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Executive Vice President and General Counsel Howard Kaufman gave an update on financing for the Storrs Center project, saying that Citizen’s Bank is “very interested in financing Phase 1A.”
Monday’s Special Town Council meeting – in which new marketing strategies for the Storrs Center project were announced _ also included a review of the project’s marketing study conducted by HR+A, a company hired by Leyland Alliance.
The council heard from Economics Research Associates (ERA), which was hired by the town to conduct an independent evaluation of the accuracy of HR+A’s findings.
ERA reported that the findings were sound – based on the best information available at this time – and reaffirmed projections of revenue that would come to the town once Storrs Center becomes a functioning entity.
ERA examined the study’s projections of potential costs (municipal services, schools, public safety).
The firm then looked at projected revenue from the retail, office and residential rental properties at each phase of build-out, and used the town’s current tax rates to calculate property, business, personal and conveyance taxes.
When the entire project has been developed and is operational, the estimated annual tax revenue would be $4.3 million.
Estimated costs to the town would be $1.7 million.
And so, projected tax revenues coming to the town would be $2.6 million a year.
The bulk of the $4.3 million in taxes would come from real estate taxes ($3.7 m), with about $200,000 coming from business/personal property taxes, $300,000 from motor vehicle taxes, and the remainder from conveyance taxes.
The $1.7 million in estimated costs to the town breaks out into $1.3 for municipal services, and $400,000 for school-related expenditures, minus any grants the town might receive.
ERA Principal Shuprotim Bhaumik noted that his firm and HR+A staff revised some of the information in the original fiscal analysis and that an updated version would be posted on the town’s Web site.
Councilman Carl Schaefer asked whether the study’s calculations allowed for the likelihood that the town will received less state funding for education in coming years, “in fact, less for everything.”
Bhaumik said school revenue/cost estimates were based on the average of the last three years and, because there were some peaks and valleys in those three years, the average was probably a good yardstick for the coming years.
Schaefer also asked for an explanation of the term “pricing premium,” used to describe components of the Storrs Center project.
Bhaumik said this means Storrs Center will be “quite different” from anything else being built in the area, meaning it is “uniquely positioned in the market.”
Citizen’s Bank is ‘very interested’
Executive Vice President and General Counsel Howard Kaufman also gave an update on financing for the Storrs Center project, saying that Citizen’s Bank is “very interested in financing Phase 1A.”
He noted that the residential units in Phase 1A are rentals because the market for condo sales is down, while the rental market “is actually very strong.”
Phase 1A design includes retail shops on the first floor of some buildings, which would bring in more revenues, “but we can build on the strength of the rental properties,” Kaufman said.
He added that while financial news reports have been discouraging, “regional and local banks are actually doing kind of well.”
This is because they didn’t get involved in high-risk speculation but “stuck to what they knew,” he said.
Working on an agreement
Town Manager Matt Hart reported that the town is still working on a development agreement, and one of the key components of that agreement is how the parking garages will be operated. Still under discussion is who will own the garage, and how it will be operated and maintained.
As for financing construction of the second garage, one option being discussed is dedicating a portion of the net tax revenue from the main project, Hart said.
Kaufman also noted that because the first garage is being paid for with a grant – and not with bonds, would be the case with a town building a garage – it is in a better position to generate “positive revenue.”
There will be 690 units of housing, “which means built-in customers,” who will pay a fee to use the garage, said.
Another aspect of the agreement is relocation costs for existing businesses.
Hart said LeylandAlliance has agreed to share that bill with the town, “but we need to codify that.”
The estimated total for relocation costs is $700,000, which would be split 50/50 between the town and LeylandAlliance, Hart said.
Another matter under discussion is who will maintain the project’s “green places” – the parks, town green, and other landscaped areas.
[Editor's Note: This and all other Town Council meetings are now taped and are aired on cable Channel 13 at noon on Mondays, Wednesdays, Fridays and Sundays, and at 7 p.m. on Tuesdays, Thursdays and Saturdays. Questions and comments concerning the Storrs Center project also may be sent to the Mansfield Downtown Partnership at P.O. Box 513, Mansfield, CT 062268 or e-mailed to email@example.com Also see previous story, "Developers announce new strategies to make Storrs Center marketable." ]
Posted Nov. 26, 2008
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