Economic and Business Development Strategic Action Plan

191 Peachtree Street NE

Suite 3280 Atlanta, Georgia 30303

Michael E. Tabb

Phone: (404) 815-1819 Fax: (404) 815-0399

www.redrockglobal.com

Economic and Business Development Strategic

Action Plan

November 6, 2016

Prepared for:

11/6/16 Page 2 of 62

.

Table of Contents

1. Research Methodology

2. Executive Summary

3. Market Overview

a. Demographic Summary

b. Analysis of Asset Classes

i. Office

ii. Industrial

iii. Retail

iv. Multifamily

v. Hospitality

c. Transportation

d. Education

e. Recreation

4. Financial Tools

5. Research & Analysis

a. SWOT Analysis for the City of Fayetteville

b. Leakage Analysis

c. Summary of Findings

i. Economic Expansion

ii. Business Development

iii. Business Incubation and Supporting Ecosystem

iv. Alliances & Partnerships

6. Marketing Strategy and the Path Forward

7. Near-Term Catalytic Planning

a. Upper Murchison Focus Area

b. Lower Murchison & Catalyst Site 1 Focus Area

c. Center City Action Park Focus Area

d. The Massey Hill Focus Area

8. Appendix

a. About the Consultant

11/6/16 Page 3 of 62

.

1. Research Methodology Red Rock Global, LLC utilized several methodologies for their research. The research focused on addressing the opportunity for new business attraction, existing business retention, and the potential for developing residential, retail, hospitality and/or office in one of several corridors in Fayetteville, NC. Research for this analysis was derived from publications, key stakeholder interviews, market tours and the analysis of existing market data. Below is a list of some of the market information and sources utilized:

Publications

o FY 2016 - 2025 Metropolitan Transportation Improvement Program

o FY 2016 - 2025 Metropolitan Transportation Improvement Program Map

o FY 2016 -2025 Strategic Transportation Improvement Program / Additional Projects

o FAMPO Congestion Management Plan

o 2016 Parks Capital Program

o 2012 Garner Report: A Competitive Realities Report for Fayetteville and Cumberland County,

NC

o Murchison Road Corridor Study Phase II (2008 Kimley-Horn study)

o 2015 ULI Technical Assistance Panel

o City of Fayetteville Consolidated Plan (2015-2019)

o Implementation Feasibility Analysis for the Land Use and Economic Development Plan for

the Murchison Road Corridor Study (2008 Isler study)

o Fayetteville Land Use and Economic Development Plan: Murchison Road corridor (2008

LandDesign)

o Bragg Boulevard Corridor Study

o Cumberland County 2030 Growth Vision Plan

o Downtown Renaissance Plan Update (2013)

o An Economic and Business Development Initiative: Sports, Family Entertainment and Mixed

Use Development Complex (Catalyst Site 1)

o Report on an Arts & Entertainment District

Market Data

o CoStar

o US Census data

o US Bureau of Labor Statistics (employment)

Interviews

o Broker input

o Developer discussions

o City of Fayetteville Staff

o Darswell Rogers, Interim Director, Chamber of Commerce / PWC Board Chair

o Russ Rogerson, President, Fayetteville Cumberland County Economic Development Corporation

o Tad Davis, Town Manager, Spring Lake

o Monica Stephenson, U.S. Army Garrison Fort Bragg, N.C., DPW Operations and Maintenance

o Tom J Keith, Owner, Keith & Associates Inc.

o Mitch Colvin, Mayor Pro Tem, Fayetteville City Council Member

o Theodore Mohn, Fayetteville City Council Member

METH

OD

OLO

GY

11/6/16 Page 4 of 62

.

o Chalmbers McDougald, Fayetteville City Council Member

o Murray O. Duggins, CEO,

o Attorney Glenn Adams, Vice Chairman Cumberland County Board of Commissioners

o John Meroski, President & CEO, Fayetteville Area Convention and Visitor Bureau

o Patrick Murray, Grant-Murray Real Estate

o Jim Smith, President, United Developers, Inc. & United Management II

o James Palenick, Director of Economic and Business Development, City of Fayetteville

o Dr. Frank Till, Cumberland County Superintendent of Schools

o Melody Chalmers, Principal, E. E. Smith High School

o Dr. James Anderson, Chancellor, Fayetteville State University

o Wesley Fountain, Director, Constituent & Community Relations Fayetteville State University

o Don Porter, Chairman, Fayetteville State University Board Trustee

o Joel Strickland, Executive Director, Fayetteville Area Metropolitan Planning

Organization, (FAMPO)

o Richie Hines, District Engineer, North Carolina Department of Transportation

o Rachael Songalewski, Crime Analyst, Fayetteville NC Police Department

o D. Autry, Sargent, Fayetteville NC Police Department

o Jack Rostetter, President, H&H Homes

o Randy L Moore, President & CEO RLM Communications, Inc.

o Kathy Jensen, Council Member District 1

o Kirk deViere, Council Member District 2

o The Cultural Planning Group, Downtown Consultants

Retail

o Esri Retail MarketPlace

o Esri Retail Gap Analysis

o STDB

o Pitney Bowes Sites (Selection Software)

o Retailer feedback

o Broker input

Hospitality

o CoStar

o STR Market Summary

o Hotels.com

The 2015 Esri Database includes the latest market statistics for Retail Trade and Food Services

and Drinking Places (the retail market). The dollar estimates, which represent total retail supply

and demand conditions for the past year, are presented in the North American Industry

Classification System (NAICS). These datasets comprise an update of supply and demand for the

27 industry groups in the Retail Trade sector, NAICS 44–45, as well as the four industry groups

within the Food Services and Drinking Places subsector, NAICS 722.

The estimation of retail sales also incorporates new business data input from Dun & Bradstreet. This database has improved data collection methodology and maintenance, industry classification, employment and sales estimation.

METH

OD

OLO

GY

11/6/16 Page 5 of 62

.

Lastly, the estimation of retail potential by industry incorporates the latest product line tables from the 2007 Census of Retail Trade (CRT), as well as the latest Consumer Expenditure surveys (2010 and 2011) from the Bureau of Labor Statistics. Market Supply (Retail Sales) Estimates of retail sales begin with the benchmark, the 2002 and 2007 CRT from the U.S. Census Bureau. All estimates of market supply are in nominal terms and are derived from receipts (net of sales taxes, refunds, and returns) of businesses that are primarily engaged in the retailing of merchandise. Excise taxes paid by the retailer or the remuneration of services are also included, for example, installation and delivery charges that are incidental to the transaction.

Market Demand (Retail Potential) To complete the profile of a retail market, Esri estimates consumer demand, or retail potential. That is the amount expected to be spent by consumers on products in the retail market. Esri's 2015 consumer spending data provides expenditure estimates for more than 700 products and services consumed by US households. Esri draws estimates of consumer spending from the Bureau of Labor Statistics' annual Consumer Expenditure Surveys, which provide consumer spending information for hundreds of goods and services by households but not by source. The Leakage/Surplus Factor (Supply and Demand) Esri enables the comparison of supply and demand simply in one measure, the Leakage/Surplus Factor. Leakage/Surplus conveniently measures the balance between the volume of supply (retail sales) generated by retail industry and the demand (spending by households [i.e., retail potential]) within the same industry. Supply (retail sales) estimates sales to consumers by establishments. Sales to businesses are excluded. Demand (retail potential) estimates the expected amount spent by consumers at retail establishments. Supply and demand estimates are in current dollars. The Leakage/Surplus Factor presents a snapshot of retail opportunity. This is a measure of the relationship between supply and demand that ranges from +100 (total leakage) to -100 (total surplus). A positive value represents 'leakage' of retail opportunity outside the trade area. Leakage in an area represents a condition where a market's supply is less than the demand. That is, retailers outside the market area are fulfilling the demand for retail products; therefore, demand is leaking out of the trade area. Retail sales leakage suggests that the trade area and the community can support additional store space for that type of business. A negative value represents a surplus of retail sales, a market where customers are drawn in from outside the trade area. Surplus in an area represents a condition where supply exceeds the area's demand. Retailers are attracting shoppers that reside outside the trade area, so the surplus is in market supply. A retail surplus does not necessarily mean that the community cannot support additional business. Many communities have strong clusters of stores anchored by destination retailers that draw customers from outside the trade area.

METH

OD

OLO

GY

11/6/16 Page 6 of 62

.

2. Executive Summary Red Rock Global, LLC was commissioned by the City of Fayetteville to inform the City Council, the City administration, the community and stakeholders of the City’s current economic status and present recommendations that will serve as catalysts for improving underutilized and underperforming areas and corridors.

Based upon our research, we recommend a path forward that adopts 4 pathways that are specific to the circumstances that are present in Fayetteville:

Pathway 1. Quality Education/Schools are one of the most important draws to attract

new residents to a community. Families will deal with traffic, long distances, financial burdens, and even modest blight to access quality education. Great Schools = Great Home Values = Great Communities.

Pathway 2. Large Scale, High Quality Active Recreational Spaces are very desirable and offer an amenity that enhance residential values. Others will seek out these spaces as a destination, thereby generating economic growth.

Pathway 3. Drive More People Downtown. A great public investment has already been

made Downtown and additional investment is being contemplated. All indicators point to an underutilization of Downtown and its amenities. It offers the most promise for demonstrating a new, more family, pedestrian friendly Fayetteville. The City must focus its actions and activities in a targeted effort to ensure the success of Downtown and the areas adjacent to Downtown.

Pathway 4. Focus Development, Marketing & Public Spending on City’s strengths of:

a. Natural features b. Military personnel c. Medical services d. Attractive Downtown e. Quality, affordable collegiate education options f. Outstanding accessibility

Utilizing the four pathways, Red Rock Global has identified four focus areas for redevelopment planning: 1) Upper Murchison Road (I – 295 to Country Club Dr, Bragg Blvd to Ramsey St); 2) Lower Murchison Road (Country Club Dr to the intersection of Bragg Blvd and Rowan Street); 3) Center City Action Park (intersection of Blount St and Gillespie St); and 4) The Massey Hill area While the specific near term opportunities surrounding these four focus areas are not mutually exclusive opportunities, it is recommended that the City work with its existing alliances and partnerships to prioritize its action plan to leverage its recently approved $35 million recreational bond to drive economic development outcomes through the strategic leveraging of parks and recreational investment to create public destinations that would then attract private development interest in adjacent areas.

Executive Summary SU

MM

AR

Y

SUM

MA

RY

11/6/16 Page 7 of 62

.

The City should also consider direct public / private collaborations on certain projects as highlighted in the Near-Term Catalytic Planning Section of the report. These public private partnerships allow the leveraging of additional financial incentive tools and allow the City to concentrate scarce public dollars on areas that generate the most impact. While many municipalities are responsive to private market requests for specific project incentives, a more proactive strategy entails the City taking on a leadership role to develop or redevelop an area or site, often blighted or underused, within a specific community. This will entail the active solicitation of private sector partners to help leverage outcomes. While, there are several delivery methods to achieve this proactive solicitation, the important point is that all interests are aligned in order to place risk and return with the appropriate partner.

SUM

MA

RY

Executive Summary

11/6/16 Page 8 of 62

.

Near Term Catalytic Opportunities

1. Upper Murchison Road. The Upper Murchison Road area is suitable for a large-scale master planned development with retail, a sports complex and hospitality. The concept would be to develop a large sports complex capable of hosting regional sporting events similar to the type of sports complexes found in Charlotte, NC, Rocky Mountain, NC and Myrtle Beach, SC. These venues are major destinations for both local and regional athletic competitions and social gatherings. The $35 million parks bond referendum includes $9 million in proposed funding for a multi-purpose sport field complex with 15 athletic playing fields for baseball, soccer and football at Exit 49 on I-95. This City should reevaluate the value of a major recreational development located in an area that provides very little catalytic growth for the City overall, and little synergy with anything else the City has developed or plans to develop. Exit 49 misses the opportunity to be in immediate proximity to the Cross Creek Mall area, Downtown, the new baseball stadium, existing museums and parks, Fayetteville State University, Fort Bragg, etc. This sports venue should be placed at a City of Fayetteville site north of Country Club Drive, off of Murchison Road and as close to I-295 as possible. The presence of the sport complex, changes in local traffic patterns, and the increased traffic counts off of I – 295, should generate enough new activity to also support a small retail development in conjunction with the sports complex. With a new retail center and a new sports complex, the economics may be present to support a hotel.

2. Lower Murchison Road and Catalyst Site 1. The greatest impediment to new development and economic growth in the Lower Murchison Road and Catalyst Site 1 focus area is its relatively low household incomes and the missed opportunity to incentivize development by capitalizing off the area’s strengths in a coordinated way that matches clear goals and objectives with qualified participants and financial resources. The City must drive more businesses, residents and visitors to its Downtown. Investment and activities must capitalize on strengths that result in more Downtown activity.

To accomplish this, we recommend two major initiatives. First, we propose the creation and branding of a recreation and entertainment area Downtown that is focused on Families and Fans. This would be a family and sports fan related entertainment and recreation district with three distinct areas. This area would span from Washington Park and Fayetteville State University (FSU), to the Fascinate-U Children’s Museum just off the circle at Hay and Gillespie Streets. The idea is to integrate the numerous existing natural features, parks and museums with increased participation from the adjacent residential neighborhoods, Fayetteville State University, local developers, Fort Bragg Directorate of Family and Morale, Welfare, & Recreation and the City of Fayetteville. We see three distinct areas in play in this District:

Area 1: A collegiate age recreational area centered on Washington Park, FSU and Catalyst Site 1, supporting the notion of team sports and major competition Area 2: A Fan based experience centered on the new baseball stadium. Inclusive of a Fun Zone type of fan experience. Maybe a huge Ferris wheel or similar tourist attraction Area 3: A Family based experience focused on children, and anchored along Hay Street and Gillespie Street

SUM

MA

RY

Executive Summary

11/6/16 Page 9 of 62

.

If done properly, the opportunities are endless. Children’s retail, a small children’s theater in Area 3. Bars, dining and merchandising along Area 2. Gamer Labs, coffee shops, an outlandish rock-climbing wall, obstacle course (think Ninja Warrior), skateboard parks, urban themed clothing store in Area 1. All with copious amounts of greenspace. Walkable. Well-lit and safe. Bright, with inviting design. The areas must feel and be connected. Connected in their look, branding and coordination. This could be done in part through the creation of a business/community improvement district. In the end, the opportunity is to play off the Focus Area’s strengths, and coordinate the area stakeholders into the planning and execution of a well thought out redevelopment and marketing strategy. Focus on projects that can benefit the area as a whole, and not individual communities. Embrace activities that can’t be replicated independently elsewhere, and will draw people Downtown. Focus on truly catalytic economic investments. Change perceptions. Create a new culture of Fun and Family. Ensure all programing and public dollars invested are focused on the goal of driving more people Downtown and improving the economy.

Second, we propose a new creative training and employment center at the current Fayetteville State University Business Center. This new creative training and employment center would house a joint initiative between RLM Communications, Inc., Fayetteville State University and other strategic stakeholders. Similar to the investment and success of the Partnership for Defense Innovation, the creative training and employment center has the potential to bring public and private investment to a facility and programs geared to supporting small, local business and startups. It could also be the new home for the Center for Defense Control and Homeland Security. The combination of these two uses would ensure the development’s success and ability to sustain its operations over time. The project would rely heavily on the experience and technical support of RLM Communications and the academic support of Fayetteville State University. Many of the concepts shared in this report’s Business Incubation and Support Ecosystem section should be implemented with the help of City staff and the Chamber of Commerce. Simple business tools from resource sites similar to the tools found at www.startupatlanta.com will be critical.

The new training and employment center is in direct alignment with Pathway 4 and its goal to help the City with new business attraction, job creation and economic growth. Other successful examples of business incubation and economic support can be replicated in the Murchison Road corridor.

3. Center City Action Park. Our recommendation would be to create a very contemporary and cool, community of small live/work urban loft offices that can support small established businesses, intertwined with greenspace, seating areas, and concrete pads with power and water for food trucks. These offices would be two or three story units with high end finishes and balconies. The food truck pads would be limited to two or three, and be tastefully mixed in with greenspace and the loft offices. The introduction of the food trucks, greenspace and loft offices would create one of the coolest spaces in the City and be within walking distance to Downtown and the Baseball Stadium/Hay Street revival.

SUM

MA

RY

Executive Summary

11/6/16 Page 10 of 62

.

4. Massey Hill. Quality education is one of the most important tools a community can offer as an incentive for development and economic growth. Where there are great schools, there are great communities. The economic dollars follow the best schools. Everything improves; real estate values, amenities, and job opportunities. The Massey Hill Classical High’s academic success is an outstanding draw to the Massey Hill community. Combine the Classical High’s appeal to any family with children, with the strength and history of the Massey Hill community, and its relative proximity to Downtown, and you have an opportunity to attract more households with higher incomes to Fayetteville. The Classical High’s well-deserved reputation for strong academic performance, and student pride and satisfaction, warrant a conscientious effort to expand the school’s reach within the City of Fayetteville. Each of these four Focus Areas has its own distinct set of action steps to move redevelopment forward as on its intended Pathway. Action Steps:

1. Consider the merits of relocating the Exit 49 recreational development to a more catalytic and synergistic area

2. Convene a collaborative group that includes Cumberland County, the City of Fayetteville, Fort Bragg and potentially private land owners, to identify potential locations for a mixed-use, public private partnership development of this scale (100 – 200 acres preferred)

3. Consider alternative sites for the sports complex and associated developments, to create a couple of smaller, but cooperative developments

4. Immediately reprioritize the planned, but unfunded, 2020 road improvement project for Upper Murchison Road in order to improve the intended delivery date

5. Define the exact boundaries of Downtown’s Families and Fans Entertainment & Recreation District

6. Define the District’s offerings 7. Convene a planning discussion between FSU, RLM Communications and the City to

align the goals of the creative training and employment center. 8. Explore the access to private, City, Sate, and Federal funding to accomplish the

redevelopment of the Fayetteville State University Business Center 9. Ensure new developments on the table are aligned with a goal to support the

District 10. Secure qualified food vendor partner for the food truck park 11. Convene true exploratory discussions with Superintendent Till and the Cumberland

County School Board about the expansion of Massey Hill Classical High 12. Identify expansion locations for the expanded Massey Hill Classical High 13. Work with State and County officials to identify funding opportunities for the

expansion

SUM

MA

RY

Executive Summary

11/6/16 Page 11 of 62

.

3. Market Overview a. Demographic Summary

433 Hay St, Fayetteville, NC, 28301 Prepared by Esri

Rings: 3, 6, 9 mile radii Latitude: 35.05421

Longitude: -78.88312

Population Summary

3 miles 6 miles 9 miles

2016-2021 Annual Rate 0.37% 0.46% 0.67%

2020 Total Population 36,624 141,997 262,464

2016 Total Population 35,952 138,745 253,858

Household Summary

2021 Average Household Size 2.16 2.32 2.43

2021 Households 16,095 59,806 106,111

2016 Households 15,716 58,177 102,196

2016-2021 Annual Rate 0.48% 0.55% 0.75%

Housing Unit Summary

Vacant Housing Units 14.3% 13.2% 12.5%

Renter Occupied Housing Units 47.6% 44.4% 43.1%

Owner Occupied Housing Units 38.1% 42.5% 44.4%

2016 Housing Units 18,340 67,011 116,745

Vacant Housing Units 15.8% 14.8% 14.0%

Renter Occupied Housing Units 46.9% 43.8% 42.5%

Owner Occupied Housing Units 37.3% 41.4% 43.5%

2021 Housing Units 19,111 70,209 123,434

Median Home Value

2016 $137,798 $118,377 $130,760

2021 $34,351 $39,459 $46,945

Median Household Income

2016 $35,814 $38,855 $42,872

2021 $25,922 $25,571 $26,198

Per Capita Income

2016 $24,165 $23,668 $24,087

2021 $170,195 $142,251 $159,079

2021 39.7 35.7 34.1

2016 39.0 34.9 33.2

Median Age

2010 37.9 33.8 31.9

White Alone 44.2% 44.6% 47.3%

2016 Population by Race/Ethnicity

Total 35,952 138,745 253,858

Other Race 8.8% 12.3% 13.9%

Black Alone 47.1% 43.0% 39.1%

Hispanic Origin (any race) 5.7% 10.0% 11.4%

Total 24,228 91,140 162,286

2016 Population 25+ by Educational Attainment

GED/Alternative Credential 4.1% 4.6% 4.3%

High School Graduate 20.4% 22.0% 21.5%

9th - 12th Grade, No Diploma 8.6% 7.1% 6.5%

Less than 9th Grade 4.3% 3.8% 3.1%

Graduate/Professional Degree 10.2% 8.6% 8.9%

Bachelor's Degree 18.0% 14.7% 15.3%

Associate Degree 8.6% 10.7% 11.4%

Some College, No Degree 25.9% 28.4% 29.0%

The City of Fayetteville has a population of approximately 205,000. Extending the study area to include Fort Bragg gains the military base’s approximately 77,200 service members, civilian’s employees and contractors. The extended area’s population of over 300,000 is diverse (50+% minority), well-educated (35% have advanced or graduate degrees) and compensated at a level on par with the North Carolina state average of $46,784.

OV

ERV

IEW

11/6/16 Page 12 of 62

.

b. Analysis of Asset Classes i. Office

The Fayetteville Office market has an area-wide vacancy rate of 10.6%. There has been essentially no absorption in 2016, and very little sublet space is available. The average quoted rate within the Class-A sector stands at $20.13 while the Class-B and Class-C rates are $15.70 and $12.21 respectively. All three classes have seen their rates decline slightly in recent years. There were no properties under construction at the end of 2015.

There is very little class A office space in Downtown or the areas adjacent to Downtown. Without an identified user, office development is not a very attractive option for new development. Most new office space would be limited to user anchored or built-to-suit requirements. With the abundance of vacant warehouse space throughout the market, a continued trend to reposition the better located, higher quality, vacant warehouse spaces into flex/office spaces should continue.

OV

ERV

IEW

Class A Submarket Statistics First Quarter 2016

YTD Net YTD Under Quoted

Market # Blds Total RBA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates

Downtown Fayetteville 3 222,232 12,820 12,820 5.8% 0 0 0 $17.95

East Fayetteville 0 0 0 0 0.0% 0 0 0 $0.00

Hoke County 1 20,001 6,200 6,200 31.0% 0 0 0 $22.00

North Fayetteville 1 44,000 4,500 4,500 10.2% 0 0 0 $0.00

Raeford 0 0 0 0 0.0% 0 0 0 $0.00

Southwest Fayetteville 3 153,059 13,229 13,229 8.6% (8,845) 0 0 $20.42

Spring Lake 1 46,625 12,328 12,328 26.4% 0 0 0 $21.03

Totals 9 485,917 49,077 49,077 10.1% (8,845) 0 0 $20.13

Class B Submarket Statistics




East Fayetteville 6 381,907 18,600 18,600 4.9% 0 0 0 $9.69

Hoke County 4 97,167 0 0 0.0% 0 0 0 $0.00

North Fayetteville 205 1,122,182 110,443 112,647 10.0% 7,788 0 0 $14.87

Raeford 1 2,772 2,772 2,772 100.0% 0 0 0 $0.00

Southwest Fayetteville 201 1,898,308 187,105 187,105 9.9% 2,369 0 0 $17.57

Spring Lake 4 9,990 0 0 0.0% 0 0 0 $0.00

Totals 516 4,310,732 465,849 468,053 10.9% 10,157 0 0 $15.70

Class C Submarket Statistics



Downtown Fayetteville 78 358,058 30,820 32,220 9.0% (4,036) 0 0 $12.33


Hoke County 4 21,164 0 0 0.0% 0 0 0 $0.00

North Fayetteville 87 343,523 60,867 60,867 17.7% (1,110) 0 0 $12.25

Raeford 21 87,431 6,500 6,500 7.4% 0 0 0 $0.00

Southwest Fayetteville 232 975,469 71,608 71,608 7.3% 3,887 0 0 $13.54

Spring Lake 8 13,499 0 0 0.0% 0 0 0 $0.00

Totals 436 1,829,908 181,095 182,495 10.0% (1,259) 0 0 $12.21

Total Office Submarket Statistics



Downtown Fayetteville 176 1,378,696 190,569 191,969 13.9% (4,036) 0 0 $15.20


Hoke County 9 138,332 6,200 6,200 4.5% 0 0 0 $22.00


Raeford 22 90,203 9,272 9,272 10.3% 0 0 0 $0.00

Southwest Fayetteville 436 3,026,836 271,942 271,942 9.0% (2,589) 0 0 $16.53

Spring Lake 13 70,114 12,328 12,328 17.6% 0 0 0 $21.03

Totals 961 6,626,557 696,021 699,625 10.6% 53 0 0 $15.47

Source: CoStar Property®

Existing Inventory Vacancy




11/6/16 Page 13 of 62

.

ii. Industrial

The Fayetteville Industrial market saw its vacancy rate rise to 13.7% in 2016. The negative net absorption of (107,734) square feet and the relatively flat average rental rate of $4.00, point to a declining industrial base that does not support new construction without a specified industrial user. As of the first half 2016, there were no properties under construction. Both of these disappointing trends are in stark contrast to the declining vacancy rates and increasing industrial rental rates seen in most of the United States. Again, one trend that has seen positive momentum in Fayetteville has been the increased popularity of flex space use for creative office uses. Flex space, on average, has single digit vacancy rates and rents in the low teens.

OV

ERV

IEW

Flex Submarket Statistics First Quarter 2016




East Fayetteville 5 64,884 19,125 19,125 29.5% (7,425) 0 0 $9.26

Hoke County 1 32,000 0 0 0.0% 0 0 0 $0.00

North Fayetteville 23 167,813 15,140 15,140 9.0% 2,100 0 0 $9.86

Raeford 0 0 0 0 0.0% 0 0 0 $0.00

Southwest Fayetteville 34 351,354 63,300 63,300 18.0% (2,620) 0 0 $12.47

Spring Lake 5 38,135 3,500 3,500 9.2% 0 0 0 $12.00

Totals 106 1,053,394 119,795 119,795 11.4% (7,945) 0 0 $9.86

Warehouse Submarket Statistics



Downtown Fayetteville 184 3,051,299 183,558 187,008 6.1% 500 0 0 $3.89

East Fayetteville 57 5,443,814 607,197 719,809 13.2% (99,047) 0 0 $3.44

Hoke County 3 69,205 0 0 0.0% 0 0 0 $0.00

North Fayetteville 59 899,591 43,188 43,188 4.8% 0 0 0 $6.12

Raeford 3 785,015 0 0 0.0% 0 0 0 $0.00

Southwest Fayetteville 49 1,708,346 729,510 729,510 42.7% 0 0 0 $3.08

Spring Lake 15 113,236 1,242 1,242 1.1% (1,242) 0 0 $7.10

Totals 370 12,070,506 1,564,695 1,680,757 13.9% (99,789) 0 0 $3.61



11/6/16 Page 14 of 62

.

iii. Retail The Fayetteville retail market has not experienced much change in 2016. The vacancy rate remains relatively low at 5.3%, and absorption has been positive at 230,767 square feet. One weaker point in the retail market is the relatively low $10.15 per square foot average quoted rental rate. This is a rate that varies significantly from a low in Spring Lake of $6.78 to a high of $20.00 in Hoke County.

Six retail buildings with 266,499 square feet of retail space were delivered to the market in the 1st quarter 2016, with 264,247 square feet still under construction at the end of the quarter. One of the largest tenants moving into a large block of space in the first quarter 2016 was Walmart, who moved into 186,000 square feet at 2820 Gillespie Street in the Southwest Fayetteville submarket. While the analysis of the retail sector points out the relative flatness of market, it does not adequately highlight the lack of parity across the City with respect to the locations or quality of the City’s retail. Unfortunately, the small size of the market and the unbalanced distribution of households and household incomes throughout the City, do not offer a clear strategy to better distribute, increase or improve the retail to the underserved areas of Fayetteville.

OV

ERV

IEW

General Retail Submarket Statistics First Quarter 2016


Market # Blds Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates

Downtown Fayetteville 224 1,169,993 92,184 92,184 7.9% (9,880) 0 0 $14.47

East Fayetteville 70 428,646 22,188 22,188 5.2% 14,942 10,542 9,026 $15.00

Hoke County 20 167,882 0 0 0.0% 0 0 0 $0.00

North Fayetteville 435 2,828,941 65,243 65,243 2.3% (1,953) 0 128,721 $17.39

Raeford 48 223,594 0 0 0.0% 1,600 0 0 $0.00

Southwest Fayetteville 564 4,120,216 94,641 94,641 2.3% (1,599) 0 126,500 $11.36

Spring Lake 152 576,148 8,696 8,696 1.5% 4,700 0 0 $13.00

Totals 1,513 9,515,420 282,952 282,952 3.0% 7,810 10,542 264,247 $12.96

Source: CoStar Property®

Shopping Center Submarket Statistics First Quarter 2016


Market # Ctrs Total GLA Direct SF Total SF Vac % Absorption Deliveries Const SF Rates

Downtown Fayetteville 10 220,353 28,630 28,630 13.0% (2,550) 0 0 $12.54

East Fayetteville 7 301,858 16,000 16,000 5.3% 3,600 0 0 $13.48

Hoke County 2 258,719 4,400 4,400 1.7% 0 0 0 $20.00


Raeford 3 179,137 0 0 0.0% 0 0 0 $0.00

Southwest Fayetteville 112 5,622,043 314,285 360,400 6.4% 178,386 250,458 0 $11.48

Spring Lake 16 886,814 71,434 71,434 8.1% 39,213 5,499 0 $6.28

Totals 210 10,095,974 773,711 819,826 8.1% 222,957 255,957 0 $9.16



11/6/16 Page 15 of 62

.

iv. Multi-Family

Our research of the Fayetteville housing market focused on class A and B properties from Downtown out to I - 295. We found over 100 properties, which we narrowed to the 60 properties in the following tables. Fayetteville’s multi-family housing market is strongly influenced by the housing demand of the military. While occupancy levels remain high, with single digit vacancy, the rents achieved fluctuate, and appear limited to an average value far less than $1 per square foot. The City’s multi-family housing product is always built with above average quality and larger floorplans. Some of the signature developments, like Parkview, have offered market leading quality and generous floorplans, but have struggled to meet their pricing expectations. In some cases, the speed of absorption and pricing compression on new construction units has been greatly influenced by other area factors, such as limited amenities, military deployment schedules, and other workforce influences. With federal limits on housing allowances and government per diem, the market is unable and/or unwilling to increase rental rates. Owners who have attempted to increase the quality levels of their developments and raise rents accordingly, have found a market that was slow to accept the higher pricing, even with the increase in quality.

OV

ERV

IEW

11/6/16 Page 16 of 62

.

One interesting consideration is the relatively low levels of walkable, high to medium density residential developments. Despite the City’s wonderful natural features, and abundant parks and greenspace, Fayetteville has struggled to embrace the popular new urbanist lifestyle. Downtown, however, is well positioned to change this fact; and with the redevelopment of Hay Street, the presence of parks, and the possible introduction of the new baseball stadium, Downtown offers the City’s its first glimpse of a truly walkable, live, work play environment. An intentional and thoughtful planning effort, should produce a very comfortable community of live/work lofts, apartments, and cluster homes, surrounded by the area’s best public amenities, retail, greenspace and flexible workplace options.

OV

ERV

IEW

11/6/16 Page 17 of 62

.

OV

ERV

IEW

11/6/16 Page 18 of 62

.

OV

ERV

IEW

11/6/16 Page 19 of 62

.

v. Hospitality

A study of the City’s hospitality inventory highlights a need for better product diversity and better market coverage more than highlighting an identified shortfall in rooms. Fayetteville does not have any 4 or 5 star hotels, nor does it have a boutique or independent hotel presence. It also has very little in the way of convention or conferencing hotels. Luxury products, and the hip, playful hotel brands that are popular in most parts of North Carolina and the United States are not present in Fayetteville. Although the City has a few new hotels under development, the market is generally viewed as saturated, and does not demonstrate a demand or need for many more rooms. Higher quality hospitality products will almost certainly come into the market through the repositioning and redevelopment of older hotels into newer products. This deficiency should not be overlooked. Lodging has a definite impact on business site selection and travel considerations. The lower quality of some of the City’s older hospitality products, combined with the limited flexibility of a non-hub regional airport, are certain business detractors. A major opportunity to attract regional organizations and corporate conventions is missed due to the absence of a larger, higher quality conference center hotel. Holiday Inn, Marriott and Double Tree all accommodate some of the City’s smaller meeting and events; and although the Ramada Plaza is capable of hosting larger events, it still suffers from historical issues with quality and market reputation.

OV

ERV

IEW

11/6/16 Page 20 of 62

.

OV

ERV

IEW

11/6/16 Page 21 of 62

.

c. Transportation Red Rock Global reviewed the recent and planned transportation infrastructure improvements in four focus areas:

1. Upper Murchison Road Corridor

2. Lower Murchison Road Corridor (Including Fayetteville Catalyst Site 1)

3. Center City Action Park (Blount and Gillespie Streets)

4. The Massey Hill Neighborhood

Since 2010, the North Carolina Department of Transportation (NCDOT) has allocated $414,323,000 to projects in the vicinity of the four focus areas that are either completed, under construction, or being planned. The six projects, listed in table 1, primarily affect three of the four focus areas; Upper Murchison Road, Lower Murchison Road, and Center City Action Park. These transportation improvement projects have the potential of creating real economic development opportunity for Upper Murchison Road. The interchange at I-295 and Murchison Road will become a major gateway into the City of Fayetteville from the northern portion of the region. The closing of the civilian access to Bragg Boulevard into Fort Bragg will divert the majority of the traffic traveling east to the northern edge of Murchison Road. These improvements will increase vehicular traffic an average of 67% along Murchison Road. Additionally, several local road widening and streetscape efforts are also planned. The increased traffic and beautification projects will improve access to all parts of Fayetteville and attract new residential and commercial development to the Upper Murchison Road area.

ID # Route Description Status Cost

X-0002 I-295 Outter Loop Bragg Blvd. east to I-95 Substantially Complete $321,028,000

U-4444 NC210 Murchison Rd I-295 to 24/85 Spring Lake Complete $87,314,000

B-4090 Rowan Street Bridge Murchison @Bragg Boulevard Underway $5,981,000

Total

$414,323,000

U-4900 Murchison Rod (NC210) I-295 south to US 401Bypass Developmental $22,483,000

EB5540 Little Cross Creek Greenway Filter Plant to Rowan Developmental $580,000

U-5101 SR 1437 Shaw Mill Rd/Shaw Rd Ramsey To Murchison Developmental $36,479,000

Total

$59,542,000

source: FAMPO

Segment 2005 AADT 2020 AADT % Increase

I-295 to Shaw Mill 23,000 36,000 57%

Shaw Mill to Country Club 20,000 35,500 78%

Country Club to Jasper 23,000 30,800 34%

Jasper to Langdon 15,000 27,900 86%

Langdon to MLK 12,000 29,300 144%

Source: FAMPO & Kimberly Horn

OV

ERV

IEW

11/6/16 Page 22 of 62

.

Bragg Boulevard Traffic Diversion / I-295 extension and NC-210 Widening

The first two funded projects, I-295 Fayetteville Outer Loop extension and the widening of NC-210 Murchison Road (Spring Lake Bypass) are substantially complete. Both of these projects were in response to a Department of Defense security decision to close a 3.4-mile section of Bragg Boulevard that crosses the southeast corner of Fort Bragg Military Base to non-military traffic. The closure, which is scheduled to take place in December 2016, will cause a significant diversion of traffic off of Bragg Boulevard. Bragg Boulevard is a critical north-south connector

between downtown Fayetteville, Spring Lake and Harnett County. Northbound traffic will be diverted to I-295 and then onto Murchison Road NC-210 north to the junction with NC 24/85 in Spring Lake. Southbound traffic will be diverted at the Junction of NC-210 /85/ 24 to Murchison Road NC 210. The effect of these improvements will be to substantially increase traffic on the Murchison Road between I-295 and downtown Fayetteville. The increase in traffic is both a strength and a weakness. The table below details the forecasted increase in automobile traffic on Murchison Road between the I-295 interchange and Fayetteville Center City. The forecast is based on the Fayetteville Area Traffic Demand Model and forecasts an overall average peak time increase of 75% by 2020.

Segment 2005 AADT 2020 AADT % Increase

I-295 to Shaw Mill 23,000 36,000 57%

Shaw Mill to Country Club 20,000 35,500 78%

Country Club to Jasper 23,000 30,800 34%

Jasper to Langdon 15,000 27,900 86%

Langdon to MLK 12,000 29,300 144%

Source: FAMPO & Kimberly Horn

The increased traffic counts will enhance the interest of both residential and commercial real estate developers, and will undoubtedly spur new development along the Murchison Road corridor; especially the areas around the Murchison Road and I-295 interchange. Increases in traffic may also increase congestion, but not at levels that would dissuade development. As discussed below, local improvements to southbound Murchison Road from I-295 to Rowan Street are not scheduled until the mid-2020s. It will be important for the City to work with the Fayetteville Metropolitan Planning Organization to accelerate this project to limit any downside to development caused by congestion and the resulting frustration of area residents, and to increase the area’s attractiveness to potential developers for development of retail and residential.

OV

ERV

IEW

11/6/16 Page 23 of 62

.

Rowan Street Bridges

The third project that has planning underway is the replacement of the bridges on Rowan Street that cross the CSX railroad tracks and Cross Creek where Murchison Road and Bragg Boulevard intersect with Rowan Street. This project is scheduled to be completed in 2018. This will eliminate a bottleneck and greatly ease access to and from Murchison Road at the edge of Downtown. This improvement is particularly important to the viability of the City’s Catalyst Site 1 and access to the Hay Street amenities downtown. It will improve the potential for institutional, housing and commercial development on the site.

The importance of accelerating improvements to Murchison Road South of I-295 cannot be overstated. Gains from increased traffic counts can be lost due to congestion. This is particularly true the further south you travel from I-295. The bridge replacement project on Rowan Street is critical to the marketability and ultimately, developability of Catalyst Site 1. Development potential for the site, located adjacent to the current traffic bottleneck, will be significantly enhanced. The improvements will significantly ease connectivity between Catalyst Site 1 and Downtown from north central Fayetteville. FAMPO Developmental Projects There are currently three area projects in the FAMPO development program. These projects are in the planning stage and funding has not been confirmed.

a. Murchison Road Widening Improvements to Murchison Road south of I-295 to Country Club Drive are currently in the early planning stages. Detailed planning and feasibility is not scheduled to begin until 2023. The project is listed in FAMPO’s 2016 – 2025 metropolitan transportation improvement program and is highly prioritized; however, it is still several years away from confirmed funding. Given the traffic growth anticipated on Murchison Road, this project is critical and should be considered for accelerated funding should additional funds become available. This is of critical importance to the Upper Murchison Road focus area. Existing and planned transportation improvements will have significant impact on the Upper Murchison Road focus area. With proper planning, the I-295 interchange will become an important commercial center and gateway into Fayetteville. The increased traffic should help attract new upscale retail, food service, hospitality and commercial development. Given its proximity to Fort Bragg and the ease of connectivity, it has the most development potential of any area in the City.

b. Shaw Road /Shaw Mill Road Connector The construction of the Shaw Road/Shaw Mill Road connector from Bragg Boulevard to Murchison Road and continuing onto Ramsay Street is scheduled to begin in 2023. Like

OV

ERV

IEW

OV

ERV

IEW

11/6/16 Page 24 of 62

.

the Murchison Road widening the Shaw connector is included in the FAMPO metropolitan transportation program and funding is not confirmed. The right-of-way alignment for this project is still under consideration. It will generally follow the current route of Shaw Road and Shaw Mill Road. This will increase connectivity in north central Fayetteville and will add to the desirability of new commercial development at the Upper Murchison Road and I-295 interchange.

c. Little Cross Creek Greenway The Little Cross Creek Greenway Extension from Filter Plant Drive to Rowan Street is scheduled to begin in 2021. This is an important link in Fayetteville’s pedestrian and bicycle network. This portion will extend the Greenway north, parallel to Little Cross Creek from Festival Park.

OV

ERV

IEW

11/6/16 Page 25 of 62

.

d. Education

The Cumberland County School System is a stable, average performing system that is highlighted by modest to above average academic achievement in 38% of its schools. The performance of Jack Britt High and The Massey Hill Classical High are notable for the fact that they both exceed the North Carolina average in several major metrics for academic achievement. From SAT participation levels and test results, to core curriculum testing in math, biology and English, their performance is exemplary. It is also important to recognize the popularity and community pride associated with the very popular Massey Hill Classical High; which also receives some of the City of Fayetteville’s highest marks for student and parent satisfaction.

Zip

En

gli

sh

Ma

th

Bio

log

y

SA

T

SA

T %

No

tes

Alger B. Wilkins High 1429 Skibo Rd 28303 33 5 8 762 11

Cape Fear High 4762 Clinton Rd 28301 58 31 49 962 44 D, S, SAT D

Cross Creek Early College 1200 Murchison Rd 28301 81 49 64 984 72 D, S, SAT D, PS

Cumberland International 1200 Murchison Rd 28303 84 57 65 N/A N/A D, S

Douglas Byrd High 1624 Ireland Drive 28304 24 9 15 846 42

E E Smith High 1800 Seabrook Rd 28301 44 9 35 824 47

Gray's Creek High 5301 Celebration Dr 28348 45 17 46 935 48 SAT D

Howard Health & Life Sci 1608 Camden Rd 28306 68 35 65 939 91 D, S, SAT D, PS

Jack Britt High 7403 Rockfish Rd 28306 71 48 73 1013 66 D, S, SAT N, PS

Massey Hill Classical High 1062 Southern Ave 28306 68 43 64 1003 73 D, S, SAT S, PS

Pine Forest High 525 Andrews Rd 28311 39 22 46 907 56 PD

Reid Ross Classical High 3200 Ramsey St 28301 63 6 32 912 79 PS

Seventy-First High 6764 Raeford Rd 28304 33 13 29 855 46

South View High 4184 Elk Rd 28348 44 17 41 918 55 PD

Terry Sanford High 2301 Fort Bragg Rd 28303 53 11 51 992 65 SAT D, PS

Westover High 277 Bonanza Dr 28303 35 12 12 819 56 PD

District Core Subject

48 30 42

State Core Subject

51 36 46

District SAT

925 54

State SAT

1001 62

National SAT

1010 50

D % of students at or above grade level in the District

S % of students at or above grade level in the State

SAT D scores on SAT above District scores

SAT S scores on SAT above State scores

SAT N scores on SAT above National scores

PD Above District Average in SAT Participation PS Above State Average in SAT Participation

PN Above National Average in SAT Participation

OV

ERV

IEW

http://www.ncreportcards.org/src/schDetails.jsp?pYear=2012-2013&pLEACode=260&pSchCode=325













11/6/16 Page 26 of 62

.

e. Recreation

Overview of Recreational Assets and Initiatives Parks and other recreational assets provide intrinsic environmental, aesthetic and recreation benefits for communities and are considered a valuable public service in urban areas. Recreation assets are also a source of positive economic benefits when planned in conjunction with tax generating redevelopment efforts. It has been well documented that active park development has the ability to positively affect proximate real estate values which is turn increase municipal ad valorem tax revenue. In addition, active park initiatives around the country have been proven to attract interest from a broader user base and help to create a destination for placemaking purposes which in turn can produce sales tax benefits and positive tourism-related impacts. However, with all the evidence to support the positive economic development impact from the creation of recreational assets, it often is one of the hardest initiatives to finance and operate. In the past, City and County governments have attempted to take the brunt of financing these initiatives; however, it is essential to evaluate how municipal recreational providers can partner effectively with the state, school and private sectors to leverage public sector investment to produce greater economic impact. The City of Fayetteville / Cumberland County Parks and Recreation Department has the mission of guiding this investment within the City of Fayetteville by offering a variety of recreational facilities and programming.

Existing Parks and Recreation Facilities Source: City of Fayetteville, NC Website

OV

ERV

IEW

11/6/16 Page 27 of 62

.

While this responsibility has undergone significant change within the past 15 years with the merger of City and County efforts, this regional planning and execution effort allows for better outcomes by avoiding the duplication of services. Even with these efficiencies, there is currently a need for both new recreational facilities and additional park space throughout the City of Fayetteville. Given the redevelopment efforts in distressed portions of the City, special care should be paid to leveraging new park investment to maximize redevelopment outcomes and attract new users through these placemaking efforts.

While the Parks and Recreation Department should take the lead, it should be acknowledged that it is not the only provider. The private sector provides a diverse offering of recreational assets throughout the city that reduces demand on city resources. While many of these private amenities are open to the public, they typically rely on user fees to justify the creation; however, these private amenities do reduce the pressure of the public sector infrastructure. In addition, the school system is a generator of recreational assets that can be shared during non-school hours. This highlights the ability to partner with the private sector and the school system to program efforts that have the greatest impact. Successes The City of Fayetteville has a unique opportunity to guide this leveraging effect through the passage of a $35 million parks referendum to issue general obligation bonds to finance the followings types of recreational assets:

Project Estimated Cost

Upgrades and renovations to existing buildings and park grounds to enhance existing facilities for seven planned assets (Brentwood School, Clark Park, Dorothy Gilmore, Massey Hill, Martin Luther King, Mazarick and Seabrook)

$800,000

Zero-depth entry splash pads, planned for installation at seven locations (Cliffdale, E.E. Miller, Gilmore Therapeutic, Kiwanis, Massey Hill, Myers Recreation Centers and one additional site TBD)

$3,000,000

Cape Fear River Park (Downtown Riverfront)

$5,200,000

Two skateboard parks

$1,000,000

A multi-purpose sport field complex with 15 athletic playing fields constructed for youth and adult baseball, as well as soccer and football (located at I-95 at Exit 49)

$9,000,000

Tennis Center (Mazarick)

$6,000,000

Two Senior Centers (East and West Fayetteville with locations TBD)

$10,000,000

Total $35,000,000

OV

ERV

IEW

11/6/16 Page 28 of 62

.

Parks and Recreation Bond Projects Source: City of Fayetteville, NC Website, ArcGIS

This public infrastructure investment is significant given it is the first general obligation bond passed by voters since 1994. Given the earlier discussion of the economic impact of placemaking efforts, this marks a unique opportunity to drive economic development outcomes through the strategic leveraging of parks and recreational investment to create public destinations that would then attract private development interest in adjacent areas. The City of Fayetteville can increase private sector project value and feasibility through co-investing in geographic areas that catalyzes higher area value and therefore project value. Opportunities One opportunity is to concentrate the recreational capital spending in a limited number of strategic areas that create a recreational venue capable of becoming a destination that improves tourism, consumer spending and regional usage. Smaller recreational venues, while attractive and enjoyable to a very local community, struggle to have a catalytic impact. They are nice amenities for a small group of users, not economic engines. They cause people to isolate themselves in their own areas, not to interact and explore. $35 million in recreational improvements spread across 15+ projects misses the opportunity to concentrate the City’s investment into a smaller amount of projects that either 1) help ensure other existing or committed (re)development initiatives have the greatest opportunity for success, or 2) the quality and scale of the new recreational venue is so great that it becomes an economic draw to an entire region. Think Centennial Olympic Park versus neighborhood splash pad. Orlando Sports Center or Charlotte’s Elon Park versus a neighborhood ballfield or playground.

OV

ERV

IEW

11/6/16 Page 29 of 62

.

4. Financial Tools

Public Sector Toolkit Framework When considering the optimal toolkit for the City of Fayetteville’s public sector investment, particular attention should be paid to accomplishing strategic economic development goals that assist in leveraging additional public and private sector investment. This leveraging effect is even more important in distressed markets given market forces often do not justify at-risk private sector investment on their own. The application of public sector tools can be illustrated by the following framework in making efficient decisions concerning scarce public sector resources: The public sector can assist in overcoming barriers and risk distribution that

make private investment in a project risky.

The public sector can increase project value and feasibility through co-investing in adjacent facilities that synergize higher value or by granting additional development entitlements that increase the development yield and therefore project value. Co-investment in parks, parking, transit infrastructure, bike trails are examples of facilities that often increase the value of adjacent development.

The public and philanthropic sectors can lower the cost of capital by either financing some components of a particular project using low-cost municipal debt or providing a source of capital that has a low or no return requirement.

The public sector can reduce the net project costs by directly funding some portions of the project, contributing land to the project or by waiving some project costs, such as development impact fees. The reduction is cost allow a lower project value to meet the investment return hurdles necessary to show economic viability and attract the remaining capital.

Overcoming Barriers through the Redeployment of Existing Funding In March 2016, the voters of the City of Fayetteville agreed through referendum to authorize the City to raise up to $35 million through the sale of general obligation bonds that would be backed by the full faith and credit of the City. The actual amount issued will depend on future decisions made by the City Council based on the actual bid prices received after detailed design of each project is completed. The impact on voters is anticipated to be roughly 1.35 cents for every $100 in assessed property value. With the successful bond referendum, this marks a unique opportunity to drive economic development outcomes through the strategic leveraging of parks and recreational investment to create public destinations that would then attract private development interest in adjacent areas. The City of Fayetteville can increase private sector project value and feasibility through co-investing in geographic areas that catalyzes higher area value and therefore project value.

FINA

NC

IAL TO

OLS

11/6/16 Page 30 of 62

.

With the bond package proceeds, the City plans to complete several projects. The Sport Field Complex is a multipurpose sports facility that will generate destination traffic to help attract additional uses and roughly $9 million has been set aside in the bond referendum package. The Consultant team recommends creating these public assets in areas that can leverage economic development impact and achieve important equity issues within the Murchison Road corridor. Also, in discussions with representatives from Fort Bragg, it would appear that this use would be appealing to the base demographic and create additional demand for the amenity. This can also be supplemented with user fees for certain programmatic activities that help in turn to offset some of the operating expense. These user fees can also be pledged, if significant enough, to issue revenue bonds if there is a construction budget gap.

Leveraging Additional Financial Incentive Tools

Private sector participation is also essential for ensuring optimized redevelopment. By properly supporting important redevelopment initiatives, the City of Fayetteville can leverage scarce public resources to encourage private developers to acquire and redevelop strategic tracts of land. The City can foster private investment by offering specific incentives to companies and developers that are renovating or repurposing existing buildings. These incentives could be tax credits, subsidies, or below market interest rate loans to specifically encourage redevelopment initiatives. Since there is currently a shortage of discretionary funds in the City budget, exemptions on future taxes may be the best path to incentivize redevelopment.

The City should also consider direct public / private collaborations on certain projects as highlighted in the Near-Term Catalytic Planning Section. Not only can these projects directly target specific economic or social needs of the community, they also help to create a spirit of cooperation between local government and the business community. These collaborations can be supported by some of the tools listed in Table xx below. Particular attention should be paid to leverage existing efforts (e.g., Self Help’s New Markets Tax Credit program is a national model in the NMTC industry) to partner in a proactive way to identify pipeline projects for NMTC lenders.

Another federal tool that is used throughout the US to encourage redevelopment of historic assets is the Federal Historic Tax Credit. This credit is one of the nation’s most successful and cost effective community redevelopment programs. The Consultant would recommend partnering with existing financial institutions to leverage knowledge transfer.

FINA

NC

IAL TO

OLS

11/6/16 Page 31 of 62

.

Uses Available For Consideration

Upper Murchison Sport Field Complex General Obligation Bonds User Fees

Community Development Block Grant Revenue Bonds

Special Use Tax

Park Foundations

Federal and State Grant Funds

New High School County Budget New Markets Tax Credits

Housing CDBG Section 108 Loan Guarantee Program Low Income Housing Tax Credits

HOME Program

Retail / Hospitality Tax Abatement New Markets Tax Credits

Small Business Revolving Loan Funds

Lower Murchison Recreational Park General Obligation Bonds User Fees

Community Development Block Grant Special Use Tax

Park Foundations


Destination Retail Tax Abatement New Markets Tax Credits

Center City Action Park Recreational Park General Obligation Bonds User Fees

Community Development Block Grant Special Use Tax

Park Foundations


Live / Work Tax Abatement Historic Tax Credits

New Markets Tax Credits

Low Income Housing Tax Credits

Housing CDBG Section 108 Loan Guarantee Program Low Income Housing Tax Credits

Tax Abatement

Massey Hill High School Expansion County Budget New Markets Tax Credits

Financial Toolkit

City of Fayetteville Financial Toolkit Evaluation

Policy Considerations

After consideration of existing and potentially new financial incentive tools, it is in the best interest of the City of Fayetteville to employ targeted, strategic policy guidelines that will leverage the region’s competitive advantages to achieve the City of Fayetteville’s highest-priority objectives. In short, this “rifle” approach to the employment of any incentive strategy will generate superior outcomes when compared to a “shotgun” approach, because solutions can be tailored to each specified outcome. Also, this strategic focus will allow for the leverage of scarce public resources in a prioritized way which will behest attract private sector investment in job and wealth-creation activities.

Currently, the City of Fayetteville is revisiting its Property Tax Grant-Back Economic Incentive Program and making policy changes to how these scarce public sector resources should be aligned. While the “but-for” analysis may be a prerequisite to using any public sector resource, this analysis does not attempt to measure the investment “yield” from this investment. The Consultant team would recommend an additional step to the current policy conversation that would attempt to measure relative magnitude of investment yield, in addition to, a “but-for” analysis. In other words, just because a potential project

FINA

NC

IAL TO

OLS

11/6/16 Page 32 of 62

.

might meet the “but for” test, there is not currently a measurement tool that would help the City to understand the benefit of a public sector investment. One helpful policy tool would be the requirement of a fiscal impact analysis prior to providing any approvals that would measure the estimated revenues / benefits to be derived by the principal jurisdictions that would tax the project and the estimated service costs of such jurisdictions as a result of the project. This additional step would allow decision-makers think like investment managers and think of the relative magnitudes of risk and return.

In addition, any incentive policy should leverage the economic competitive advantages from an industry perspective. As noted, the Garner report highlighted industries and industry clusters where Fayetteville has an “edge”, thus the policy should give preferences to these industries from an economic development perspective while supporting the City’s over-arching and holistic community building efforts. This alignment will help to retain existing businesses that have already made an investment in the region and further focus business attraction efforts on the “right” outcomes.

FINA

NC

IAL TO

OLS

11/6/16 Page 33 of 62

.

5. Research & Analysis a. SWOT Analysis for the City of Fayetteville

Strengths Opportunities

Military Personnel Presence of Natural Features

Museums & Attractions Nursing Education

Medical Services

Diversity of the Community Architecturally Attractive & Historic

Downtown Intended Regional Road Improvements

Regional Airport

Highway Accessibility Good Veterans Administration Presence

Collegiate Level Educational Options

Increased cooperation between various economic development organizations for

“proactive” business attraction efforts Leverage efforts to accentuate competitive

advantages (e.g., military presence)

Lead efforts to create small business “ecosystem” which captures “brain drain”

Increased partnership with educational training partners to leverage strengths for workforce

development

Leverage recent tax abatement policy to complement community building efforts

Consider more economically impactful deployment of $35m Parks Bond.

Potential to reposition vacant warehouse space into popular flex space

Weaknesses Threats

Limited Commitment to Fund Capital Projects

Consistently Average Public School Performance

Lack of Quality Hospitality

Poor Post Career Retention of Veterans Area Bias by Some Developers

Historic Reputations/Perceptions of Some Communities

Delayed Implementation of Local Road Improvements

Lack of Recognized Technology Base

Resistance to Support Public Funding Shrinking Industrial Base

Air Travel Inefficiency Due to Non-Hub Status

Neighboring Cities are Targeting Service Industry Neighboring Cities are Providing Area Amenities

Continued “brain drain” of trained workforce to competitor cities

Low level of coordination between downtown

and nearby institutions results in silo effect Lack of downtown branding initiative misses an

opportunity to retain and attract creative class which helps to change public perception

Lack of housing options targeting the “urban pioneer” will continue millennial drain

Inability to offer development ready sites is

another missed opportunity Military deployment adjustments risk higher

residential vacancies

RESEA

RC

H &

AN

ALY

SIS

11/6/16 Page 34 of 62

.

b. Leakage Analysis

The retail leakage analysis for Fayetteville shows a very clear picture of excess supply over demand. In the 3 miles from Downtown, the Ersi statistics point to almost ($150,000,000) in excess retail supply. The retail leakage analysis for Fayetteville shows a very clear picture of excess supply over demand. In the 3 miles from Downtown, the Ersi statistics point to almost ($150,000,000) in excess retail supply. This is not a favorable position for promoting new retail to the area. This excess is consistent even when the City is analyzed out to 9 miles by Fort Bragg. The excess does drop to approximately ($1,150,000), but it is still a greater supply than demand, nevertheless. What is also clear is the concentration of spending in Cross Creek, Downtown, Massey Hill and Upper Ramsey Rd. While the City may not have a tremendous retail challenge based upon a simple analysis of supply and demand, the leakage analysis does not address the challenges that exist within some communities due to retailer preference of one location over another. Some retailer’s decisions on where they will locate leave many smaller, more modest income communities with very little retail of their own. The leakage analysis also fails to address the lack of quality retail that is missing from those same underserved markets.

RESEA

RC

H &

AN

ALY

SIS

Murchison Rd

11/6/16 Page 35 of 62

.

RESEA

RC

H &

AN

ALY

SIS

-48.3 13Drinking Places - Alcoholic

Beverages

$2,131,136 $6,119,310 -$3,988,174

-14.9 6Special Food Services $480,800 $649,642 -$168,842

-39.7 40Limited-Service Eating

Places

$18,754,783 $43,478,744 -$24,723,961

-30.8 90Full-Service Restaurants $21,542,216 $40,751,729 -$19,209,513

-35.9 148Food Services & Drinking

Places

$42,908,935 $90,999,426 -$48,090,491

-31.9 3Direct Selling

Establishments

$1,853,242 $3,589,396 -$1,736,154

-87.4 3Vending Machine

Operators

$354,639 $5,274,264 -$4,919,625

-27.1 5Electronic Shopping & Mail-

Order Houses

$5,704,849 $9,945,937 -$4,241,088

-40.8 11Nonstore Retailers $7,912,730 $18,809,597 -$10,896,867

-12.5 26Other Miscellaneous Store

Retailers

$10,956,218 $14,093,237 -$3,137,019

-49.2 22Used Merchandise Stores $1,654,785 $4,864,021 -$3,209,236

-35.8 15Office Supplies, Stationery

& Gift Stores

$2,486,727 $5,263,831 -$2,777,104

-52.6 9Florists $513,141 $1,653,963 -$1,140,822

-24.7 73Miscellaneous Store

Retailers

$15,610,872 $25,875,052 -$10,264,180

19.0 10Other General

Merchandise Stores

$16,911,133 $11,518,658 $5,392,475

46.4 6Department Stores

Excluding Leased Depts.

$57,946,350 $21,190,578 $36,755,772

39.2 16General Merchandise

Stores

$74,857,483 $32,709,236 $42,148,247

20.1 4Book, Periodical & Music

Stores

$2,571,309 $1,711,407 $859,902

-11.8 17Sporting

Goods/Hobby/Musical

$7,621,599 $9,657,367 -$2,035,768

-5.5 21Sporting Goods, Hobby,

Book & Music Stores

$10,192,908 $11,368,774 -$1,175,866

43.1 4Jewelry, Luggage &

Leather Goods Stores

$3,884,694 $1,544,555 $2,340,139

-12.4 4Shoe Stores $2,417,303 $3,103,793 -$686,490

-15.4 36Clothing Stores $12,990,305 $17,725,853 -$4,735,548

-7.4 44Clothing & Clothing

Accessories Stores

$19,292,302 $22,374,201 -$3,081,899

-25.7 25Gasoline Stations $28,857,427 $48,872,797 -$20,015,370

-39.5 37Health & Personal Care

Stores

$23,896,871 $55,133,174 -$31,236,303

11.7 1Beer, Wine & Liquor

Stores

$2,437,345 $1,927,653 $509,692

39.2 9Specialty Food Stores $15,200,198 $6,642,759 $8,557,439

-27.0 31Grocery Stores $67,551,464 $117,568,153 -$50,016,689

-19.4 41Food & Beverage Stores $85,189,007 $126,138,565 -$40,949,558

-10.0 3Lawn & Garden Equip &

Supply Stores

$1,928,379 $2,356,585 -$428,206

-59.5 31Bldg Material & Supplies

Dealers

$16,282,013 $64,146,452 -$47,864,439

-57.0 34Bldg Materials, Garden

Equip. & Supply Stores

$18,210,392 $66,503,037 -$48,292,645

14.4 12Electronics & Appliance

Stores

$18,445,695 $13,803,486 $4,642,209

-43.4 11Home Furnishings Stores $4,516,723 $11,457,474 -$6,940,751

-1.3 6Furniture Stores $7,954,672 $8,167,822 -$213,150

-22.3 17Furniture & Home

Furnishings Stores

$12,471,395 $19,625,295 -$7,153,900

-47.7 32Auto Parts, Accessories &

Tire Stores

$7,013,233 $19,807,478 -$12,794,245

13.6 3Other Motor Vehicle

Dealers

$8,337,538 $6,339,362 $1,998,176

31.7 17Automobile Dealers $75,506,801 $39,182,561 $36,324,240

16.3 52Motor Vehicle & Parts

Dealers

$90,857,572 $65,329,401 $25,528,171

Leakage Number Industry Group (Expenditure) (Retail Sales) Factor Busines

Demand Supply Retail Gap

-35.9 148Total Food & Drink $42,908,935 $90,999,426 -$48,090,491

-11.0 382Total Retail Trade $405,794,655 $506,542,615 -$100,747,960

-14.2 530Total Retail Trade and

Food & Drink

$448,703,590 $597,542,040 -$148,838,450

Leakage Number Industry Summary (Expenditure) Factor Busines

Demand Retail Gap

Prepared by Esri

Retail Gap Analysis

2016 Median Disposable Income $30,454

2016 Per Capita Income $24,165

2016 Population 35,951

2016 Households 15,716

Summary Demographics

11/6/16 Page 36 of 62

.

RESEA

RC

H &

AN

ALY

SIS Leakage/Surplus Factor by Industry SubsectorLeakage/Surplus Factor by Industry Subsector

Food Services & Drinking Places

Nonstore Retailers

Miscellaneous Store Retailers

General Merchandise Stores

Sporting Goods, Hobby, Book, and Music Stores

Clothing and Clothing Accessories Stores

Gasoline Stations

Health & Personal Care Stores

Food & Beverage Stores

Bldg Materials, Garden Equip. & Supply Stores

Electronics & Appliance Stores

Furniture & Home Furnishings Stores

Motor Vehicle & Parts Dealers

Leakage/Surplus Factor

3020100-10-20-30-40-50

11/6/16 Page 37 of 62

.

c. Summary of Findings

i. Economic Expansion

In considering economic expansion opportunities, the City of Fayetteville should look to leverage industry clusters where it has a competitive advantage. Industry clusters are geographic concentrations of businesses, suppliers and supporting inputs that are associated with a particular industry. Industry clusters are important since they often provide an ecosystem that serves to increase productivity so these clusters can compete more effectively on a broader scale. In 2012, the Fayetteville – Cumberland County Chamber of Commerce commissioned a competitive realities report prepared by Garner Economic LLC that provided valuable input on local specialization, competitiveness and growth that highlighted regional assets and challenges for economic expansion. While our assignment did not include this specific scope of work, the Consultant team has reviewed the findings and believe the recommendations are still applicable. That report highlighted the following industry clusters as those with which the region has a competitive advantage in expanding:

Defense and Security Business and Financial Services Education and Knowledge Creation Chemicals and Chemical Based Products

Given the region’s competitive advantage in these areas, the City of Fayetteville should evaluate concentrating economic development and business expansion strategies to leverage these clusters. In addition, business attraction efforts would be enhanced if starting from the premise that regional competitive advantages are being leveraged to create strong industry cluster ecosystems. ii. Business Development

Given the discussion above, the Consultant team would recommend concentrating all economic development tools and potential incentives to align as much as possible with efforts to attract new business. These business attraction efforts should be executed with a focused approach instead of responding to one-off opportunities. Also, it is recommended that the City creates a workforce development ecosystem agenda that ensure that members of the current and future workforce are prepared and connected with meaningful work in the region’s economy. While managing this system is complex, it requires a clear agenda for action, which includes developing a better understanding of the current capacity of workforce services, strengthening ties with industry clusters to ensure workforce development programs are actually meeting employer needs and are aligned with the City’s economic development strategy, and starting a broader conversation about how the City might better position itself so that the region’s human capital enhances its competitive advantage and spurs targeted economic growth.

In fact, many communities often emphasize business attraction efforts at the detriment of retaining the businesses that already call the region home. These business retention efforts are often the area where economic development efforts can have the most

RESEA

RC

H &

AN

ALY

SIS

11/6/16 Page 38 of 62

.

immediate impact. Given the region’s “home-field” relationship advantages with these companies, particular interest should be given to understanding their needs and how their growth can be managed to accomplish other important city goals along redevelopment lines. Often, retention surveys can help to identify strengths and weaknesses and it is recommended that there is close collaboration between the Chamber of Commerce and the City’s business retention efforts.

Thirdly, the impact of business creation efforts is where new and small businesses are incubated so that one day these companies become the economic generators that attract the same attention as business attraction and retention targets. This economic development strategy has the broadest impact and the potential to create new industry clusters that can contribute to the City and the region. This all starts with creating an environment conducive to startup / expansion opportunities as discussed further below.

iii. Business Incubation and Supporting Ecosystem

While the recent conversation has focused on physical incubators and small business “places”, one of the most important factors for early stage success, either for individuals or small businesses, is access to functional networks. These networks may consist of capital networks, talent networks, ideas networks and vendor / services networks. While place-based incubators provide great benefit to entrepreneurial users and efforts should be made to enhance these offerings in Fayetteville, it is but one resource required in a menu of needs. One of the most valuable resources to this entrepreneurial community is to assist in the development these networks and build the entrepreneurial ecosystem that provides ultimate value to the end users. One low-cost way to gather these resources in one place is to concentrate on building a web-based solution that provides a virtual ecosystem where entrepreneurs at all stages of venture formation can use to customize the available resources in these networks. Often these resources are already available in the entrepreneurial ecosystem; however, given the lack of concentrated physical spaces where networks can be shared, there is a need to provide this virtual ecosystem to generate valuable resources. An example of this type of virtual ecosystem can be found at www.startupatlanta.com. This resource website was created by Invest Atlanta, the City of Atlanta’s economic development authority, and at its outset had the modest goal of connecting users with needed resource networks (capital, workspace, accelerators / incubators and meetups). As entrepreneurs started to use the tool, a grassroots, community non-profit took the lead in focusing on different component of the ecosystem and now StartUp Atlanta is an independent, member-driven organization that hosts events catered to the startup community, brings regional leaders together, supports policy that is friendly to innovation and entrepreneurs and promotes corporate involvement with the local ecosystem with a creative program called the CEO Pledge campaign. The CEO Pledge is simply a commitment by City-based CEOs to support the local startup ecosystem. In the Atlanta example, CEOs that take the pledge promise that their companies will evaluate at least one new product or service from an Atlanta-based startup in the next 90 days and at least one of their senior executives will seek to join the board of advisors of a local startup within the next 12 months.

RESEA

RC

H &

AN

ALY

SIS

http://www.startupatlanta.com/

11/6/16 Page 39 of 62

.

This is not a new concept and has been done successfully in other cities that try to capture the exportation of talent to other markets. While this ecosystem can originate through City efforts, it is recommended that it ultimately is managed by members of the startup community that can ensure content to relevant.

iv. Alliances and Partnerships

Given the business attraction, retention and creation findings above, and the discussion of scarce existing financial tools, every effort should be made to leverage existing and new partnerships and alliances to eliminate duplication of efforts. The recent reorganization of the Fayetteville Regional Chamber and the Economic Development Alliance brings a much needed bifurcation of traditional chamber of commerce private market activities and economic development initiatives. This bifurcation recognizes that pure economic development is a subset of community development and that the goal should be holistic in nature. With this preface, the City will need to work with partners to assure that the right skills are concentrating on the right efforts. The City of Fayetteville should concentrate on the broader community development backdrop that will make neglected areas future targets for economic development growth. This “community building” support is where the City would be best served to concentrate its resources while public private partnership (e.g., chambers of commerce and economic development organizations) is where economic development initiatives are best managed. While these efforts are distinct, they require simultaneous effort and attention since business growth tends to gravitate around established community development assets (e.g., adequate infrastructure, quality of life amenities, etc.). The natural alliances and partnerships have been identified by the City during its revision of the economic development policy and are summarized below:

• Economic Growth and Development Organizations Fayetteville Cumberland Economic Development Corporation (FCEDC) Center for Economic Empowerment and Development (CEED) Downtown Alliance (DTA) Southeastern Economic Development Commission (SEDC) Economic Development Partnership of North Carolina (EDPNC) Fayetteville Are Convention and Visitor Bureau (FACVB) Greater Fayetteville Chamber of Commerce

• Public Sector Partners Cumberland County Department of Defense (Fort Bragg)

• Education and Workforce Development Fayetteville State University (FSU) Methodist University (MU) Fayetteville Technical Community College (FTCC) Cumberland County Workforce Development Center

• Community Outreach Cumberland Community Foundation

RESEA

RC

H &

AN

ALY

SIS

11/6/16 Page 40 of 62

.

Public Private Partnerships

While the above partners and alliances will be helpful to implement the economic strategy, there will inevitably be a need to look at individual private market projects that may help to achieve broader City goals. While many municipalities are responsive to private market requests for specific project incentives, a more proactive strategy entails the City taking on a leadership role to develop or redevelop an area or site, often blighted or underused, within a specific community. This will entail the active solicitation of private sector partners to help leverage outcomes. While, there are several delivery methods to achieve this proactive solicitation (e.g., RFIs, RFQs, RFPs), the important point is that all interests are aligned in order to place risk and return with the appropriate partner.

RESEA

RC

H &

AN

ALY

SIS

11/6/16 Page 41 of 62

.

6. Marketing Strategy and the Path Forward

Fayetteville faces many new challenges that are similar the challenges facing every other city of similar size and history. Industries are changing throughout the country. Housing and lodging preferences are evolving. The workplace of today is remarkably different than anything seen twenty years ago. Retail has moved online, and is no longer dominated by brick and mortar locations. The role of the military is also changing; as is the way they are funded and supported. Quality education has never been more important for long term earning potential and achievement; but it has also never been more difficult to obtain. So what does this mean for the City of Fayetteville, and how does this factor into the City’s path forward? It is safe to say, it will take time, and it will come with some risk. It will also require a willingness to cooperate, form stronger alliances, align spending with intended outcomes, and invest heavily in the City’s long-term future. Some communities are better poised to move forward aggressively. Other communities will require more time. A realistic self-assessment of City strengths and weaknesses, and a refocused effort to align business strategies and spending to support the strengths and avoid the weaknesses, is imperative.

Based upon our research, we recommend a path forward that adopts 4 pathways that are specific to the circumstances that are present in Fayetteville:

Pathway 1. Quality Education/Schools are one of the most important draw to attract new residents to a community. Families will deal with traffic, long distances, financial burdens, and even modest blight to access quality education. Great Schools = Great Home Values = Great Communities

Pathway 2. Large Scale, High Quality Active Recreational Spaces are very desirable and offer an amenity that enhance residential values. Others will seek out these spaces as a destination, thereby generating economic growth

Pathway 3. Drive More People Downtown. A great public investment has already been made Downtown and additional investment is being contemplated. All indicators point to an underutilization of Downtown and its amenities. It offers the most promise for demonstrating a new, more family, pedestrian friendly Fayetteville. The City must focus its actions and activities in a targeted effort to ensure the success of Downtown and the areas adjacent to Downtown.

Pathway 4. Focus Development, Marketing & Public Spending on City’s strengths of: a. Natural features b. Military personnel c. Medical services d. Attractive Downtown e. Quality, affordable collegiate education options f. Outstanding accessibility

Pathways 1, 2 and 3 look to increase the number of households and the strength of household incomes in the core areas of the City of Fayetteville along Murchison Road form I – 295 to Rowan Street, Downtown, Gillespie Street and Massey Hill. Pathway 4 is focused on helping the City with new business attraction, job creation and economic growth. The successful execution of all four pathways will drastically change the economic strength of Fayetteville; making it a more focused and strategic, and capable of attracting new development and business.

MA

RK

ETING

STRA

TEGY

11/6/16 Page 42 of 62

.

7. Near-Term Catalytic Planning

Utilizing the four pathways, Red Rock Global has identified four focus areas for redevelopment planning. 1) Upper Murchison Road (I – 295 to Country Club Dr, Bragg Blvd to Ramsey Rd); 2) Lower Murchison Road (Country Club Dr to the intersection of Bragg Blvd and Rowan Street); 3) Center City Action Park (intersection of Blount St and Gillespie St); and 4) the Massey Hill area. Each of these Focus Areas were researched and programmed based upon the four pathways above. The details for each of these focus areas are provided in the following Near-Term Catalytic Planning recommendations.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 43 of 62

.

a. Upper Murchison Road Focus Area

Strengths Weaknesses

Proximity to Fort Bragg

Presence of Natural Features Regional Road Improvements Underway

Large Undeveloped Land Parcels Presence of Publically Owned Land

Strong Community with Good Local

Involvement Lower Density Helps Assemblage Prospects

Methodist University Historical Precedent to Considering Some of

Red Rock Global’s Recommendations

Local Road Improvements Announced But Not

Underway Timeframe of Improvements are Far Off

Low Density Hurt Economic Projections Industrial Properties May be Expensive

Environmental Issues on Industrial Sites?

Rail Line Shortens Depth of Sites Off of Murchison Rd

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 44 of 62

.

Upper Murchison Road Focus Area Concept: The redevelopment of Upper Murchison Road will focus on four major strengths the area offers:

1. The area’s proximity to Fort Bragg 2. The increased traffic that will come off of I – 295 down Murchison Road as

portions of Bragg Boulevard are closed to non-military personnel 3. The large, developable land parcels that are for sale or underutilized in the

area 4. The recently approved $35 million recreational bond

Our research and interviews with the real estate community led us to believe that the Upper Murchison Road area is suitable for a large-scale master planned development with retail, a sports complex and hospitality. The concept would be to develop a large sports complex capable of hosting regional sporting events similar to the type of sports complex found in Charlotte, NC, Rocky Mountain, NC and Myrtle Beach, SC. These venues are major destinations for both local and regional athletic competitions and social gatherings. Our belief is that many of Fayetteville’s athletic, professional and social activities from family reunions and military conferences to school championships and holiday tournaments, would be huge economic draws. The region does not offer any competitive venue of this type and Fayetteville has several natural user groups already present in the City. Our research discovered that the $35 million parks bond referendum includes $9 million in proposed funding for a multi-purpose sport field complex with 15 athletic playing fields for baseball, soccer and football at Exit 49 on I-95. This project offers a great opportunity to reevaluate the value of a major recreational development located in an area that provides very little catalytic growth for the City overall, and little synergy with anything else the City has developed or plans to develop. Exit 49 misses the opportunity to be in immediate proximity to the Cross Creek Mall area, Downtown, the new baseball stadium, existing museums and parks, Fayetteville State University, Fort Bragg, etc. Lost is the opportunity to easily, and conveniently, bring groups of athletes into the City on a regular basis and have their sports activities take advantage of the rest of the City’s amenities (some of which need the increased visitors). This sports venue should be placed at a City of Fayetteville site north of Country Club Drive, off of Murchison Road and as close to I-295 as possible. Site selection is one of the key considerations for this development’s ability to secure a retail developer and potentially a hotel operator. Prior studies in this area have considered the annexation of Shaw Heights, as well as developments in cooperation with Fort Bragg and Spring Lake and Cumberland County. The City, Cumberland County and several prominent land owners all own large parcels of land that fall within the targeted area for this development. It would be essential that all parties work together to identify the best site for this development. Its location will have a positive regional impact for Spring Lake, Fort Bragg and the City of Fayetteville. Red Rock Global’s discussions with some of the landowners, including the County, indicated a willingness to explore a catalytic development of this scale.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 45 of 62

.

The presence of the sport complex, changes in local traffic patterns, and the increased traffic counts off of I – 295, should generate enough new activity to also support a small retail development in conjunction with the sports complex. With a new retail center and a new sports complex, the economics may be present to support a hotel. We presented our concept to several retailers and retail developers at the 2016 ICSC Conference in Las Vegas and received some interest from developers that were familiar with Fayetteville. We also reached out to hotel developers and determined that a small conference center hotel was worth exploring. This interest is exploratory and conditioned upon many public and private actions occurring. The Swerdlow Group (http://www.swerdlow.com/) and Frontier Development (http://frontier-development.com/) were the most responsive to express their willingness to explore retail and hotel development. Local residential developer Murry Duggins (http://www.murrayduggins.com/) also expressed a willingness to exploring the residential options associated with a development of this scale; especially for affordable or tax credit development projects. The concept’s greatest challenge was the identification of a developable site and the availability of public funds for infrastructure improvements and development of the sports complex. Action Steps:

1. Consider the merits of relocating the Exit 49 recreational development to a more catalytic and synergistic area

2. Convene a collaborative group that includes Cumberland County, the City of Fayetteville, Fort Bragg and potentially private land owners, to identify potential locations for a mixed-use, public private partnership development of this scale (100 – 200 acres preferred)

3. Consider alternative sites to create a couple of smaller, but cooperative developments

4. Immediately reprioritize the planned, but unfunded, 2020 road improvement project for Upper Murchison Road in order to improve the intended delivery date

5. Offer organizational and planning assistance to the adjacent neighborhoods to ensure they are organized, coordinated and have their objectives formulated into practical intended outcomes

6. Preliminary Public Funding/Budgeting discussions

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

http://www.swerdlow.com/

http://frontier-development.com/

http://www.murrayduggins.com/

11/6/16 Page 46 of 62

.

b. Lower Murchison Road & Catalyst Site 1 Focus Area

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 47 of 62

.

Lower Murchison Road

Strengths Weaknesses Adjacent to Downtown

Anchored by Fayetteville State University Regional Road Improvements are Underway

Contains Undeveloped Land Parcels Presence of Publically Owned Land

Moderate Density

Strong Neighborhoods with Good Local Citizen Involvement

Good Residential Density, Anchored by Communities of Single Family Homes

Timeframe of Some Area Improvements are Far

Off Some Historic Bias Against the Area

Demographic Information Reports Residents with Lower Incomes

Retailers Experiencing Poor Sales

Bronco Square is Underperforming Moderate Density

Acquiring Occupied Properties May be Expensive Environmental Issues on Industrial Sites?

Rail Line Impacts Some Sites

Catalyst Site 1


Proximity to FSU and Downtown Presence of Natural Features

Adjacent to Major Planned Developments (Baseball)

Adjacent to Museums and Parks Regional Road Improvements Underway

Presence of Publically Owned Land

Potential To Be Developed in Conjunction with FSU’s Washington Park site

Large Enough for Good Scale Commercial Development

Environmental Issues on Industrial Sites? Some Historic Bias Against the Area

Rail Line Impacts Development Options Incomplete Assemblage Hinders Complete

Development Will be Expensive Too Small for Many Large, Catalytic Uses

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 48 of 62

.

Additional planning by independent groups of consultants, community leaders and government agencies have substantiated and supported our vision for the City of Fayetteville to adopt a cohesive Downtown strategy for arts, entertainment and culture. The Culture Planning Group addressed the ideas very well in its Report for an Arts & Entertainment District. “In its Central Core, there is a strong concentration of arts and cultural entities, small creative enterprises, excellent independent restaurants and shops, and numerous festivals and special events. It has a corps of creative and committed individuals – civic leaders, municipal leaders, elected officials, business owners, artists and arts leaders - who understand the benefits of an arts and entertainment district. This includes artistic advancement, economic and community development, residential development and attraction of young creative professionals. In addition, numerous civic development plans are underway that have the potential to significantly alter the critical mass of activity in the Central Core. Private investment in the downtown area continues to create a wonderful mix of retail, restaurants, galleries, cultural facilities, residential units, office space and in the near future, a hotel. Redevelopment plans range from repurposing of the Prince Charles Hotel for housing and retail, to preliminary plans and studies for a minor league baseball stadium. Fayetteville residents recently passed a bond referendum to invest in its parks and recreation facilities. This will greatly benefit areas adjacent to the Central Core, in particular development of the Cape Fear River District. This is the time to launch a district and position the Central Core as a vibrant hub and catalyst. Through this planning process Fayetteville begins creating and launching an Arts and Entertainment District in the Central Core. This placemaking strategy is the intersection between community development, economic development and cultural development so cities develop arts and entertainment districts for many reasons including:

• Supporting the revitalization of downtown or some area of a city • Creating greater evening and weekend activity • Creating an identity around an existing concentration of cultural, dining, and shopping resources • Establishing tourist destinations • Strengthening local arts and cultural organizations • Developing economic vitality

For Fayetteville, creating an arts and entertainment district provides a cohesive placemaking strategy linking the numerous current civic development efforts and ultimately creating an opportunity for increased economic development through the identity of a district.”1

1Report for an Arts & Entertainment District, The Culture Planning Group

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 49 of 62

.

Lower Murchison Road & Catalyst Site 1 Focus Area Concept: The redevelopment of Lower Murchison Road & Catalyst Site 1 will focus on several major strengths the area offers:

1. Proximity to FSU and Downtown

2. Adjacent to Major Planned Developments (Baseball)

3. Adjacent to Museums and Parks 4. Regional Road Improvements Underway

5. Presence of Publically Owned Land 6. Potential To Be Developed in Conjunction with FSU’s Washington Park site

7. Large Enough for Good Scale Commercial Development The development of Lower Murchison Road and Catalyst Site 1 must be considered with the inputs from the Focus Area’s critical stakeholders in mind. The City government offices, Fayetteville State University, Downtown’s existing parks and museums, the retail on Hay Street, the high quality residential developments, and the proposed Fayetteville baseball stadium, all play essential roles in influencing the development of Lower Murchison Rood and Catalyst Site 1. Today, each of these stakeholders appears to manage its activities independently. It is not clear that there is a coordinated, comprehensive strategy to address any of these stakeholder’s goals for economic and business growth. Nor is it clear that the strengths of the City or the Focus Area are driving actions such as:

1) development recommendations, 2) the allocation of financial resources, and 3) the application of financial tools and incentives to facilitate economic growth.

The greatest impediment to new development and economic growth in this Focus Area is its relatively low household incomes and the missed opportunity to incentivize development by capitalizing off the Area’s strengths in a coordinated way that matches clear goals and objectives with qualified participants and financial resources. The City must drive more businesses, residents and visitors to its Downtown. Investment and activities must capitalize on strengths that result in more Downtown activity.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 50 of 62

.

To accomplish this, we recommend two major initiatives. First, we propose the creation and branding of an activities and recreational area Downtown that is focused on a Families and Fans. This would be a family and sports fan related entertainment and recreation district with three distinct areas. This area would span from Washington Park and Fayetteville State University (FSU), to the Fascinate-U Children’s Museum just off the circle at Hay and Gillespie Streets. The idea is to integrate the numerous existing natural features, parks and museums with increased participation from the adjacent residential neighborhoods, Fayetteville State University, local developers, Fort Bragg Directorate of Family and Morale, Welfare & Recreation and the City of Fayetteville. We see three distinct areas in play in this District:

Area 1: A collegiate age recreational area centered on Washington Park, FSU and Catalyst Site 1, supporting the notion of team sports and major competition

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 51 of 62

.

Area 2: A Fan based experience centered on the new baseball stadium. Inclusive of a Fun Zone type of fan experience. Maybe a huge Ferris wheel or similar tourist attraction

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 52 of 62

.

Area 3: A Family based experience focused on children, and anchored along Hay Street and Gillespie Street

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 53 of 62

.

If done properly, the opportunities are endless. Children’s retail, a small children’s theater in Area 3. Bars, dining and merchandising along Area 2. Gamer Labs, coffee shops, an outlandish rock-climbing wall, obstacle course (think Ninja Warrior), skateboard parks, urban themed clothing store in Area 1. All with copious amounts of greenspace. Walkable. Well-lit and safe. Bright, with inviting design. The areas must feel and be connected. Connected in their look, branding and coordination. This could be done in part through the creation of a business/community improvement district. In the end, the opportunity is to play off the Focus Area’s strengths, and coordinate the area stakeholders into the planning and execution of a well thought out redevelopment and marketing strategy. Focus on projects that can benefit the area as a whole, and not individual communities. Embrace activities that can’t be replicated independently elsewhere, and will draw people Downtown. Focus on truly catalytic economic investments. Change perceptions. Create a new culture of Fun and Family. Ensure all programing and public dollars invested are focused on the goal of driving more people Downtown and improving the economy.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 54 of 62

.

Second, we propose a new creative training and employment center at the current Fayetteville State University Business Center. This new creative training and employment center would house a joint initiative between RLM Communications, Inc., Fayetteville State University and other strategic stakeholders. Similar to the investment and success of the Partnership for Defense Innovation, the creative training and employment center has the potential to bring public and private investment to a facility and programs geared to supporting small, local business and startups. It could also be the new home for the Center for Defense Control and Homeland Security. The combination of these two uses would ensure the development’s success and ability to sustain its operations over time. The project would rely heavily on the experience and technical support of RLM Communications and the academic support of Fayetteville State University. Many of the concepts shared in this report’s Business Incubation and Support Ecosystem section should be implemented with the help of City staff and the Chamber of Commerce. Simple business tools from resource sites similar to the tools found at www.startupatlanta.com will be critical.

The new training and employment center is in direct alignment with Pathway 4 and its goal to help the City with new business attraction, job creation and economic growth. Other successful examples of business incubation and economic support can be replicated in the Murchison Road corridor.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

http://www.startupatlanta.com/

11/6/16 Page 55 of 62

.

Action Steps: 1. Define the exact boundaries of the Families and Fans Entertainment & Recreation

District 2. Define the District’s offerings 3. Convene a planning discussion between FSU, RLM Communications and the City to

align the goals of the creative training and employment center 4. Explore the access to private, City, State, and Federal funding to accomplish the

redevelopment of the Fayetteville State University Business Center 5. Ensure new developments on the table are aligned with a goal to support the District 6. Offer organizational and planning assistance to the adjacent neighborhoods to ensure

they are organized, coordinated and have their objectives formulated into practical intended outcomes


NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 56 of 62

.

c. Center City Action Park Focus Area


Proximity to Downtown & Massey Hill Large Undeveloped Land Parcels

Presence of Publically Owned Land Historical Site

Walkable to Downtown and the New

Stadium Good Residential Density, Anchored by

Newer Communities Great Flat, Developable Site

No Clear Real Estate Identity Not the Strongest Commercial Corridor or

Residential Corridor

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 57 of 62

.

Center City Action Park Focus Area Concept: The redevelopment of Center City Action Park Focus Area will focus on four major strengths the area offers:

1. Large Undeveloped Land Parcel

2. Walkable to Downtown and the New Stadium

3. Good Residential Density, Anchored by Newer Communities 4. Great Flat, Developable Site

Our recommendation would be to create a very contemporary and cool, community of small live/work urban loft offices that can support small established businesses, intertwined with greenspace, seating areas, and concrete pads with power and water for food trucks. These offices would be two or three story units with high end finishes and balconies. The food truck pads would be limited to two or three, and be tastefully mixed in with greenspace and the loft offices.

The introduction of the food trucks, greenspace and loft offices would create one of the coolest spaces in the City and be within walking distance to Downtown and the Baseball Stadium/Hay Street revival.

Our analysis of real estate asset classes showed very low vacancy in the industrial flex space market. Subsequent interviews with owners also supported the popularity for live/work flex space. The introduction of a new contemporary style of small, flex office product, at market leading levels of quality, in combination with comfortable, fun-loving food and relaxation space, will bring an exciting new area downtown and increase Downtown’s dining amenities, small office spaces, and households. Another key consideration in making this development a reality is the fact that the City owns the land and the cost to develop this type of product is very reasonable. In Atlanta, wonderful new construction loft product is being built for less than $70 per square foot, making this type of product very reasonable for this market.

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 58 of 62

.

Action Steps: 1. Speak with local developers to assess the feasibility live/work loft office development 2. Secure qualified food vendor partner 3. Identify Offer organizational and planning assistance to the adjacent neighborhoods to

ensure they are organized, coordinated and have their objectives formulated into practical intended outcomes


NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 59 of 62

.

d. Massey Hill Focus Area

Strengths Weaknesses Proximity to Downtown

Strong Community with Very Good Local

Citizen Involvement Massey Hill Classical High Offer Top

Academic Performance Good Residential Density, Anchored by

Communities of Single Family Homes Larger Parcels/Properties are for Sale

Lack Control of Any Site for Expansion

Site Control Could be Expensive

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 60 of 62

.

Massey Hill Focus Area Concept: The redevelopment of the Massey Hill Focus Area will focus on three major strengths the area offers:

1. Strong Community with Very Good Local Citizen Involvement

2. Massey Hill Classical High Offers Top Academic Performance

3. Good Residential Density, Anchored by Communities of Single Family Homes

Quality education is one of the most important tools a community can offer as an incentive for development and economic growth. Where there are great schools, there are great communities. The economic dollars follow the best schools. Everything improves; real estate values, amenities, and job opportunities. The Massey Hill Classical High’s academic success is an outstanding draw to the Massey Hill community. Combine the Classical High’s appeal to any family with children, with the strength and history of the Massey Hill community, and its relative proximity to Downtown, and you have an opportunity to attract more households with higher incomes to Fayetteville. The Classical High’s well-deserved reputation for strong academic performance, and student pride and satisfaction, warrant a conscientious effort to expand the school’s reach within the City of Fayetteville. Part of the attractiveness of this school expansion is the availability of additional space adjacent to the school. Several properties appear to be possibilities for development, including one considerable warehouse property less than ½ mile away. Action Steps:

1. Convene true exploratory discussions with Superintendent Till and the Cumberland County School Board 2. Identify expansion location 3. Work with State and County officials to identify funding opportunities 4. Offer organizational and planning assistance to the adjacent neighborhoods to ensure they are organized, coordinated and have their objectives formulated into practical intended outcomes 5. Preliminary Public Funding/Budgeting discussions

NEA

R-TER

M C

ATA

LYTIC

PLA

NN

ING

11/6/16 Page 61 of 62

.

8. Appendix a. About the Consultants

Since its formation in July 2001, Red Rock Global, LLC ("RRG") has provided corporations, government agencies, institutions and other real estate owners a broad range of real estate services throughout the United States. Red Rock Global has built its business reputation on a foundation of professional excellence, integrity and quality service. This foundation has shaped the Company’s commitment to conscientious, value-adding recommendations and actions, and a sincere desire to support its clients as they seek to understand and improve the value of their real estate portfolios. Specifically, RRG has become a committed partner to many government and public sector agencies in providing real estate transaction and advisory services related to the management and value enhancement of their real estate holding. We are often these groups’ trusted advisor and their primary means of executing their real estate strategies. It is this style of service, to a focused group of clients, across very specific real estate requirements that has become the key to RRG's success. RRG’s Key Services RRG believes the majority of our client's commercial real estate activities can be placed into one of four main service areas: Brokerage, Management, Capital and Advisory Services. These service areas address both the current needs and future opportunities for real estate services in the urban core and public sector. Within these service areas, RRG possesses the expertise and resources to perform a broad array of value-adding services. RRG services include:

BROKERAGE SERVICES DEVELOPMENT SERVICES ADVISORY SERVICES CAPITAL ADVISORY

Brokerage Development & Project Services Revitalization Financial Advisory

Tenant Representation Fee Based Development Community Redevelopment Public Incentive Structuring

Landlord Representation Site Selection Strategic Planning Equity Private Placement

Investment Sales Vendor Selection and Oversight Feasibility Studies EB-5 Private Placement

Retail Zoning Coordination & Entitlements Market Research Mezzanine Debt Placement

Industrial and Land Programming & Design Assistance Economic Revitalization NMTC Placement

Lease Administration Budgeting & Cost Forecasting Economic Growth

Financial Analysis Social Impact & Opportunity Deal Structuring Services

Valuation Services Project Management Capital Stack Advisory Services

Highest & Best Use Analysis Contract Administration

Opinion of Value Develop Feasibility & Market Studies Fund Management Services

Asset Repositioning NMTC Fund Formation

Acquisition Analysis Mezzanine Debt Fund Mgmt

Asset Services

Asset Management

Property Management

Facilities Management

AP

PEN

DIX

11/6/16 Page 62 of 62

.

Experience Using Complex Funding Sources

Red Rock Global Capital Partners

Red Rock Global Capital Partners is the financial advisory, deal structuring and fund management arm of Red Rock Global and is uniquely positioned to bring sophisticated financial capability to markets in the urban core. RRG Capital Partners is expert in the fields of tax increment financing, municipal finance, tax exempt bonds and new markets tax credits. RRG Capital Partners and has a vast array of experience providing capital solutions to urban areas which have difficulty in attracting private capital. RRG Capital Partners compliments the real estate services provided by RRG to design holistic solutions to urban communities in meeting their capital needs to get projects off the ground; understanding how political, internal or financial issues often jeopardize the success of projects. The Company’s specific knowledge of how complex, financial solutions can be tailored for successful real estate projects creates a competitive advantage for RRG’s clients in the execution of their real estate activities.

AP

PEN

DIX

Documents

Economic and Business Development Strategic Action Plan