CITY OF ATLANTA Office ofthe Chief Operating Officer asa re 5 Tenty Avert: Ste mros.aces 10: ty counet : FROM: Michiel. Geisler 227 LencZp SUBJECT: — Respense to Questions Concerning Ordinance 5-0-1011 DATE. Snty iu, S09 1, What process was used to advertise the Underground property for sale? ‘The proposed sale of the real property by the Downtown Development Authority (DDA") isin an area commonly known as Underground Atlanta ("Underground") and is described in “The wderground Redevelopment Plan of April 7, 986" (the “Redevelopment Plan’), This sale of property owmed by the City and DDA in Underground is being undertaken pursuant to the Urban Redevelopment Law (OCGA 36-61-1 ot seq) which was intended to provide additional tools for municipalities to formulate "workable programs utilizing public and private resources” inredevelopment. ‘he sale of Underground by DDA follows the requirements ofthe Urban Redevelopment Lave. One of the stated gous is to create a process "to afford maximum opportunity, consistent with the sound needs ofthe municipality or county as a whole, tothe rebabiltaion or redevelopment ofthe urban redevelopment area by private enterprise.” In the implementation of the Redevelopment Plan, some parcels were acquired in the 1980's, and were titled in the name of DDA. Some other parcels which were a part of the Redevelopment Plan were owmed by and remained titled in the name of the City. The City then lessed the DDA. parcels and subleased the entire area for the purpose of commercial redevelopment. The sublease was purchaced by the City in March of 2014. Unifying the ile tothe entire area being sold in the ownership of DDA was the only fessble alternative to address the title issues and the leases so that the Underground could be sold asa unified property. OCGA. 36-61-10 sets forth the only process that was legally required to be followed in the disposition of property subject to the Redevelopment Plan, The statutory process requires “public notice by publication once each week fortwo conseeutive weeks ina newspaper having a general circulation in the community, prior to the execution of any eontract to sell ease, Or ‘otherwise transfer real property.” DDA hired CBRE Brokerage Services ("CBRE") to assist with the advertisement and sole of Underground. CBRE placed an advertisement in the Atlanta Journal Constitution (”AJC") on “Monday, June 23, 2014 and again on Monday June go, 2014, The notice identified the propertyMemorandum on 15-0-1011, Page-2: and stated that inquicies could he made to CBRE and gave the name and e-mail addresses to ‘which inquiries couldbe made. [Not only did CBRE field inquiries that originated from the AJC advertisement, it prepared an electronic database of documents that would provide extensive information about Underground ‘and listed it on the CERE website whichis available to developers and investors throughout the ‘world, From the statutorily required advertisement and the advertisement on its website, CBRE. received several inquiries but only one qualified bid. WRS Ine. Real Estste Investments (the “Buyer”) metal of the criteria which are deseribed below. ‘2. What eriteria were listed in the advertisement for Underground? Adetailed redevelopment plan; Identification of frm(s) and principals associated with the redevelopment team; Acquisition price; Financial statements demonstrating ability of team to carry out redevelopment plans; Examples of previous successful redevelopment projects, ‘Were any “focus groups” or “think tanks” used to create scenarios for this future redevelopment? {In z013, the Atlanta City Council created the Downtown Development Technical Advisory Group CDDTAG") which provided a set of recommendations on November 1, 2013. The goal of the DDTAG was to “identify recommendations to ensure the successful revitalization of Downtown Atlanta, specifically the atea south of Five Points, in context of planned investment in nearby large projets." An “immediate” priority of the DDTAG was to “reposition Underground Atlanta asa neighborhood asset.” ‘The DDTAG recommendations specific to Underground Atlanta were: Understand the status of bond/debt/public financial obligations; Pursue an appraisal ofthe real estate; Evaluate market potential and opportunit , their managers and ‘+ Position market and communieate the opportunity for repositioning, ‘The conclusion was that these recommended “task force activities should proactively push the repositioning process.” ‘The DDTAG also recommended “strategic incentives” and with respect to Underground identified “retail recruitment incentive (develop strategy and market assets) focused on storefronts with a repositioned Underground as the momentum-builder.” 4: What zoningcontrols will govern future redevelopment? ‘The Subject Property is zoned Special Public Interest District #1 (SPI-1) waich was adopted in 12007. The SPI-1 zoning, codified at Sec. 16-18A.001 et seq, applies not onlyto the Underground property but also to the surrounding area,‘Memorandum on 15- 0-101 Page-3~ No specific application f the SPI-1 zoning regulations can be determined until plans are actually submitted to the Office of Planning. The list of permitted uses which may be undertaken at the site are set forth in the Zaning Code. ‘The zoning process for $PI-i begins with a special administrative permit ('SAP") application, An application for a special administrative permit requires a site plan, a landscape plan and elevation drawings of each exterior facade to be submitted prior to an applicant fling for = building permit. All exterior demolition, new construction (including additions to existing buildings), modifications of outdoor dining, or any construction which results in increased lot coverage, modification cf the building footprint, or modifieation of building facades that alters the configuration of openings, shall be subject to said SAP approval, In addition to the regulation ofthe building form, there are requirements for the configuration of sidewalks, cut culs and driveways, minimum landscaping and lighting for parking lots, 5. Has environmental testing, soil boring or other testing been conducted: ‘This ype of work is almost always a part ofthe buyer’ due diligence in real estate transactions and is rarely undertaken by the seller. This model is generally consistent with these terms inthe Purchase and Sale Agreement, 6, Has the Buyer done other projects in Georgia? 2002 Centreat Evans, Bvans, Ga, 2003 Shoppes at Lilbinn, Lilburn, Ga 2004 Shoppes at Thompson, Thompson, G 2004 Shoppesat Trickum, Woodstock, 2004 Lawrenceville Commons, Lawrenceville, Ga, 2005, Center at Lovejoy, Loveoy, Ga 2005 Hudson Bridge Crossing, Stockbridge, Ga. 2006 Chamblee Village, Chamblee, Ga 7 Wasan appraisal done on Underground? ‘An appraisal of Underground (the “Property”) was performed by Childers Associates CChilders”). The value given for the interests appraised by Childers was $51,937,000. This is based on a value assumption of $135.00 per aquare foot of land area. The Childere Appra included properties that are nota part of the proposed sale, specifically the Martin Luther Ki 4, Drive parcel atthe fermer World of Coke Pavilion. Excluding these properties the acreage being sold is less approxinately 393,998 square feet. ‘The Childers Appraisal was 2 “highest and best use” opinion based on the value of the Property as vacant and available for “intensive high rise development.” The Childers Appraisal used high ‘comparable values because ofthe assumption thatthe “expected future use of the property is the termination of the existng mixed use facility, and redevelopment of the property for more intensive institutional us in support of the neighboring governmental and educational enti as discussed elsewhere in this report.” The “institutional use” on which the Childers Appraisal focuses was identified to come from two potential sources. The fist was the “dedicated governmental district” tothe south and the second was Georgia State University (;GSU"), which ‘was identified as the “most important institutional use in the proximity to the subject” Most notably, the Childers Appraisal states that “[Clonsidering all ofthe available data, we consider the best indication of land value is provided by three of the most recent and mast proximateMemorandum on 15-O-1011 Page 4 is purchased by Georgia State University just north ofthe subject, Land Sales 37, 39 ané se land sales had extremely high Dollar per Square Foot values, (Land Sale Number 178.06; Land Sale Number 39=$123.94; Land Sale Number 41=$109.95). Comparable values nearer to Underground are inthe mid-860.00 per square foot range or lower. ‘The “highest and best use" opinion appeared in large part to be based on the possibility that GSU would continue to “aggressively” expand. The date of the Childers Appraisal sae ‘September 11, 2013 and thus predated the announcement on November 12, 2013 that the Atlanta Braves would move to Cobb County. This means that a second large parcel in close proximity to OSU is now available and more importantly that parcel is already developed with « ‘major athletic facility. This new fact would likely result in @ major change to the assumptions ‘under which the Childers Appraisal was prepared Ifthe primary institutional uses are excluded from the sles value approach a beter indlcator of ‘vale is the sale of ike properties in close proximity. Only a few ofthe sales in close proximity come near tothe dolar per square foot value opinion given by the Childers Appraisal (8195.00) nd these are sales which, fr the most part, are further north and loser tothe Central Business District. Therefore, the price per square fot offered by the Buyer is comparable to or beter than other sales in the immediate area and while the Childers Appraisal is an estimate of value, the best determination of values an arms-length transaction between two independent parties and that is what the Purchase and Sale Agreement represents,