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.
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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\:
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~ 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
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..,.•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.