conditions and real estate economics applying to the proposed de,-clopment do not support as high of land ,·alue as that sought by the land m\·ner, a subsidy is needed. If this is the case, the optiom aYailablc arc to: (I ) wait to commence dtTelopment until market conditions and the real estate economics impron· to support a land \·aluc ntual to the rescn·ation price (2) \Yair until the land 0\Yncr reduces its resen·ation price: or (3) subsidize the dtTelopmcnt to b1idgc the feasibility gap created by the rescn·ation price being higher than the supportable land Yaluc. KEY FINDINGS AND CONCLUSIONS Residual Land Value of the 1.4-acre Site Based on Developer-and Builder-Specified Assumptions The real estate economic analysis re,·ie\\'cd in this report show~ that, based on land deYdoper-and builder-specified assumptiom regarding costs, revenues, and return reLjuirements. the residual land Yaluc of the unimprm·etl site is approximately S450,000 or S7 .50 per syuare foot of land. In essence, after deducting for the estimated land deYdopment costs, the to\vnhome builder has agreed to pay 5450,000 for the raw land. GRUEN GRUEN + ASSOCIATES PAGE 2 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT Amount of Subsidy Needed Based on Developer-Specified Assumptions If the applicant/ mvner were willing to dispose of its property for approximately S--1-50,000 or accept this value as a land equity credit, the project could feasibly move fonvard at this time. I lowe\Tr, because the owner's rcscn'ation price of $650,000 exceeds the residual land \'aluc of S--1-50,000, the need for subsidy arises. The applicant has requested that the feasibility gap of approximately $200,000 be mitigated through a rebate of the resulting incremental property taxes over the next 20 years. Reasonableness of Development Cost Estimates and Return Requirements , \s indicated, the estimates abO\'C are based on assumptions specified by the applicant and builder. Entitlement and land de,·elopment costs are estimated at approximately $8.70 per square foot of land or $20,000 per townhome unit. Total vertical de,"elopment costs incurred to build the units, including builder profit, arc estimated at approximately $167 per square foot of building space or $208,500 per unit (these costs are in addition to land development). Given the proposed attached housing product type, neither of these cost estimates appear unreasonable. :\ccording to the builder, its cost estimates arc based on actual and recent experience building the same units in Stapleton. The land developer is seeking to earn a 12 percent annual return on its land contribution and investment. The townhome builder is targeting a 10 percent margin on the unit sale prices. Gin:n the risks associated with the proposed dc,·elopment, neither return target is unreasonably high. Request for Subsidy Primarily Relates to Uncertainty about Unit Sale Revenues and Competitive Position of the Site as a Housing Location The townhome builder has assumed a\·erage sales prices of approximately $200 per square foot or approximately $250,000 per unit. The townhome builder is uncertain about obtainable unit sale rc\·enues and as indicated above has assumed a price level that docs not result in a project that supports the land payment required by the land de,·eloper. If one assumes an a\·erage unit sale price of S215 per square foot or approximately $270,000 per unit, holding all other assumptions and estimates the same, the proposed development would be financially feasible to complete without any tax rebate. Our inten·iews with residential real estate brokers, discussions \Vith the builder, inspection of the site and surrounding neighborhoods, and re,·iew of secondary data suggest that uncertainty a bout obtainable sale revenue is a ,-alid concern and risk. This uncertainty reflects a nriety of factors: • Because of the size and configuration of the site, many of the tmvnhomes must adjoin and face 38th :\\Tnue. Brokers indicate that, aU else being equaL these units will need to be priced at a discount in order to sell; • The neighborhood has experienced no new residential construction of this product type or seal<: in many years, so few if any true comparables exist in \\'heat Ridge; • Some residential uses adjacent to the site can be expected to detract from (rather than GRUEN GRUEN + ASSOCIATES PAGE3 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT bolster) its appeal as a desirable housing location responsive to contemporary preferences of households able to afford new market-rate product; and • The site is not within reasonable walking distance of the activity centers (dining, nightlife, shopping) in Highlands and Berkeley that contribute to the desirability of these urban neighborhoods . Townhome product pricing at the site will not be as high as pricing for new construction housing product in these neighborhoods. While not far away, the neighborhoods of West Highlands and Berkeley are not so close for the project to link with the brand associated with these neighborhoods. These factors suggest the builder must compete by offering a compelling product option at price s lower than prices obtainable for similar products in the West Highlands and Berkeley neighborhoods . The findings summarized above are consistent with the applicant and builder's description of the likely market for the townhome units. Estimate of I n cremental Property Taxes Resulting from Development Based on an average sale price of $200 per square foot or $250,000 per unit, the build-out value of the project totals $6.5 million. For residential property, this equates to an assessed value of $517,000. According to assessment records, the current 2012 base assessed value of the 1.4 acres of vacant land is approximately $77,000. The development will accordingly result in $440,000 of additional assessed value at build-out. Based on the current 2012 property tax rate applicable to the site (8.55 %), this equates to annual property tax increment revenue of approximately $37,700 assuming no growth over 20 years. Conservatively assuming that property values do not increase over time, the net present value of the tax increment revenue to the applicant over 20 years is estimated at approximately $213,700. This is based on the applicant's annual discount rate requirement of 12 percent. If property values increase GRU EN GRUEN +ASSOCIATES PAGE4 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT at an an~rage annual rate of three percent mTr the period, the net present \'aiue of tax increment reYenue to the applicant would approximate $260,000. Both scenarios indicate that a full rebate of tax increment is not needed to bridge a feasibility gap. I Iowe\'er, the applicant would need to recei\-c at least 75 percent of tax increment in order to fully bridge the S200,000 feasibility gap (between the supportable land \'alue and the owner's current reservation price). POLICY IMPLICATIONS AND RECOMMENDATION ,\ full rebate of property tax increment would result in no increment accruing to Rene\val \\'heat Ridge. T he results of the research and analysis summarized in this report indicate that approximately 75 percent to 95 percent of the estimated tax increment resulting from the de,·clopment of the site would need to be rebated to the land owner/ applicant in order for it to: (1) obtain its resen·ation price (stated land equity) of $650,000; (2) pay the costs of land de,Tlopment; and (3) earn a 12 percent annual return on land contributed to and equity invested in the project. \\lllle a property tax increment rebate yielding a present ,·alue of $200,000 to the land owner/applicant is warranted to meet its land resen"ation price and im-cstment return target, the results of the real estate economic analysis indicate that the resen"ation price is higher than the land value the proposed project can support. If all of the increment were rebated to the applicant, none of the increment would be a\'ailabk to the municipality to help fund the costs of public sen·ices to the residents of the development. In addition, rebating all of the increment could encourage other property owners to maintain resen·ation prices higher than the land values that feasible dcTelopments could support. Therefore, consideration should be gi,Tn to sharing the property tax increment induced by the de,·elopment of the project to permit Renewal \'Cheat Ridge to retain some of the tax increment accruing o\'er the next 20 years and to prm·ide for funding of municipal sen'ices to the de,·clopment. One approach would be to rebate the first S20,000 of tax increment re\Tnue each year to the applicant, with the balance to be retained by the City/Renewal \'Cheat Ridge.1 The rebate pro,'ision should terminate after 20 years. 1Such an approach would prm·ide for nearly a 50/50 split of increment likely to result from the project. The arrangement would prov ide some assurance to the land owner that it would receive a minimum threshold in the <.Tent that the project does not perform as \veil as currently anticipated. .\dding 17 years of increment re,·enue following project build- out, at S20,000 per year, to the land owner's net cash flow indicates it would recoup a land nlue of S560,000 and would achie,·e its 12 percent annual return requirement on land contributed to and equity im·ested in the project. GRUEN GRUEN + ASSOCIATES PAGES Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy CHAPTER II REAL ESTATE ECONOMIC ANALYSIS OF PROPOSED DEVELOMPENT BASED ON DEVELOPER-AND BUILDER-SPECIFIED COST AND REVENUE ASSUMPTIONS PROPOSED DEVELOPMENT PROGRAM Table II-1 summarizes the physical parameters of the proposed tmYnhome den·lopment. TABLE 11-1: PHYSICAL PARAMETERS OF PROPOSED DEVELOPMENT Land :\rca l .. r acres Total Townhomc L"nits 26 Parking :\ ttached garages DensitY I C).O units / acre L ·nit Sizes 1J 00 -I ,500 square feet (range) I ,250 square feet (aYcrage) Gross Building Space .12,500 square feet Sources: Crosswire Tm-cstments LLC; 1\:ew Town Builders; Gruen Cruen + "\ssociates. DRAFT The 1.3 7 -acre site is currently planned to accommodate 2(J townhome units in fiye buildings at a density of approximately 19 units per acre. The project is expected to contain two-and three- bedroom units, with attached t,rarages, generally ranging from 1,100 to 1,500 SlJUare feet in size. The aYerage unit size is estimated at 1.250 SLJUare feet. The amount of residential building space is estimated to total 32,500 SLJuare feet. REVENUE PARAMETERS OF PROPOSED DEVELOPMENT The applicant and the townhome builder haYe assumed an aYerage unit sale price of S200 per SLJUare foot or S250,(l()() per unit. "\s summarized in Table TI-2, this elJUates to total gross sale rlTenue of S(J.5 million for the 26 townhome units. TABLE 11-2: ESTIMATED UNIT SALE REVENVES . \ wrage L. nit Size (ii. Square het) I ,250 Sale Price Per Square Foot S200 Sale Rewnuc Per L'nit S25o,ooo Total Sale ReYenue (26 units) S(J,500,000 Sources: Cross wire lmTstments LLC; 1\:ew Town Builders; Gruen Gruen + . \ssociatcs. GRUEN GRUEN + ASSOCIATES PAGE6 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT The builder anticipates an absorptio n rate of approximately two units per month . .-\t the estimated sale price of S200 per square foot or S250,000 per unit, the finished lot nlucs arc estimated at S-l1 ,500 . .-\. tinished lot nlue is the price a builder can afford to pay a land de,· eloper for ready-to- build finished lots. The price the builder can afford to pay reflects the difference in the per-unit sale price and the per-unit \Trtical cost to build. Based on information furnished by the applicant, Table II-3 summarizes the anticipated timing of finished lot payments (i.e. payments from builder to land deYeloper). TABLE 11-3: FINISHED LoT PAYMENT SCHEDULE Fi..ttished Lot Takcdowm Lot Price Year 1 '{car 2 Year .3 Total ~ # # # t1. First 8 Lots 57,250 4 4 0 8 Last 18 Lots 34,.')00 () R 10 18 Total 41,500 4 12 10 26 Sources : Crosswirc !twestments LLC ; Gmen Gmcn + :\ssociates . The land mvner/ applicant expects to rccciYe total finished lot payment reYenues of $1 ,079,000 (26 lots x S-ll ,500 per lot) m-er the course of three years. The payment schedule is weighted so that the first eight finished lots will be purchased for $57,250 per lot and the 18 remaining lots will be purchased for S34,50U per lot. DEVELOPMENT COST ESTIMATES Based on information furnished by the applicant, Table Il--l summarizes an estimate of land dC\·clopment costs, including both hard and soft costs. TABLE 11-4: LAND DEVELOPMENT COST ESTIMATE .S Per Square Foot of Land .S Per l 1nit .S. Total liard Costs 6.36 14,596 379.500 Contingcnc~· (10° o) 0 .64 1,460 r.9so Construction Management Fcc (4° o) 0.25 584 15,180 Permits & Entitlement 0.89 2,048 53,260 Other Soft Costs o.r 1,084 28,186 Total Land Development Cost 8.61 19,772 514,076 Sources: Crosswin: Investments LLC; c;mcn Gruen +Associates. GRUEN GRUEN+ ASSOCIATES PAGE 7 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT I lard costs an: cstima ted at approximate!~· S6.::)(i per sguarc foot of land or S 15,000 per townhomc unit. The estimated hard costs of S379,500 represent 7-l-percent of total land dcnJopmcnt cost .. \ hard cost contingency of 10 percent is also included, resulting in an additional S1.500 per unit or S3H,OOO in total. Construction management, entitlement fees, and other soft costs arc collectiYclr estimated at S1.60 per sguarc foot of land or S3,70ll per unit. These soft costs represent approximately 19 percent of total land deYelopmcnt cost. Table 11-5 presents an estimate of Ycrtical deYelopmcnt costs, or the total cost to dcYclop the townhome units exclusi\T of land. These estimates arc based on our discussion with the proposed townhome builder. TABLE 11-5: VERTICAL DEVELOPMENT COST ESTIMATE .S Per Syuan: h><>t of Building .S Per Cnit }. Total I lard Costs <)() II~,')()() ~-!)~_),()()() Soft Cosb 1 @ ~0.4" o of Sale Ren·nue 41 .1 I ,OliO I ,.)2(>,000 i\larkcting and Sales 2 @ 8.0° o of Sale Rc,Tnue 16 ~0.000 520,000 Builder Profit @ I 0.0" o of Sale Rc\Tmtc 20 2.1,0110 6.10.( )(}() Total Vertical Development Cost 167 208,500 5,421,000 1 Building permit fees. impact fees. constnJCtion usc tax, Insurance warranty rcscn-cs, cost of funds, option upgrades, contractor mTrhead, etc. 2 Costs incurred to sell the units, including commissions, closing. marketing, and model. Sources: 1\'ew Town Builders; Gruen Crucn + . \ssociatcs. Total n.·rtical deYelopmcnt costs arc estimated at approximately S1(,7 per sguarc font or S20R,500 per unit. I lard construction costs arc estimated at approximately S90 per S<..Juarc foot of building space or S113,000 per unit. .\dditional soft costs and the cost of selling the units arc estimated at approximately 2R percent of sale r<.'Ycnuc or S57 per S<..Juare foot. This includes permit and impact fees, usc tax. insurance and warrant~· rescrn:s, financing, contractor mTrhcad, marketing. model unit, and commission and closing costs. Before builder protit, Yertical deYelopmcnt costs arc estimated at approximatcl~· Sl-l-7 per Sl)Uare foot or S1R.1,50() per unit. .\ccording to it~ rcprescntatin-. ~cw Town Builders is targeting a 10 percent margin on the ~ale price of the unib: or S2U per sguare foot. Table 11-(J summarizes how the applicant and builder haYc estimated an aYerage tinishcd lot nlue of S-l-1 ,500. GRUEN GRUEN+ ASSOCIATES PAGE 8 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT TABLE 11-6: FINISHED LoT VALUE ESTIMATE ~Per Cnit ~Total Gross Salt: Revenue 250,000 6,500,000 Cost to Build (I lard and Soft Costs) (163,500) ( 4,251 ,000) Cost to Sell and Builder Profit ( 45,000) (1, J70,000) Finished Lot Value 41,500 1,079,000 Sources: New Town Builders; Gruen Gruen + .-\ssociates . . \s summarized preYiously, the cost to build and sell the units before paying for land is estimated at $208,500 per unit. The gross sale reYenues are estimated at $250,000 per unit. Thus, the difference of S-ll ,500 is the finished lot Yalue. FINANCING AND INVESTMENT PARAMETERS The costs of funds (debt and equity) associated with the Yertical deYelopment of the townhomes are included in the soft cost estimated presented in Table 5. The builder indicated that these costs are estimated to approximate four percent of sale re,·enues. The owner/ applicant has indicated that it does not plan to secure a construction loan to fund land deYelopment expenditures. Land deYelopment will be funded by equity. The owner/applicant's hurdle rate return requirement is a 12 percent IRR. RESULTS OF REAL ESTATE ECONOMIC ANALYSIS Based on the de,Tioper-and builder-specified assumptions reYiewed abm·e regarding costs, re\·enues, and return expectations, Table 11-7 presents an estimate of the residual land ,·alue supported by the proposed dnTlopment program and the net cash flow resulting from land de,·elopment. GRUEN GRUEN + ASSOCIATES PAGE9 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT TABLE 11-7: ESTI!\tATE OF RESIDUAL LAND VALUE AND NET CASH FLOW Total Year 1 Year 2 Year 3 Residual Land Value s (447,306) $ (447,306) s -s - Land Development: Entitlement s (53,260) s (53,260) s -s - Sitework I Infrastructure s (432,630) s (432,630) s -s - Carrying I Soft Costs s (28, 186) s (18,791) s (9,395) s - Total s (514,076) s (504,681) s (9,395) s - Equity Investment $ (961,382) $ (951,987) $ (9,395) $ - Finished Lot Revenue: Tier 1 $57,250 s 458,000 s 229,000 s 229,000 s - Tier2 $34,500 s 621,000 s -s 276,000 s 345,000 Total $41,500 s 1,079,000 s 229,000 s 505,000 s 345,000 Cost of Lot Sales 1.00% s (1 0, 790) s (2,290) s (5,050) s (3,450) 2020 Sign Grant s 15,000 s 15,000 s -s - Net Revenue $ 1,083,210 $ 241,710 $ 499,950 $ 341,550 NET CASH FLOW $ 121,828 $ (710,277) $ 490,555 $ 341,550 Internal Rate of Return (IRR) 12.0% c;iYcn the applicant\ hurdle rate reguirement of a 12 percent lRR (highlighted in yellm\·), Table 11-7 aboYe shows that the propmed dl'\·dopment program can only support a residual raw land \·alue of approximately S~-P J )( l() based on the cost and reYenue assumptions specified by the applicant and builder. If the owner \\Tre \\-illing to accept the 5~~7,000 as it's land eguity contributed to dtTclopment, the net cash tlow resulting from land den·lopment would total approximately 5122,0()() and the applicant/land cl\\·ncr \nmld earn a 12 percent IRR on its elluity im·estment of approximately 5961,000. The town home builder would also receiYe its 10 percent margin on sales. I IoweYer, as summarized preYiously, the applicant/ owner has specified a reserYation price of 5650,000 for the raw land. This means that, because the deYdopment program cannot support a land \·alue of 5650,00() under market expectations of the builder, a feasibility ~-,rap exists of approximately negatiYe (5203,000). :\s indicated in Chapter I, the options anilablc arc to: (1) wait to commence deYdopment until market conditions and the real estate economics improYc to support a land Yalue egual to the reserntion price; (2) wait until the land owner reduces its resen·ation price; or (3) subsidize the de\·clopment to bridge the feasibility gap created by the resen·ation price being higher than the supportabk land \·alue. GRUEN GRUEN+ ASSOCIATES PAGE 10 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT ;\s summarized in Table Il-8. without any subsidy or tax rebate. the economics of the tmvnhome dcYelopment will not allow the applicant/ owner to achieYe the specified 12 percent hurdle rate while returning S650,000 in land equity from de,·clopment and sale of the finished lots. TABLE 11-8: NET CASH FLOW AND INTERNAL RATE OF RETURN RESULTING FROM LAND DEVELOPMENT IF OWNER IS TO BE CREDITED $650,000 OF LAND EQUITY Total Year 1 Year2 Year3 Land Equity Value s (650,000) $ (65 0,000) s -s - Land Development: Entitlement s (53,260) s (53,260) s -s - Sitework / Infrastructure s (432,630) s (432,630) s -s - Carrying / Soft Costs s (28, 186) s (18,791) s (9,395) s - Total s (514,076) $ (504,681) s (9,395) s - Equity Investment $(1,164,076) $ (1,154,681) $ (9,395) $ - Finished Lot Revenue: Tier 1 $57,250 s 458,000 s 229,000 s 229,000 s - Tier2 $34,500 $ 621,000 s -s 276,000 s 345,000 Total $41,500 s 1,079,000 s 229,000 s 505,000 s 345,000 Cost of Lot Sales 1.00% s (10,790) s (2,290) s (5,050) s (3,450) 2020 Sign Grant s 15,000 s 15,000 s -s - Net Revenue $ 1,083,210 $ 241,710 $ 499,950 $ 341,550 NET CASH FLOW $ (80,866) $ (912,971) $ 490,555 $ 341,550 Internal Rate of Return (IRR) -6.3% GRUEN GRUEN + ASSOCIATES PAGE11 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy CHAPTER III SENSITIVITY ANALYSIS, REVIEW OF RESIDENTIAL MARKET CONDITIONS, AND PROPERTY TAX INCREMENT ESTIMATE LAND VALUE SENSITIVITY TO UNIT SALE PRICE EXPECTATIONS DRAFT To illustrate tlw sensitiYity of the real estate economic analysis to changes in sales prices, the Yariable that is more difficult to predict than costs, Table 111-1 shows how small changes to unit sale price affect the land Yalue supported b~· the proposed townhome deYelopment program. TABLE 111-1: LAND V ALllE SENSITIVITY TO SALE PRICE Townbo!ll<' .L;/e Pri,<· $200 5210 S2L'i Per Square Per Square Per Square Foot Foot h)()t Tnral \' alue of Finished Lots $1,079,000 s 1.303,600 S 1.-1-16.000 Pem•nfdJ!/ Cbdng<' +:! fO 0 -.-I 31" o Residual Land \'alue $447,300 S6.f 1,300 s-3s.ooo Pm<'!lfaoe (}'"'Z~" -r--/--1-"o '6 'i 0 o Subsid\· Rn1uired to J\lect ReserYation Price 1 $202,700 ss. -oo so 1 ( )wner's reserYation price of S6SO,OOO less residual land ,-alue. Source: G men G men + :\ssociates The left column of Table 111-1 abmT summanzcs the pro forma sale price assumption of tlw applicant and builder and the land nlues resulting from that assumption. The results of the real estate economic analysis, holding all other ,·ariables but sale price constant, arc presented based on a 5.0 and 7.5 percent increase to aYerage per-syuarc-foot sale price of the townhome units. The analysis shows that if sale prices an·rage S210 per syuarc foot (as opposed to S200). the total ,·alue of the 26 finished lots would approximate S1.3 million. ]n other words. the builder could afford to pay the land dcn·loper SL1 million for the finished lots and still earn its 10 percent profit margin. This in turn would produce a residual raw land ,-alue of S6-J. 1,000. .\ fi,·e percent increase in unit sale price results in a -1--1-percent increase in residual land nlue. I ·:ssentially, the deYclopment would be feasible with only minimal subsidy because the residual land ,-alue would be eyuinlent to the land owner's resetTation price of S650,000. ] f sale prices are eYcn ~lightly higher at S215 per syuare foot, the residual land nlue would exceed the owner's rescrYation price. l\io subsidy would be reyuired. SALE PRICE UNCERTAINTY AND RESIDENTIAL MARKET CONDITIONS The townhome builder is uncertain about obtainable unit sale ren·nues and has assumed a price lcYel that docs not result in a project that supports the land payment ret]uircd by the land deYdopcr. If one assumes an anTage unit sale price of S215 per syuare foot or approximately S270,000 per unit, holding all other assumptions and estimates the same, the proposed dtTclopment would be GRUEN GRUEN + ASSOCIATES PAGE 12 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT financially feasible to complete without any tax rebate. Our interdews with residential real estate brokers, discussion with the builder, inspection of the site and surrounding neighborhoods, and rc,·iew of secondary data suggest that uncertainty about obtainable sale revenue is a nlid concern and risk. .\ \'ariety of factors contribute to this uncertainty. ;\ significant factor is the lack of comparable, recently-built townhome product in \\'heat Ridge near the site. The lack of new construction suggests the proposed de,·clopment will be pioneering in nature. Table III-2 summarizes a sample of recent townhome sales occurring during the past year in the City of \\.heat Ridge within one mile of the site. TABLE 111-2: RECENT TOWNHOME SALES NEAR THE SITE IN WHEAT RIDGE L'nit Size L'nit Type Year Sale Price Sale Price # Sq Ft Beds/ Baths Built } Per L'nit }. Per Sq Ft 5920 \\. 41st 9-4 2/2 19""'0 109,000 112 625-\\.34th 1,493 2/2 19-2 205,000 1r 3451 Fenton #3 880 3/2 1983 82,500 94 3451 Fenton #6 880 2/1.5 1983 n;,-oo 156 3775 Harlan 1,160 3/2 2004 164,425 142 2812 Eaton 840 2/1 19'"'1 120,000 143 Average 1,038 1981 136,438 131 Sources: Jefferson Count~· Assessor; Gmen Gmen + :\ssociates . . \!though the sample size is small, the rc,·iew of recent sales indicates that existing townhome units in \\'heat Ridge located \Vithin one mile of the site ha\T sold for an average price of $131 per square foot during the past year. The a\-crage unit contained 1,038 square feet of Ji,·ing area and was originally built in 1981. The aYeragc sale price for the six units sold was approximately 5136,000. Only one of the units sold was less than 10 years old. One 1 ,160-square-foot three bedroom townhome unit at 3775 Ilarlan Street, built in 2004, sold in May of2012 for a price of$164,425 or S142 per square foot. In the context of the small but recent sample of existing townhomc sales ncar the site in \\·heat Ridge, a S200 per square foot sale price expectation would be a significant premium m·cr existing older product. .-\!though not recent, a two-unit duplex built in 2009 on 32nd :\venue in \\'heat Ridge sold for an a\·erage price of $170 per square foot in late 2009. The units each contained approximately 1,445 square feet of Ji,·ing space with three bedrooms. One of the units is currently listed for sale at a price of 5187 per square foot. Neighborhoods east of the site in the City of DenYer, such as \\'est I Iighlands and Berkeley, ha,·e experienced a much higher Yolumc of infill residential deYelopment acti,·ity. 1\fany of these projects ha\-c been small 2-4 unit teardowm of older single-family homes replaced with custom-build townhomes and duplexes or larger mixed-usc rcdc,·elopments. Townhome product pricing at the site will not be as high as pricing for new or newer construction housing product in these GRUEN GRUEN+ ASSOCIATES PAGE 13 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT neighborhood~. Our intctTicws sug,_gcst the site is not sufficiently close to be linked \\ith the brand associated ,,;th the I Iighlands and Berkeley neighborhoods; nor is it \\ithin walking distance of the acti\·ity centers in these neighborhoods that contribute to their desirability as housing locations. In short, the locational image and pricing associated with these neighborhoods has not yet geographically expanded to encompass the 38th & Dcpe\\" site. Each broker with whom we spoke indicated that the site is not percei\"ed to be part of these residential submarkets; although a moti\·ating factor of home buyers likely to consider the site is proximity to them. To put the sale pticc expectation of S200 per ~quare foot into pcrspecti\·c, Table lll-3 presents a summary of townhomc sales occurring dming the past \'Car in the \\'est llighlands and lkrkeley neighborhood~. 1 ~ach sale was generally located \\ithin one mile of the site and only units built since 20(Hl, and containing between C)()() and 1,800 square feet, arc included in the summary. TABLE 111-3: RECENT SALES NEAR THE SITE IN WEST HIGHLANDS AND BERKELEY NEIGHBORHOODS OF DENVER . \ n:rage L' nit :\Yerage L'nit . \ n~rage ~ale . \ \·erage ~ale ~ize .\ge Price Price #Sales # ~lj h #Years S Per L'nit ~Per Sq Ft I lighlands (;arden s ur 12 .) 16,WO TH \'illage Other Townhomes & 15 1,-192 8 182,16-1 2S6 Condos ~ources: Dem-cr County. \ssessor; Gmen Gmen + . \ssociatcs. The saks data is consistent \\ith our intef\·iews suggesting that new or newer construction units of roughly the same size and quality command sale prices of S250 to S27 5 per square foot if located one-half mile to one mile cast of the site in Dem·er. l\Iultiplc brokers indicated that a discount of 20 percent or more should be anticipated for townhome product at the site relati\T to pricing in west Dcm·er, particularly if the units arc not planned to include roof top decks or basements (as many of the infill residential projects in DenH·r do). Our intcf\·iews also suggest that frontage along 38'" .·\ \Tnue may be of concern to some prospecti\·e buyers (because of ptiYacy, noise, and safety concerns), resulting in in the need to price such units below prices for new product in preferred locations in the \\'est I Iighlands and Berkeley neighborhoods . . -\!though residential ~ale price~ arc clearly ri~ing and the momentum of the \\'est I Iighlands and Berkeley neighborhoods appears to be mm·ing west, our intcf\'icws and re\·icw of sale and listing data indicate that the applicant and builder's sale price assumption of S200 per square foot is not unjustified. :\!though difficult to quantity its effect on prices, the type and lluality of housing that exists directly adjacent to the site can be expected to detract from (rather than bolster) the pcrceiYed image of the site. GRUEN GRUEN+ ASSOCIATES PAGE14 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT ESTIMATED PRESENT VALUE OF PROPERTY TAX INCREMENT REVENUE Table III-4 presents an estimate of property tax increment reYenue resulting from deYclopment. TABLE 111-4: PROJECTION OF PROPERTY TAX INCREMENT REVENUE ,\'o A.r.re.ued I 'u!ue Gmwlb 3.0° o ,' lnmwl Growlb .\ssessed Tax Increment Assessed Tax Increment \' alue 1 Re,·enue2 \'alue 1 Ren~nue 2 Year .s } .s } 2013 ---- 2014 ---- 2015 51"",400 -51',400 - 2016 51"" ,400 3':' ,655 532,922 3"",655 201'"' 5!7,400 3"",655 548,910 38,982 2018 51"",400 37,655 565,3 7 7 40,349 2019 5 !"' ,400 .r,6ss 582,338 41,"75'7 2020 517,400 3"",655 599,808 43,207 2021 517,400 3"",655 61"",803 44,""01 2022 51',400 3"",655 636,33'7 46,239 2023 51"" ,400 3"",655 655,42' 47,824 2024 51'7,400 37,655 6""5,090 49,456 2025 51"",400 3"',655 695,342 51,13"' 2026 51 '7,400 37,655 '16,203 52,868 20T 51"" ,400 3"",655 -:'37,689 54,652 2028 51-,400 3'"',655 ""59,819 56,489 2029 51',400 3"",655 '82,614 58,381 2030 51-,400 37,655 806,092 (J(),330 2031 51-:',400 3"",655 830,275 62,33"' 2032 517,400 3"",655 855,183 64,404 Cumulative Tax 640,138 850,767 Increment (Nominal) Net Present Value of Tax Increment to Applicant @ 213,700 260,200 12% Annual Discount Rate Net Present Value ofTax Increment to URA @ 6% 351,100 445,400 Annual Discount Rate 1 Based on built -out market value of S6.5 million and residential assessment rate of-.96 percent. 2 Based on 2012 property tax rate of 8.55 percent and 2012 base assessed ,·alue for the land of s-6, 963 (per Jefferson County ;\ssessor records). Sources: Jefferson County .\ssessor; Gmen Gmen + Associates. Based upon a build-out market Yalue of SG.S million for the :26 units, or S:250,000 per unit, the assessed ,-alue is estimated at S517 ,400. This is based on the :2012 residential assessment rate of 7.96 percent. If Yalues increase at an aYe rage annual rate of three percent, the assessed ,-alue of the de,·clopment would grow to approximately 5850,000 by the end of the :20-year period. GRUEN GRUEN+ ASSOCIATES PAGE 15 Analysis of Proposed Perrin's Row Townhome Project and Evaluation of Request for Subsidy DRAFT ConseJ.Tatin:ly assuming no increase in property Yalue m·er time, annual property tax increment is estimated at 537,655. On:r 20 years, this eyua tes to cumulatiYe property tax increment reYenue of approximately 56~0,0()0 on a nominal basis. The net present Yalue of the tax increment ren:nue to the applicant owr 20 years is estimated at approximately 5213,700. This is based on the applicant's annual discount rate of 12 percent. If property ,·alues increase at an aYe rage annual rate of three percent oYer the period, the cumulatiYe property tax increment reYenue would total approximately 5851,000. The net present nlue of tax increment reYenue to the applicant would approximate 5260,000. Table III-~ abon: also summarizes the present ,·alue of tax increment reYenue forgone by Renewal \\"heat Ridge if it were to rebate 100 percent of the tax increment to the applicant. These estimates are based on a lower annual discnunt rate of six percent (to rdlcct a lower borrowing rate for a municipality). If no property nlue growth is assumed, Renewal \\"heat Ridge would forgo approximately 5.15l,(H)(l in reYenue on a present nlue basis. If Yalues grow at three percent annually, the present Yalue of forgone l"C\TI1Ue would approximate 5~~5,()()(). GRUEN GRUEN + ASSOCIATES PAGE 16 (;rucn (;rucn + .\~~ociatv~ '(;(;-! \1 b a firm <1( t'C<>11<lll1i~t~, ~OCI<>logi~t~, ~Llti~tician~ and market, tinancial and ti,cal anah~t:;. DnTlopn~, puhlic agcnciL.,, :lttornc\'' and othn~ im·oh-cd in rcale,t;ttc a~,;t·t managt'llll'lll utilize C ;c ;+_\ rL·,earch and cnn:-;ulting to makl' and implement inH·,;tn1l'nt, marketing, product, pricing and legal ~upporr deci,ion' The linn',; 'taft' ha' extL·n,;i' L' experience and special training in the lhl' < ,f demographic :mah-,i~. ,;urH'\ re,;cuch, l'C< 'nonll'trics, P'Ychonwtrics anJ tlnancwl :lllalY~is to describe and forecast markL·" fur a \\·ide 1·arict\ of rcalest:ttL· projL·ct~ and L'C<IIlomic :lCii\ i1ic~. ~inn· its founding in I <)~I I, c;c; +. \ has pi< >m·ned 1 he integration of heh :l\·iond l'L'SL·arch and L'conon1l'tric an:tl\'sts to pre ,,·ide a ~ound foundation for sucn·s,fulland usv pol in· and L'C<lnc ,mic de1·dopment act tons. c;c; -1.\ has abo pioneered the USL' of economiC, social and tlscd impact analYsb. C ;c;-t-_\ impact studies :lccuratL·h· :111d cc llnprclll'nsl\ dy portra\ till' effects of public and priY:1lL' real estate dL·,·clopml·nt,;, land u,;L· plan,;, regulation~, :1!11lcxa t ions and a'sL·,~mL·nts on t hL· a ffectcd 1 reas uriL·s, taxpa \ L'I'S, c< H1~ttmns, ot hn residents and propnt\' O\\'I1L'r~. Dl '\I 1\: 1-211, 'il-l.) :211')(, dn1n-rlo g,t:;assc >c.cr >111 (:Ill< \ < ;< ): , Kr 1 _) ,...., 1 1rd-1 mid\\·o 1 ltlggass< 1C .com ~" l·t{ \'\,( 1~1 ( ): -II:; 1 -13.)--'i<J~ sflll ggas~oc.com ~ 4 ~ ~~ ~ .-City of • .. ~Wheat&_dge ~OFFICE OF THE CllY MANAGER TO: FROM: DATE: SUBJECT: Memorandum Mayor and City Council Patrick Goff, City Manager March 12,2013 (for March 18,2013 Study Session) 2012 Year End Budget Report and Potential Revenue Enhancements Discussion At the March 18 , 2013 Study Session, I will present and distribute the 2012 Year End Budget Report . This report will include my annual analysis of General Fund revenues and expenditures. Additionally, I will provide an analysis ofthe Capital Investment Program (CIP) beyond 2013 including revenues and expenditures. As noted in my 2013 Budget Message, the General Fund will no longer be able to fund the CIP Budget after 2013 and maintain the targeted reserve level of 25% that Council set in 2011. Therefore we need to continue our strategic discussions about the long-term fiscal sustainability of the City, specifically revenue enhancements that would allow the City to fund the capital investment program. Council last discussed potential revenue enhancements in July of 2012, when Council directed staff to work with Lori Weigel of Public Opinion Strategies to conduct a phone poll to ascertain the level of support of new or increased revenue sources for capital infrastructure projects in the City. The polling was completed in July and Council consensus at the time was not to pursue a revenue enhancement ballot question for the November 2012 election. 3/18/2013 1 3/18/20 13 2 3/18/2013 3 3/18/2013 4 3/18/2013 5 3/18/2013 \. 6 3/18/2013 7 l • I 'I ..,.•A~ .... # .,. City of • .. ~WheatRi._dge ~PUBLIC WORKS Memorandum TO: Patrick Goff, City Manager FROM: Tim Paranto, Director of Public Works DATE: March 11,2013 (for Study Session ofMarch 18, 2013) SUBJECT: Fleet Replacement Policy This memo is written to provide information for the March 18, 2013 Study Session review of the Fleet Replacement Policy approved by the City Council in 2011. Virtually every significant business and governmental entity uses a fleet management program to detennine timing of fleet replacement. Factors that weigh into vehicle replacement include repair record, age, mileage, depreciated value, safety record, service use, downtime cost, mechanical condition, general appearance and, of course, the cost of the replacement vehicle. A fleet management pro~:,JTam provides for cost-effective replacement of vehicles and equipment. Guidelines are typically developed from historic information to determine when vehicles should be reviewed for possible replacement. The guidelines are usually based on age and mileage. Most programs have an analytical tool or process to assist in making the final determination for replacement. Wheat Ridge's fleet management program is considered an industry-standard program. As a demonstration ofthe City's Fleet Replacement Program, each of the vehicles recommended for replacement this year will be discussed below. Supporting information is attached . Unit #4, 2007 Ford F-150 pickup 135,000 miles meets replacement guideline 6 years old meets replacement guideline Police service severe service Reliability poor Maintenance history above normal , maintenance deferred Current value $5,700 Life cycle should have been replaced in 2010 Condition level level IV Unit #23, 2001 Honda Accord 107,000 miles below replacement guideline 12 years old meets replacement guideline Police service nonnal service Reliability average Maintenance history average, maintenance deferred Fleet Replacement Policy March l R. 2013 Page 2 Current value Life cycle Condition level S1.750 n.:place in 20 12 levellY Unit #77, 1998 Chevy Express Car~o \'an 45.000 miles below replacement guideline. excessive engine idle time I 5 years old meets replacement guideline Police service nonnal service Reliability poor Maintenance histl)ry average. maintenance deferred Cuncnt value S2.000 Life cycle replace in 2012 Condition level level IV Unit #100, 1993 Chevy S-10 pickup 95.000 miles below replacement guideline 20 years old meets replacement guideline Maintenance sen·ice heavy service Reliability poor Maintenance history average. maintenance deferred Current value S300 Life cycle should hm-c been replaced prior to 2006 Condition Je,·el le,·el IV Unit #302, 1997 Che''Y 4X4 pickup with plow 95.000 miles bclo\\· replacement guideline 16 years old meets replacement guideline Maintenance scn·ice hea,·y service Reliability poor Maintenance history above an~rage. maintenance deferred Current value S 1.300 Life cycle should hm-c been replaced prior to 2006 Condition level le,·el IV Unit #315, 1994 Chevy 1-ton dump truck 59.000 miles below replacement guideline 19 years old meets replacement guideline Maintenance sen icc heavy scn·icc Reliability poor Maintenance history abo' c average. maintenance deferred Cun·ent value S700 Life cycle should have been replaced prior to 2006 Condition ]c,·el Jc,·c] IV Fleet Repla~.:ement Policy March 18. 2013 Page 3 Unit #290, 1998 International pothole patcher 73 .000 miles below replacement guideline I 0. 700 idle hours meets replacement ~:,ruideline 15 years old meets replacement guideline Maintenance service heavy sen·ice Reliability poor Maintenance history average. maintenance defen·ed Current value $7.000 Life cycle should have been replaced prior to 2006 Condition Je,·el level IV Recommended replacement purchases Statf recommends the purchase of the following vehicles under the State of Colorado Price Agreements : One 2013 Dodge Durango All Wheel Drive SSV One Large 2013 Ford F -150 XL. 4x4. Crew Cab Pickup One Large 2013 Chc\Tolct 1500 Cargo Van One Large 2013 Ford F-150. 4x4. Extended Cab Pickup One Large Che\Tolet Silverado 2500. 4x4. Extended Cab Pickup with Plow Package One 2013 Chevrolet Silverado 3500 4x4 Cab & Chassis with Dump Bed Body Package Total Cost: $ 26.669 s 26.915 s 17,510 s 22.766 s 28.195 s 3 1.306 $153.361 Staff also requests approval to purchase. install and /or relocate auxiliary equipment required for the operation of the replacement vehicles along with installation of lighting. markings and ~.:ommunication equipment at a total cost of$14.000. The total expense ofthc vehicles. including preparation tor usc. is not to exceed S 16 7 .361. It should be noted that usc of the state bid process provides an a\·cragc savings of 30% from the manufacture list prices for the vehicles. The pothole patchcr is a one-of-a-kind critical piece of equipment. In lieu of full replacement. t\o,·o additional options have been developed: Replacement oftruck and patcher bod y Replacement of patcher body Repair truck and patcher body Current value of equipment Vehicle !\1 aintenance s 150.000 s 116.000 S25.000 S7.000 The City currently has two full-time mechanics maintaining 150 vehicles and pieces ofhcavy equipment. In 2012. 7X2 vehicle work orders were completed . The cunent budget for \'Chicle maintenance is approximately S275.000. As the tlcct ages. the cost of fleet maintenance also increases and outsourcing of major repairs increases. Fleet Replacement Policy March I H. 20 13 Page 4 Stall appreciates the City Council's review ofthe Fleet Replacement Policy. Ha\·ing a policy that is acceptable to the City Council will reduce staff time expended in reYiewing vehides and equipment condition and history. writing specifications and obtaining pricing for procurement. Attachments: I. Fleet Replacement Policy 1 Life Cycle Analysis 3. Fleet Replacement Rating Summary 4. 2013 Fleet Replacement Requests FLEET REPLACEMENT POLICY Attachment 1 ·1 hL' L'UnL'I11 fkL·t rL·plaL'L'IllL'I1t pl1lic~ 1'-partially ha..,cd upnn the age and m1kagc ]Hlllr~ (lf the un1t. Old age PI h1gh mileage lwur ... dt,es J1()t JLltnmJtic.Jll~ _ju<.t1f~ replacement. hut Jll:-;IL'.Jd trigger~ an 111\ eo,;tigatinn into <.~II n:a"Pll~ ft'l Jcplacemcnt a-. noted belt''~: • lligh and or n~1ng ma1ntcnancc repair c<,sh. • I !Jgh and 01 n~111g opnating l'll~l (fuel economy). • Pa~t w.cful ~en 1ce. tcchnologiL·al. 01 L'l'PJwmicalltt\: (~cc ddimtiPJh lw]P\\) • l\.111-. -.cn·icc np longer J\ ailahk. • I cdc1al. :--tall" and tli lllLaiJcljUircmcnt~ render unit not kg~dl:--u~ahk • ( h crallmcchanical. 1ntcrior and both L'1111ditinn. • l ·,LT dJ~Ill!'-1 <Jnd lll di,'-ati~faL'Iton due IP pcrL'L'J\ cd un~dtc Cllnditinn ol 'chicle h,hL'd Lipl•lllllgh lll!lc,JgL. • Ponr utili/at ion (unit tO<' big. 'mall l(lr _jllh, ~ea~tlll<d u~L' (ln]~. ctc.l. It Jl<l-,..,ihlc. :1 unit that ha~ 11ll Pther dcticJellL"IL'~ othLT than poor util11atinn \\ill he mm cJ '' Jth111 the 11cl'l rather than dcktcd. DEFI:\lTIO:\S Sen ict• Life: Refer~ Ill the anwunt oft1111e a unit 1-. C<lp.Jhk PI <'J1l'Idtll1g and rcndcr!n!:! -;cnJl'L'. Thi.., lik ma} he 1ndclinitc if the unrt rccL'i\e'-adcLJuatc maintL'I1allL'c and Horn llllt parh arc dutiful]: I"L'placcJ. Technological Life: RcprL'"l'llh the rcl:llin: producti\ it: decline 1,f ll umt '' 11L'n l'llll1J1<1fcd to .1 nc\\ cr unit. [conomical Life Rde1 ~Ill thL· !cn~th l11 timL that the a\ t:rat:c tlltal 'chick co~t j-. at It~ !11II11!11Ulll. FLEET REPLACEMENT GUILDLINES TABLES LIGHT DUTY VEHICLES (UNDER 8,600 GVWR) Description Hours/Miles Years Police Patrol Sedan -Marked 120,000 miles 5 Police Patrol Sedan -Unmarked 120,000 miles 8 Police Sedan -Administrative 120,000 miles II Police Truck/Van 120,000 miles II Police Motorcycle 30,000 miles 5 Police Patrol SUV 120,000 miles 5 Administrative Sedans 120,000 miles II Light Duty Small Truck!V an 120,000 miles II MEDIUM DUTY VEHICLES (8,600 to 10,000 GVWR) Description Hours/Miles Years Van, Truck w/Gasoline Engine 120,000 miles 10 Van, Truck w/Diesel Engine 185,000 miles 10 HEAVY DUTY VEHICLES (OVER 10,000 GVWR) AND HEAVY EQUIPMENT Description Hours/Miles Years Single-Axle Dump Truck w/Plow 150,000 miles 10 Tandem-Axle Dump Truck 150,000 miles 10 w/Plow Street Sweeper-Mechanical I 0,000 hours/30,000 miles 6 Street Sweeper-Vacuum 8,000 hours/30,000 miles 6 Stonn Sewer Cleaner I 0,000 hours 10 Articulated Loader I 0,000 hours 12 Backhoe I 0,000 hours 12 Grader I 0,000 hours 12 Tractor wllmplements 10,000 hours 12 City Council consensus on 3-21-11. FLEET REPLACEMENT GUIDELINES The current fleet replacement guidelines are based on lhe age and milcaael1lours of the unit Old age or high mileagelhoul'$ does not mun automatic replacement, but instead trigen an invest.iaation into all reasons for replacement 1lle following list of reasons are used in determining if replacement is warranted. REASONS FOR REPLACEMENT 1. High and/or risina maintenancelrep1ir cosu. 2. Hi&h andlor rising openting cons (fuel economy). l Excessive downtime. 4 Past useful service, tt.chnological, or C(;()nomicallife (see definitions below). S. Parts/setvic:e no lonaet available. 6. Federal, State and/or Local requirements render unit not leaally usable. 1. Overall mechanical condition . 1. Overall physical appearmc:e . 9. User distrust andlor diuatishction due to perceived unsafe condition ofvehicle based on hiah milcap. 10. Poor utilization (unit too bi&floo small for job, seasonal use only, etc.). A unit &hat has no other deficiencies other than poor utilization will be moved wilhin the fleet rather than deleted. if possible. Ted nolt~~kal Ure: Bconomicall.Jfc: DEFINITIONS Refers to the amount of time a unit is capable ofoperatfna and rcndcrina service. This life may be nearly infinite iflhe unit receives adequate maintenance and worn out parts are dutifully replaced. Repracots the relative productivity decline ora unit when compercd to a newer uniL Refen to the lenph of time that che avcrqe total vehicle cost is at i1l minimum. The economically optimum replacemeat point is reac:hod When avuap period costs arc at a minimum. (See illustration below). t- CJ) ·-·--.................................... ___ ................................................. -···········-~::::::-;:7; .... ..._. __ .... ~. ., .. - 0 u .... .... -.. ,- .~~ , ....... .. --· .. -- TM: DecHne In resale loUie ~··--··-­-··- Oporellng end malnteNnee costa A~oerege or annual costs to date $20,000.00 $18,000.00 $16,000.00 $14,000.00 " $12,000.00 ~ ~ ., i $10,000.00 a ! $8,000.00 $6,000.00 $4,000.00 $2,000.00 $0.00 Life Cycle Analysis Unit #4 -2007 Ford F-150 XL 4x4 Pickup (PD Speclallnvestiptions) -Actual Depreciated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs 2007 2008 2009 2010 2011 2012 2013 2014 Years of OWnership N ., c • E .1: u " ; $20,000.00 $18,000.00 $16,000.00 $14,000.00 ., $12,000.00 :I ~ 1 ~ $10,000.00 u f i $8,000.00 $6,000.00 $4,000.00 $2,000.00 Ufe Cycle Analysis Unit #23 -2001 Honda Accord LX (PO Investigations) 1 -Actual Depredated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs ~~----------~-------~~-------~ $0.00 ~~------------------------------------------------------- 2001 2007 2008 2009 2010 2011 2012 2013 2014 Years of Ownership $20,000.00 $18,000.00 $16,000.00 $14,000.00 • $12,000.00 :::1 ~ l 1; $10,000.00 l c! $8,000.00 $6,000.00 $4,000.00 $2,000.00 $0.00 I I Ufe Cycle Analysis Unit #77 • 1998 Chevrolet G-1500 Large cargo Van (PD Investigations) ' -Actual Depredated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs \ r I 1998 2007 2008 2009 2010 2011 2012 2013 2014 Years of Ownership ., ::J $12,000.00 $10,000.00 $8,000.00 ~ 1 i $6,000.00 ~ c! $4,000.00 $2,000.00 $0.00 Life Cycle Analysis Unit #100 • 1993 Chevrolet S-10 4x2 Pickup (P & R Maintenance) -Actual Depreciated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs 1993 2007 2008 2009 2010 2011 2012 2013 2014 Years of Own ership $25,000.00 $20,000.00 " $15,000.00 ~ ~ 1 i ~ a. .! $10,000.00 $5,000.00 $0.00 Life Cycle Analysis Unit #302 • 1997 Chevrolet 2500 4x4 Pi ckup With Plow (P & R Mai ntenance) ' -Actual Depredated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs r---.... ~ \ 1997 2007 2008 2009 2010 2011 2012 2013 2014 Years of OWnership $20,000.00 $18,000.00 $16,000.00 $14,000.00 Ill $12,000.00 :I ii > 1 i $10,000.00 e D. c! $8,000.00 $6,000.00 $4,000.00 $2,000.00 $0.00 I I Life Cycle Analysis Unit #315 -1994 Chevrolet 3500 Dump Truck LX (P & R Maintenance) , -Actual Depreciated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs _,.,....,., / ~ 1994 2007 2008 2009 2010 2011 2012 2013 2014 Years of Ownership ., :II $120,000.00 $100,000.00 $80,000.00 ~ 1 .. $60,000.00 .!! ! Q. ! $40,000.00 $20,000.00 $0.00 Life Cycle Analysis Unit #290-1998 Asphalt Pothole Patcher Truck (PW Operations) -Actual Depreciated Value -Actual Operating & Maintenance Costs -Projected Depreciated Value -Projected Operating & Maintenance Costs 1998 2007 2008 2009 2010 2011 2012 2013 2014 Years of Ownership 2013 FLEET REPLACEMENT CONSIDERATION RATING TABLE DepattmentiDivision VehideJEquiprMnt for Replacement ConsideratiOn Purchase Cost Depreciation Value Year Age Rating Miles Miles Rating SeMceType ST Rating Reliability Rating M&R 5 Year Cos ts M&R Rating Cond~KYI Rating PoliceiSpeciallnvesligations FOfd F-150 XL Pdlup (unH #4) $18.58200 $5 ,985.00 2007 6 135.000 13 Police 5 3 $11 ,50000 3 POiice/lnvesbgalions Honda Accord LX (unrt #23} $17,779.00 $1,765.00 2001 12 107,000 10 POlice 1 1 $2.70000 1 Police/Investigations Chevy Express 1500,Large Cargo Vi!Xl (unit #n) $17,799.00 $2.004 .00 1998 15 45,000 4 POlice 1 1 $1 .900.00 1 PubliC WOfks/Operations lntemational4900 wlpolhOie patcher (unil #290) $98.490.00 $7,068.00 1998 15 73,000 7 Maintenance 5 3 $16,100.00 1 Parks & Recreation/ParkS Maintenance Chevrolet S-10 4x2 PICkup (unit #100) $10.062 .00 $320.00 1993 20 95,000 9 Ma1n1eoance 5 3 $2.700.00 1 Parks & Recreation!Pcrts Maintenance Chevrolet 2500. 4x4 pickup w/plow (umt #302) $21 .99200 $1 ,341 .00 1997 16 95.000 9 Maintenance 5 3 $1 1,000.00 3 Parks & Recreation/ParkS Maintenance Chevrolet 3500 w/dump body (unn #315) $17.875.00 $670.00 1994 19 59,000 6 Maintenance 5 3 $5 .600.00 2 Age Rating -One pomt IS g1ven for each year of chronological age, based on !he m-serw:e date Mlles Rating· One point is given tor each 10.000 miles of use tor vehiCles and three poin!S are g1ven tor each 10.000 miles tor motorcycles Mileage is calcula ted out to approximate next year replacement month. Serviee Type lUting· 1 · 3 Ol 5 points are assigned based upon the type of service the vehicle is used for . FOt example, a poUce patrol ~ide. tandem dump truck or a backhoe will be given a '5' rating because the type of service use is considered severe, whereas a '1' rati ng will be assigned to an administrative vehicle. Refilbllity Rating · 1. 3 Of 5 points are asSIQiled based upon the frequency that a vehicle is in for repair A 5 rating would be assigned to a vehicle thai is in tor repair two or more times a month A 1 rating is assigned to a vehicle in for repairs on average of once every three months or less 5-Y&at Mantenance & Repair (II&R) Costs Rdng · 1 to 5 points are assigned based upon the total M&R costs (not i~luding accident damage). A 5 rating IS assigned 1o a vehtdelequipment w~h life M & R oosls equal to or greater than the vehicle'slequipmenrs purch ase poce, while a ·1· rating is given to a vehicle/equipment wJ!h life M&R costs equal to 20% or less of its original purchase cost Condition Rlfini · Category takes into conSideration: body condition . rust. interior condition, accident history, anticipated repars , etc A scale of 1 to 5 points is used with 5 be1ng poor condnion Ratlnp Total-Tolal points of all ratings 1o determine condition status tor replacement consideration Replacement Condition Levefs · Based upon ratings total . the following condnion levels are assigned : Condition 1 (excellent) • under 18 points ; Condition H (good) . 18 to 22 points: Condition IH (qualifies fOf replacement) • 23 to 27 points: Condition IV (needs immediate consideration for replacement) • 28 points aoc1 above. 3 3 3 4 4 4 5 Revised : 317113 Ra ti ngs Total Replacement Condition Leve l 33 Condition IV 28 Condrtion IV 25 Cooditoo IV 35 Condition IV 42 Cood'nion IV 40 Condition IV 40 Condition IV 0 Attachment 3 2013 FLEET REPLACEMENT BUDGET-REQUESTS, NEEDS & APPROVED WORKSHEET Re vi sed :818112 DEPARTMENT REQUESTS COST PRIORITY NEEDS COST APPROVED COST MUNICIPAL COURT None $0.00 TOTAL $0.00 $0.00 $0.00 AOMINISTRA TION • IT TOTAl $0.00 $0.00 ~0 COMMUNITY DEVELOPMENT TOTAL w.oo $0.00 $0.00 POOCE DEPT -special Investigations 2-Speciaf Investigations vehiCles (2,4) $45.000.00 1 i2-Speciallnvestigations vehicles (2.4) $47 .000.00 POLICE DEPT. • Administration 1-4x4 Mid-Size SUV (20) (lo replace unit23) $26,000.00 2 1-4x4 Mid-Size SUV (20) (lo replace unit 23) $26.000.00 POUCE DEPT • Investigations 1-Sedan (23) (lo be replaced by okl ullt 20) $0.00 3 1-Sedan (23) (to be replaced by okj unit 20) $000 POLICE DEPT.-Investigations 11 -Large cargo van (71) $16.000.00 4 11 -Large cargo van (n ) $21 ,500 .00 POLICE DEPT • Investigations 11 -Hybrid Sedan (18) $35,000.00 5 POUCE DEPT· Traffic 1-PPV sedan (28) $35,000.00 6 POUCE DEPT -Patrol 1-PPV Sedan (40) $35.000.00 7 POLICE DEPT-Investigations 1-Hybrid sedan (101) $35.000.00 8 POUCE DEPT-Investigations 1·Hybrid sedan (3) $35.00000 9 POLICE DEPT-Investigalions 1-Hybrid sedan ( 14) $35.000 .00 10 POLICE DEPT-Administration 1-Hybrid Sedan (un~ 43) $35.000.00 11 POLICE DEPT -Patrol 1-PPV Mcnee! Sedan (55) $40.000 .00 12 POLICE DEPT · Patrol 1-PPV Ma'ked Sedan (54) $40,000.00 13 POLICE DEPT· Traffic 1-Police Patrol MotOfC)'de (7} $35 .000 .00 14 POLICE DEPT -Patrol 1-PPV Man\ed Sedan (51) $40,000.00 15 POLICE DEPT -Patrol 1-PPV Unmarked(?) Sedan (89) $35,000 .00 16 POLICE DEPT -Investigations 1-Hybrid Sedan (21) $35.000.00 17 POLICE DEPT -Investigations 1-Hybrid sedan (200) $35.000.00 18 TOTAl 5592,000.00 $94,500.00 .. lQ.OO PUBLIC ~, '"' 11 -Palen trucK 4x2 wfequtpmenl {l9U) ~:rou.uuu.uu 1 11 • l"'atcn li\JCI( 4X2 WieQUipmenl (l9U} ~WU.:'JW.W PUBLIC WORKS.Operalions 1-Mechanical Sweeper (264) $20,000.00 2 1-Mechanical Sweeper (264) $200.500.00 PUBLIC WORKs-Operations 1-Jet-Vac (256) $250.000.00 3 PUBLIC WORKS.Operations 1 • Single Axle Dump w/equipment (249) $200.000.00 4 PUBLIC WORKS-Operations 1 · SmaH 4x2 Pickup (212) $20,000.00 5 PUBLIC WORKS-Operations 1-Front End 6218 Loader (272) $140.000.00 6 PUBLIC WORKS.Operalions 1-410H Bad\hoe (271) $125.000.00 7 PUBLIC WORKS-Operations 1-120H Grader (281) $140.000.00 8 PUBLIC WORKS-OperatiOns 1 -1-ton Trucl\ (201) $30,000.00 9 PUBLIC WORKS-Operations 1-Large, 4X4 Pickup (208) $25 ,000.00 10 PUBLIC WORKS-Operations 1 -Skid Steer Loader (new addition) $75,000 .00 11 PUBLIC WORKS-Operations PUBLIC WORKS.Clperations TOll( 51,225,000.00 $401,000.00 $0.00 PARKS & REC. -Pm Maintenance 1-Large, HO. 4x4 Pickup w/ploN (302) $30.000.00 1 1-Large, HO, 4x4 Pickup w/ploN (302) $30.000.00 PARKS & REC. • Parils Maintenance 1-Small. 4x4 Pickup (100) $20.000.00 2 1-Small, 4x4 Pi:kup (100) $20,000.00 PARKS & REC -Parl\s Mainlenance 1-Large,1-ton. Cab & Chassis w/Oump Body-(315) $36,500.00 3 1-Large,1-ton. HO 4x4 Pickup wtDump Body· (315) $36,500.00 Attachment 4 PARKS & REC. -Parlts Maintenance 1-New Addition Plow Package lor Unit 308 $5,000.00 4 1-New Addition Plow Package tor Unit308 $5.000 .00 PARKS & REC. -Parks Mainlenance 1 -Sma8 4x4 Pickup (367) $23,000.00 5 PARKS & REC. -Forestry 1 -1-lon Pickup wmt gate{?} & dump body (332) $50,000.00 6 PARKS & REC . • Pallcs Malnlenance 1-Small4x2 Pickup (202) $20.000.00 7 PARKS & REC. • Paltts Maintenance 1 -2 wd, 5300 Tractor wlloader, options (266) $80,000.00 8 PARKS & REC. • Pants Maintenance 1-2 wd, 5300 Tractor w~. options (370) $80.000.00 9 PARKS & REC. -Parks Mainlenance 1 -2 wd . 5300 Tractor w.1oadef. opiQ\s (371) $80,000.00 10 PARKS & REC . -Senior Center 1-15 Passenger Van rot Senior C~iZen leYel Use (381) $65,000.00 11 PARKS & REC. -Senior Center 1-15 Passenger Van rot Senior Citizen LeYel Use (382) $65,000.00 12 PARKS & REC. -Parlts Maintenance 1 -Large,4x2 Pickup w/Lalont bed tor mowers (32) $40.000.00 13 PARKS & REC • Pw Maintenece 1-Large 4X2 Pidlup(318) $25,000.00 14 J(JTAL $618,500.~ $91~~ ~ lVI~ U,4JO,UV.W J:HJ _f_._U1J~·UU ~uv ~ ~ ~ ~ .... _ ~ City of • .. ~WheatP.4._dge ~OMMUNJlY DEVELOPMENT Memorandum TO: Mayor and City Council THROUGH: Patrick Goff, City Manager Kenneth Johnstone, Community Development Director FROM: Sally Payne, Senior Planner DATE: March 6, 20 13 SUBJECT: Every Trip Counts Program (March 18 1h City Council Study Session) The Every Trip Counts Program encourages people to eliminate two single occupancy vehicle trips per week during the summer ozone months which are approximately April through September here in the Denver front-range area. The Every Trip Counts Program is part of the Regional Air Quality Council's (RAQC) OzoneAware Program which is designed to help people become more aware of ozone issues in the Denver metro area. Every Trip Counts utilizes a combination of outreach and education strategies to encourage people to reduce summer driving in favor of alternatives such as public transportation, walking or biking. Strategies to encourage program participation include individual mailings, workplace marketing, mass media, and an informational website. Participants in the Every Trip Counts Program choose an incentive as a reward for their participation in the pro!,JTam; incentives include bus passes or gift certificates to local bicycle shops . In 2012, three random prize drawings were held during the summer months; prizes included an iPad, Nook Color and RTD Ride Coupons. At the conclusion ofthe program, all participants are entered in a drawing tor prizes that include gift certificates to local restaurants and attractions. In 201 0 and 2011, the Regional Air Quality Council partnered with the City of Arvada for the Every Trip Counts Program. In an effort to expand the program along Wadsworth Blvd . for the 2012/2013 program, the RAQC partnered with the Cities of Wheat Ridge and Lakewood in addition to Arvada. The RAQC is again asking the City of Wheat Ridge to participate in the 2014/2015 program. The Every Trip Counts Program is funded through the federal Congestion Mitigation/ Air Quality (CMAQ) program through DRCOG's regional Transportation Improvement Plan process. Every two years the RAQC must apply for funding for Every Trip Counts through DRCOG. Applications for the 2014/2015 program are due in May. The application for the funding requires a local match. This match can be in the form of staff time devoted to the program through member communities. The RAQC is asking that the City be a partner for the 2014/2015 program and provide a local match of City staff time devoted to the project. This staff time would not be significant and would consist of assisting with program outreach in the community, coordinating areas for RAQC targeted mailings and providing space in the City newsletter and on Channel X to ad\'ertise the program. In addition. the RAQC asks communities to pro\'ide a letter of support ftw their application to DR COG. The pat1icipation in the E\·ery Trip Counts Program has continued to grow every year. In 2012. there was a 5 7° o increase in participation from 20 II. The RAQC would I ike to increase participation and expand the program to other corridors in member communities. In 2013 . in addition to Wadsworth Bh·d .. Kipling St.. JX 111 Ave. and 44111 Ave. will be included in the targeted area for the program . These corridors ha\c good transit service through the City providing more opportunities for people to consider lca,·ing their cars at home. In 2012. there \vere 1.2(17 participants in the E\cry Trip Counts Program. Of that total 25 ° o were tf·om An·ada. 41° o were ti·om Lakewood. and (1°·o were tl·om Wheat Ridge. Gi\'en the City's population in comparison to An ada and Lakewood. the participation ti·om Wheat Ridge ,,·as a respectable number. The RAQC estimates that the reduction in 'chicle miles tran:led in 20 12 was R(19.1 (12. The estimated reduction in volatile organic compounds, a precursor to ozone. ''as 2.106 pounds. And the estimated reduction in nitrogen oxides. also an ozone precursor. ,,·as I. 914 pounds. Staff is requesting guidance ti·om City Council to participate in the EH~ry Trip Counts application for the 2014 ·20 IS program . As was mentioned. staff time would not he signi ti c ant and participation in the program could prm ide good exposure l(lr the City f()r otiH:r projects such as COOTs· Planning and Emironmental Linkages study t<.1r \Vadsworth Blvd . and for the RTD Gold Line project as it mo\'es t(m\'ard. If Council would like a presentation on the E\·cry T1ip Counts Program. staff from the RAQC would he happy to attend a City Couneilmecting.