sample Development/Financial Feasibility Projects
riverdale shopping center
In response to the City’s desire to revitalize the Mercury Boulevard Corridor, and to address persistent high vacancies, the ownership of Riverdale Plaza retained RKG Associates to prepare a highest & best use analysis. The subject property is a 60-acre commercial property located near the intersection of I-64, I-644 and Mercury Boulevard in Hampton, VA. The property is primarily used as a retail shopping center including three anchor stores and contains approximately 238,000 SF of commercial space. RKG identified a variety of uses that would capitalize of the region’s recent growth in medical office and developed an outparcel parcel strategy to maximize future lease revenue. In addition, RKG analyzed the potential of creating a new town center development to complement the proposed redevelopment of the Coliseum Mall property located to the west of Riverdale Plaza. RKG prepared a phasing strategy that would allow the owners of Riverdale Plaza to incrementally redevelop their property based on prevailing market conditions. When the strategy was developed in late 2006, there was evidence that the market was starting to wane and the owners were advised to proceed cautiously. In addition, the preparation of the highest & best use plan allowed the owners to satisfy the City’s desire to see the Plaza redeveloped in the future.
Pyramid urban redevelopment
The Memphis Pyramid was built in 1991 as a sports and entertainment venue, but has been an underutilized resource and development opportunity, adjacent to the Mississippi River, since the NBA Grizzlies relocated to a more centralized downtown arena. For several years the City and Bass Pro have been in negotiations to reuse the facility as a flagship retail store and entertainment destination. Recently, a local developer has proposed to also redevelop the adjoining 8-block neighborhood to the east. Combined the two projects could result in more than 600,000 SF of retail and a 200-room hotel. RKG worked with the City of Memphis to estimate employment and wage opportunities presented by this development including an assessment of the potential sales tax revenues. In Tennessee, the legislature allows for the establishment of tourism development zones, or a TDZ, where the cash stream represented by future incremental sales tax revenues may be bonded against for infrastructure and other public-sector investments. Construction of the project is estimated to result in 2,100 short-term jobs and the ongoing economic activity another 1,500 jobs. The combined incremental sales tax generated by the development was estimated to be nearly $15 million (in 2010 dollars) and could support a substantial development bond. The City of Memphis has recently pledged $70 million in federal recovery act bonds to facilitate this development.
highest and best use analysis
For many years, the Town of Winchester disposed its municipal solid waste at a Town-owned landfill located on McKay Avenue near the downtown. The landfill has since been closed and capped and remains largely underutilized with only a small portion of the site being used as a municipal solid waste transfer station. Feeling the pressure from many constituents, the Town needed an unbiased opinion relative to realistic development options for the site. Working with an engineering firm, RKG conducted a highest and best use analysis for the site which included an analysis of real estate market conditions, as well as an examination of the physical development limitations of the former landfill site. Based on interviews with municipal officials, local real estate brokers, and potential end-users, RKG generated several realistic development options for the site—a challenge given the physical, environmental, locational and political constraints. RKG’s analysis concluded that the site could support the development of a 500 kW photovoltaic solar array and a 20,000 square foot municipal building (future Department of Public Works garage). Leasing the site to a solar power owner/operator through a power purchase agreement (PPA) would generate the highest value to the Town (as opposed to developing the solar station themselves) as well as retain flexibility of the site for future municipal uses—a “win-win” situation for the Town.
adaptive reuse/ waterfront development
Newmarket, New Hampshire
RKG assembled a team of professionals that included architecture, civil and environmental engineering firms to evaluate the reuse potential of historic and underutilized mill buildings under a variety of alternative scenarios. The analysis undertaken by the team, along with on-going public input, led to the creation of a “developer’s kit” that the Town used to market the property to potential private sector partners. A developer has since acquired the site and successfully developed high-end residential condominiums in the attractive waterfront setting, which, in turn, is helping to transform the retail core of the down-town.
Two former town-owned school properties, the Crosby School and the Parmenter School, are currently leased to tax-exempt educational/institutional uses. In addition to assessing the market opportunities for these properties, the fiscal impacts of existing and selected future uses were assessed, as well as some of the potential social impacts if the uses/tenants were to change. RKG reviewed a variety of alternative uses for these properties, in the context of existing zoning, possible historical constraints, neighborhood compatibility and social impacts. As a result, the feasible reuse of the properties would be for them to continue as educational (or other institutional) facilities, or to be converted to residential use. A financial analysis of the cost to acquire, renovate, market and other expenses, further diminished the convert to residential option. As part of this process, RKG was actively engaged in ongoing discussions with the existing tenants and the Arlington community at large. In April (2010) the Arlington School Committee voted to declare the two former schools as permanent surplus property. Subsequently, Town Meeting vote conveyed the schools to the Board of Selectman to explore the feasibility of long-term leases and bonding on the revenue.