New York Avenue Corridor Strategy Adopted Report New York Avenue Corridor Strategy Adopted Report | Page 81

NEW YORK AVENUE CORRIDOR STRATEGY ECONOMIC GAPS For urban infill projects, it is not unusual to have economic “gaps” (project costs are higher than project value) of between 20% and 50%. These gaps typically represent the higher cost of prop- erty acquisition in an infill environment, as well as the difference between prevailing market conditions and desired real estate products. In quantifying the economic gaps associated with the Opportunity Sites, the following steps were completed: • estimated development value that could be created from each potential product type, based on current and fu- ture market conditions in Arlington and the North Texas; • prepared build-out economic analyses for each project; and • estimated project costs. This analysis resulted in project “gaps” for each of the Opportunity Sites. The largest gap was for Opportunity Site B, which includes the library/ recreation center concept. Because these public uses do not typically generate revenue in excess of operating expenses, they only contribute to the cost side of the equation. If the City were to construct the library/recreation center facilities, it would significantly contribute to Opportunity Site B’s economic “gap” reducing it to approximately 15%. Opportunity Site A and C resulted in gaps of 18% and 24%, respectively (See Fig. 5.22). Several variables affect economic feasibility (both negatively and positively): land cost; build- ing density; rehab vs. new construction costs; parking requirements; premiums on rents and sale prices; and “place-making” potential (ame- nities, connections, public spaces). The goal in 73 FINAL REPORT | SEPTEMPER 2013 redevelopment is to balance variables in an aes- thetically and economically responsible manner. POTENTIAL CONTRIBUTIONS TO GAPS Once the project “gaps” were quantified, esti- mated potential “contributions to gap” were iden- tified. “Gap filling” measures considered includ- ed: • Land Acquisition/Writedown • Site Improvements Contribution (infra- structure, parking) • Property Tax TIRZ (25 years) • Sales Tax Sharing (380 Loan) • Public Improvement District (20 Years) • Property Tax Abatement (10 Years) • Development Fee Waivers (Roadway, Water) • Federal/State/Local Grants • Streamlined Development Approval Process • Tax Credit Equity (LIHTC, Historic, New Market) As shown in Figure 5.22, economic gaps could be filled with a combination of measures outlined above. These measures shown in Figure 5.23 are illustrated only to provide examples of po- tential funding contributions to gaps and are not the recommended funding contributions for each Opportunity Site. Potential contributions could