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Agenda 02/28/2012 Item #14B12/28/2012 Item 14.8.1. EXECUTIVE SUMMARY Recommendation that the Collier County Community Redevelopment Agency (CRA) review the Finance Committee report and recommendations concerning Bayshore Gateway Triangle CRA financial outlook and provide guidance to the CRA Executive Director. OBJECTIVE: To receive Collier County Community Redevelopment Agency (CRA) Board guidance concerning the actions to be taken relative to the Bayshore CRA bank note, Revitalization/Catalyst Program and ongoing operations. BACKGROUND: The Collier County Redevelopment Plan adopted in 2000 envisioned land acquisition and the development of Catalyst Projects as a primary means of achieving revitalization within Bayshore Gateway Triangle CRA. In furtherance of that goal certain commercial and residential properties were acquired between 2006 and 2011. These properties were primarily purchased through bank note financing though some properties were acquired with available CRA funds. Ultimately the CRA acquired numerous parcels with a total purchase cost of $13.8 million. The current outstanding debt is $10.2 million while the Property Appraiser's records currently value these properties at $4.4 million. CONSIDERATIONS: The Board requested that the Finance Committee review the CRA financial situation in light of the Revitalization/Catalyst Program land holdings and the bank note due in September 2014 and develop a recommended plan of action for the Board to consider. The present bank note, which included refinancing $5.9 million in existing land acquisition debt, was put in place in September 2009. The terms of the note include; a 5 year term with an $8.8 million balloon payment due in September 2014, $900,000 annual principal payments, variable interest rate (4% average), CRA TIF and other legally available revenue as the pledged repayment source, proceeds from land sales financed by the loan required to be paid against the loan (the land itself is not pledged), and no County Backstop to the loan. The key factors that made the financial plan of the Revitalization/Catalyst Program work, growth in CRA taxable value and a healthy development and economic environment, have not been favorable. CRA TIF revenue that was $2.3 million in 2008 is now $996,000. The robust economic and development environment that existing when the Revitalization/Catalyst Program was initiated ground to a halt in 2008 and is yet to show significant signs of improvement. Packet Page -641- 2/28/2012 Item 14.6.1. The Finance Committee met twice to consider the financial outlook of the Bayshore CRA and developed the following recommendations: Recommended Plan of Action Executed Simultaneously • Immediately issue Invitation to Bid for refinancing with follow -up action by the Board at the first June meeting ■ Continue negotiations with existing lender • Immediately eliminate discretionary Bayshore CRA Programs, expenditures and contracts • Focus resources on financial problem • Hiring Freeze • Re- evaluate in 90 days • Immediately issue a Request for Proposal for the development phase of the Revitalization/Catalyst Program. • Gateway Triangle Mixed Use Development • Bayshore Mixed Use Development • Bayshore Residential Infill • Return with a 90 day Status Report FISCAL IMPACT: The fiscal condition of the Bayshore CRA is contingent upon refinancing current outstanding debt ($10.2 million), taxable property values ($244.9 million increment value) and the value of held property ($4.4 million Property Appraiser value). With the exception of the outstanding loan amount these conditions are unknown and the Finance Committee's recommendations attempt to position the Bayshore CRA to deal with the current level of uncertainty. GROWTH MANAGEMENT IMPACT: None. LEGAL CONSIDERATIONS: This item has been reviewed by the County Attorney and is legally sufficient for Board action. -JAK RECOMMENDATION: For the CRA Board to review the Finance Committee recommendations concerning the actions to be taken relative to the Bayshore CRA bank note, Revitalization/Catalyst Program and ongoing operations and provide guidance to the CRA Executive Director. Prepared by Edward N. Finn on February 15, 2012 Sr. Budget and Management Analyst, Office of Management and Budget Packet Page -642- 2/28/2012 Item 14.B.1. COLLIER COUNTY Board of County Commissioners Item Number: 14.13.1. Item Summary: Recommendation that the Collier County Community Redevelopment Agency (CRA) review Finance Committee report and recommendations concerning Bayshore Gateway Triangle financial outlook and provide guidance to the CRA Executive Director. (Mark Isackson, County Manager "s Office) Meeting Date: 2/28/2012 Prepared By Name: BrockMaryJo Title: Executive Secretary to County Manager, CMO 2/22/2012 9:09:55 AM Submitted by Title: Executive Secretary to County Manager, CMO Name: BrockMaryJo 2/22/2012 9:09:57 AM Approved By Name: FinnEd Title: Senior Budget Analyst, OMB Date: 2/22/2012 11:39:08 AM Name: IsacksonMark Title: Director -Corp Financial and Mgmt Svs,CMO Date: 2/22/2012 12:51:30 PM Packet Page -643- ^I^ r% //'%A A 2 2/28/2012 Item 14.13.1. Bayshore Gateway Triangle CRA Redevelopment Catalyst Projects Financial Review Task: The Finance Committee has been charged by the Board of County Commissioners with reviewing the CRA financial situation in light of the Catalyst Program land holdings and the bank note due in September 2014 and developing a Plan Of Action, given current and future budget constraints, for consideration by the Board. Plan -of- Action Executed Simultaneously • Immediately issue RFP for refinancing - Continue negotiations with existing lender • Immediately eliminate discretionary CRA programs, expenditures and contracts until refinancing is resolved - Focus resources on the financial problem - Hiring freeze - Evaluate in 90 Days • Immediately issue RFPs for the next phase of the revitalization program • Gateway Triangle Mixed Use Development • Bayshore Mixed Use Development • Bayshore Residential Infill • 90 Day Status Report to BCC Packet Page -644 - 1 ninninnA2 2/28/2012 Item 14.13.1. L Creation of a Community Redevelopment Area The Bayshore Gateway Triangle CRA was created in 2000 and has a 30 year Life Conditions that supported creation of the CRA: • The need to encourage revitalization of neighborhoods & business districts • The presence of substandard or inadequate structures • A shortage of affordable housing • Inadequate roadways /infrastructure /parking Redevelopment • Revolves around a publicly developed adopted plan, funded by increases in taxable value through a Tax Increment Financing (TIF) mechanism. • Breathes new life into areas in need revitalization -An investment in the future of an area -Consistency and predictability for private sector -Fully transparent public process to develop a common vision for a sustainable community 3 Collier County Annual Program of' ork Community Redevelopment Agency S Bayshore Beautification MSTU Haldeman Crook MSTU Advisory Committees JACKSON j :Bayshore Gateway "Local" Advisory Board eRAnasTu ExecrrtiveDiractor Program of Work I—] Budget -0ASERTA CRA Grants Coordinator Neighborhood Subcommittees Advisory Committees JOURDAN .VACANT TRONE CRA ..CRA .STU ProjeetManaesr .Project Maneaer Project Man Shadowlawn Bayshore - Design Promotions Economic Development FY2012 ORG CHART 4 Packet Page -645- 2 //1/1 A 2 2/28/2012 Item 14.13.1. Tax Increment Financing Explained w"111, "I, Tax Revoenues Flow to $ �►, Coun#�r and, k `, Basi*.7alue� fierailieg t r Creation Termination Date Date s Community Redevelopment Plan Plan Adopted in 2000 Should update in FY-2012 6 Packet Page -646- 3 01% //9 /l IAA A 2/28/2012 Item 14.6.1. CRA Plan Catalyst Projects Land Acquisition & Assembly Uwod_9aaulaltion Plan and Proaram A land acquisition program will be designed to meet the goals and objectives of the redevelopment plan, while minimizing disruption of the nsignbomood fabric to be retained and reinforced, and minimizing acquisition costs. A land acquisition program could consist of the following components: • Right of way Acquisition • Commercial Project Acquisitions • Residential Acquisitions for Major Projects • Residential Acquisitions for In ill The disposition of all publidy owned or assembled land will be subject to objective and clearly defined standards and procedures which will assure timely reuses and improvemertts to properly in accordance with the plan and tis development controls, Guidelines may include but are not limited the following activities: • sae Ro-USG Guidelines • Preferred Redeveloper Designation • Competitive Private Developer Selection • Terms of Property Conveyance • Development Controls and Design Review • Residential Relocation + Commercial Relocation 7 Packet Page -647- 4 nrnnrnnw� 2/28/2012 Item 14.B.1. Nuts & Bolts • What do we have? — Adopted Revitalization Plans — TIF revenue for 18 more years (assuming value stays above base) • TIF revenue presently $996,000 • Total annual CRA Revenue is approx. $1.4 million — Land Holdings for Catalyst Projects (Property Appraiser's Value $4.4 million) • What do we Owe? — Bank Loan Liability, annual P &I $1.35 million — $8.8 million bullet payment due in September 2014 Loan Facts Slide 1 • Current outstanding principal $10.2 million. The Loans' principal balance due in Sept 2014 will be $8.8 million (Loan has a 5 year term and a 15 year amortization) • Loan is a Special Obligation Payable solely from Pledged Funds — Increment Tax Revenues (TIF) & legally available Non -Ad Valorem Revenues of the CRA (rent, interest, etc.) — Annual CRA Revenue is approx. $1.4 million ($996k TIF, $300k rents, $136k reimburse for mgt. of MSTU) — TIF revenue cannot be modified or impaired 9 io Packet Page -648- 5 A 1r% 1 /'1!1 A 2/28/2012 Item 14.13.1. Loan Facts Slide 2 • Principal is $900k per year and variable interest is approx. $450k per year. (LIBOR Rate plus 3.75 %, avg. 4.00 %) • Proceeds from land sales financed by the loan are required to be applied against loan principal. — Property Appraiser's land value $4.4M — Bank cannot take property • Minimum Debt Service Coverage Ratio is 1.25 • Reserve Requirement is $1,461,000 • There is no pledge of County revenues. There is no County backstop to the loan. no Bayshore Gateway Triangle CRA Land Holdings YKXORE WTEWPVIRIAMGIF CRAYND MOLDINGS 3011 2035 3051 " ":OFSGIFIpN EEC0N0 WfM' ACA VALIRi AVLLIE fUllOttlEMf1NOD :40NHG. ARw VaWe� Con VYLr MaYJUa:. MND PURCHASED FROM PWRGIUAFNIFRPRISF5 , 3165 YKHOREGRIVE G)A14654,6142 /350 Wa I. LaMar M Uddit R. &Comm $1359027 5373560 SM.167 WE KELLY WT 2 LOT 65 3005 HARVEST0 06/30/07 $ 111322.00 W. 0l Credlt dndal $22,214 $22,244 KELLY PW2A LOT 20 3032 VW WREN AVE 06/30/01 $ 91.090.95 WachOVla Le0N91Cndlt Rnitlantlal $10,920 $10,920 WE KELLY WIT 2 WT 67AR 3979 HARKST CT 06130/07 $ ,S93.00 WacheMa falter of Cradl[ RlNltlntlal $32572 $32572 IAKEKELV11NIT210T66 3991HARVESTCT 0~1$ 111,922100 WachMalaLtedW It Realtlemlal $22244 $22240 NARLB GROVE E TRUCK COS UTTLE FWS 2 LOTS 2664 FRANCIS AVE 01/31/07 S 1)7,51950 WacFatla411erdf CrR I1 Raldannal $96,000 $95,000 KOLYPYY30T23 3009 VIN 911REN AVE YAO/O) 5 90,)02.75 WaFlwvia LLFer M U.It Aealdentlal $11,002 $11,002 LLKE KELLY LIMT2 LOTe 4049 FULL MOON CT GM/ /0) S 90,934.10 W.[-1. letter of Cretllt Rnitlmtlal $311441 $31.441 CREWS LOTS 3252 WNAR ST I 05/31/07 S 90,902.25 WacheNe MRerMGedlt Re4ltlmnM $14010 $14000 09/9]/01 $ $25429 S 25,429 KELLY PV LT 3139 VAN 9UREN AW W130/07 $ 90,97ISO WYhO letter df Crallt Ruldentl4l 11002 11002 1wC111 LOT S1 09/30/01 $ R,. C-1 522157 $12157 KELLY PUS&LOT 22 3016 VAN 1ddd!I VE 09/30/07 $ 93A1250 Wa " .lever df Crellt R4Sldntlal $10920 $10,920 09//0) 30 5 91 .011.50 1c.Mlr 10920 $20,M WE KELLY UNIT 2 LOT 65 3962 HARVEST COURT 09 /31/01 $ 91536.00 Wachwla letter M Credit Ridden..' $21893 $21,693 TAKE KELLY UNIT 3 LOT 43 3991 NEW MOON CT 09/31Po7 S 91536.00 Wachwla loner 01 Credit AildeMlal 21,)69 $21769 rUPLFS GROVE 6 TRUCK COS UTOf FARMS 2 3015 KAREN OR 05131/09 V _._ � 5 66A 5725 ICR IE CASH - -Id— $23520 $23520 CRW GS 11 LOT 12 1605 V WRIIREN 06/30/Y _- .. ". S 5ASA.00 ,del C4 TVaTnd[IeY GSN Mldentlal 313 $303]3 LAKE SIDE MD911E EST. LOT I 1315 _.RE OR, 01/11/09 5 765451.19 $ 99ARIAG CYTIF CASH CYTi GSN RildntlKl $136099 ,100 $138,059 $66400 RAY,— I.00E.— MS IIECCA AW 12/29/09 3031WWST 12N6/Oe _ $ 45.000.00 MMF(ASN RRRM011 S220d 23000 WNEI�LVIM ]LO W 3029 LUW ST ]2/09/09 $ 45".. CYTIF USN'.:. Realdentlal l3N $73000 31S9 WNAR ST of /15/09 S )5A Gd -' CYTIF CASH Rildemlal Sn.. 133695 NAPLES GROVE B TRUCK COS UTTLF FARMS 2 3155 KAREN OR Y/30/09 $ 9,)0355 Yn SV Iua TnnaY erf Rif...., 2350 23520 NAPLES GROVE9TPU[K COS UTREFARM53 3])S KAREN DR Y/30/09 5 9,70335 do 3R IVa Tnnalar fAfX RealdeMfal $23,520 $23,520 TRIANGLE U4(f 6bra tvlM mmer[Ia16ulltlln 916M9 $ 6,396100.00 fIfM lNlyd Ynk ban Cwmxrclal TRIANGLE W(f 19360av1a &vtl 9 36 9 $]076,303 $1.07 103 T... WtE 1965 TamIaml Troll E 91609 $295071 $295001 TRIANGLE WE 1933 TO— TO 9/16/09 S96.W ANGLE WEE 2000610540 Blvd 9/16/09 5449740 $049,740 AVGIf UKE 1991 T4miaM TI E 9/16M9 $357890 $357,991 NAPLES GROVE 6TRUCR COS LITRE F RM52 en 06/1)/11 S 41,642.11 nnafeL YSN RA41diMal l2M Xar un Su liT 3000 Karen Or 06117/11 Raldentlal ,. 9152 R.— Or. 06/17111 RnldarNal 3205Karen Dr 06/1)/11 R- dental TwL S12A16495.)S SS --.221 $., ..:.1579),50799 Len _ Cash" Tetel AN lrMaVY+ _..._. 23520 $23.520 $23,52D $23.520 $23520 $23,520 64,452,271 52,787,045 $3;6Y,226 Packet Page -649 - 6 ninnrnnw2 2/28/2012 Item 14.6.1. CRA TIF Revenue Trend TIF Revenue (minion:( $2,500 ............_ - ...... -. — .... I $2,000 — — — $1,500 - ......... -- i $1,000 - -- i $500 — - $2,000 - I 2006 2007 2008 2009 2010 2011 2012 2013 2014 I ■ TIF Revenue 13 CRA Fund Balance Trend jCRA'Fund Balance(.,,,,..,) $6,000 - -- – - -- — - -– -- i $5,000 ._._._....--...---....-----.–.._....-- i$4,000 ....... ........................... - - -- -- -- -- -- ... - -- - -- $3,000 $2,000 - I $1,000 — – I $0 2007 2008 2009 2010 2011 2012 2013 2014 ■Fund Balance 14 Packet Page -650- 7 ^ I^ f% lr%^ A 2 2/28/2012 Item 14.6.1. L CRA Rev & Exp Trend CRA Projection thru Debt Payoff No Program Reductions CRA Revenue anti Expense Projections Combined TIF Fund and Debt Service Fund No Program Change __... _..... Budgeted Estimated Estimated Estimated FY- 2012... FY -3112 FY -7013 FY- 2014... Carryforward (CRA Operating) 3,260,000. 3,586,298 12,200,598 1,216;693 Tan lncrementR enue 996,100 996,100 946,295 946,295 Interest Revenue _. 16,000 32,000 25,000 15,000 Rent Revenue 300,000 300,000 293,000 293,000 MSTU Mgt F 1s'Fevenue 201,800 _ 136,600 136,1= _ 136,800 Personal Services (411,307) (406,000) (4(16,000) (406,0671 Personal Services(MSTU Mgt) (82,000) (82,000) (79,000) (79,000) Operating Exp.,(Ina. SW Proj Eng. Contracts) (705,200) (586,000) (400,000) (40010(10) Community Improvement Grants (426,600) .(426,600) (150.000) (150,000) Other (5,000). 0 0 0 Debt Service - P (900,000).. (900,000) ...(9001000)._.._. . (8,786,000) Debt Service- I_, ... ., (699,400) (45(),000) _.... (450,000) Net —ied forward Add for Property Sales 16 Packet Page -651- 8 CRA Projection thru Debt Payoff Suspend CRA Programs tuw revenue and Expense Projections 3,26DAD 3,586,298 2,507,278 2,006;373- Combined TIF Fund and Debt Service Fund 996,100 996,100 946,295 946,295 Suspend CRA Programs 16,000 32,000 25,000 15,000 Rent Revenue Budgeted _ ___ Estimated ....._ Estimated ... - _ 'Estimated'_ MM tvlgt Fees Revenue FY -2012 FY -2D12 FY -2013 FY- 2014... CerryforwaM (CRA Operating) _ ._ 8,260,000 - '3,586,298 2,629,878 2,544;173 Tax increment Revenue_ 996,1(10 996,100 946,295 946,295 into Revenue ... 16,000 -32,1000 -..._ 25,000_ 15,000 !Rent Revenue 300,000 300,000 293,000. 293,000. MSTU Mgt Fees Revenue 201,8(10 68,400 - -' Personal Services (Storrnwater Proj.. Mgt) (411,300) ,_(290,000) 0. 0 Personal Services (MSTU Mgt) (82.000) (41,000) -, 0 _ _ �. 0, (Operating Exp. (Inc. 5W. Proj Eng. Contracts) (705,200) (413,720) 0 0 Ccimmunitylmprovement Grants (426,600) 0 0 Other _ (5,000) _ ._.(258,200) 0 T 0 0 Debt Service - P (900.000) ...(900,000) (900,000) (8,786,000) Debt Service I _ (699,400) (450,000)' .__ (450,000) (450,000) _ Net camed forward .. . :.'.' n.. 1 - - -- (:Property Sales _.._.. Combined Fund Balance CRA Reduced Programs OPERATIONAL COSTS + 1 FTE REDUCTION (Proj Mgr) (Phased out FY12) CRA Revenue and Expense Projections Combined TIF Fund and Debt Service Fund Reduced Program (1 FTE Reduction in FY2012) Budgeted Estimated _Estimated Estimated _._ _ .__. FY -2012 FY -2012 FV -7013 FV_MLA Carryforward (CRA Operating)_ , _ ,- 3,26DAD 3,586,298 2,507,278 2,006;373- Tax Increment Revenue 996,100 996,100 946,295 946,295 Interest Revenue 16,000 32,000 25,000 15,000 Rent Revenue 300,000 300,000 294,000 294,000 MM tvlgt Fees Revenue 201,800 136,800 136,800 136,800 Personal Services (411,300) (365,000) (324,000) (324,000) Personal Services(MSTU NV). (82,000) ,(82,000) _ _ (74,000) (791000) Operating Exp. (Inc SW Proj Eng. Contracts)_. (705,200) (463,720) (100,000) (1OQ000) Community improvement Grants (426,600) (283,200) (50,000) Other (5,000) 0 0 0 Debt Service - P (900,000) (90Q000) (900,000) (8,786,000) Debt Service- I_ (699,400) (450.000) (450,000) (450000 Net carried forward Add for Property Sales Combined Fund Balance n inn /^^A 2/28/2012 Item 14.13.1. 17 18 Packet Page -652 - 9 ^ IeNr% /r%^ A 2 2/28/2012 Item 14.8.1. Worst Case Scenario • By September 2014; if the loan is not renegotiated, and the CRA is unable to otherwise make the $8.8 million balloon payment a Default will occur. • Upon Default the Loan becomes immediately due and payable. Pledged Funds and any proceeds from land sales will be directed against the Loan until it is paid. 19 Plan -of- Action Executed Simultaneously • Immediately issue RFP for refinancing - Continue negotiations with existing lender • Immediately eliminate discretionary CRA programs, expenditures and contracts until refinancing is resolved Focus resources on the financial problem Hiring freeze - Evaluate in 90 Days • Immediately issue RFPs for the next phase of the revitalization program • Gateway Triangle Mixed Use Development • Bayshore Mixed Use Development • Bayshore Residential Infill • 90 Day Status Report to BCC Zo Packet Page -653 - 10 ninninnw2 2/28/2012 Item 14.6.1. Refinancing Action Plan • Immediately Issue RFP to other lenders to refinance loan • Continue ongoing negotiations with current lender CRA Programmatic Changes Operational & Administrative Adjustments • Reduction in operational expenditures — Contractual — Outside vendors — Discretionary spending (only `need to have' items) • Perform planning functions in house — Catalyst site marketing & advertisement — Grant writing & applications — Grant Management (CDBG -DRI) — Grant management (CRA TIF) — Master Plan Update • Maintain civic presence & public outreach • Staffing adjustments Pf1 zz Packet Page -654- 11 r% /r1 ^ 1/1 ^ A 2 2/28/2012 Item 14.13.1. Expedited Catalyst Program Goal & Objective of Catalyst Projects • Attract investment/development groups to build • Provide CRA & County incentives • Facilitate rezoning, if required • Develop sites at highest and best use • Return sites to tax rolls at higher land value • Attract or relocate businesses • Incentivize job growth 23 Expedited Catalyst Program Commercial Lots • Gateway Triangle - - Invitation to Negotiate: March 2012 — July 2012 — Market to local brokers — Advertise in Real Estate Journals & Magazines — Attend ICSC "Deal Making" Forums • Bayshore Cultural Village MPUD - - Complete rezoning (June 2012 BCC Review) — Invitation to Negotiate: March 2012 — July 2012 — Market to local brokers — Advertise in Real Estate Journals & Magazines — Attend ICSC "Deal Making" Forums 24 Packet Page -655- 12 Expedited Catalyst Program Residential Lots • Residential Infill - - Request for Proposals — Market to private parties (first attempt) — Market to local builders (fourth attempt) — Offer at Market Value — Deed Restriction — Allow only single - family homes on mobile home lots Questions? r% I^ e% / A /1 A 2 2/28/2012 Item 14.13.1. 2s 26 Packet Page -656- 13