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HomeMy WebLinkAbout10/21/2014 08 Cascade Mill Site Economic and Fiscal Impact Study Summary ReportBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 8. For Meeting of: October 21, 2014 IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII ITEM TITLE: Summary Report from Jones Lang LaSalle related to Economic and Fiscal Impact Study at the Cascade Mill Site SUBMITTED BY: Tony O'Rourke, City Manager Joan Davenport, Director of Community Development SUMMARY EXPLANATION: The City of Yakima contracted with Jones Lang LaSalle (JLL) to produce an Economic and Fiscal Impact Study for the Cascade Mill site related to future land use types and occupancies. The report includes analysis of likely development scenarios with econometric models to determine the best and highest land uses for the site. Additional work with JLL may include assistance in connecting with possible future tenants. A preliminary draft of the study will be presented by Reggie Ross to the City Council and stakeholders for comment. Resolution: Other (Specify): Contract: Contract Term: Start Date: End Date: Amount: Ordinance: Item Budgeted: Funding Source/Fiscal Impact: Strategic Priority: Insurance Required? No Mail to: Phone: APPROVED FOR SUBMITTAL: Economic Development City Manager RECOMMENDATION: Review draft report and presentation. Provide direction and comments. ATTACHMENTS: Description Powerpoint Presentation of Fiscal Analysis report for Cascade Mill Site Upload Date 10/13/2014 Type Backup IMaterliall Cascade Mills Site Project Update October 21, 2014 KEVIN C. GILLEN, Ph.D. gillenk@upenn.edu Disclaimers and Acknowledgments: The Fels Institute of Government at the University of Pennsylvania provides this report free of charge to the public. The report is produced by Fels Senior Research Consultant Kevin Gillen, in association with the University of Pennsylvania Institute for Urban Research. The author thanks Azavea.com, the Philadelphia Office of Property Assessment, the Federal Housing Finance Agency, Case-Shiller MacroMarkets LLC, RealtyTrac, Zillow.com, Trulia.com and the NAHB for making their data publicly available. © 2014, Fels Institute of Government, All Rights Reserved. © 2014 Fels Institute at U. Penn.1 gillenk@upenn.edu 4�1 K • Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Location of Cascade Mill Parcel(s): MEM -T, •• r 11 a r -r T Simms 111111111111111 1111111111111111111 1111■ ■ "`1n11111. ..1 1111mI11111■ •111111 111:.1111111: IMIl1111 1111® E /, T f I� IlfllIII gfLH mai I M =g 11111111 111111111 111111111 I 1 1101111 1111111111 11111 111 UHill ill UulA1111111 I<11I1 111111 111 num■IRS © 2014 Fels Institute at U. Penn.1 gillenk@upenn.edu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Location of Cascade Mill Parcel(s): © 2014 Fels Institute at U. Penn.1 gillenk@upenn.edu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Residential Parcels Color -Coded by Assessed Value Yakima Single -Family Residential Parcels Color -Coded by $Assessed Value per SqFt 'es •• 4111 • - ' r7:71 3 • $Assd Value/SqFt <$65 [MI $65-77 $77-90 $90-103 >$103 t_z.LztLtLz AILJLLLULG 12L U.1 tILIL. Lttei utv,,upei ti t.euu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Parcels near Mill Site: Yakima Single -Family Residential Parcels Color -Coded by $Assessed Value per SqFt 41W- $Assd Value/SqFt <$65 $65-77 $77-90 $90-103 >$103 jFels Institute of Government UNIVERSITY 0 PENNSYLVANIA Parcels Within 1/4 Mile of Mill Site Yakima Parcels Within 1/4 Mile of Cascade Mill Site • .1po! _• .,'.I Fels Institute of Government UNIVERSITY./ PENNSYLVANIA Parcels with Current Uses Similar to Proposed Uses -�\ IR '�L111 N -Yakima Parcels With Current Uses Similar to Pro • osed Use of Mill Site -Use Type ▪ Amusement Apartments/Condos ▪ Education/Training Light Manufacturing Office/Public Assembly ® Park Retail Apparel/General r \� C 1 • �i��G��llll 1�_I�II!'ti���`��"��� i�C� 1��,�``������N��•�allh ��Y1�11.�111�II�I� �IIIII�. _ IIIIIIIIhiI.-.•.::.;����:���1 �����iaunuun�.0 �1 � ilk �. fel IIIIIIIIIIIIII"'III�IIIIIl11111187 ` �i►uuu= - - IT `' rl II � IIIIIuIIIIIIIIumE Ilil`IIIIIII iiiiiiii� l { n. rinuuilll Irimm Y uwu lila `�1 7 111 �I iii IIH11l.IIIIIIIILI'y IIIIIIIu�IIIIIIIIIIII!I , IIll� ' 111111"111 111111111 loll+lhllllllllllllll � ��INIIII 111111111111111 � 611�l1" Ilnn■111 11111111 � � CIG1111�� .—IIIIIIIII ■IIIIIIIIIII ��Y� ��. �11� 11111111111 •- R � `I ..Y!■� „ ilt .til 1 ■II�J■1� r' ��"�I 1■11111111 � � Iii � �` 11/11111 � �I ■ '�1 I I I I ba I I I �IIIIYI� 1.71lin l47 2014 rets lnsnrure ur u. reran. 1 yuwenicLupenn.euu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Capitalization of Different Uses This table shows how proximity to different land use types in Yakima is currently capitalized into house values. Amusement uses have the largest negative effect, while office/public assembly is associated with the largest positive effect. The last column shows the annual gain (loss) in property tax revenues as a result of the capitalization. Use Type Pct Value $ Value Stock $ Annual Revenue Amusement -23.3% ($38,635) 189 ($22,773) Light Manufacturing -5.5% ($9,172) 315 ($9,011) Apartments/Condos -2.5% ($4,089) 11,462 ($146,166) Education/Training* 1.1% $1,799 6,981 $39,172 Retail Apparel/General 3.4% $5,609 2,394 $41,878 Park 6.2% $10,311 2,269 $72,964 Office/Public Assembly 6.3% $10,409 5,848 $189,855 *not statistically significant © 2014 Fels Institute at U. Penn. . illenk@u.enn.edu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Net Effect of Different Development Scenarios This table shows how proximity to different land use types in Yakima is currently capitalized into house values. Amusement uses have the largest negative effect, while office/public assembly is associated with the largest positive effect. The last column shows the annual gain (loss) in property tax revenues as a result of the capitalization. Use Type Pct Value $ Value Stock $ Annual Revenue Amusement -23.3% ($38,635) 189 ($22,773) Light Manufacturing -5.5% ($9,172) 315 ($9,011) Apartments/Condos -2.5% ($4,089) 11,462 ($146,166) Education/Training* 1.1% $1,799 6,981 $39,172 Retail Apparel/General 3.4% $5,609 2,394 $41,878 Park 6.2% $10,311 2,269 $72,964 Office/Public Assembly 6.3% $10,409 5,848 $189,855 *not statistically significant © 2014 Fels Institute at U. Penn. . illenk@u.enn.edu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Net Effect of Different Development Scenarios This table shows the projected annual gain in property tax revenues as a result of redeveloping the mill site to alternative uses. The gain is a combination of removing the loss from being near a blighted property, plus the net gain (loss) of being near the new use. Scenario Outcomes New Use of Mill Site $ Annual Net Revenue Change Amusement -$29,787 Light Manufacturing $45,313 Apartments/Condos $57,968 Education/Training $73,132 Retail Apparel/General $82,839 Park $94,649 Office/Public Assembly $95,059 © 2014 Fels Institute at U. Penn. . illenk@u.enn.edu Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA Net Effect of Different Development Scenarios $ Annual Revenue Change $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $0 -$20,000 -$40,000 $Annual Revenue Change by New Use Park t9 G .ce/Public Assem 5,059 ail Apparel/General, • ucation/Training, $73,132 artments/Condos, $57,968 Light Manufacturing, $45,313 2 3 0 1 4 5 6 7 Amusement, -$29,787 © 2014 Fels Institute at U. Penn. • illenk@u •enn.edu New Use ljtil Fels Institute of Government UNIVERSITY 0 PENNSYLVANIA JONES LANG LASALLE Fels Institute of Government UNIVERSITY o/ PENNSYLVANIA Economic and Fiscal Impact Study for Yakima, WA Reginald Ross, MBA Director of Econometrics, Jones Lang LaSalle Kevin C. Gillen, Ph.D. Senior Research Consultant, University of Pennsylvania Introduction and Overview Typical Method for Economic Impact Studies Careful Empirical Methods Interviews with Local Stakeholders • Use geospatial drivers and probability analysis compared against similar analyses from other regions to determine the range of likely industries with highest probability of industry attraction • Conduct interviews with local stakeholders that will both inform and are informed, by our empirical analysis. We promise to give a fair hearing to ALL ideas, from community members of goodwill, making objective comparisons between all of them based on agreed upon and transparent standards. Overview Quantitative Process Overview 1. Examine the proposed site(s) for likely development possibilities given the new highway being considered. - Use a series of geospatial models designed to show likely new development types given the increased levels of traffic available to the site. - Models based on historical data and typical development patterns for sites with similar demographic and traffic profiles. - Reconcile our theoretical data with local knowledge of, and expectation for, the site given its history and place in the community. 2. For each of the modeled likely development types and occupancies, we would create generic real estate financial models. - 5 to 10 year RE models for each concept based on both lease and purchase concepts scenarios. - Create aggressive and conservative scenarios for modeled industry types to estimate likely jobs creation and growth based on accepted industry forecasts and occupancy trends 3. Lastly, an econometric and implied new tax revenue analysis would be applied to each of the above models financial models. - Latest Federally based econometric multipliers and/or accepted forecasts of likely impact, by industry, along with modeled local tax structure. The above steps should allow us to imagine a high and low range of likely future tax income streams, jobs, and economic activity assuming new infrastructure and traffic estimates. Overview Qualitative Process Overview 1. Sit with local officials and administration - Get a clear sense for priorities of local government - Develop series of measures by which ideas and proposals can be judged One time and ongoing jobs One time and ongoing tax income Direct and induced economic activity Rate of return on taxpayer dollar Quality of life Community need (housing stock, commercial/retail/industrial) space capacity, etc Others 2. Create time to listen to the thoughts and expectations of ALL interested stakeholders in the community - Set up as many calls, videoconferences, Skype chats, and/or web meetings as is required to get a complete sense of the thoughts and sentiments of the Yakima community. - Maintain open lines of communication with stakeholders for the duration of the assignment until delivery of completed product. 3. Keep a clear focus on the most practical ideas with the highest possibility of coming to fruition in the near term The above steps should allow us to us to create recommendationsthat effectively address all of the needs, and a good deal of wants in the community for this site. Representative Clients in the Northeast Our clients tend to include: • Private Sector Firms • Municipal & State Government Entities • Quasi Government • Higher Ed oda .40 >0 D'C IVESI'RUAI Development Company Building Strung for !;Karn Cityof�rg-1O EDISON �•—Philadelphia JTALLEGE We are excited about the opportunityto work with the City of Yakima on this Assignment Team Backgrounds Reginald Ross -Econometrics Director Mr. Ross leads ILL's econometric modeling and forecasting effort for North America. He is also a 2013 winner of the firm's DaVinci Award for Innovation for his economic modeling work. Experience Developed econometric underwriting model for NewJersey Economic Development Authority's investment arm to fulfill ongoing statutory requirement of proving jobs and tax benefits for taxpayer funded developments. To date, the model has been used to underwrite over $1 billion of state loan packages. Developed and maintain a nationwide series of forecasting models, including over 30 individual regression models to project rent pricing in major US markets. Collaborated with UC Berkeley economist, Dr. Ken Rosen developing an economic triggers model for Related Companies' Westside Rail yards purchase option restructuring (largest RE transaction in NY history). Developed a multiple linear regression model for projecting rent pricing over a two year period. Collaborated with economists at Wharton Business Schoo! to refine and recast mode! in "econometrically defensible" format for anticipated peer reviewed publication. Collaborated with Port Authority of NY/Nl on economic impact analysis for the World Trade Center. Worked with the Real Estate derivatives group of the International Securities Exchange on structuring and pricing models for a proposed RE derivatives platform Currently, working on second model with several leading economists at Wharton using hedonic modeling techniques to accurately project rents in areas where standard rental data does not exist or is inaccurate. Structuring transaction for Charter school in Harlem. Currently working with City of Philadelphia on modeling adjustments to existing tax abatement policy Education and Affiliations Mr. Ross received his MBA from the Wharton School of Business at the University of Pennsylvania. He received his BA from Morehouse College in Economics with a Mathematics concentration. Team Backgrounds Kevin C. Gillen Ph.D. - Senior, Research Consultant , University of Pennsylvania Dr. Gillen is a Senior Research consultant at the University of Pennsylvania and is a respected and well published economist in Pennsylvania Experience With a background in urban economics and real estate finance, Dr. Gillen's research and consulting practice is concentrated in applied work in the analysis of real estate developments and operation of real estate markets, including their fiscal, economic and financial implications. This work is deployed in advising both public and private sector entities on the costs/benefits of public policy options, as well as the design and implementation of local economic development strategies. Dr. Gillen's past clients have included the Pew Charitable Trusts, the Delaware Valley Regional Planning Commission, the Philadelphia Tax Reform Commission, First American CoreLogic, the Philadelphia Redevelopment Authority, the Schuylkill River Development Corporation, the Philadelphia Housing Authority, the William Penn Foundation, and the U.S. Geological Survey, to name a few. Education and Affiliations Dr. Gillen received his Ph.D. in Applied Economics in 2005 from the Wharton School of the University of Pennsylvania, and received both the U.S. Department of Housing and Urban Development Dissertation Award and Lincoln Land Institute Dissertation Fellowship. Dr. Gillen also serves as a board member of the Building Industry Association of Philadelphia, the Pennsylvania Builders' Association and the Greater Philadelphia Association of Realtors. Prior to attending Wharton, Dr. Gillen worked for the Federal Reserve Board of Governors and HUD's Federal Housing Finance Agency (FHFA).