Current view of the West Northfield Drive focus area Real Estate Development & Reuse Indiana Economic Development Course Horizon Convention Center, Muncie,

Current view of the West Northfield Drive focus area

Real Estate Development & ReuseIndiana Economic Development CourseHorizon Convention Center, Muncie, Indiana

www.greenstreetltd.com

Parkview Randallia Campus

Good Morning!

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Founded in 2004, Greenstreet Ltd. is an Indianapolis-based real estate development, brokerage and consulting firm which leverages sustainable strategies in the planning, development, marketing and disposition of urban mixed-use assets throughout the United States.

Agenda

About the Audience

Chapter 6 Development Defined The Basic Real Estate Development Process Dealing with Environmental Contamination Public Participation in Development

Roundtable Discussion about Development & Reuse Strategies

IN Economic Development Conference | © Greenstreet Ltd.

Types of Development

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Build-to-Suit

Speculative Development

Greenfield Development

Redevelopment, Reuse, Brownfield Development


Lots of projected growth…

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US Growth Projections 2000-2030:+ 82 million more people (27 million between 2000 and 2010)+ 55 million new housing units

IN Growth Projections 2000-2030:+ 718,000 more people (400,000 between 2000 and 2010)+ 481,000 new housing units

Source: U.S. Census Bureau


Neighborhood Preference Studies

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Source: Arthur C. Nelson; RCLCO; National Association of Realtors

Nelson RCLCO NAR

Housing Type 2006 2008 2011

Attached 38% 38% 39%

Detached 62% 62% 61%

The National Association of Realtors completed a major national survey on neighborhood

preference in February 2011 (95% confidence level)


Neighborhood > House

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Source: National Association of Realtors

Downtown 8%

City-Residential Area 11%

Suburb-Mixed-Use 28%

Suburb-Housing Only 12%

Small Town 18%

Rural Area 22%

Do our land use policies support the fulfillment of nearly half of demand?

• 88% favor neighborhood over home size

• 59% would buy a smaller house on a smaller lot in exchange for a shorter commute to work

• Most important factors in purchasing a home:1. privacy from neighbors2. short commute to work3. high quality public schools4. access to sidewalks5. places to walk to


Where will growth occur?

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US Growth Projections 2000-2030:+ 82 million more people+ 55 million new housing units

IN Growth Projections 2000-2030:+ 718,000 more people+ 481,000 new housing units

Greenfield ~60-65%

Suburban Densification ~15-20%

Urban Infill~15-20%

Source: ULI, ‘Developing Greenfields without Sprawl,’ 2004


Trends Redefining the American Dream

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Source: MPO-MIBOR Consumer Preference Survey


% Owner Occupied 1990 2000 2010 2040

Indianapolis MSA 64% 69% 66% ? %

U.S. 64% 66% 65% 60%

Drivers:• Single-person households already outnumber family households

• The sub-prime mortgages that enabled growth in ownership between 1990 and 2000 are history

• Fannie Mae and Freddie Mac may disappear

• 20% down payments will become conventional

• The next generation of homebuyers is the most educated generation ever, but also the poorest generation since the Great Depression - submerged in debt, no savings or liquid assets

Central Indiana Reflects National Trends

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Massive Supply-Demand Inbalance

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Suburban Housing-Only Neighborhood

Suburban Mixed-Use

Urban Neighborhood

Downtown

25% of regional Consumer Preference

88% of the regional Construction Pipeline

75% of regional Consumer Preference

12% of the regional Construction Pipeline

Evolution toward Smart

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Source: Urban Green


Paying the Way

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Sources: U.S. Source: Growing Cooler, Urban Land Institute; Smart Growth & Conventional Suburban Development: Which Costs More? U.S. EPA

Smart growth development patterns reduce infrastructure costs from 32% to 47% vs.

conventional development patterns.


Green is the New GraniteGen Y and the Baby Boomers have a strong preference for green amenities… and they’re the largest generations in history. Serving these 50 million potential homebuyers over the next 10-20 years will dominate the U.S. economy.

Nationally, consumers are paying premiums of 1.5 to 5% for green development. Surveys are indicating that green is the fastest way to sell a home, and that the neighborhood is more important than the house.

Is green the new granite countertop? (Atlantic Monthly)Source: The Atlantic Magazine, Joe M. McIlwain

Green Building MegatrendsU.S. Trends

1. Green building growth to rebound2. Federal momentum has slowed3. LEED-EBOM will gain momentum4. Water issues grow in importance5. Zero net energy to gain traction

Global Trends

6. Green building movement will continue to grow7. Performance disclosures8. Global carbon ratings9. Solar power stalls10. Building management goes into the Cloud

Source: Hanley-Wood Builder online

Real Estate Development Process

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Pre-development

Market, financial and political feasibility

Site and engineering analysis

Financing

Contractor negotiations and public approvals

Construction

Marketing

Building occupancy and management


Dealing with Environmental Contamination

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Indiana defines a brownfield as:

“a parcel of real estate that is abandoned or inactive; or may not be operated at its appropriate use; and on which expansion, redevelopment, or reuse is complicated; because of the presence or potential presence of a hazardous substance, a contaminant, petroleum, or a petroleum product that poses a risk to human health and the environment.”

Source: Indiana Code 13-11-2-19.3


Challenges in Brownfield Redevelopment

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Environmental Liability ConcernsDevelopers and property owners want to manage past and future liabilities associated with the property’s environmental history.

Financial BarriersPrivate lenders are often reluctant to give loans for potentially impaired lands. In some cases, cleanup costs for a property may ultimately be more than the property’s value.

Cleanup ConsiderationsA brownfield redevelopment timeline may take longer than typical development due to environmental assessment and cleanup activities.

Reuse PlanningA reuse plan based on community goals or sound economic and environmental information (e.g., market potential) may be lacking.


Typical Brownfield Redevelopment Process

18IN Economic Development Conference | © Greenstreet Ltd.

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Brownfield Redevelopment Process


Public Sector Partnership in Development

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• Bond Financing

• Loan Guarantees

• Revolving Loan Funds

• Tax Credits

• Tax Increment Financing

• Sale-Leasebacks

• Tax Abatement

• Grants

RegulatorEstablishing rules of the game

FacilitatorHelping catalyze development

InitiatorLead role in some capacity


Brownfield Toolbox

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FederalSite (property) assessment grants

Site cleanup grants

Grants to establish Revolving Loan Funds

Job training grants

Funds for state brownfield programs

IndianaGrants for site assessments

Grants for remediation of petroleum contaminated sites and hazardous substances

Grants to match federal funding

Low interest loans for assessment or remediation activities

Tax credits for voluntary remediation


Public Sector’s Role in Development

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Type I Type II Type III

Industrial

Used more in the past; less frequent now

Common Rare

Office Rare Commonly used as initial catalyst for development

Used occasionally

Retail Used more in the past; less frequent now

Common Rare

Residential

Common Common Rare

Hotel Rare Used to stimulate convention business

RareType I - No market demand, requiring subsidy with little potential for

value recapture

Type II - Little current market demand, but potential support if built

Type III - Publicly owned/controlled land with market demand and

development potentialIN Economic Development Conference | © Greenstreet Ltd.

Homan Square, Chicago, IL

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• Urban mixed-use redevelopment of former Sears, Roebuck and Co. Headquarters (1907 to 1973)

• 55 total acres

• 14 acres of open space (25%)

• 308 for-sale and rental homes

• One million sf of adaptive reuse of commercial and institutional space to serve as “vessels for jobs” and community services

• Development: 1994 to 2000

• Developed as a venture of The Shaw Company, Sears, Roebuck and Co., and the City of Chicago


Vacancy to Vibrancy

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U.S. Census 1990 2000 2010Unemployment 24% 21% 18%Single-Parent Households 45% 43% 28%Families in Poverty 51% 31% 22%Home Ownership 20% 32% 32%

1990 2005

Sources: U.S Census Bureau for the four census tracts around Homan Square (2715, 2716, 2904, and 2905)


Redevelopment Strategy

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• Jobs: One million sq. ft. of adaptive reuse of commercial and institutional space to serve as “vessels for jobs”

• Community Services: Integrate new community center services with existing facilities and programs

• Diverse Housing: Mixed-income for-sale and rental homes


IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.

Site Plan

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IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.27

Administration Building

Economic Development

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• Adaptive reuse of commercial buildings for non-profit and business incubator space

• Chicago Police Training Facility

• Henry Ford Academy: Power House Charter High School

• Holy Family Lutheran School

• 3,000 jobs generated

• Spurred development of new grocery anchored community shopping center


29IN Economic Development Conference | January 12, 2012 | © Greenstreet Ltd.

Community Center

Community Services

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• Chicago Park District Recreation Center

• North Lawndale YMCA

• Robert Crown Center for Health Education

• Lawndale Christian Health Center

• Family Focus of North Lawndale

• Neighborhood Technology Resource Center



Mixed-Income Housing


Mixed-Income Housing

New Life for North Lawndale

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• 308 units of mixed-income housing

• 50% owner-occupied housing from $90,000

• 50% rental housing from $395 per month

• Integrated housing products

• Housing for families earning between $15,000 to over $75,000 (1999)

• Decreasing subsidy over time – market rate homes sold for $185,000 (1999)


Public – Private Partnership

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Private SectorSears, Roebuck and Co. LIHTC Equity InvestorsThe Shaw Company

Federal/StateHOME CDBG

City of ChicagoInfrastructure New Homes for ChicagoChicago Park District


Homan Square: Lessons Learned

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• Committed founders and patient capital

• Compelling vision to inspire partnerships

• Community that is vested in the result

• Sustainable organization (strong HOA)

• Homes + Jobs + Community Services

• Homes vs. “affordable” or “workforce”

• Design for safety and securityorientation, fencing, security, police

• Creating value by designopen space, green building, architecture


Prairie Crossing, Grayslake, IL

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• Greenfield, 40 miles northwest of Chicago

• Surrounding landowners partnered to buy the site after an intense legal battle that would have allowed 2,500 units

• Zoning allowed up to 1,600 units

• 678 acres total

• 470 acres Open Space (69%)

• 395 units (.58 UPA Gross)

• 9% attached product

• 73 acres of commercial including TOD with commuter rail to Chicago and O’Hare

• Charter School

• Community Barn

• Community Supported Agriculture

• Boarding Stable

• 10 miles of trails


Conventional vs. Sustainable Development

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667 acres1,600 units

2.4 units per acre

667 acres 395 units

.4 units per acre











Prairie Crossing: Lessons Learned

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Price premium above market increased over time:

1995: 15% premium

2000: 33% premium 19% is the home 14% is the

community

2005: 100% premium

LID practices yielded savings vs. conventional infrastructure:

Reduced Road Width:$178,000

Curb & Gutter:$339,000

Storm Sewer:$210,000

Sidewalk Alternatives:$648,000

_______________________________Total Savings

$1,375,000

A 2,000 sq. ft. home is:$250,000 in Grayslake, IL$500,000 in Prairie Crossing


Creating a Dynamic Life Sciences Campus

In the Heart of Fort Wayne, Indiana

Randallia CampusFuture Use Plan & Economic

Development Strategy

While space programming and configuration activities are on-going, commitments of Parkview Health System to the Randallia Campus include:

• At least a 120-Bed Main Hospital Facility with a mix of inpatient acute care, post acute care and rehabilitation services, including skilled nursing facilities

• Full Emergency Room Services• Family Birthing Services• Outpatient Services• Physician Practices• Surgery Suites• Parkview Behavioral Health

(Will continue to be located on Beacon St.)

These services will remain at the Parkview Randallia

Campus after the opening of the Parkview Regional

Medical Center in 2012.

Understanding Parkview’s Projected Services at Randallia

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BSO

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PARKVIEWMAIN HOSPITALCOMPLEX

ST. ANNE’SRETIREMENTCOMMUNITY

VETERANS ADMINISTRATIO

NHOSPITAL

PARKVIEWBEHAVIORAL

HEALTH

CROSSROADCHILDREN’SHOME

PARKVIEWCAREW MEDICALPARK

PARKCENTER

Parkview Hospital in the Context of a Neighborhood of Institutions and

Organizations

IN TOTAL, A HEALTH AND

MEDICAL CAMPUS OF

APPROXIMATELY 150 ACRES

ALREADY EXISTS IN

THIS LOCATION.

PARKVIEW OWNS

APPROXIMATELY 65 ACRES.

VARIOUS PARKVIEW SUPPORT BUILDINGS

Senior Care

Behavioral Health

Rehabilitation

Ort

hope

dics

&

Bio

Mec

hani

cs

Health Technology

Life SciencesEducation & Research

HEALTH CAREDELIVERY

EDUCATION &RESEARCH

A CAMPUS POSITIONING STRATEGYBeyond a continuedParkviewHospital presence…

WHAT IS OUR NICHE

?Parkview Health

believes that the Randallia Campus, in

association with neighboring

institutions, can become a

National Center of

Excellence in Senior Care,

Rehabilitation and Behavioral

Health Services.

THE FUTURE:A Center of Life Science Activity…• Major

Employment in higher paying jobs.

• Significant Education and Research Opportunities

• Focus on niche Areas and Themes for National Success

• Significant land for future Economic Development

An Artist’s Conceptualization of a 20-30 Year Vision of a Fort Wayne

Life Sciences Campus

Indiana’s $69 billion health industry, defined as biopharmaceuticals, medical devices and instruments, healthcare delivery, laboratories and payors – accounts for over 20 percent of Indiana’s total state taxes and almost 10 percent of the state’s employment.

Indiana is one of the nation's

top four life sciences leaders as defined by number and concentration of life sciences-related jobs

Getting in Alignment with Indiana Economic Development Strategy:An opportunity to tap the momentum and resources committed to Indiana’s Health and Life Science initiatives, such as BioCrossroads and OrthoWorx.

Getting in Alignment with Indiana Economic Development Strategy:An opportunity to expand the R&D capacity of Indiana’s Life Science initiatives

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2, 3

4, 5, 6

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54% of total university research in Indiana is in life sciences

As the home to some of the best research institutions in the U.S., Indiana is unearthing innovative research, discovering the healthcare solutions of tomorrow. But, there is opportunity in Northeast Indiana.

“Medical innovation has significant positive outcomes for the health of the nation, the health of the economy, and the health of Americans.”

Battelle Institute

Indiana Adults with a College Degree:

Indiana 2008

33.4%

Lumina Foundation Big Goal for 2025

60%

Additional number of degrees needed to meet workforce needs in 2025

877,737

Institutions can address these converging trends, with a more sustainable, cost-effective, public-private partnership model that integrates institutions into communities and leverages economic development strategies.

Increasing Demand for Higher EducationA State and National Challenge

Getting Started:Creating a Culture of Education and

Research

The Life Science Education and Research Consortium of Northeast Indiana

• In July 2011, 5 area education and research institutions agreed to form a consortium to create a culture of education and research at the Randallia Campus.

• Each institution is collaborating with each other to create dynamic and unique career paths or “ladders” for students – from K-12 through doctoral programs.

• The physical presence of the Consortium at the Randallia Campus will give unparalleled access for students, faculty and researchers to not only Parkview Hospital, but the tremendous health care assets of its neighbors, including the VA Hospital.

• Near-term activities are anticipated by Fall 2012, with full occupancy possible by 2013.

Reuse of Existing Buildings Provides Vessels for Jobs:

Driving High Growth, High Wage Employment

Source: Indiana Department of Workforce Development, 2011

High Growth and High Wage Employment: The Randallia Campus is an opportunity to align and support the implementation of local, regional and state economic development initiatives around life sciences.

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5%$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

$180,000

Registered Nurse

Licensed Prac-tical Nurse

$555

Social Worker

$431

Health Care Manager

$248

MechanicalEngineer

PhysicalTherapist

Projected Annual Employment Growth : Indiana : 2008-2018

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$33,176 2009 Median Wage

• Today, financing is always creative and the capital stack is getting taller

• Today, catalytic development is always a public-private partnership

• Make infrastructure work harder

• Do your own homework; know the market, ask the right questions

• Become a student of ‘best-practices’ – financial, regulatory, development

• You’ll always get what you always got if you always do what you’ve always done; if necessary, go outside your community to get what you want

• One size does not fit all; focus incentives by project to improve the developer’s return and/or reduce their risk

Takeaway Thoughts on Redevelopment


Discussion Questions


• When it comes to development, what type of community are you (proactive, reactive, supportive, or anti-growth)? What type of community should you be? Is a government's support for growth and development something that should be considered at a regional, rather than a local level?

• What are some ways that communities can make their infrastructure work harder, or more efficiently? In an era of limited resources, can long-term benefits outweigh the short-term costs?

• What type of development do residents of your community want? What type of housing choices do they have? Do your community's policies and incentives match up with local demand?

• Where does your community look for best practices? Within your region, the state, or nationally? What are some ways that you've brought attention to best practices, and how have you educated decision makers and the public?

• How does your community handle brownfields? Do you document them, help developers get funding, actively purchase and hold property, incentivize development, or help actively plan the site?

• Urban Land Institute (Case Studies) : www.uli.org

• US EPA : www.epa.gov/brownfields/index.html

• IN Brownfields : www.in.gov/ifa/brownfields

• IN Department of Environmental Management : www.in.gov/idem/

• New Markets Tax Credits : www.cdfifund.gov

• Historic Tax Credits : www.nps.gov/hps/tps/tax

• LIHTC : www.hud.gov/offices/cpd/affordablehousing/training/web/lihtc/basics/

• CDBG : www.in.gov/ihcda/2529.htm

• HOME : www.in.gov/ihcda/2530.htm

• NSP : hud.gov/offices/cpd/communitydevelopment/programs/neighborhoodspg/

Resources


Documents

Current view of the West Northfield Drive focus area Real Estate Development & Reuse Indiana Economic Development Course Horizon Convention Center, Muncie,