Uptown Worthington - East Whiteland Township

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Uptown Worthington
Tax Increment Financing Proposal
O’Neill Properties Group
Tax Increment Financing Proposal

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Introduction

• Objectives for today’s meeting

1. Obtain global support for alternative TIF
proposal

2. Review case studies that represent lost
revenue from undeveloped projects

3. Review turmoil in credit markets since last
meeting and understand market impact on
the Uptown Worthington project

4. Update School Board on leasing success

5. Debunk the “myth of risk”

6. Understand benefits to local taxpayers and
the Commonwealth

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Alternative TIF Request:
- Reduce TIF Cost By 50%
- Increase net proceeds to East Whiteland Township from $67,000 to

$97,000

-Preserve East Whiteland Townships Earned Income Tax increase of

$630,000

Tax Increment: BUILDING M6/R6 M4 SUBTOTAL
Tax Increment Office
Tax Increment Theater C10 Total Total 1,036,246
Tax Increment Retail 186,284
Total 593,798.40 - 330,278
Total Tax Increment - 186,283.60
442,447.64 115,087.50 1,552,807
- 196,172.50 301,371.10
789,970.90
19,017.50
461,465.14

• Annual Debt Service: $1,500,000
• Gross TIF Proceeds: $15,000,000

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Alternative TIF Request - Proposed Alternative TIF District

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Examples of Missed Opportunity
in Chester County

Lost Revenue Hurts All Taxpayers...
Long Term Delays are the Norm for Large

Development Projects in the Area
Large Sites Have Sat Undeveloped for
Long Periods of Time in This Market Area

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Atwater Corporate Center (Malvern, PA)

• 2,600,000 Total Available SF
• 2,449,000 Vacant SF
• 11 years Vacant
• $53,878,000 Revenues Lost

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Glenloch Corporate Center (Exton, PA)

• 1,000,000 Total Available SF
• 655,750 Vacant SF
• Vacant for Over 20 Years
• $26,230,000 Revenues Lost

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Bishop Tube (Malvern, PA)

• 146,000 Vacant SF
• 20 years Vacant
• $5,840,000 Revenues Lost

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Deerfield Executive Center (Malvern, PA)

• 271,000 Total Available SF
• 181,000 Vacant SF
• Vacant for Over 10 Years
• $3,620,000 Revenues Lost

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Rubino Land (Malvern, PA)

• 144,000 Vacant SF
• Never Developed
• $864,000 Revenues Lost in Last Three

Years

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Total Impact of Delayed and Vacant Developments

Total Square Feet: 4,157,000 SF
Vacant Square Feet: 2,449,000 SF
Total Lost Revenue: $90,432,000

UPTOWN WORTHINGTON Tax Increment Financing Proposal

State of the Capital Markets

• The international capital markets and
lending community are frozen and in
disarray. We may already be in an
economic recession that could become an
international depression

• Equity, debt and sub-debt or “mezzanine
financing” are scarce to impossible to obtain

• There is no immediate fix in sight (the
congressional bailout notwithstanding)

UPTOWN WORTHINGTON Tax Increment Financing Proposal

State of the Capital Markets

• March 14, 2008, Bear Stearns agrees to sell assets to JP
Morgan in order to avoid insolvency; assets sold at
pennies on the dollar

• September 15, 2008, Merrill Lynch is sold to Bank of
America at fraction of value to avoid insolvency

• September 15, 2008, Lehman Brothers declares
bankruptcy

• September 16, 2008, $85 billion AIG bailout funded by
Federal Reserve

• July 11, 2008, Indymac Bank fails
• September 25, 2008, Washington Mutual Bank fails
• September 29, 2008, Wachovia Bank sold to Citigroup

for $2.2 billion
• October 5, 2008, three of the largest banks in

Germany fail, requiring the largest bailout in German
history

UPTOWN WORTHINGTON Tax Increment Financing Proposal

TIF Is More Necessary Now Than Ever

“Twenty Nickels Makes a Dollar”

Capitalization Total %
Equity 38,000,000 7.2%
RCAP Grants 19,300,000 3.7%
BEDI Grant 0.4%
Wegmans Sitework Contribution 2,000,000 0.4%
HUD Loan 2,000,000 0.9%
BIOS Loan 5,000,000 0.9%
Pennvest Loan 5,000,000 2.1%
TIF 11,000,000 2.1%
Building PA Loan 11,000,000 2.0%
Sub-Debt 10,400,000
Senior Debt 100,000,000 19.0%
322,646,425 61.3%
Total 526,346,425 100.0%

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Leasing Continues to Be Successful

• 1,644,301 SF of retail space leased or
with LOI’s under negotiation

– 2x the available square footage

• 263,000 SF of office space leased or
with LOI’s under negotiation

– 50% of the available square footage

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Debunking The Myth of Risk

1. Construction will not commence until every
penny of capital is secured

2. Built in one continuous phase from start to
finish

3. A diverse product mix for accelerated
stabilization

4. TIF bonds secured only by project tax
revenues – no recourse to EWT

5. Chester County Industrial Development
Authority will issue bonds – no effect on
EWT’s balance sheet or credit rating

6. First $5 million guaranteed by the
Commonwealth’s TIF Guarantee program

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Economic Impact

-What This Money Can Do For East Whiteland
Township

• $1,000,000+ could go towards the General
Fund each year

• Could help with road and traffic
improvements

• Could go towards potential purchase of
open space and maintenance of parks and
recreational

• Could help defray the costs of emergency
services and infrastructure

• $630,000 in new Earned Income Tax can
help reduce the tax burden on the residents
of East Whiteland Township

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Economic Impact

-Benefits to the Commonwealth and Local
Economy
• Largest private investment in a single project

in the history of the Commonwealth

• Will be one of the most significant economic
development drivers in the Commonwealth
over the next 2 years

• Over 3,000 permanent jobs will be created
and as many as 7,000 total jobs

• Sales tax and personal income tax will
exceed $24,000,000 annually

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Social & Environmental Benefits
-Something For Everyone

• A walkable, new urbanism, live, work
& play, 24-hour community

• Environmental reclamation and
remediation

• New housing for workforce and
“empty nesters”

• A public gathering place with
recreational areas

– Biking, walking, running, rollerblading
– Revitalized Creek
– Public square for the town and events

• Fully ADA compliant

UPTOWN WORTHINGTON Tax Increment Financing Proposal

What Are We Asking For?

– $1.55MM of the $6.4MM (approximately
25%) of new tax revenue generated by
this project only to be invested back
into the project

– Funds will be invested in specific public
infrastructure improvements that
enhance the area – not just extras for
the Worthington project

UPTOWN WORTHINGTON Tax Increment Financing Proposal

Only Risk is A “NO” from the Board

– A No to TIF means . . . .
– OPG might need to slow down/stop our build

out for 5 or more years.

– And, for Taxpayers, that means . . .
– A lost opportunity to have more than

$1,000,000 a year that could reduce taxes

• $5 million over 5 Years – Lost Revenue
• $10 million over 10 Years – Lost Revenue