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Redevelopment of City-Owned Property
LaVilla District – Jacksonville, FL Bid No: ESC-0456-13
Gorman & Company, Inc.
Hana Eskra, Florida Market President
9100 S. Dadeland Blvd, Suite 1500 Miami, Florida 33156 (305)668.5810
May 1, 2013 COPY
May 1, 2013 Deidra Baines, CPPB Purchasing Analyst 214 N. Hogan Street, Suite 800 Jacksonville, FL 32202 RE: Request for Proposals for Redevelopment of City‐Owned Property – LaVilla District Bid No: ESC‐0456‐13 Dear Ms. Baines, Gorman & Company is proud to submit to the City of Jacksonville the attached response to the above‐ referenced Request for Proposals. Gorman & Company, Inc. has over 27 years of experience in developing some of the nation’s highest quality workforce housing and neighborhood revitalization projects. Gorman regularly receives local and national recognition for its developments including a recent national award for the “Best Mixed‐Use/Master Planned Development” for Villard Square in Milwaukee, Wisconsin. This past fall, we received an award from the American Planning Association for excellence in affordable housing for the development of the Glendale Enterprise Lofts in Glendale, Arizona. Gorman has developed a reputation in Florida and our other core markets for being a strong partner with non‐profit organizations and local government agencies. We have a reputation for being an innovative problem solver that gets things done across the United States. You will find Gorman & Company to be extremely flexible, cooperative and creative in structuring a unique partnership model that will serve to benefit the objectives of both the City of Jacksonville and Gorman. We have access to significant short term predevelopment capital, construction and permanent financing, as well as a stellar track record with all of our equity partners. We have structured many complex transactions involving a multitude of layers of public and private financing, and have access to some of the nation’s most experienced attorneys, CPA’s and consultants to supplement our collective capacities to take any feasible project across the finish line. Our response to this RFP includes two separate proposals; both include market rate rental apartments with live/work lofts and commercial/retail space:
REAL ESTATE DEVELOPMENT AND MANAGEMENT 200 N. Main Street Oregon, WI 53575 phone 608.835.3900 fax: 608.835.3922 www.GormanUSA.com
Statement of Qualifications
1. Development Plan, Economic Impact, Design Concept and Vision Gorman & Company, Inc.’s response to this RFP includes two separate proposals for the sites. Proposal A encompasses Development Site 2 only, as described below. Proposal B includes the same plans for Development Site 2 as Proposal A, but also has an option of including Development Site 1. Details of each proposal are below. We strongly believe that both proposals contain the vision, design, and features of a catalytic project that will further the City’s efforts to advance the investment and economic opportunities in the neighborhood. Our proposals provide for housing, retail space and an inviting, walkable neighborhood that is reminiscent of the historic LaVilla community. Proposal A (Development Site 2) Gorman & Company, Inc.’s Proposal A includes Development Site 2 only. It encompasses re‐opening Arthur Street between W. Union Street and W. Beaver Street and includes three, three‐story buildings, open space, and parking. Two of the buildings line either side of Arthur Street, each with 3,000 square feet of corner retail space at the intersection with W. Union Street and residential units along Arthur Street. The third building runs along N. Jefferson Street and includes apartments and retail space fronting the corner at W. Union Street. Street‐level apartments will be designed as live‐work lofts for neighborhood entrepreneurs and housing for local families. This design offers economic opportunities for local residents and is pedestrian‐oriented with parking located on the street or behind the buildings. LaVilla Enterprise Lofts includes 105 apartment units total, 24 of which are live‐work units, giving local entrepreneurs’ the ability to live and work in their neighborhood. The remaining units are available for families and seniors from the community. The proposed unit mix includes (39) one‐ bedroom units, (51) two‐bedroom units, and (15) three‐bedroom units distributed within the three mixed‐use buildings. The plans also feature 9,000 SF of commercial space (3,000 SF per building) and 115 parking spaces. Re‐opening Arthur Street, adding retail space along W. Union Street, and building live/work lofts fronting Arthur Street and W. Jefferson Street bring back the history of the LaVilla neighborhood. It allows the residents to avail themselves of housing and economic development opportunities in their own neighborhood. Open green space would buffer the parking area from W. Union Street. Proposal B (Development Sites 1& 2) Proposal B includes all elements of Proposal A as outlined above, but would also add an option to include Development Site 1, with a 6,000 SF Restaurant and an additional three‐story building with
35 apartments, including 8 live‐work units. The proposed unit mix for both Development Site 1 and 2 includes (52) one‐bedroom units, (68) two‐bedroom units, and (20) three‐bedroom units distributed within the four mixed‐use buildings. The total unit count for Proposal B is therefore 140 apartment units, including 32 live‐work units, 9,000 SF of retail space, and the 6,000 SF restaurant. The current restaurant building would be demolished, with the new spaced located at the corner of N. Davis Street and W. Union Street. Outdoor seating is available for the restaurant as well as an additional entrance to the parking from W. Union Street. Site plans and preliminary renderings for both Proposals A and B are enclosed with this response. Economic Impact At Gorman & Company, we recognize that the projects we build not only bring quality housing and act a catalytic drivers for urban renewal neighborhoods, but they are also important economic and job generators. New construction and development of projects of this magnitude bring significant job opportunities to local communities such as the City of Jacksonville. In our experience, our 100+ unit multi‐family projects create 70‐100 jobs during the construction phase of the project. This experience is borne out by a 2009 study by the National Association of Home Builders which states that every 100 units of new construction multi‐family housing creates 80 direct jobs and an another 42 indirect jobs (through the buying of materials, etc.). According to a recent analysis of the economic impact of rental housing construction completed by Florida Housing Finance Corporation, new construction projects create approximately 350 new jobs per property1. This includes direct, indirect, and induced jobs created by the construction of the development. New construction also creates additional permanent jobs, particularly for management and maintenance of the new development. It is anticipated that this development will experience similar job opportunities for Jacksonville and will create a minimum of 80 direct jobs and 30 indirect jobs during construction. All construction jobs will provide family‐supporting wages. Both Proposals A & B include commercial/retail space within the building. Proposal A has 9,000 square feet of commercial space and Proposal B includes that 9,000 square feet and adds an additional 6,000 square feet for a restaurant. Successful businesses in these commercial/retail spaces will create additional economic opportunities and additional permanent jobs for downtown Jacksonville. The type of businesses that occupy these spaces will determine the number of jobs created but we estimate a range of 10‐50 permanent jobs will be created by this development (the higher end of the range includes employees of the restaurant). In addition, Proposals A & B have a total of 30 street‐level live/work units, which would be available for neighborhood entrepreneurs. This design feature will provide additional economic opportunities for residents, giving them the opportunity to run small businesses in these units. Lastly, construction of the proposed development will result in an increased tax base for the City of Jacksonville. Currently, the properties are mostly vacant and are owned by the City, which means
“Financing Affordable Rental Development: Jobs Created by New Construction and Preservation – March 2011”, Florida Housing Finance Corporation
they are property tax exempt. The development and transfer of the sites would lead to increased property taxes. We estimate, based on similar residential properties downtown, that the value of LaVilla Enterprise Lofts under Proposal A would generate an additional $189,000 in annual property taxes for the City of Jacksonville and for Proposal B, that amount would increase to $252,000. Design & Compatibility Gorman & Company’s proposals are consistent with the local plans and districts referenced in this Requests for Proposal: Downtown Jacksonville Master Plan, 2000 o Our proposals include a mixture of commercial and residential, maximized lot coverage, neighborhood retail and incubator businesses, and workforce urban live‐ work housing to serve downtown employees, as outlined in the Plan. Zoning Overlay District – LaVilla Neighborhood, 2003 o Consistent elements include zero building set‐back at lot line, maximized lot coverage, inviting facades with awnings and overhangs, a variety of materials, close proximity of uses, landscaping in and around parking areas, wrought iron fencing and shrubs around parking, and transparent materials at street frontage. City of Jacksonville Downtown Action Plan, 2007 o As highlighted in this plan, our proposals: encourage walkability; are destinations for unique retail; create a neighborhood feel; provide workforce housing; include streetscaping with trees, benches, and lighting; and help to slow down traffic. JEDC Strategic Plan – Downtown Workforce Housing Strategy o Our proposals include an array of workforce housing options for families and residents in the neighborhood, including live‐work lofts for entrepreneurs. Downtown Transportation Concurrency Exception Area Implementation Plan, 2005 o Both Proposals A&B encourage shared parking where appropriate, particularly with the live‐work units. 2. Qualifications and Experience of Proposer Resumes of Key Individuals at Gorman & Company, Inc. GARY J. GORMAN PRESIDENT After completing his B.A. in Economics and Law Degrees from the University of Wisconsin at Madison, Mr. Gorman began his career as a practicing attorney focusing on representation of developers and real estate syndicators. In 1984 Mr. Gorman formed a firm for the purpose of developing and syndicating multifamily real estate projects. After the passage of the Tax Reform Act of 1986, Mr. Gorman specialized in the development of affordable multifamily rental communities utilizing the tax credit created by Section 42 of the 1986 Tax Reform Act.
Gorman & Company, Inc. is now a major developer of affordable rental housing as well as historic renovations. The firm has offices in Wisconsin, Illinois, Arizona, and Florida, as well as projects in six states. Gorman & Company, Inc. has in‐house design and construction divisions that have successfully completed over $350 million of new construction and major renovations. Its affiliated property management firm manages over three thousand units. Mr. Gorman serves as a board member for Catholic Charities and Northern Bankshares, Inc. Mr. Gorman also serves as a member of the Steering Committee for the Housing Credit Group of National Association of Homebuilders (NAHB) and on the Advisory Board for the Federal Home Loan Bank of Chicago. In addition, Mr. Gorman previously served on the Board of Directors for the Madison Area Apartment Association, Credit Bureau of Madison, South Madison Community Development Corporation, and Business Education Partnership. TOM CAPP CHIEF OPERATING OFFICER Tom Capp has directed Gorman & Company's real estate development since 1994. Under his direction, the company has focused on urban revitalization, mixed‐income housing, historic preservation and the preservation of affordable housing. Prior to joining Gorman & Company, Mr. Capp was a Senior Associate at Camiros, Inc., an urban planning firm based in Chicago. Mr. Capp is a former public official having served as mayor of Fitchburg, Wisconsin, where he also served as chairman of the city's Planning Commission and chairman of its Economic Development Commission. As executive assistant to Dane County Executive Rick Phelps from 1993‐1994, he directed land use and development policy for Dane County (Madison, Wisconsin and surrounding areas). Mr. Capp has a degree in Economics and Political Science from the University of Illinois at Champaign‐Urbana. Tom has served on many industry boards and commissions. He currently serves on the Board of Directors of the National Housing and Rehabilitation Association. In 2007 he was appointed by the White House as a Panel Expert for the Preserve America Summit, an initiative created by executive order to modernize our nation’s approaches to historic preservation. He is a frequent speaker and presenter at conferences sponsored by state housing authorities, planning associations, and housing industry groups such as NCSHA, NH&RA, and IPED. HANA ESKRA FLORIDA MARKET PRESIDENT Hana Eskra serves as Florida Market President for Gorman and Company. Her experience includes more than 18 years of affordable housing development consultation and financial feasibility and project management services, as well as housing policy analysis and implementation. Ms. Eskra has worked for local governments and both non‐profit and for‐profit housing development organizations. She has an operational knowledge of nearly all aspects of affordable housing.
Ms. Eskra has been directly involved in the development of over $140 million of affordable multi‐family and single family housing units and has worked with local officials to create housing policies that encourage the development of affordable housing in their communities. In her previous positions, Ms. Eskra worked for a national non‐profit to acquire, recapitalize and rehabilitate a failing low‐income housing tax credit portfolio and was Acting Director of Miami‐Dade County’s Office of Community and Economic Development. In that capacity, she managed 120 employees and oversaw a $400 million operating and capital budget that incorporated federal, state and local funding for affordable housing. Ms. Eskra has also worked as a technical advisor for a Florida statewide affordable housing organization, providing technical assistance and training to non‐profits and local governments. She also was the Director of Real Estate for the Greyston Foundation, a non‐profit community development corporation located in Yonkers, New York. Ms. Eskra has a Master of Public Administration from the University of North Carolina at Chapel Hill and wrote her Master’s thesis on the low‐income housing tax credit. She resides in Miami, Florida. PATRICK PATRELLO LEAD ARCHITECT, FLORIDA Patrick Patrello has more than 10 years of experience in commercial and residential architectural design. He is a registered Architect in Wisconsin, Illinois, Florida, Michigan and is NCARB certified. His experience includes a wide range of construction types and occupancy classifications including adaptive reuse. Prior to joining Gorman & Company, Patrick worked for the City of Detroit. Previously, he was with an award winning Chicago architecture firm recognized as a leader in the design of mid to high‐rise residential and mixed‐use developments. Patrick received his Bachelors and Masters of Architecture degrees from the University of Michigan. He is passionate about urban redevelopment. Firm Expertise Gorman & Company, Inc. has developed a portfolio of over 50 multi‐family rental properties, representing over 3,000 units of housing in 6 states, including Florida, Arizona, Wisconsin, Illinois, Mississippi, and Louisiana. Gary J. Gorman started Gorman & Company in 1984 to develop, syndicate, and manage multifamily housing properties. Our mission is to create high‐quality housing opportunities for a variety of income levels. Gorman & Company, Inc. is listed as the 26th largest developer of low and moderate income housing in the May 2013 issue of Affordable Housing Finance Magazine. Gorman & Company’s ability to assemble the resources necessary to tackle tough developments has made it an industry leader in partnering with communities to address housing needs. The company has extensive experience in developing a wide variety of low, moderate, and mixed income housing for entrepreneurs, young professionals, special needs populations, families, and the elderly. Gorman & Company works closely with local governments and community groups to help communities meet their development, planning, economic and social goals. Gorman’s staff brings a broad range of development, construction and real life experience to the development process and applies those skills to solve problems and help communities bring their plans to reality. Our developments range from upscale condominium communities to mixed‐use developments in downtown redevelopment areas. Gorman’s unique affordable housing communities offer high quality amenities that serve the creative class, seniors, accessibility‐challenged, entrepreneurs, families, and individuals.
Of the over 50 projects that Gorman & Company has developed in the past 27 years, the company has never had a foreclosure, never defaulted, and never has had the general partner replaced by the investor. WsG and Partners LLC Wight Greger, President and CEO of WsG and Partners LLC, opened her own practice as a Redevelopment Consultant with a focus on real estate development and public finance. Wight’s expertise comes from over 20 years of experience in the community development arena in Florida, and she has worked in many communities throughout Florida leveraging public financing programs with private capital. Wight currently serves on the Jacksonville Housing Finance Authority Board, the Florida Housing Coalition Board Executive Committee, and is a member of the Jacksonville Chamber of Commerce and Northeast Florida Builders Association. Until recently, Wight served as the Director of the City of Jacksonville’s Housing and Neighborhoods Department. As Director of the Housing and Neighborhoods Department, Wight was the Executive Director of the Jacksonville Housing Finance Authority (JHFA). Wight’s primary responsibilities included managing the department’s 46‐member staff and $20+million budget, creating and structuring programs to respond to community needs; and recommending policy options to the Mayor and City Council. Prior to her employment with the City, Wight served for ten years as Senior Technical Advisor for the Florida Housing Coalition. Ms. Greger will have a consultant role on the project. She will serve as a liason with the local government, assisting with the entitlement process and lending her local expertise to the project.
Project Experience PARK EAST ENTERPRISE LOFTS MILWAUKEE, WI These stylish urban lofts provide entrepreneurially‐minded residents with creative space in their units and also unit and project amenities that give them the opportunity to start businesses from their homes. Community amenities include multiple conference rooms, office spaces, copy and media/presentation center, and a library. The development also has a community kitchen, fourth‐floor community room with rooftop patio and fireplace, and health facility. This property has helped spur redevelopment of the Park East corridor in Milwaukee and is across the street from Manpower International’s new world headquarters. In 2007, Park East received an award of excellence in urban design from Milwaukee Mayor Tom Barrett, received a 2007 WCREW award, was a large project finalist in the 2007 MANDI awards, and was an Affordable Housing Finance’s reader’s choice finalist. VILLARD SQUARE GRANDFAMILY MILWAUKEE, WI Villard Square GrandFamily Milwaukee is a mixed‐use development that addresses two strong needs of Northwest Milwaukee – relocation of a neighborhood library that was housed in a building that was failing, and housing for families where grandparents are the primary caregivers for their children’s kids. Villard Square was recently awarded a national award from Affordable Housing Finance for Best Master‐Planned/Mixed‐Use Development, The Milwaukee Mayor’s Design Award, Public Policy Forum’s Project of the Year for Best Public‐Private Cooperation, and the 2012 MANDI LISC State Farm Insurance Building Blocks Award for a real estate project that contributed significantly to the enhancement of the community.
STATE AT MAIN RACINE, WI State at Main is the northern anchor of Racine’s downtown redevelopment. This mixed‐use community provides 16,800 square feet of retail, 84 active‐adult affordable apartment homes and 23 market‐rate condominiums. This multi‐faceted development brings a vibrant urban feel to Racine’s reemerging downtown. Located across the street from Belle Harbor, State at Main is helping Racine meet its goals of bringing and keeping more people and employment back to downtown Racine. State at Main received a recognition award from Sustainable Racine. GRAND RIVER STATION LA CROSSE, WI Grand River Station Apartments is comprised of a number of components which include a transit center, retail, rental housing, and a parking deck. The rental housing component of this development includes 72 units and is targeted toward artists and entrepreneurs. The design of the units includes live/work space and project amenities such as a business center, artists’ workspace, and an art gallery to cater toward these populations. The first floor transit center serves as a hub for public transportation in downtown La Crosse consisting of 10,000 square feet and also located at ground level. The third floor of the building has a parking deck available to all residents.
BLUE WATER TAVERNIER, FL Blue Water is a 36 unit development on a 2.7 acre site on Tavernier Key in Monroe County. Gorman & Company teamed with Duany Plater‐Zyberk (DPZ), an internationally renowned architectural and planning firm to focus on creating innovative design approach to housing. The team was competitively selected by the Florida Keys (Monroe County, FL) to develop viable workforce housing. The County contributed land, fees and entitlements to the project. GLENDALE ENTERPRISE LIVE‐WORK LOFTS GLENDALE, AZ Glendale Enterprise Live‐Work Lofts is a 28‐unit, mixed income development specifically designed to serve the city’s downtown workforce as a “live‐near‐work” development. Gorman & Company, along with ABIL, worked closely with Glendale’s largest employers to understand their workforce housing needs. The idea, in part, is to offer Glendale Enterprise Live‐Work Lofts as an asset to companies in their efforts to recruit and retain employees. In addition, some of the unit designs, and most of the common amenities, are designed to allow entrepreneurial people to further their work and small businesses.
MOLINE LIVE‐WORK LOFTS MOLINE, IL In the Quad Cities, Gorman & Company created a mixed‐use, mixed‐income, 69‐unit "live‐work" development. It is designed to serve up‐and‐coming entrepreneurs and other members of the region’s evolving "creative class." The development is the result of an innovative partnership that includes: the city; the local Housing Authority; a business‐focused nonprofit organization; and three of the region’s largest employers. The development features live‐ work units that have commercial street entrances, activating the street and allowing small business owners to combine their office, studio, and residence in one place. THE LOFTS AT MCKINLEY PHOENIX, AZ The Lofts at McKinley is a 60‐unit, mixed‐use, affordable development specifically designed to serve independent seniors 55 years and better in the city’s downtown core. The development is a 3‐story, urban loft building. It fronts W. McKinley St. and N. 5th Avenue in downtown Phoenix’s historic Roosevelt Neighborhood. Lofts at McKinley involves a subterranean, podium parking structure with three stories of residential units constructed on top of the podium. Amenities are targeted towards the creative class, with a computer graphics lab, a clay potters room, and a painting studio. This offers unique synergies between the creative class offerings in the Roosevelt Historic Neighborhood.
References: (Descriptions of projects are listed above) Wisconsin Housing and Economic Development Authority (WHEDA) o 201 W. Washington Ave. Ste. 700 Madison, WI 53703 o Bill Boerigter, Manager, Multifamily Housing o (608)267‐1450; email@example.com o Projects: Villard Square, Grand River, Park East Enterprise Lofts City of Moline o 619 16th St. Moline, IL 61265 o Ray Forsythe, Economic Development Director ‐ (309) 797‐0708 ‐ firstname.lastname@example.org o Project: Moline Enterprise Live‐Work Lofts City of Milwaukee o 200 E. Wells St. City Hall Rm. 201 Milwaukee, WI 53202 o Mayor Tom Barrett ‐ (414) 286‐2200 o Maria Prioletta, Housing and Neighborhood Development Manager o (414)286‐5903; email@example.com o Projects: Villard Square, Park East Monroe County Commissioners (Florida) o 102050 O/S Highway, Suite 234 Key Largo, FL 33037 o Sylvia Murphy, Commissioner o (305) 453‐8787; boccdis5@monroecounty‐fl.gov o Projects: Blue Water 3. Financial Capability and Capacity With a portfolio of over 50 properties currently in our portfolio, Gorman & Company has extensive multi‐family experience and strong relationships with syndicators and direct placement investors. In addition, we have strong lending partners (US Bank, JP Morgan Chase, and Bank of America to name a few) and have financed numerous properties using FHA programs. Gorman & Company also employs a wide range of local, state and national funding sources targeted to stimulate in‐fill rental housing to revitalize urban neighborhoods. Examples range from Federal Home Loan Bank AHP Grants, HOME and CDBG funding, local general funds and general obligation bonds and municipal Tax Incremental Financing. We are skilled in the layering of funding sources to ensure that a project is financially successful. In our 27 years in business, Gorman & Company has never had a default or foreclosure on any property. Gorman & Company has the financial capacity and experience to develop the LaVilla sites. As developers of residential properties we are financially responsible to: fund predevelopment costs; finance gaps in project financing; pay for project overruns; financially guarantee lease up; and fund any operating deficits for several years. Of the over 50 projects that Gorman & Company has
developed in the past 27 years, the company has never had a foreclosure, never defaulted, and never has had the general partner replaced by the investor. The current stockholder equity for Gorman & Company and its affiliate, Gorman General Contractors, is valued at $42,000,000. In addition, we reduce the financial risk of our projects by reducing our risk of cost overruns. We invest heavily in due diligence from the early stages of the development process, have an architect on staff, and employ our in‐house general contracting division to produce detailed cost estimates from early design drawings. We reduce our operating risk by incorporating features and amenities that are cutting edge for the market in which we are building. In addition, our property management affiliate works very early in the process to identify our target market and create demand prior to the completion of the construction. Audited financial statements were not included due to the page limit requirements of this RFP. Proforma, Sources & Uses, financing commitment, evidence of ability to fund A survey of market rate rental units in downtown Jacksonville indicate that average square foot rents are $1.35 in downtown Jacksonville. This square footage rent was used to determine the rents for LaVilla Enterprise Lofts. Proformas for both Proposals A and B are enclosed for reference, including a sources & uses analysis for each scenario. Also attached is a financing commitment for each Proposal, for the Permanent Mortgage financing. Equity commitment and timing/disbursement As is typical in urban revitalization areas, market rents in downtown Jacksonville do not support the cost of the development. Gorman & Company will contribute $3,467,151 and $4,611,489 in developer equity for Proposals A and B, respectively, to provide needed financing for the project. As part of our commitment to the LaVilla Enterprise Lofts and to our partnership with the City of Jacksonville, Gorman will re‐invest developer fees and general contractor fees back into the project to ensure its financial feasibility. This investment of the fees that are normally earned by Gorman to off‐set construction and development risk will be used instead to fund project costs. Fees will be re‐ invested as earned throughout the development of the LaVilla Enterprise Lofts. Bank references JPMorgan Chase Bank, N.A. 10 S. Dearborn Mail code: IL1‐0953 Chicago, IL 60670 Rhonda McFarland , Vice President, Community Development Banking (312)325‐5075 firstname.lastname@example.org
BMO Harris Bank 111 W. Monroe Street/2 East Chicago, Il. 60603 Katherine B. Mazzocco, Senior Vice President of Community Development Lending (312) 461‐2797 Katherine.Mazzocco@harrisbank.com Projected financial structure of project Gorman & Company specializes in urban in‐fill and urban renewal projects that act as catalytic developments for the surrounding neighborhood. Gorman’s projects have spurred private investment, revitalized communities and encouraged surrounding development by the private sector. We have built and operated over 50 multi‐family and mixed‐use properties, primarily in partnership with local governments, and have always been asked back to develop additional projects in the communities in which we have served. Because of our extensive experience developing urban renewal properties, we understand the financing structure needed to ensure that these projects are successful and that they become the catalytic driver for the surrounding area. Current market demand (i.e. rent and property values) in LaVillla is not high enough to spur private investment, yet development is needed in this area to attract that additional private investment. Our experience shows that properties like the LaVilla property need a true private/public partnership to be successful and, as such, we are proposing the following financing structure: Proposal A (Development Site 2) o Permanent Mortgage (FHA 221(d)(4) program) ‐ $14,190,000 o Developer Equity (Gorman & Company) – $3,467,151 o City of Jacksonville – $1,819,840 Proposal B (Development Site 1 & 2) o Permanent Mortgage (FHA 221(d)(4) program) ‐ $18,915,000 o Developer Equity (Gorman & Company) – $4,611,489 o City of Jacksonville – $2,287,940 This financing structure allows us to maximize the debt available to the project (FHA products currently have the lowest interest rate available on the market with an extended amortization period) and creates a true partnership between the City of Jacksonville and Gorman & Company. Both the City and Gorman will benefit from the success of LaVilla Enterprise Lofts. The City will increase its tax base both by the development of this project and by surrounding development spurred by LaVilla Enterprise Lofts. Gorman & Company will benefit by receiving a return on its
equity investment into the project in the form of cash flow from operations. This financial structure has been very successful with numerous urban renewal projects we have developed in partnership with local governments. 4. Development Schedule (see Section 4 of RFP) The development schedule for both proposals is outlined below: Proposal A (Development Site 2) For Proposal A, the development schedule will mirror the Performance Schedule requested in the RFP: Within 15 months of the effective date of the purchase and sale, Gorman & Company will have applied for all permits for the construction of LaVilla Enterprise Lofts for Development Site 2. o Effective date of the Purchase and Sale – September, 2013 o Completion of architectural plans – December, 2013 o Submittal to the Downtown Development Review Board – January, 2014 o Pre‐Application to FHA for the 221(d)(4) financing – January, 2014 o Full application for FHA for 221(d)(4) financing – March, 2014 o Submittal for site plan approval – June, 2014 o Completion of construction drawings –October, 2014 o Application for all building permits – November, 2014 Within 60 days of the issuance of the permits, Gorman & Company will have broken ground and be in material, on‐going physical construction of the improvements o Permits issued – January, 2015 o Groundbreaking/commencement of construction –February, 2015 Within one year of that date, Gorman & Company will have completed construction and received certificates of occupancy. o Completion of construction/certificates of occupancies – February, 2016 Proposal B (Development Site 1 & 2) The development schedule for Proposal B will be the same as the schedule for Proposal A. Within 15 months of the effective date of the lease agreement, Gorman & Company will have applied for all permits for the construction of LaVilla Enterprise Lofts for Development Site 2. o Effective date of the Purchase and Sale – September, 2013 o Completion of architectural plans – December, 2013 o Submittal to the Downtown Development Review Board – January, 2014 o Pre‐Application to FHA for the 221(d)(4) financing – January, 2014 o Full application for FHA for 221(d)(4) financing – March, 2014 o Submittal for site plan approval – June, 2014
o Completion of construction drawings –October, 2014 o Application for all building permits – November, 2014 Within 60 days of the issuance of the permits, Gorman & Company will have broken ground and be in material, on‐going physical construction of the improvements o Permits issued – January, 2015 o Groundbreaking/commencement of construction –February, 2015 Within one year of that date, Gorman & Company will have completed construction and received certificates of occupancy. o Completion of construction/certificates of occupancies – February, 2016
5. Purchase Price or Lease Terms As is typical in urban renewal areas, current market rents in downtown Jacksonville remain below what is needed to enable the private sector to purchase land and develop new housing units in the downtown area. To finance this project, Gorman & Company is re‐investing its normally earned developer and general contractor fees back into project costs as well as requesting additional capital funding from the City of Jacksonville. Because market conditions require additional funding for the construction of LaVilla Enterprise Lofts, Gorman & Company is proposing to acquire Development Site 1 and Development Site 2 for $100, utilizing a Purchase and Sale Contract. When constructed, we estimate that our proposals will generate significant property taxes for the City of Jacksonville on property that is now tax‐exempt. We estimatethat the value of LaVilla Enterprise Lofts under Proposal A would generate an additional $189,000 in annual property taxes for the City of Jacksonville and for Proposal B, that amount would increase to $252,000.
Proposal A – Proforma, Sources & Uses
Key Assumptions Income increase Expense increase Vacancy rate Other revenue/unit/month Interest rate‐senior loan Amortization‐senior loan Stabilized debt coverage ratio Investor services fee 1% 1% 7% 0 4.50% 40 1.20 $ ‐ 1 Tenant‐paid rent 1,687,635 Other revenue 0 Potential income 1,687,635 Vacancy loss (118,134) Net income 1,569,501 Operating expense 598,500 Replacement reserve 52,500 Net operating income 918,501 1st loan debt service Principal 129,617 Interest 635,898 New loan balance 14,060,383 Cashflow after 1st loan 152,985 Debt coverage ratio 1.200 Investor services fee 0 Cashflow after fee 152,985 Deferred dev fee debt service Principal 0 Interest 0 New loan balance 0 Cash flow after deferred fee DS 152,985 2 1,704,511 0 1,704,511 (119,316) 1,585,196 604,485 53,025 927,686 135,572 629,944 13,924,811 162,170 1.212 0 162,170 0 0 0 162,170 141,800 623,716 13,783,011 171,447 1.224 0 171,447 0 0 0 171,447 610,530 53,555 936,962 148,314 617,201 13,634,697 180,816 1.236 0 180,816 0 0 0 180,816 3 1,721,556 0 1,721,556 (120,509) 1,601,048 616,635 54,091 946,332 155,128 610,388 13,479,569 190,280 1.249 0 190,280 0 0 0 190,280 4 1,738,772 0 1,738,772 (121,714) 1,617,058 622,802 54,632 955,795 5 1,756,160 0 1,756,160 (122,931) 1,633,229
Proposal B – Proforma, Sources & Uses
Key Assumptions Income increase Expense increase Vacancy rate Other revenue/unit/month Interest rate‐senior loan Amortization‐senior loan Stabilized debt coverage ratio Investor services fee 1% 1% 7% 0 4.50% 40 1.20 2 2,272,682 0 2,272,682 (159,088) 2,113,594 805,980 70,700 1,236,914 180,715 839,703 18,561,508 216,496 1.212 0 216,496 0 0 0 216,496 189,017 831,401 18,372,491 228,865 1.224 0 228,865 0 0 0 228,865 814,040 71,407 1,249,283 197,700 822,718 18,174,791 241,358 1.237 0 241,358 0 0 0 241,358 3 2,295,409 0 2,295,409 (160,679) 2,134,730 822,180 72,121 1,261,776 206,782 813,635 17,968,009 253,976 1.249 0 253,976 0 0 0 253,976 4 2,318,363 0 2,318,363 (162,285) 2,156,077 830,402 72,842 1,274,394 5 2,341,546 0 2,341,546 (163,908) 2,177,638
$ ‐ 1 Tenant‐paid rent 2,250,180 Other revenue 0 Potential income 2,250,180 Vacancy loss (157,513) Net income 2,092,667 Operating expense 798,000 Replacement reserve 70,000 Net operating income 1,224,667 1st loan debt service Principal 172,777 Interest 847,640 New loan balance 18,742,223 Cashflow after 1st loan 204,250 Debt coverage ratio 1.200 Investor services fee 0 Cashflow after fee 204,250 Deferred dev fee debt service Principal 0 Interest 0 New loan balance 0 Cash flow after deferred fee DS 204,250
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