Market and Feasibility Study Waterfront Planning. TERMS OF REFERENCE PHASE TWO & THREE Financial Analysis & Defragmentation Strategy

Transcription

1 Market and Feasibility Study Waterfrnt Planning TERMS OF REFERENCE PHASE TWO & THREE Financial Analysis & Defragmentatin Strategy NOVEMBER 1, 2010

2 Terms f Reference Page 2 Market and Feasibility Study (Waterfrnt Planning) TERMS OF REFERENCE INTRODUCTION The District f Missin is lcated alng the Fraser River a water resurce that has been central t the develpment f the cmmunity given its industrial legacy. The river cntinues t have an industrial functin, but increasingly, it is being viewed in terms f the pprtunities it presents fr mixed-use residential and cmmercial waterfrnt develpment. The waterfrnt represents a significant pprtunity fr Missin t achieve urban land intensificatin fr ver 60 hectares (150 acres) f land designated fr high-density residential and mixed cmmercial/residential uses and industrial uses. As part f the visin t redevelp the waterfrnt, the District seeks a develpment services cnsultant t cmplete an independent market and develpment feasibility analysis f Missin s waterfrnt. The key purpse f the market and financial develpment analysis is t determine the verall market and financial viability t planning and redevelping the waterfrnt lands. The market analysis, which has since been cmpleted, identified the market pprtunities and cnstraints fr develping Missin s waterfrnt in terms f apprpriate types, density threshlds, supply cnsideratins, demand factrs, price ptential and effective cmbinatins f land uses and identified the factrs that present the highest and best use f land fr the waterfrnt area. The remainder f the analysis t be cmpleted relates t the financial viability f redevelping the waterfrnt. OBJECTIVES The study s findings and recmmendatins will be used in the plicy-making and planning f future land use, zning, capital imprvements, and ecnmic incentives. Based n the findings f Phase 1 Market Analysis, the previus Lead Cnsultant, Grund Cntrl Enterprises Ltd, has recmmended that there is merit t prceed with Phase 2 and 3 f the Study. Phase 2 and 3 f the Study will determine the financial viability f develping the Waterfrnt Area and prvide a strategy fr assisting third-party develper(s) with Land Defragmentatin. The engagement is divided int fur discrete cmpnents: 1) Market Analysis - Cmpleted 2) Financial Analysis 3) Land Defragmentatin Strategy 4) Implementatin Strategy The gal f the study is t prvide the District with clear decisin-making directin with respect t the future cmmitment t, and investment in, the waterfrnt redevelpment initiative.

3 Terms f Reference Page 3 T achieve this bjective, relevant existing backgrund reprts and ther studies shuld be utilized as apprpriate t minimize csts and maximize the quality f the final prduct. The District will prvide existing dcuments as needed. SCOPE OF WORK The fllwing utlines the necessary Scpe f Wrk based n the remaining three Study cmpnents. This is als summarized and crss-referenced in the appended flw chart fr the engagement (Schedule A). 1) Market Analysis Cmpleted 2) Financial Analysis Undertaking a Financial Analysis fr the develpment f the Waterfrnt Area will require the cnsideratin f numerus variables. Additinally, there are a number f develpment scenaris that can be examined. Cnsequently, the Cnsultant is tasked with prducing ne cnceptual plan (herein after the Baseline Cnceptual Plan ) fr the Waterfrnt Area n which t base a Financial Analysis. The Baseline Cnceptual Plan will be used as a financial benchmark fr analyzing further develpment scenaris s as t prvide the District with a cnsistent pint f cmparisn. a) Prduce Baseline Cnceptual Plan Cnsidering the findings f Phase 1 f the Study, previus studies undertaken by the District and in cnsultatin with District Staff, the Cnsultant will prduce the Baseline Cnceptual Plan. The Baseline Cnceptual Plan will use the Develpment Plan created in Phase 1 f the Study as its starting pint, but will be mdified and enhanced with greater detail based n infrmatin prvided by the District and Sub-Cnsultants. There will be tw cmpnents t Baseline Cnceptual Plan: Stage 1 f the Develpment and Stage 2 Build-ut f the Develpment. While Build-ut will include the fullydevelped Waterfrnt Area including the dwntwn cre and prtins f the Cre, Nrth and East precincts, Stage 1 f the Develpment as illustrated in Schedule B is anticipated t include the fllwing cmpnents: 1. Hrne Street Cnnectin Residential, & Cmmercial Village 2. West Precinct Aut-centric businesses 3. West Central Precinct large-scale cmmercial It shuld be clearly nted that the Baseline Cnceptual Plan will nt be cnsidered a Land- Use Plan fr the Waterfrnt Area, but simply a starting pint that will allw the Cnsultant t prvide mre accurate csting estimates thrugh financial mdeling. The final waterfrnt land use plan may r may nt cnsider r incrprate the varius elements f the Baseline Cnceptual Plan.

4 Terms f Reference Page 4 If the Financial Analysis is determined t be feasible and the District elects t prceed t Phase 4 Implementatin f the study, the Financial Analysis can serve as a baseline financial mdel fr the District when determining the apprpriate Land-Use Plan fr the Waterfrnt Area. In rder t develp the Baseline Cnceptual Plan the Cnsultant will undertake the fllwing: i. Understand Existing Opprtunities and Cnstraints f Develpment Lands The Cnsultant will meet District Planning & Engineering Staff and/r ther agencies r stakehlders as required t further understand pprtunities and cnstraints f the Develpment Lands, including existing land uses, wnership and bth private and public imprvements. ii. Prduce Baseline Cnceptual Plan Based n infrmatin derived frm 2(a)(i) abve, the Cnsultant will prduce the Baseline Cnceptual Plan that will frm the basis fr the Financial Analysis. The Baseline Cnceptual Plan and assciated Financial Analysis will be prduced under the assumptin that the Waterfrnt Area is being develped in its entirety by nemaster develper. As utlined abve, the Baseline Cnceptual Plan will have tw cmpnents: Stage 1 and Build-Out and the Financial Analysis will mirrr this. The Baseline Cnceptual Plan will include majr assumptins fr rad and infrastructure netwrks, as well as, density and parking assumptins by neighburhd. iii. Feedback frm District While the Baseline Cnceptual Plan will nt be cnsidered the basis fr a Land-Use Plan, the Cnsultant will btain feedback frm District Planning and Engineering Staff prir t finalizing the Plan that will be the basis fr the Financial Analysis. b. Financial Analysis The Financial Analysis will be based n the Baseline Cnceptual Plan and will be split int tw cmpnents: Stage 1 and Build-Out. The Financial Analysis will include the fllwing: i. Develpment Cst Assumptins The Cnsultant will develp cst assumptins by develping preliminary develpment strategies and applying defensible unit, r ther, cst estimates t quantified develpment prgrams allcated n an annual basis ver the prjected life f the prject. Nte: at this pint in the Financial Analysis is it assumed that the Prject Develper will be respnsible fr all csts, and the District is nt respnsible

5 Terms f Reference Page 5 fr any csts f Develpment. In Phase 4 Implementatin it may be determined that the District may chse t undertake sme Develpment Csts t facilitate develpment f the Waterfrnt Area. Hwever, that requirement cannt be determined until Phase 2 f the Study is cmplete. The cst assumptins shall include rugh rder f magnitude cst estimates fr the fllwing categries, at the minimum: Pre-develpment Csts General and Administrative Planning Design Apprvals (e.g., zning) On-site Infrastructure Csts, phased Site preparatin Remediatin Fld prtectin Rad Parks Water Sanitary sewer Strm sewer Other Off-site Infrastructure Csts, phased Gas, hydr, telephne Water system upgrades Sewer system upgrades Fld prtectin upgrades Rad/intersectin upgrades Other Residential Develpment Csts, by building, neighburhd r ther reasnable unit f measure when cnsidering scale f the develpment Land Site preparatin Cnsultants Hard cnstructin Parking FF&E DCC s and ther levies General and Administrative Marketing and Sales

6 Terms f Reference Page 6 Hlding and perating Cmmercial Develpment Csts, by building, neighburhd r ther reasnable unit f measure when cnsidering scale f the develpment Land Site preparatin Cnsultants Hard Cnstructin Parking DCC s and ther levies General and Administrative Marketing and Sales Tenant Inducements Hlding and Operating Financing Csts Interest and fees Recgnizing that estimates are being made frm cnceptual, nt actual cnstructin plans, it is apprpriate t carry reasnable cntingencies. The cnsultant shuld identify and defend the cntingency assumptins used. In additin t the current estimate cst, in tday s dllars, the Cnsultant shall prvide estimates f the timing f incurrence f expenses based n annual allcatins f the develpment prgram with respect t residential absrptin and cmmercial phasing. It is anticipated that the Cnsultant will rely n suppliers fr aspects f this wrk including, but nt necessarily limited t: Getechnical engineering: seismic and grundwater; Civil engineering: rads, water, sewer, strm-water, street-lighting, pwer, gas, cmmunicatin, and fld management; Envirnmental engineering: cntaminatin/remediatin, water s edge and habitat; Architectural: building prgrams; and Quantity Survey: market cnstructin cst data. All suppliers and sub-cnsultant s backgrund reprts shall be made available t the District as an Appendix t the study and shall becme the prperty f the District. ii. Revenue Assumptins The cnsultant will develp revenue and cst recvery assumptins fr all aspects f the Prject Develpment Plan. Ntwithstanding the current fragmentatin f land wnership, it is imprtant t understand the ptential develpment revenues f the entire waterfrnt lands,

7 Terms f Reference Page 7 individually and in aggregate, as thugh there were ne master develper undertaking the entire prject. In this regard it will be necessary t develp and dcument justifiable assumptins and prject revenue and cst recvery estimates fr the fllwing: Sales revenue relating t the vertical develpment f all residential buildings. Such prjectins are t fllw the market study cnclusins and a phasing plan reflecting defensible absrptin assumptins; Sales revenues relating t the vertical develpment f all cmmercial buildings assuming defined lease and cap rates. Such prjectins are t fllw the market study cnclusins and a phasing plan reflecting defensible absrptin assumptins; DCC r ther municipal cntributins t site wrk, parks, utilities, rads, ther infrastructure, etc; Ptential grants r subsidies frm senir levels f gvernment r ther surces; and Ptential sale f unneeded develpment rights, easements r access t private parties. c) Financial Mdeling The cst and revenue assumptins and prjectins develped accrding t the freging must be incrprated int financial mdels. Fur mdels are required in ttal tw scenaris fr each f tw Stages (Stage 1 & Build-ut). The first scenari is t cnsist f the Cnsultant s best estimate f the true financial ptential f the Prject Develpment Plan. This is t be augmented by a pessimistic scenari that reflects a slw start cmpared t the plan. A slw start is defined as slwer than anticipated absrptin f residential and cmmercial units due t adverse market cnditins. Each Mdel will, at a minimum; be created with Micrsft Excel. Cncise ntes t explain variables, inputs and results will be prvided ; reflect the entire prjected life f the prject with revenues and csts allcated in annual increments; be sufficiently detailed s as t independently prtray a reasnable understanding f the Prject Develpment Plan, timing f individual elements and key assumptins used; be internally cnsistent with respect t key assumptins used within the same scenaris; be rbustly dynamic whereby numerus key assumptins can be changed with immediate effect n results. Examples f such required flexibility wuld include, but nt be limited t: Revenues and csts per square ft; Adding, amending r deleting items in Infrastructure cst summaries; Csts estimated as a percentage f revenues (e.g. sales cmmissins); Timing f specific buildings, infrastructure r ther plan elements; Prject and structured financing terms;

8 Terms f Reference Page 8 Cap rates; and Etc. prvide annual and cumulative cash flws that summarize inflws, utflws and net cash flw; prvide the applicatin f ptentially cmplex financing assumptins at the vertical and hrizntal prject levels; prvide a meaningful integratin f develpment statistics (acres, BSF, etc.) with financial prjectins; prvide residual land values assciated with all residential and cmmercial vertical prjects and cmpare such values t current market cmparables; and prvide reprt and a meaningful ne-page summary f findings and results. d) Financial Viability Assessment Based n the Financial Mdels, the Cnsultant shall summarize and discuss the financial viability and risks assciated with the Baseline Cnceptual Plan. This pinin shall frm the basis f the cnsultant s recmmendatin t the District whether t undertake further wrk n the brader waterfrnt planning initiative, r nt. 3. Land Defragmentatin Strategy The Waterfrnt lands are nt wned by the District. The Prject Develpment Plan references five precincts ttaling apprximately 160 acres. Apprximately: 1) East 27 acres. 2) Nrth 38 acres 3) Cre 19 acres 4) West 43 acres 5) West-Central 33 acres Almst half f the ttal Waterfrnt land is currently held by ne, private wner (West and West-Central precincts). The balance is widely held under a highly subdivided plat prviding relatively small lts. It is nt intended that the District will be respnsible fr undertaking the Land Defragmentatin. Rather, the Cnsultant will utline strategies where the District can help facilitate develpment f the Waterfrnt Area thrugh Land-Use Planning plicies. If the Financial Analysis determines the develpment f the Waterfrnt Area is viable, the required relcatin f sme existing uses and cnslidatin f parcels will be left t the private sectr. a) Land Defragmentatin Strategy By reference t municipal law, best practices and prprietary creativity, the Cnsultant is challenged t develp varius strategies that culd achieve the gal f assisting the private sectr in defragmenting the land wnership fr this purpse.

9 Terms f Reference Page 9 b) Land Defragmentatin Assessment Based n its wrk, the Cnsultant shall summarize and pine n the feasibility f the defragmentatin strategy. This pinin shall frm the basis f a recmmendatin t the District whether t undertake further wrk n the brader initiative, r nt. Based n the Financial Viability Assessment and the Land Defragmentatin Assessment, the District shall, at its wn discretin, decide whether r nt t prceed t the furth cmpnent f the engagement. The Cnsultant shall nt be entitled t any revenue r recveries fr wrk beynd Step Tw & Three unless and until the District has authrized cntinuance in writing. 4) Implementatin Strategy The District f Missin, at their discretin, may r may nt retain the cnsultant fr the cmpletin f Cmpnent 4 Implementatin Strategy. Based n psitive assessments in Phase 2 and 3 and a decisin by the District t mve frward, the Cnsultant will develp an Implementatin Strategy that will utline next steps fr the District t facilitate develpment f the Waterfrnt Area. a) Alternative Scenaris T get t this pint, the study will have cncluded that a market pprtunity exists fr the Baseline Cnceptual Plan, that it is pssible t create a land defragmentatin strategy and that there is financial viability fr a develper(s). T mve the pprtunity beynd thery, the first step is fr the Cnsultant t utline the full definitin, and financial implicatins, f the varius rles that the District can assume in rder t advance the initiative. These culd include, but nt be limited t, b) Prcess Acquisitin f all r part f existing waterfrnt land, directly r with partner(s); Jint venture with waterfrnt land wner(s); Initiatin f District planning, zning and incentive prgrams t drive desired develpment utcmes; and Prcessing f applicatins t facilitate wner-initiated redevelpment. Regardless f whether r nt the District becmes directly invlved in the develpment f the Waterfrnt lands, given the current wnership fragmentatin it will be necessary t take a leadership rle in rganizing the initial planning wrk assciated with the pprtunity until such time as a capable wnership representative r grup can cme int being. Of curse this invlvement is even mre justifiable shuld the District pt int direct participatin. Furthermre, much f the wrk necessary t enhance and advance the Prject Develpment Plan will be f cmmensurate value t the District fr the purpse f develping planning principles, OCP amendments, zning bylaws, develpment permits,

10 Terms f Reference Page 10 etc. Accrdingly, the District has a vested interest in seeing planning cntinue. T facilitate this, the Cnsultant shall develp a detailed critical path f the prject planning effrts and assciated csts (and cst recveries) that wuld advance the prject thrugh varius key milestnes and prcesses such as: Land defragmentatin and/r acquisitin plan; (Re)envisining cnceptual plan; Detailed site planning including landscape plan, circulatin plan; infrastructure plan and building ftprints; Cmmercial plan; Marketing and Cmmunicatin plan; District Apprvals; Financing; and Etc. The freging shall be rganized and presented in a budget frmat with separatin between District and develper cst respnsibilities. The Cnsultant shall prvide guidance with respect t hw District csts culd be funded. c) Determine Next Steps The cnclusin f the Market and Feasibility Study shall cnsist f a planning sessin with District Staff and the Cnsultant wherein next steps are planned in the cntext f the entire Study generally and the implementatin alternatives and critical paths specifically.

11 Schedule A Terms f Reference Page 11

12 Schedule B Terms f Reference Page 12