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WOcry of COMMUNITY DEVELOPMENT 44 VFW DEPARTMENT 11 RIGHT ON the city that works for you MEMORANDUM DATE: May 18, 2012 TO: Dean Lotter, City Manager FROM: Grant Fernelius, Community Development Director SUBJECT: May 22nd Work Session:New Brighton Exchange Financial Update Introduction For several months, staff from the City and Ehlers have been working with the Economic Development Commission (EDC) to update the financial projections for New Brighton Exchange (NBE). As you may recall, the last time the City Council received an update was in April 2010. At that time, there was still some uncertainty about development prospects — negotiations had not yet begun with Stuartco and the City did not have a marketing partnership in place for commercial development opportunities. Since then some of these pieces have been filled in to help paint a better picture about the future. The following memo is a summary of the analysis that has been done. Staff is looking for feedback from Council on the information provided. Overview As we've discussed many times in the past, doing financial projections is part science and art. Key assumptions have to be made about such things as the level of density; building and land values; timing; property tax class rates; local tax rates and so forth. Any one of these variables can influence the bottom line. In general, the approach is to be conservative when preparing the projections. In practice, land and building values are held constant over time, meaning there is no inflation factored into the equation. This is highly unlikely, but does recognize that there can be variability in values over time. 2012 Analysis Beginning last fall and continuing into this past winter, staff has been working with the City's commercial development partners (Ryan Co. and Colliers International) to update the development assumptions. Ryan prepared a site plan to determine potential building sizes, along with parking needs, setbacks, and development time frames. With regard to residential development, staff did not do any extensive site planning work, but instead used previous assumptions in the models. I:\COUNCIL\REPORTS\2012\Community Development\5-22-2012\CD MEMO-City Council Meeting 5-22-2012.doc