MESA CITY CENTER Economic & Implementation Opportunity Assessment March 20, 2015
I.
OPPORTUNITY & CONTEXT ! ! !
Introduction Economic Opportunity Context
II. IMPLICATIONS & NEXT STEPS ! ! ! ! !
Framework Public Space Program Making it Real Downtown Implications Next Steps
INTRODUCTION | HR&A Advisors is a real estate and economic development consultancy with expertise in the economics of place making. Planning
Design & Construction
Phased Implementation
Complete
MSP Green Line
Seattle Waterfront
Waterfront Toronto
Cincy Fountain Square
Fort Mason Center
MOA Peavey Plaza
NYC The High Line
Boston RK G’way
Oklahoma City
Memphis Shelby Farms
Brooklyn Bridge Park
NYC Battery Park
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INTRODUCTION | Parks that support place making require an upfront alignment of goals, design, and implementation structure.
VISION Desired constituencies
Responsibilities; authority
DESIGN & PROGRAMMING
FUNDING & GOVERNANCE
Resource requirements; revenue potential HR&A Advisors, Inc.
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INTRODUCTION | Stakeholders agree on the broad strokes: Great downtowns support strong cities. Great parks support great downtowns.
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OPPORTUNITY | Stakeholders also agree on objectives: denser market rate housing, increased visitation, and a stronger retail core.
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ECONOMIC OPPORTUNITY | A new “city center” can help realize Mesa goals and provide return on public investment.
The High Line, Discovery Green, NYC Houston ! Investment: $134M ! Investment: $70M public ($143M total) public ($125m total) ! Result: $1B net ! Result: ~$1B new impact development HR&A Advisors, Inc.
Fountain Square, Cincinnati ! Investment: $5m public ($50m total) ! Result: $125M+ new development 7
Yes!...... but
CONTEXT | Yes! Parks can catalyze development.
Central Park, Construction
CONTEXT | Yes! Parks can catalyze development.
Central Park, Present Day HR&A Advisors, Inc.
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CONTEXT | But – local stakeholders agree that public space is just one of a series of interventions required to realize the downtown vision.
Programming new frontiers
Commercial development
VIRTUOUS CYCLE OF URBAN DEVELOPMENT
Retail amenities HR&A Advisors, Inc.
Public realm & infrastructure
Residential development 11
CONTEXT | But -- public space is just one of a series of interventions required to realize the downtown vision.
Waterfront Seattle HR&A Advisors, Inc.
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CONTEXT | Yes! Strong metro and citywide population growth can support downtown transformation.
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CONTEXT | But – local stakeholders are well aware that downtown Mesa lags other regional centers. Downtown Residents per Square Mile 7,510
8,000 7,000 6,000 5,000
4,550
4,710
Scottsdale
Phoenix
5,030
5,260
Chandler
Gilbert
4,000 3,000
2,580
2,000 1,000 0 Mesa
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Tempe
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CONTEXT | Moreover - success in Mesa will require distinguishing Mesa’s image from that of the region. Metro Population Growth, 20-34 yr. olds, 2007 - 2013 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Phoenix HR&A Advisors, Inc.
Austin
Raleigh
Charlotte
Denver
San Antonio Fort Worth 15
CONTEXT | Yes! Downtown Mesa trends are favorable, with strong organic growth and significant public support for major initiatives
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Image credits (Clockwise from top left): Mesa Arts Center, HR&A, Southwest Maker Fest, AZ Central
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CONTEXT | But – investments are disconnected, and phasing may not have been optimal; an overarching framework for urban development is essential.
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Image credit: Colwell Shelor team
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CONTEXT | Yes! Extraordinary public land control in a compact CBD creates a unique redevelopment opportunity.
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Image credit: City of Mesa Central Main Street Area Plan
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CONTEXT | But – the absence of market rate housing supply means that demand is not demonstrated. Current Monthly Rent, 1-Bedroom Apartments 1,200
$1,109
1,000 800 600
$561
$622
$671
$779
$892
400 200 0 Mesa
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Chandler
Gilbert
Tempe
Phoenix
Scottsdale
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CONTEXT | Yes! Mesa has “good bones.”
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Image credits: Meas Museum; Nick Florio via Mesa Preservation Foundation
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CONTEXT | But – City facilities can be challenging neighbors to active parks.
Dressed for success in the fashion of the day A daytime population of moderate means Ceremonial streets Orphaned public space
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CONTEXT | Therefore – great operations (including programming) will be as important as great design.
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I.
OPPORTUNITY & CONTEXT ! ! !
Introduction Economic Opportunity Context
II. IMPLICATIONS & NEXT STEPS ! ! ! ! !
Framework Public Space Program Making it Real Downtown Implications Next Steps
FRAMEWORK| Mesa’s vision and context inform key moves in three categories.
1. Public Space Program
Vision & Context 3. Other Downtown Actions HR&A Advisors, Inc.
2. Public Space Implementation 24
PUBLIC SPACE| The Colwell Shelor proposal for City Center supports 3 related but distinct objectives for the public space itself.
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Image credits: Colweel Shelor team
PUBLIC SPACE 1| The new public space must support downtown Mesa’s distinct new brand within the metro region: the “Brooklyn” of metro Phoenix.
Kimbell Museum / Fort Worth Cultural District HR&A Advisors, Inc. Image Credit: Kimbell Art Museum
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PUBLIC SPACE 2| The space must become the central gathering space for downtown residents and employees, adjacent neighborhoods, and visitors.
Klyde Warren Park, Dallas HR&A Advisors, Inc. Image Credit: KlydeWarren Park
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PUBLIC appeal and drives value. appeal and PUBLICSPACE| SPACE Programming 3| The space enhances will host programming that enhances drives value: a 21st century park, not a 19th century one.
Lawn on D - Boston HR&A Advisors, Inc.
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MAKING IT REAL| A thoughtfully designed, well-maintained, activated, multiuse “district� can build brand - ensuring value creation over time.
Waterfront Toronto HR&A Advisors, Inc. Image Credit: KlydeWarren Park
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MAKING IT REAL| A “civic district� anchored by the Civic Center could
distinguish Mesa from regional alternatives and national competitors.
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MAKING IT REAL| Phasing must lead with nodes of strength.
Main & Center HR&A Advisors, Inc.
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MAKING IT REAL| Leave well enough alone.
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MAKING IT REAL| Ensure that the first phase is right-sized for the objectives established.
Romare Beardon Park, Charlotte HR&A Advisors, Inc. Image Credit: KlydeWarren Park
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MAKING IT REAL| Signature public spaces are costly to build and maintain.
Millions
Capital and Operating Cost Summary $600 $500 $400 $300 $200 $100 $0 Millennium Yerba Bueno Park Gardens Capital
High Line
Discovery Green
Hance Park
Centennial Olympic Park
Operating (20 yr estimate) Discount Rate = 5%
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MAKING IT REAL| Public capital funding will be tied to probable ROI. Additional sources will be needed for O&M. Public versus Private Funding 100% 90%
Capital
80%
Private
70%
Public
60%
O&M
50%
Private Public
40% 30% 20% 10% 0%
Brooklyn Millennium Discovery HighHigh LineLine Brooklyn Bridge Park Millennium ParkDiscovery GreenFountainFountain Square Bridge Park Park Square Green
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MAKING IT REAL| Meeting the O&M funding need (~$250k/acre) is likely to require layered funding approach. General Fund/Bond
Special Levy
BID Charge /Bond
POPS
Real Estate Proceeds
Food & Beverage
Events & Promotions
Parking Fees/Bond
Philanthropy
Corporate Sponsorship
501(c)(3)
Public HR&A Advisors, Inc.
Value Capture
Earned Income
Private Charlotte Rail Trail | 36
MAKING IT REAL| In Mesa, funding constraints can support development activity that will strengthen the park and advance the vision.
Brooklyn Bridge Park HR&A Advisors, Inc. Image Credit: KlydeWarren Park
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MAKING IT REAL| At Brooklyn Bridge Park, residential and commercial development on park-owned land to provide ongoing revenue for operations. One Brooklyn Bridge Park ~$2 million/year towards operations
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Pierhouse (under construction) ~$3 million/year towards operations
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MAKING IT REAL| Value capture can support public space / downtown activation while providing a stable long-term funding stream.
Tax Increment Financing
Special Assessment District
Sales Tax Allocation
On-site real estate development
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MAKING IT REAL| The Brooklyn Bridge Park story is relevant to Mesa.
Tax Increment Financing
Special Assessment District
Sales Tax Allocation
On-site real estate development
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MAKING IT REAL| After public and philanthropy, earned income is a viable secondary funding source (30%-50% max). Earned income supports activation.
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MAKING IT REAL| Project implementation will require a range of capacities over time. Not all of these are resident in the Parks Department. Construction & Development “Hard”
Capital Maintenance Routine O&M Security Management Earned Income Program Assemblage/disposition
“Soft”
Fundraising & Advocacy Programming
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Charlotte Rail Trail | 42
DOWNTOWN IMPLICATIONS| Again, public space is just one of a series of interventions required to realize the downtown vision.
Programming new frontiers
Commercial development
VIRTUOUS CYCLE OF URBAN DEVELOPMENT
Retail amenities HR&A Advisors, Inc.
Public realm & infrastructure
Residential development 43
DOWNTOWN IMPLICATIONS| A “housing first” strategy supports all subsequent steps in the “cycle.”
San Antonio Strategic Framework HR&A Advisors, Inc.
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DOWNTOWN IMPLICATIONS| A “housing first” strategy supports all subsequent steps in the “cycle.”
San Antonio Strategic Framework HR&A Advisors, Inc.
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DOWNTOWN IMPLICATIONS| New and enhanced retail/restaurant opportunities support a strong sense of place.
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Image credit: Colwell Shelor team
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DOWNTOWN IMPLICATIONS| New and enhanced retail/restaurant opportunities support a strong sense of place.
Downtown Greensboro Retail HR&A Advisors, Inc.
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DOWNTOWN IMPLICATIONS| Balance preservation and modernism for an environment that is appealing and authentic to Mesa.
The Menil Collection, Houston HR&A Advisors, Inc.
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DOWNTOWN IMPLICATIONS| Phasing should focus on key nodes, with a broadening geographic focus over time.
Investment Predictable housing incentives Management Planning & regulation
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DOWNTOWN IMPLICATIONS| A singular vision for can maximize benefits to all within the City Center and beyond.
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DOWNTOWN IMPLICATIONS| You can put lipstick on a pig!
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NEXT STEPS| Near-term actions can support the success of Mesa City Center.
Assemble public and private stakeholders to advise City Center throughout design, development, and implementation Develop a comprehensive downtown vision that can be sold to public & private partners over time Begin programming for activation
Begin to secure funds & capacities for implementation HR&A Advisors, Inc.
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MESA CITY CENTER Economic & Implementation Opportunity Assessment March 20, 2015
Multifamily Market: Mesa’s existing apartment stock is significantly less expensive than in other regional downtowns.
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DRAFT
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ECONOMIC OPPORTUNITY | Great downtowns support strong cities. Population Growth in Central Business Districts, 1990-2010 119% 94% 75% 74%
66% 65%
59%
52%
44% 43% 41% 39% 35%
30% 2%
CBD: definition is 1 mile radius of center point of CBD HR&A Advisors, Inc.
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Outcome: Shelby Farms Park has an established brand and community of advocates poised to implement the first phase of the Master Plan.
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Charlotte Rail Trail | 56
Activation
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DOWNTOWN IMPLICATIONS| Strengthen and enhance the street grid throughout the square mile.
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4.  Fully'ac*vate'downtown’s' unique,'historic(building(stock'
Context
Destination for culture & entertainment
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Unique building stock at core of its retail culture
Growing residential presence
Context Poor building conditions are greatest barrier to reducing vacancies Rehabilita)on,of,building,with,significant,capital,needs, Net(Opera5ng(Income(
'$150,000'' '$100,000'' '$50,000'' '$=''''
1'
2'
3'
4'
5'
6'
7'
8'
9'
10'
11'
12'
13'
14'
15'
16'
17'
18'
19'
20'
'$(50,000)' '$(100,000)' '$(150,000)'
Years(
Cash Flow Key Assumptions:
$150,000 down payment
Loan repayment
9,000 SF building - Ground floor retail - 4 2BR apartments $750,000 renovation
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- Retail :$70/SF - Apartments: $90/SF
2011
Recommendations 1. Strengthen building & fire codes; increase fines 2. Expand programs targeted to new businesses – Increase DGI facade grant to cover all fit-out upgrades, to a cap of $20,000
2013
– Provide business planning support 3. Establish incentives for building renovation projects – Facilitate access to capital to reduce effective project costs up to 15% – Provide one-stop technical support
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Benefit Scenario:
City funds 20-building program for owner rehabilitation and tenant fit-out over 5 years
Cost:
Owner $100,000
Tenant Fit-Out + $20,000 =
Annual benefits: Property Tax Sales Tax $3,000 + $17,000 Break-even: 15 years
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=
1 building 20 buildings $120,000 $2.4 million 1 building 20 buildings $20,000 $400,000
MAKING IT REAL| Public space must be integrated into a connected neighborhood fabric and supported by active park edges.
HR&A Advisors, Inc. Image credit: Colwell Shelor team
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MAKING IT REAL| Public space must be integrated into a connected neighborhood fabric and supported by active park edges.
HR&A Advisors, Inc. Image credit: Colwell Shelor team
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