BROAD STREET COMMUNITY DEVELOPMENT AUTHORITY REVENUE BONDS SERIES 2003

Transcription

1 BROAD STREET COMMUNITY DEVELOPMENT AUTHORITY REVENUE BONDS SERIES 2003 ANNUAL CONTINUING DISCLOSURE REPORT FOR FISCAL YEAR ENDING JUNE 30, 2008 Prepared By: MUNICAP, INC. January 30, 2008

2 BROAD STREET COMMUNITY DEVELOPMENT AUTHORITY REVENUE BONDS SERIES 2003 ANNUAL CONTINUING DISCLOSURE REPORT For the Period Ending June 30, 2008 I. INTRODUCTION 1 II. DEVELOPMENT ACTIVITY 3 A. Overview 3 B. Status of Construction 3 III. TRUSTEE ACCOUNTS 5 IV. DISTRICT OPERATIONS 7 A. Parking, rates, fees and charges 7 B. Levy of Special Assessments 7 C. Payment in Lieu of Assessments 9 D. Delinquent Special Assessments 10 E. Collection Efforts and Foreclosure Proceedings 10 V. AUTHORITY FINANCIAL INFORMATION 11 A. Parking Operations Revenues 11 B. Compliance with Revenue Covenant 11 C. Bonds Outstanding 13 D. Debt Service Payments 13 E. Assessed Value 13 F. Changes to the Administrator or Developer 13 G. Changes to the Methodology of levying Special Assessments. 14 H. Amendments to Land Use Entitlements 14 I. Material Changes to Nature of Facilities 14 J. Property By Ownership and Classification 14 K. Draws on Debt Service Reserve Fund 14 L. Amendments to the Continuing Disclosure Agreement 15 VI. OTHER AUTHORITY NOTICES 16 VII. APPENDIX A: Authority Audited Financial Statements

3 I. INTRODUCTION The Broad Street Community Development Authority (the Authority or CDA) was created pursuant to Ordinance No adopted by the City Council of Richmond (the City) on July 8, Pursuant to the provisions of Article 6 of Chapter 51 of Title 15.2 of the Code of Virginia of 1950 (the Act), as amended, the Authority issued $66,740,000 of revenue bonds in May 2003 to finance certain improvements in connection with proposed development and redevelopment of the Broad Street Community Development Authority District. The Broad Street Community Development Authority Revenue Bonds Series 2003 bonds were issued pursuant to an Indenture of Trust by and between Broad Street Community Development Authority, Richmond, Virginia and the U.S. Bank National Association (formerly known as Wachovia Bank National Association), dated as of May 15, These bonds are to be repaid from pledged revenues that are comprised of special assessment revenues, parking revenues and payments in lieu of assessments. Special assessments are to be levied and collected on all taxable real property within the District pursuant to Ordinance No , which was adopted by the City Council on September 23, 2002 and pursuant to the Memorandum of Understanding dated May 15, 2003 between the City, the Developer and the Authority. The Broad Street Community Development Authority District (the District ), located within an area referred to as the Central Business District or City Center of the City of Richmond, Virginia (the City of Richmond ), is the center of a planned revitalization of the former retail center of downtown Richmond along the Broad Street and Grace Street corridors. The District s geographic boundaries encompass approximately five city blocks of mixed-use commercial and retail properties, including the Richmond Coliseum, a sports and entertainment facility with a maximum seating capacity of approximately 13,000. The District is immediately adjacent to The Greater Richmond Convention Center, a multi-use regional facility of approximately 640,000 square feet. Broad Street (State Route 250) serves as the main thoroughfare within the District. Interstates 64 and 95 and the Downtown Expressway (Route 1-195), which run both east to west through downtown Richmond, provide easy access to the District, being situated less than one mile driving distance from each. The District is also located approximately nine miles west of the Richmond International Airport, approximately one mile from the historic Main Street train station and approximately four miles east of the Greyhound bus station (see district map below). Continuing disclosure pursuant to Rule 15c2-12 of the Securities and Exchange Commission is not required for the Series 2003 bonds. However, the administrator, the developer and the Authority have agreed to provide an annual report. This report is provided pursuant to this agreement. The annual continuing disclosure report is being provided pursuant to continuing disclosure agreement between MuniCap and the Authority. This report is not provided pursuant to Rule 15c2-12. No representation is made as to the materiality or completeness of the information provided herein or as to whether other relevant information exists with respect to the period covered by this report. Other matters or events may have occurred or become known during or since that period that may be material. All information is provided as of June 30, 2008, unless otherwise stated, and no representation is made that the information contained in this report is indicative of information that may pertain since the end of the period covered by this report or in the future. 1

4 BROAD STREET COMMUNITY DEVELOPMENT DISTRICT 2

5 II. DEVELOPMENT ACTIVITY A. OVERVIEW With the completion of the $162 million Richmond Convention Center expansion and in anticipation of the new Federal Courts Building at 7th and Broad Streets, the planned Virginia Performing Arts Center Complex at 6th and Broad Streets, and the planned Miller and Rhoads Hotel at 5th and Broad Streets, the imminent need for City Center parking and streetscape improvements in this vicinity had been identified in 2002 by the City Administration as one of Richmond s priorities. The Broad Street Community Development Authority, in conjunction with the City of Richmond, initiated plans for the construction of two new surface lots, the renovation of three existing parking decks, the demolition of the existing 6th Street Marketplace, the reopening of 6th Street to automobile traffic, and the upgrading of underground public utilities and aboveground streetscaping and landscaping within the Broad Street CDA District boundaries. The aggregate cost for the project was projected at $53,447,900. Utility upgrades of $6,360,700 were to be funded by the City of Richmond, leaving $47,087,200 to be expended on project cost to be financed by bond proceeds. The breakdown of the elements of the project is as follows: 1. The acquisition cost of the properties for the two new lots at 5th and Broad (i. e. G C Murphy block) and at 6th and Grace (i.e. Atlantic Life block) was projected at $9,938,000. The demolition and construction cost for the two new surface lots was projected at $5,762, The acquisition cost for the existing deck at 5th and Marshall was projected at $13,500,000. The construction cost for the renovation of the three existing parking decks at 7th and Marshall, 5th and Marshall, and 6th and Franklin were projected at $7,380, The cost to demolish the 6th Street Marketplace was projected at $400,000. The cost to reopen 6th Street and for providing streetscape/landscape improvements for all six blocks within the Broad Street CDA District, including the perimeter of the Coliseum, was projected at $6,280, The underground public utilities and electrical systems upgrading cost within the seven-block area of the Broad Street CDA were projected at $6,360, A Construction Cost Contingency of $500,000 was established for unforeseen construction conditions that typically arise in utility upgrading projects. Development Coordination Expenses and project Development Fees, including the Project Feasibility Report total was estimated at $3,326,800. B. STATUS OF CONSTRUCTION The Authority filed a certificate of substantial completion in May 2005 after the developer reported the completion of construction activities in the district. The final budget and the costs funded from bond proceeds as of December 31, 2006 are shown in Table-II-1 below: 3

6 Table II-1 Construction Proceeds From Bond Issue Cost Center Original Budget Budget Changes Final Budget 1. Property Acquisition $9,217,372 ($59,145) $9,158, Atlantic Life Site - 6th & Grace Environmental Remediation $655,000 $866 $655,866 Demolition Costs $1,207,025 $36,049 $1,243,074 Construction Costs - Surface Lot $663,500 ($16,236) $647,264 Subtotal $2,525,525 $20,679 $2,546, G.C. Murphy Site - 5th & Broad Environmental Remediation $295,898 $0 $295,898 Demolition Costs $1,088,147 $11,005 $1,099,152 Construction Costs - Surface Lot $531,811 $237 $532,048 Subtotal $1,915,856 $11,243 $1,927, Parking Deck - 5th & Marshall Property Acquisition $13,490,667 $0 $13,490,667 Construction & Engineering Costs $922,000 $59,531 $981,531 Subtotal $14,412,667 $59,531 $14,472, Parking Deck - 6th & Franklin Construction Costs $2,587,000 $61,284 $2,648,284 Subtotal $2,587,000 $61,284 $2,648, Parking Deck - 7th & Marshall Construction Costs $2,934,000 $192,836 $3,126,836 Subtotal $2,934,000 $192,836 $3,126, th Street Marketplace Demolition Costs $1,039,987 ($7,776) $1,032,211 Façade Restoration $1,434,500 $103,198 $1,537,698 Subtotal $2,474,487 $95,423 $2,569, Streetscaping Design & Construction Costs $5,543,000 $1,074,467 $6,617,467 Coliseum Area Improvements $1,300,000 ($560,534) $739,466 Subtotal $6,843,000 $513,933 $7,356, Construction Contingency $611,796 ($611,796) $0 10. Project Management and Misc. Costs Development Coordination Expenses $1,400,000 $132 $1,400,132 Project Development Fee $1,401,800 $83,920 $1,485,720 Project Feasibility (reimbursement to City) $275,136 $0 $275,136 Subtotal $3,076,936 $84,052 $3,160, Other Professional Fees $288,561 ($54,861) $233, Community Information $200,000 ($69,680) $130,320 NET TOTAL FOR BOND FINANCING $47,087,200 $243,497 $47,330, Public Utilities Professional Fees $1,002,810 $114,126 $1,116,936 Construction $5,357,890 ($114,126) $5,243,764 Added Scope $0 $2,289,758 $2,289,758 City Reimbursement for Added Scope $0 ($2,289,758) ($2,289,758) Subtotal $6,360,700 $0 $6,360,700 TOTAL PROJECT $53,447,900 $243,497 $53,691,397 4

7 III. TRUSTEE ACCOUNTS The trustee for the Series 2003 Bonds is U.S. Bank, National Association (formerly Wachovia Bank, NA). The balance at June 30, 2007, and subsequent interest paid, disbursements, revenue collections and additional proceeds, and account balances for each fund as of June 30, 2008 are shown by the following table: Table III-1 Account Balances Accounts 06/30/07 Balance Interest Paid Additional Proceeds Disbursements 06/30/08 Balance Capitalized Interest Account ($0.00) $0.00 $0.00 $0.00 ($0.00) Utility Improvements ($0.00) $0.00 $0.00 $0.00 ($0.00) Utility Payments ($0.00) $0.00 $0.00 $0.00 ($0.00) Revenue Fund ($0.00) $9, $4,896, $4,903, $2, City Settlement Sub-Account $0.00 $7, $508, $456, $58, Interest Account $421, $30, $4,740, $4,971, $220, CDA Repair & Replacement $463, $18, $0.00 $16, $465, Principal Account $0.00 $0.00 $0.00 $0.00 $0.00 Redemption Account $0.00 $0.00 $0.00 $0.00 $0.00 Administrative Exp. Fund $10, $ $419, $419, $11, Project Fund ($0.00) $0.00 $0.00 $0.00 ($0.00) Debt Service Reserve $6,136, $253, $0.00 $253, $6,136, Subordinate Debt Service $0.00 $0.00 $0.00 $0.00 $0.00 Rebate Fund $0.00 $0.00 $0.00 $0.00 $0.00 Supplemental DSR Fund $944, $30, $125, $954, $146, General Surplus Fund $0.00 $0.00 $0.00 $0.00 $0.00 Operating Reserve $75, $2, $41, $119, $0.00 Repair & Replacement Fund $103, $6, $95, $1, $203, Operating Fund $122, $1, $879, $1,003, $0.00 VAPAF Escrow $220, $9, $0.00 $0.00 $229, TOTAL: $8,497, $371, $11,707, $13,101, $7,475, Additional proceeds to the Revenue Fund are revenues received from the parking garage operations, special assessments and payments in lieu of assessments. Additional proceeds to the City Settlement Sub-account are deposit of city commitment towards the Marriott parking fees for fiscal year as result of global settlement between the Authority, City, Marriott and RRHA. Additional proceeds to the Operating Fund and Administrative Expense Fund are transfers from the Revenue Fund to fund operating and administrative expense requirements. Additional proceeds to the Supplemental Debt Service Reserve Fund, Repair & Replacement Fund and Operating Reserve Fund are transfers from the Revenue Fund. Additional proceeds to Interest Account are transfers of pledged revenues and interest earned 5

8 in the Debt Service Reserve Fund. Disbursements from the Revenue Fund are transfers to Operating Fund, Administrative Expense Fund, Supplemental Debt Service Reserve Fund, Repair & Replacement Fund and Operating Reserve Fund as stipulated by the trust indenture. Disbursements from the City Settlement Sub-account are payments to the Revenue Fund for Marriott parking during the fiscal year. Disbursements from the Interest Account are payments for scheduled debt service. Disbursements from the Administrative Expense Fund and Operating Fund are to pay CDA administrative and operating expenses, respectively. Disbursements from the Debt Service Reserve Fund are transfers of interest income to the Interest Account for payment of interest due on the Bonds. Disbursements from the Debt Service Reserve Fund are transfers of interest income to the Interest Account for payment of interest due on the Bonds. Disbursements from the Operating Reserve are transfers to Operating Fund to pay CDA operating expenses. Interest income posted on Table III-1 above as interest paid to the Authority does not include accrued interest. The reserve fund is invested in guaranteed investment contract that pays interest semi-annually. Other account balances not invested in a guaranteed investment contract are invested in money market funds currently earning 1.68 percent. The table below shows the average rate of return on the investments in each fund or account as of November 30, Investment income on interest account, administrative expenses fund, project fund, operating reserve, revenue fund, repair & replacement fund and VAPAF Escrow account will remain in the respective fund and be used for the purposes of such accounts. Investment income in the reserve fund will be used in the following order of priority: (i) restoration of the reserve fund, if the balance in the fund is at less than the reserve requirement, (ii) applied to the payment of debt service, and (iii) made available for the payment of administrative expenses. Table III-2 Average Investment Rate of Return Rate of Account Return Interest Account 1.68% Administrative Exp. Fund 1.68% CDA Repair & Replacement 1.68% Operating Reserve 1.68% Supplemental DSR Fund 1.68% Revenue Fund 1.68% Repair & Replacement Fund 1.68% Debt Service Reserve 4.15% VAPAF Escrow 1.68% 6

9 IV. DISTRICT OPERATIONS A. PARKING FACILITIES RATES, FEES, CHARGES AND CHANGES There have been no changes to the list of the parking facilities. Tables IV-1 & IV-2 below shows the monthly rates, number of parkers, average monthly rate and the transient fees charged by each of the five Authority s parking facilities as of October 31, Table IV-1 Monthly Rates 7th Marshall 6th & Franklin 5th & Marshall 5th & Broad 7th & Grace Parkers Rate Parkers Rate Parkers Rate Parkers Rate Parkers Rate 87 $85 85 $ $80 54 $ $ $ $ $95 15 $ $ $95 3 $135 * 64 $0 Average $107 Average $ $110 * 4 $0 Average $85 * 16 $0 Average $119 Average $91 * The free parking noted for monthly parking in both 5 th & Marshall, 7 th & Marshall and 6th & Franklin parking facilities represents value parking passes issued to the parking operator, Marriott valet parking, security and equipment vendors to necessitate daily operations and unhindered access to both facilities. Table IV-2 Transient Rates Duration (Hours) 5 th & Marshall 7 th & Marshall 7 th & Grace 5 th & Broad 0-1 $4.00 $4.00 $4.00 $ $8.00 $7.00 $8.00 $ $12.00 $12.00 $13.00 $ (Daily Max) n/a n/a n/a $ (Daily Max) $16.00 $16.00 $18.00 $17.00 Early Bird $7.00 $7.00 n/a $7.00 Special Event $9.00 n/a n/a Night/Weekend $8.00 $8.00 $4.00 Hospitality House $5.00 B. LEVY OF SPECIAL ASSESSMENTS Special Assessments in the amount of $492, were levied for collection in fiscal year There were eight taxable properties within the district of which, six properties were classified as commercial properties and the remaining two as hotel property. The Richmond City Council adopted Ordinance No on September 23, 2002, which approved the Memorandum of Understanding and the Participation Agreement. It also established special assessments in accordance with the Code of Virginia (1950), as amended, section (5) and sections to and the Memorandum of Understanding. Special assessments are levied to pay a 7

10 portion of the costs of improvements to be provided by the CDA. According to the Ordinance, special assessments are apportioned in accordance to the Rate and Method of Apportionment. The CDA shall cause annual notice of special assessment to be provided to the City s Director of Finance or other City Official responsible for collection of taxes. As mentioned above, special assessments in the amount of $492, were levied for collection in fiscal year As of October 31, 2008 the entire amount levied for fiscal year 2008 in the amount of $492, had been collected by the city and transferred to the trustee. a) Method of Levying the Annual Special Assessment Installment The Annual Special Assessment Installment imposed on each taxable parcel will vary depending on either the number of rooms rented per night with respect to hotel property or the square footage of a property with respect to other commercial property. The Annual Special Assessment Installment to be collected in fiscal year 2008 and each subsequent year until the Series 2003 Bonds are paid or redeemed is equal to the following amounts: (i.) For hotel property, the Annual Special Assessment Installment shall be equal to $2.50 multiplied by the number of rented rooms per night with a minimum of $256,778 for the Marriott hotel and $124,173 for the Miller and Rhoads property. The Miller and Rhoads property was transferred to a private entity on March 17, 2006 and, as a result, the special assessment was first levied on the property in (ii.) For other commercial property, the Annual Special Assessment Installments shall be equal to $0.35 per square foot for space on the first level and $0.29 per square foot for space on the second level and higher. Levels below the first (street) level are not subject to Annual Special Assessment Installments. b) Taxable Property Table IV-3 below includes a list of the parcels of taxable property in the CDA. The classification of each parcel is shown. For commercial property, the square footage of the first level and for the levels above the first level as well the Annual Special Assessment Installment per square foot along with total Annual Special Assessment Installment for each parcel are shown. For hotel property, the minimum Annual Assessment is shown. This minimum Annual Special Assessment Installment on the Marriot hotel equates to 102,711 rented rooms during the course of the year (an average of 281 rented rooms per night, which is equal to an average occupancy rate of 72%). Should additional rooms be rented, the Marriott will owe additional Annual Special Assessment Installments at the rate of $2.50 per room per night on the excess over 102,711 rooms rented during the course year. For year ending December 31, 2007 the number of room nights rented at Marriott was 100,066. This equates to $250,165 in special assessments. As a result, the hotel was billed for the minimum amount due of $256,778. In 2008 the Miller and Rhoads property is still under construction, as result its payment for fiscal year 2008 was based on the minimum chargeable amount. 8

11 Table IV-3 Fiscal Year 2008 special assessments Map Reference First Sub-Total Upper Sub-Total Annual Number Property SF Assessment SF Assessment Assessment Commercial: N East Broad 8,988 $3,146 29,660 $8,601 $11,747 N East Broad 26,910 $9, ,994 $61,768 $71,187 W East Grace 9,294 $3,253 9,158 $2,656 $5,909 W East Grace 7,161 $2,506 7,161 $2,077 $4,583 W East Grace 10,463 $3,662 8,796 $2,551 $6,213 W East Grace 9,856 $3,450 29,568 $8,575 $12,024 Sub-total Commercial Property $111,663 Hotel: N Marriott Hotel $256,778 W Miller & Rhoads $124,173 Sub-total Hotel Property $380,951 Total FY07 Annual $492,614 C. PAYMENTS IN LIEU OF ASSESSMENTS Payments in Lieu of Assessments (PILOA) became effective after the completion of streetscape improvement on May 29, These payments are due each quarter as per the terms of the respective agreements between the Authority, the City of Richmond and the Center Stage Foundation, (formerly Virginia Performing Arts Foundation - VAPAF). The PILOA from the Richmond Redevelopment and Housing Authority (RRHA) is due each month pursuant to the Coliseum Garage Charge Payment Agreement between the Authority and the RRHA. PILOA for the fiscal year 2008 had all been received by the trustee by October 31, 2008 and are shown on Table IV-4 below. Table IV-4 Payment in Lieu of Assessments Fiscal Year 2008 Amount Paid City of Richmond - Coliseum payment $400,000 City of Richmond Special Event $250,000 Center Stage Foundation $225,000 RRHA $208,125 Total PILOA for FY08 $1,083,125 The total PILOAs received in fiscal year 2008 are comprised of quarterly payments due from the city and VAPAF. Payments from RRHA are for the actual parking activities during the course of the year and are paid each month as per the terms of the agreement governing these payments. There are no amendments to the documents relating to the Payments in Lieu of Assessments as outlined in the PILOA agreements. 9

12 D. SPECIAL ASSESSMENTS PAYMENTS AND DELINQUENT SPECIAL ASSESSMENTS Special Assessments in the amount of $492, were levied for collection in fiscal year As of October 31, 2008, special assessment in the amount of $492, due from the taxable properties in the district have been collected by the city and transferred to the trustee. There are currently no delinquent special assessments. E. COLLECTION EFFORTS, FORECLOSURE PROCEEDING OR JUDGEMENT FOR TAX SALE There are no collection efforts underway at this time. The Authority or the Administrator has no knowledge of any property within the district that has been subject to foreclosure proceedings or a judgment for tax sale. 10

13 V. DISTRICT FINANCIAL INFORMATION A. PARKING OPERATIONS FINANCIAL INFORMATION AND AUTHORITY ADMINISTRATIVE EXPENSES Parking revenue derived from parking operations for fiscal year 2008 are shown in the table below. The table also includes the operating expenses related to the parking operations that were paid by the trustee during the course of the year. These expenses include the parking operator management fees and facility insurance. (i.) Parking Revenue Payments $3,291,958 (ii.) Operating Expenses $727,022 The Authority s total administrative expenses for fiscal year 2008 were $282,502. These payments include payment for services rendered by the trustee, CDA counsel, administrator, auditor, D&O annual insurance and miscellaneous expenses related to hosting of monthly CDA meetings. The Authority audited financial statements for fiscal year 2008 are attached as Appendix A. B. COMPLIANCE WITH REVENUE COVENANT Under the bond indenture, the revenue covenant became effective in the first full fiscal year beginning after completion of the project. The Authority filed the certificate of substantial completion in May As a result, fiscal year 2006 was the first year in which the Authority was required to comply with revenue covenant. For fiscal year 2006 Net Revenues were required to at least equal the sum of (a) 100% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2007 Net Revenues were required to at least equal the sum of (a) 120% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2006, the Authority did not meet the covenant requirement. Net Revenues equaled seventy-nine percent of the covenant requirement. Pursuant to the requirements of the trust indenture, the Authority engaged the services of a special parking consultant to analyze the parking operations and to make recommendations on how the parking operations can be improved. The special parking consultant delivered his report to Authority during the month of August 2007 and this report was subsequently filed with the trustee. The Authority has implemented most of the recommendations from the special parking consultant report. In fiscal year 2007, the Authority did not meet the covenant requirement. In order to have time to implement the recommendations of the special parking consultant from FY06, the Authority requested and received from the trustee a waiver of the special consultant requirement for FY07. The waiver was granted after the trustee polled bond-holders and received the consent of a majority of the holders. For fiscal year 2007 Net Revenues were required to at least equal the sum of (a) 120% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2007, the Authority did not meet the covenant requirement. Net Revenues equaled seventy-nine percent of the covenant requirement. The actual debt service and reserve requirements coverage from Net Revenue for fiscal year 2007 was equal to ninety-five percent. The Authority was able to 11

14 pay its annual debt service obligations by a utilizing a portion parking revenues accumulated in the Supplemental Debt Service Reserve Fund during the capitalized interest period together with other pledged revenues collected during For fiscal year 2008 and going forward, Net Revenues are required to at least equal the sum of (a) 130% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2008, the Authority did not meet the covenant requirement. Net Revenues equaled fiftyfour percent of the covenant requirement. The actual debt service and reserve requirements coverage from Net Revenue was equal to seventy percent. The Authority was able to pay its annual debt service obligations by a utilizing a portion of the parking revenues accumulated in the Supplemental Debt Service Reserve Fund during the capitalized interest period together with other pledged revenues collected during The Authority wrote to the trustee On October 9, 2008 to request a waiver for the hiring of another special parking consultant due to its failure to comply with fiscal year 2008 revenue covenant. The trustee polled bondholders and the request was granted by a majority of bondholders. This will give the Authority additional time to continue assessing the effects of the implementation of the special consultant recommendations. Effective October, , the Authority raised parking rates in an effort to increase revenues. A copy of the waiver request to trustee, which includes the new rate structure is attached hereto. The calculation of debt service coverage ratios for fiscal year 2008 is shown on Table V-1 below. Table V-1 Revenue Covenant FY 2008 Revenues deposited into Revenue Fund and Interest Income Revenues deposited into the revenue fund $4,896, Interest income on operation revenues $45, Sub-total revenues $4,941, Expenses (actual expenses paid during the year through June 30, 2008) Administrative $419, Operating $1,003, Sub-total expenses $1,423, Total net revenues $3,518, Revenue covenant coverage requirement FY08 covenant 130% of annual debt service $4,971,856) $6,463, Operating reserve requirement $41, Repair and replacement reserve requirement (account fully funded in FY08) $0.00 Replenishment of debt service fund $0.00 Net revenue covenant requirement $6,505, Net revenue covenant deficit ($2,986,648.03) Net revenue as percentage of covenant requirement 54.09% Net revenue as percentage of actual debt service and reserves requirements 70.18% 12

15 C. BONDS OUTSTANDING AND SUBDORDINATE DEBT The Authority does not have any subordinate debt. The total outstanding bonds are shown in the table below. Table V-2 Outstanding Series 2003 Bonds CUSIP Coupon Issue Outstanding Term Number Rate Amount Amount AA9 June 1, % $7,185,000 $7,185, AB7 June 1, % $1,675,000 $1,675, AC5 June 1, % $57,880,000 $57,880,000 D. DEBT SERVICE PAYMENTS Total $66,740,000 $66,740,000 The amount of Series 2003 Bonds debt service paid in fiscal year 2008 and the amount of debt service scheduled to be paid in the fiscal year 2009 are shown in Table V-3 below. Table V-3 Debt Service Payments FY 2008 and FY Interest Payment, December 1 $2,485,928 $2,485,928 Interest Payment, June 1 $2,485,928 $2,485,928 Principal Payment, June 1 $0 $400,000 Total Debt Service $4,971,856 $5,371,856 E. ASSESSED VALUE The assessed value for all parcels within the District as of January 1, 2008 increased by 4% from the same period last year as shown in the table below: Table V-4 Assessed Valuation January 1, 2008 January 1, 2007 January 1, 2008 Total Increase Percent Increase $92,334,200 $96,388,900 $4,054,700 4% F. CHANGES TO THE ADMINISTRATOR OR DEVELOPER There have been no changes to the names of the Administrator or the Developer. 13

16 G. CHANGES IN THE METHODOLOGY OF LEVYING SPECIAL ASSESSMENTS There have been no changes to the methodology of levying special assessment in the district. H. SIGNIFICANT AMENDMENTS TO LAND USE OR LEGAL CHALLENGES TO CONSTRUCTION OF THE FACILITIES The Authority or the Administrator has no actual knowledge of any significant amendments to the land use entitlements or legal challenges to the construction of the Facilities. I. CHANGES TO THE NATURE OF THE FACILITIES There has been no change to the nature of the Facilities. J. SPECIAL ASSESSMENT PAID BY OWNER AND CLASSIFICATION The table shows the special assessments paid by property owner and by class of property (commercial or hotel) for the 2008 fiscal year, based on the status and ownership of property as of January 1, The table also shows the percentage paid by each taxpayer: Table V-5 Special Assessments Paid By Owner and Classification Owner Classification Total Percent Broad Seven LLC Commercial $11, % Richmond Equities LLC Commercial $71, % Ajax Realty Corp* Commercial $16, % Berry Burk LLC Commercial $12, % Miller & Rhoads Master Condo Unit Owners Association Hotel $124, % Apple Seven Spe Richmond Inc Hotel $256, % Total $492, % *Owns 3 properties subject to special assessments K. DRAWS ON DEBT SERVICE RESERVE FUND No draws have been made from the Debt Service Reserve Fund. Consequently, the trustee has not made any requests to the City to replenish any such draw as outlined in Memorandum of Understanding. 14

17 L. AMENDMENTS TO THE CONTINUING DISCLOSURE AGREEMENT There are no amendments made to the Continuing Disclosure Agreement. 15

18 VI. OTHER AUTHORITY EVENTS AND NOTICES Effective January 1, 2008, the Authority hired a part-time administrator to manage its affairs and to serve as it parking consultant. The part-time administrator/parking consultant is an independent contractor and not an employee of the Authority. The administrator has not received nor has the Authority filed any notice in regards to the occurrence of any material event. However, there are some notices that have been included together with this filing for information purposes. These notices include: 1. Authority s letter to trustee requesting waiver of special parking consultant requirement. 2. Authority presentation to the Richmond City Council dated July 17,

19 Broad Street Community Development Authority c/o James R. Johnson 951 East Byrd Street, Suite 930 Richmond, VA October 9, 2008 U.S. Bank, National Association Corporate Trust Department 1051 East Cary Street Suite 1150 Richmond, VA Attention: Stephanie E. Haysley, Relationship Manager $66,740,000 Revenue Bonds Series 2003 Bond Indenture Waiver Request Ladies and Gentlemen: The Broad Street Community Development Authority ( CDA ) did not achieve net revenue coverage (130%) required for fiscal year 2008 by Section 9.7(b) of the Indenture of Trust, dated as of May 15, 2003, under which the above-referenced bonds were issued. The 130% net revenue requirement for FY2008 is $6,505, Actual net revenue was $3,518, or 54.09% of the required amount as determined by Municap, Inc, the CDA s independent consultant, using unaudited year-end numbers. Net revenue was 70.18% of the amount needed to pay debt service and fund reserves, which funding requirements were met using net revenue and funds previously accumulated in the supplemental debt service reserve fund. Municap s report is attached as Exhibit A. To address this issue, the CDA has raised transient and monthly parking rates at all of its parking facilities effective October 1, The new rates are based upon recommendations of the CDA s parking operator which are based on current market conditions. The revised rate schedule is attached as Exhibit B. In any year in which required net revenue coverage is not met, Section 9.7(c) of the Indenture requires the CDA to retain a special consultant to review parking operations and make recommendations towards achieving coverage in the next fiscal year. As long as the CDA follows the recommendations of the consultant to the extent it is legally permitted to do so, the coverage requirement will be deemed to have been met. The CDA is required to provide a copy of the consultant s report to the bond trustee within 60 days after receipt of the final audit for the year.

20 U.S. Bank, National Association October 9, 2008 Page 2 In light of the rate increase imposed by the CDA, and taking into consideration that a special consultant was obtained for FY2006, the CDA requests a waiver of the special consultant requirement for FY2008. The CDA does not expect the final audit to result in a material change of the unaudited results and is requesting a waiver at this time. The final audit is being prepared, and a copy will be provided to U.S. Bank, as trustee, promptly upon completion as required by the Indenture. We realize this request may involve soliciting the consent of a majority of the beneficial holders of the bonds. We authorize you to obtain a list of the beneficial holders from the Depository Trust Company ( DTC ) or other appropriate entity if not DTC. The CDA will pay the costs associated with processing this request, including the fees of DTC. Your prompt attention to this matter will be appreciated. Please let me know if you require anything further in connection with this request. Sincerely, James R. Johnson Chairman cc: Broad Street CDA Board Members Lynne Lancaster Mr. Charles Kungu Mr. Carl Woo George L. Scruggs, Jr., Esquire Exhibit A Municap Coverage Report Exhibit B Parking Rate Schedule

21 Memorandum To: Broad Street CDA Board of Directors From: MuniCap, Inc Date: September 24, 2008 Re: Broad Street CDA FY08 Revenue Covenant Compliance Table A represents the monthly activities for unaudited revenues deposits, interest income and expenses payments for fiscal year 2008 as reported in account statements provided by US Bank National Association (formerly Wachovia Bank, National Association), the trustee for the Series 2003 Bonds: Revenues represent parking revenues, special assessments and payments in lieu of assessments received by the trustee during FY08 and deposited into the revenue fund during the course of the year. Interest income represents investment income realized on revenues held by the trustee on various Authority accounts. Operating and Administrative expenses represent all payments made by the trustee from the operating and administrative accounts. Table A Broad Street CDA FY08 Unaudited Monthly Revenues, Interest Income and Expenses Month Revenues Interest Income Expenses Operating Administrative Jul-07 $465, $1, $230, $10, Aug-07 $667, $3, $67, $88, Sep-07 $396, $3, $57, $49, Oct-07 $230, $5, $91, $49, Nov-07 $529, $6, $0 $0 Dec-07 $322, $7, $63, $66, Jan-08 $214, $2, $43, $3, Feb-08 $506, $2, $62, $51, Mar-08 $383, $2, $58, $4, Apr-08 $578, $3, $119, $58, May-08 $304, $3, $74, $23, Jun-08 $296, $3, $135, $13, Total $4,896, $45, $1,003, $419, Alexander Bell Drive, Suite 220 Columbia, MD Phone: (443) Fax: (443)

22 Compliance with Revenue Covenants Under the terms bond indenture, the revenue covenant became effective in the first full fiscal year beginning after completion of the project. The Authority filed the certificate of substantial completion in May As a result, fiscal year 2006 was the first year in which the Authority was required to comply with revenue covenants. For fiscal year 2006 Net Revenues were required to at least equal the sum of (a) 100% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2007 Net Revenues were required to at least equal the sum of (a) 120% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2007, the Authority did not meet the covenant requirement. Net Revenues equaled seventy-nine percent of the covenant requirement. For fiscal year 2008 and going forward, Net Revenues are required to at least equal the sum of (a) 130% of debt service for the fiscal year, plus (b) the funding requirements for the Operating Reserve Fund, Repair and Replacement Reserve Fund and the Debt Service Reserve Fund. For fiscal year 2008, the Authority did not meet the covenant requirement. Net Revenues equaled fifty-four percent of the covenant requirement. The actual debt service and reserve requirements coverage from Net Revenue was equal to seventy percent. The Authority was able to pay its annual debt service obligations by a utilizing a portion of the parking revenues accumulated in the Supplemental Debt Service Reserve Fund during the capitalized interest period together with other pledged revenues collected during The calculation of these ratios is shown on Table B below. Table B Broad Street CDA FY08 Revenue Covenant Coverage Revenues deposited into Revenue Fund and Interest Income Revenues deposited into the revenue fund $4,896, Interest income on operation revenues $45, Sub-total revenues $4,941, Expenses (actual expenses paid during the year through June 30, 2008) Administrative $419, Operating $1,003, Sub-total expenses $1,423, Total net revenues $3,518, Revenue covenant coverage requirement FY08 covenant 130% of annual debt service $4,971,856) $6,463, Operating reserve requirement $41, Repair and replacement reserve requirement (account fully funded in FY07) $0.00 Replenishment of debt service fund $0.00 Net revenue covenant requirement $6,505, Net revenue covenant deficit ($2,986,648.03) Net revenue as percentage of covenant requirement 54.09% Net revenue as percentage of debt service and reserves requirements 70.18% Alexander Bell Drive, Suite 220 Columbia, MD Phone: (443) Fax: (443)

23 5th & Broad Rate History File name:cdaratehist.xls Transient rates July, 2007 December, 2007 Effective Current Oct hour $4.00 $4.00 $ hours $8.00 $8.00 $ hours $11.00 $12.00 $ hours $13.00 $14.00 $ hours $15.00 $15.00 $17.00 Early Bird (1) $7. 00 $7. 00 $7. 00 Monthly rates Unreserved $75.00 $75.00 $ Reserved $ $ $ (1) Early Bird implemented in late 2005.

24 7th & Grace Rate History File name:cdaratehist.xls Transient rates July, 2007 December, 2007 Effective Current October, hour $4.00 $4.00 $ hours $8.00 $8.00 $ hours $13.00 $13.00 $ hours $16.00 $17.00 $18.00 Nights /Weekends $4.00 $4.00 $4.00 Monthly rates Unreserved $ $ $ Reserved $ $ $135.00

25 7th & Marshall Rate History File name:cdaratehist.xls Transient rates July, 2007 to December,2007 Effective Current October, hour $4.00 $4.00 $ hours $7.00 $7.00 $ hours $10.00 $11.00 $ hours $13.00 $14.00 $16.00 Monthly rates Nights/weekends $7.00 $7.00 $8.00 Early Bird $7.00 $7.00 $7.00 Unreserved $85.00 $85.00 $95.00 Reserved $ $ $110.00

26 5th & Marshall Rate History File name:cdaratehist.xls Purpose: To document the rate history for the 5th & Marshall garage. Transient rates June 2003 to December, 2007 Effective December 2005 Current October, hour $4.00 $4.00 $ hours $7.00 $7.00 $ hours $10.00 $11.00 $ hours $13.00 $14.00 $16.00 Monthly rates Nights/weekends s $8. 00 $8. 00 $8. 00 Early Bird (1) $7.00 $7.00 $7.00 Event rate (1) $5.00 $8.00 $9.00 Hospitality House $5.00 $5.00 $5.00 Unreserved $85.00 $85.00 $95.00

27 6th & Franklin Rate History File name:cdaratehist.xls July, 2007 December, 2007 Effective Monthly rates Current October, 2008 Unreserved $ $ $ Reserved $ $ $ Tandem $80.00 $80.00 $85.00

28 Broad Street Community Development Authority A Presentation to the Richmond City Council Finance Standing Committee James R. Johnson Chairperson, Broad Street CDA Thursday, July 17, :00pm

29 Budget Information Objectives of Presentation 2 Capital Improvement Needs Elevator Repairs and/or Replacement South of Grace Street Properties Broad Street Community Development Authority 12/3/2008

30 Operating Budget 3 Budget Cash Basis Budget Projected Parking Revenues $ 3,479,896 $ 3,006,331 $ 2,980,660* Special Assessment Revenue 492, , ,614 Payment in Lieu of Assessments 1,040,000 1,034,266 1,040,000 Interest Earnings on Debt Service Reserve Fund 254, , ,625 Total Budgeted Revenues 5,267,190 4,787,891 4,766,899 Parking Expenses 679, , ,395 Other Operating Expenses 365, , ,983 Total Budget Expenses 1,044, ,445 1,203,378 Projected Cash from Operations $ 4,222,200 $ 3,789,446 $ 3,563,521 * Reflects $340,000 adjustment relating to the Global Settlement Broad Street Community Development Authority 12/3/2008

31 Cash Available for Debt Service Payments 4 Required Debt Service Payments Principal Payments $ 400,000 Interest Payments 4,971,856 $ 5,371,856 Cash Provided From Operations $ 4,222,200 Less Repair and Replacement Reserve Fund deposit ( 75,000) Less Payments Received After June 1, 2009 ( 949,273) $ 3,197,927 Plus Debt Service Fund at July 1, 2008 $ 656,220 Plus Supplemental Debt Service Reserve Fund 639,434 Plus Operating Reserves 56,005 Plus Repair and Replacement Reserve 206,184 Plus CDA Repair and Replacement Reserve 491,304 $ 5,247,074 $ 5,247,074 Projected Short Fall on June 1, 2009 $ 124,782 Broad Street Community Development Authority 12/3/2008

32 Funding Alternatives for June 1, The payments received after June 1, 2009, would be available to repay the following reserves: Debt Service Reserve Fund $ 124,782 Operating Reserve Fund 75,000 Repair and Replacement Fund 206,184 CDA Repair and Replacement Fund 491,304 Supplemental Debt Service Reserve Fund 52,003 $ 949,273 Acceleration of Special Assessment and Payments in Lieu of Assessment payments. Acceleration of other payments from the City of Richmond Increase revenues/decrease expenses. Broad Street Community Development Authority 12/3/2008

33 Capital Improvement Needs 6 Replacement of existing 3 unit elevator bank in 7 th and Marshall Garage with an estimated cost of approximately $750,000 Repair of the second floor ceiling at the 6 th and Franklin Deck with an estimated cost of approximately $10,000 Replacement of parking equipment in all garages with an estimated cost of $ Broad Street Community Development Authority 12/3/2008

34 6 th and Franklin Deck South of Grace Properties Basement and First floor have been renovated and provide parking for 94 vehicles. Floors 2 to 5 have not been renovated and would provide an additional 200 vehicle parking spaces. The lack of renovation and maintenance on floors 2 to 5 are beginning to impact the use of the first floor. 7 th and Grace Surface Lot Provides 124 parking spaces. Was originally intended to house a parking deck that would connect with the 6 th and Franklin Deck and would accommodate approximately 702 additional parking spaces. Combined Facilities Total Size: 71,201 Sq. Feet / acres Total Assessed Valuation: $6,729,000 Estimated As Is market value: Below Assessed Valuation 7 Broad Street Community Development Authority 12/3/2008

35 Alternatives Under Review Continue to operate as we presently operate the facilities. 8 Revenues Budget Expenses and Capital Improvements Cash Flow 6 th and Franklin $ 123,480 $ 42,826 $ 80,654 7 th and Grace Lot 298,054 57, ,915 $ 421,534 $ 99,965 $ 321,569 Sell the existing 6 th and Franklin Parking Deck if we cannot renovate the upper floors to provide necessary parking. Work with Commonwealth of Virginia and/or other interested parties to develop a parking deck at 7 th and Grace Street to accommodate parking demands. Broad Street Community Development Authority 12/3/2008

36 Alternatives Under Review 9 Estimated new Parking demand. Center Stage Commonwealth of Virginia Miller & Rhoades Hotel Federal Courts Building Downtown Redevelopment Efforts Other Downtown Parkers Broad Street Community Development Authority 12/3/2008

37 Issues To Be Addressed Existing Agreements with ECI for developmental rights and retail development rights on these properties. 10 Need to remove mortgage from 6 th and Franklin Deck and 7 th and Grace Street lot as part of a cooperative effort to further develop these parking facilities. Agreement to ensure that 700 parking spaces are available to the general public for performance events at Center Stage. Funding for new projects. Broad Street Community Development Authority 12/3/2008

38 VII. APPENDIX A: AUTHORITY AUDITED FINANCIAL STATEMENTS

39 BROAD STREET COMMUNITY DEVELOPMENT AUTHORITY (A Component Unit ofthe City ofrichmond, Virginia) Basic Financial Statements June 30, 2008 and 2007 (With Independent Auditors' Report Thereon)

40 KPMG LLP Suite East Cary Street Richmond, VA Independent Auditors' Report The Board ofdirectors Broad Street Community DevelopmentAuthority: We have audited the accompanying statements of net assets ofthe Broad Street Community Development Authority (the Authority), a component unit of the City of Richmond, Virginia, as of June 30, 2008 and 2007, and the related statements of revenues, expenses, and changes in net assets and cash flows for the years then ended. These fmancial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these basic fmancial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the Specifications for Audits ofauthorities, Boards and Commissions, issued by the Auditor of Public Accounts of the Commonwealth of Virginia. Those standards and specifications require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes consideration of internal control over fmancial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Authority's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements, assessing the accounting principles used and. significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the basic financial statements referred to above present fairly, in all material respects, the financial position of the Broad Street Community Development Authority as of June 30, 2008 and 2007, and the changes in its financial position and its cash flows thereof for the years then ended, in conformity with U.S. generally accepted accounting principles. The Management's Discussion and Analysis on pages 2 through 8 is not a required part of the basic financial statements but is supplementary information required by U.S. generally accepted accounting principles. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit this information and express no opinion on it. December 3, 2008 KPMG LLP, a U.S. limited liability partnership, is the U.S. member firm of KPMG International, a Swiss cooperative