The Downtown Florence Revitalization Strategy · B. Medical/Mixed Use Project This project, shown at right, occurs within the Downtown Central District. The project evolved from the

The Downtown Florence Revitalization Strategy

Phase 2 Report

HUNTER INTERESTSAllison Platt & Associates

Landscape Architecture Urban Design Urban Economics • Finance • Real Estate Development

121 Main Street • Annapolis, Maryland 21401 • (410) 269-0033 • www.hunterinterests.com

The Downtown Florence Revitalization Strategy

Phase 2 Report

Prepared for:

The Florence Downtown Development Corporation and

The City of Florence

Prepared by:

Hunter Interests Inc. Annapolis, MD • New York City • Clearwater, FL

In Association with:

Allison Platt & Associates Baltimore, MD

May 12, 2005

Table of Contents

Page

I. Background and Introduction 1

II. Downtown Florence Master Illustrative Site Plan 2

III. Central Mixed Use Project ⎯ Conceptual Building Program and Financial Feasibility Assessment 18

IV. Interior Evans/Mixed Use Project ⎯ Conceptual Building Program and Financial Feasibility Assessment 25

V. Florence Little Theatre ⎯ Conceptual Building Program and Financial Feasibility Assessment 27

VI. Florence Center for the Arts⎯Conceptual Building Program and Financial Feasibility Assessment 29

VII. Restaurant/Entertainment Center Prototype ⎯ Conceptual Building Program and Financial Feasibility Assessment 36

VIII. Business Incubator Conceptual Building Program and Financial Feasibility Assessment 41

IX. Destination Grocery Store ⎯ Conceptual Building Program and Financial Feasibility Assessment 53

X. Economic and Fiscal Impact Analysis 59

XI. Funding and Finance Strategy 63

XII. Phased Implementation Strategy 72

XIII. Marketing Strategy 74

Appendix: Observations/Comments on the February 26–28 Trip to Florence 80

I. Background and Introduction

This report conveys the observations, findings, and recommendations associated with the Phase 1 work program for the revitalization of downtown Florence. This body of work builds on the completion and ongoing implementation of the Phase 1 effort, which featured development of three Zoning Overlay Districts, detailed Design Guidelines, and formation of a Redevelopment District that will serve as a precursor to a Tax Increment Finance (TIF) District. It will be used to fund many of the public improvements that will be required to effect a complete renaissance in the downtown area.

The Phase 2 work program and associated results further builds on the public outreach and community involvement process that goes back several years in Florence, and which was accentuated by the consulting team and the FDDC in Phase 1. This process has yielded a vibrant vision for the future of Downtown Florence, one that is reflected in the Master Illustrative Site Plan contained in this report and the associated catalyst projects and physical improvements that are recommended. The recommendations contained in this Phase 2 report are not, however, the product of vision plan or community wish list alone. Rather, they are the result of applying market analysis, financial feasibility analysis, creative yet practical urban design elements, and the consulting team’s national experience in downtown revitalization to the issues and opportunities at hand. Phasing, leveraging, land-use and property ownership dynamics, the status of proposed projects, public policy, and the key role of the private sector in the revitalization process have all been carefully taken into consideration.

Thanks to Mayor Frank Willis, the board and staff of the Florence Downtown Development Corporation, the City of Florence staff, the Florence City Council, all stakeholders within the business, civic, and cultural communities and the people of Florence at large, for their help in making Phase 2 of the Downtown Florence Revitalization Strategy a meaningful step toward a bright future.

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HUNTER INTERESTS Allison Platt & Associates I N C O R P O R A T E D

II. Downtown Florence Master Illustrative Site Plan

The Revitalization plan at buildout is shown on the preceding fold out page. Major projects for which market work has been completed will be presented first, followed by other aspects of the plan, such as streetscapes and additional development opportunities.

For reference, the figure below illustrates the districts drawn up for the Design Guidelines. These include the overall redevelopment district, and within it, the Historic District, the Downtown Central District, and the Arts & Cultural District. Each district has its own set of design guidelines, prepared to ensure quality development and development that relates in site planning and architecture to the best existing examples of the desired architecture within it. The text that follows will refer to the projects within their districts.

A. Overview of the Districts

The Districts were set up based on the predominant existing uses within them. The Historic District contains the majority of the remaining late 19th and early 20th Century commercial buildings. This forms the natural boundaries for a possible future National Historic District, and also the natural location for the center of a revitalized downtown. The Downtown Central District surrounds this area. This district is already the center of many traditional downtown uses, such as government buildings, office buildings, and additional commercial uses. The intention will be to reinforce the urban feel of this district with future infill development. The Arts & Cultural District is defined as such because it already contains uses such as a magnificent new library at the southern end, and several former school buildings, one of which (the Poynor School) now serves as a community center. The goal for this district is to infill additional arts and cultural uses to create a unique and attractive district that will reinforce and create synergy with the downtown.

Lastly, the Redevelopment District forms the basis The above map shows the Redevelopment District with afor creation of a self-funding (or TIF, Tax Increment black border, the Florence Historic District in green, the Financing) district. The purpose and use of TIF Downtown Central District in blue, and the Arts & Cultural

District in purple.districts is discussed elsewhere in this report. Within

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this area, it is likely that additional districts may be defined over time.

B. Medical/Mixed Use Project

This project, shown at right, occurs within the Downtown Central District. The project evolved from the desire of a group of doctors to locate downtown, and the availability of most of the property on the south side of the block bounded by Evans, Dargan, Cheves, and Irby.

Because the project falls within the Downtown Central District, it is required to have commercial facades and uses on the ground floor, and to encourage pedestrian traffic through the creation of attractive sidewalks and safe street crossings. The The illustration above shows the Medical/Mixed Use project medical portion of this project is shown in blue on (outlined in yellow). Commercial uses would occur on the the left (west) side of the block. The group interested first floor, with medical uses on the upper floors of the in this use has expressed some interest in locating a building on the left, and residential uses on the upper floors pharmacy, lab and other medical-related commercial of the building on the right. Cheves Street borders the project

uses on the ground floor. The upper levels (three below, with Irby on the left and Dargan on the right.

levels above the ground floor) would provide space for about 100,000 s.f. of medical office space.

On the right (east) side of the project, more traditional commercial uses are envisioned for the ground floor, such as retail stores and restaurants. This would be an ideal location for such uses both because it would continue the downtown commercial uses south, and because these uses would be located directly across the street from the planned Performing Arts Center.

Because parking is critical for the success of these buildings, and because additional parking is also needed for adjacent uses, parking is shown both on the interior of the block as shown, and as a single level of subsurface parking within the entire south half of the block (indicated on the drawing at right as a dashed yellow line). This treatment of parking not only provides sufficient parking for the uses shown, but also potentially for downtown uses and for the Arts complex to the south. An additional benefit is that pedestrian access through the center of the block is possible, and the views from the portions of the new buildings that face the interior would be far superior than if the interior were taken up by a parking deck.

C. Florence Center for the Arts and Little Theater

An Arts complex in this location will be ideal to support the future revitalization and growth of both the historic downtown and Arts & Cultural District of which

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it is a part. The Little Theater organization has been in existence for many years, located several miles out of the downtown. It has recently received funding from the Doctors Bruce and Lee Foundation to proceed with site plans and architecture for a new building on the site shown in the drawings. The Florence Center for the Arts (FCA) does not currently have a facility, but it is actively planning and fundraising for the future. In the interim, additional parking can be located on this block to serve the Little Theater while planning proceeds for the FCA. Another possibility would be to consider placement of a semipermanent tent-like structure on a smaller footprint within the block to “hold the place” for the FCA, and to create a location for large concerts and events in the downtown. The final footprint of the FCA may also be slightly smaller than the one shown, due to opportunities to share facilities between the two venues. This would allow additional on-site parking. Programs and financial projections for the two facilities are discussed in greater detail in Section III.

The public spaces for the two facilities are envisioned as some of the “highest and best” within the

The two buildings shown above in purple are the Florence Center for the Arts (top) and the Florence Little Theater (bottom). This block, within the Arts & Cultural District, is bounded by Cheves to the north, Dargan to the east, Palmetto to the south, and Irby to the west.

A concept for the Arts Complex is shown at left. This view, shown from the corner of Palmetto and Dargan looking north, shows The Little Theater to the left, and the Center for the Arts to the right. A concept for the mixed use buildings to the north of Cheves can be seen in the background.

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Darlington

NB Baroody

Cheves

Evans

Irby

Dar

gan

P1 P2

P3

P5 P6 P4

Downtown Retail/Commercial Area Revitalization (shown within blue borders). The buildings shown in flat orange in the plan at left are all buildings that fit within the definition of traditional downtown retail/mixed use. Buildings shown in flat red are suggested new buildings of the same type. Not all of the existing buildings are historic, but all help to form a cohesive downtown character. The concept for this area is to restore as many buildings as possible, and to infill with new buildings that reinforce the historic building patterns and character of the area. New pedestrian-priority “downtown” streetscapes are recommended. See Design Guidelines for more information on streetscape recommendations. New or expanded parking opportunities are shown in magenta.

downtown. Because cultural facilities such as this attract visitors and area residents to the downtown, it will be important that the spaces around them express the cultural aspirations of the community. Thus, the plan shows in concept attractive gathering spaces, plazas, fountains, and locations for sculpture. The sketch on the previous page illustrates how the architecture and public spaces can work together to create a major attraction for the downtown.

D. Downtown Revitalization

Section III discusses a restaurant theme for revitalization of the downtown. In addition to this, there are other important considerations for revitalization, including renovation standards, streetscape improvements, and uses for the upper levels of new and existing buildings within the district.

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Revitalization of Existing Buildings

Revitalization of existing downtown buildings is already underway. Buildings are being purchased with new retail uses in mind. The Design Guidelines illustrate the recommended standards for both renovation of existing buildings and construction of new buildings. The ground floor of such buildings must include “transparency,” that is, large areas of glass as in traditional commercial buildings. This will create interest on the street level and encourage pedestrians to park and walk rather than to drive from store to store as is typical in suburbia. To enhance and support new retail/commercial uses, the plan recommends that the upper levels of new and existing buildings include residential and office uses. This will help to support the commercial uses and enliven the street both day and night. It will also increase security by having more “eyes on the street” at all hours. Standards for “pedestrian” streetscapes, recommended for this area, are included in the design guidelines.

The photo at left shows the existing view

The sketch above looking east on Evans Street toward the intersection with Dargan. illustrates renovation of buildings, signage and streetscapes, and a concept for a new building at the end of the street on Dargan.

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New Commercial/Mixed Use Buildings

The plan on page 6 illustrates possible locations for new retail/mixed use buildings within the downtown area, plus additional similar buildings on Dargan north of NB Baroody and on Evans within the Arts & Cultural District. These are only examples of possible locations for such buildings, rather than a list of the only locations envisioned. The examples were placed where the existing site or buildings were in poor condition and/or vacant, and where new buildings would reinforce or complement existing or planned uses. They also reinforce the building edge along important pedestrian corridors, such as north of NB Baroody on Dargan, and on Cheves and Dargan across from the new Little Theater building above.

Parking for the Downtown

New and additional parking for the downtown is shown in the plan on page 6, and indicated on the plan shown with magenta “P” symbols, followed by a number. The opportunities are as follows:

• P1 is the location discussed in Section B of this section of the report.

• P2 illustrates a reorganization of the parking off Cheves Street for theState Mental Health building. This area could also easily accommodatea parking deck in the future.

• P3 shows a reorganization of the City and County properties behind thebuildings on Evans Street, combined with the parking for the church atthe northwest corner of Cheves and Irby. It may be possible to considera deck in this location in the future, provided the church agrees.

• P4 shows the parking owned and used by the City-County complex.Although no change in this parking is recommended at this time, thisparking area could be available for nighttime uses in the downtown, andcould accommodate a deck in the future should one be needed.

• P5 shows a reorganization of the parking behind the Tech Center. If theTech Center expands in the future as shown in the plan, a deck will beneeded to accommodate parking. This deck should be sized to enableits use for patrons, office workers, and residents of the buildings alongEvans Street as well. Improvements to the organization of parking behind and between the Evans Street buildings are also shown.

• P6 illustrates a possible location for a parking deck off NB BaroodyStreet in the center of the block bounded by NB Baroody, Irby, Evans,and Coit Streets.

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NB Baroody

Darlington

Irby

Dar

gan

Lucas

ProposedBusiness Incubator

Grocery

Alternate Incubator location

Farmers’ Market

Specialty

Standards for parking are shown in the Design Guidelines. All parking areas must be to the side or rear of new buildings, and parking areas near the street must be screened from view with a 30–36-inch hedge or wall.

E. Business Incubator and Other Proposed Uses North of NB Baroody

The area north of NB Baroody Street has several important recommended development sites within it. The proposed Business Incubator, discussed in Section VII, is shown on the right of the drawing above. This facility is envisioned to specialize in the food and beverage industry. The location shown would share parking with a proposed 40,000 s.f. specialty grocery store, such as a Whole Foods Market or Trader Joe’s. Complementing these two uses is a Farmers’ Market, shown immediately north of NB Baroody on Dargan. The grocery store and Farmers’ Market should not only provide activity and jobs for the area, but should attract shoppers regionally.

The business incubator is shown in a new facility north of the grocery store, but if cost becomes a limiting factor, it is also possible that the incubator could locate immediately north of NB Baroody on the east side of Dargan. These existing two-story buildings have an attractive historic character and are two

This close-up of the area north of NB Baroody shows proposed revitalization efforts, including a future destination attraction on the Recycling property, future residential/mixed use, a Farmers’ Market, and specialty grocery store.

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stories in height, offering opportunities for both street-level storefront space and upper level classroom space.

The Farmers’ Market is shown as a 10,000 s.f. shed-type building that would allow produce trucks to back up to the covered area and sell goods out of their trucks or on stands directly behind the trucks. Shoppers would enter the covered areas and shop on either side from a center aisle. An enclosed building at the Other new development front could house restroom facilities and a small office for the market. The south of NB Baroody is regional farmers’ market has expressed interest in locating downtown. shown below. Yellow boxes

indicate residential or residential/mixed use, blue

Existing commercial buildings on Dargan are shown renovated in the plan. It indicates new office,will be important to create pedestrian connections between the historic downtown magenta indicates new area, the Farmers’ Market, and the specialty grocery store. This will encourage cultural, and buildings for people to explore the downtown on foot rather than shopping for food and then which a use has not yet been

driving away. A small infill commercial opportunity is shown on the west side determined are shown in

of Dargan immediately north of the purple stripes.

Farmers’ Market. This represents an excellent opportunity to take advantage of shoppers at the markets by offering snacks, ice cream, and/or sandwiches.

A major destination attraction is shown between Irby and Dargan north of Darlington to Lucas. This property was earmarked in the previous master plan as a park or other “gateway” use, and this plan reinforces that assessment, although we feel that passive parkland would be less desirable than an active regional attraction in a parklike setting. Several possibilities are being explored at the present time.

Another future development site lies across Irby Street from the regional destination. This property is now in the hands of a single individual who would like to redevelop it according to the plan. The exact configuration of use and buildings remains to be decided once the use and configuration of the regional destination is confirmed.

O1

O2

O3

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F. Other Development South of NB Baroody

Other development south of NB Baroody Street includes residential and residential/mixed use, office/mixed use, and restaurant refit, and a new home for the Florence Museum.

New Residential/Mixed Use

New residential (in addition to the project discussed in IIB) is shown on the plan on the previous page highlighted by yellow boxes. Whether commercial ground floor uses are recommended would depend on location. For instance, the residential shown on the upper left hand corner of the plan, on NB Baroody Street, would probably not have commercial uses on the ground floor because it is too far from other retail/commercial areas. Likewise, the residential on the lower portion of Dargan may or may not have commercial for the same reasons, although such uses Possible uses across from the arts complex.

as an art gallery or cafe might do well near the Museum and Library. Another potential use for the residential building shown across from the library might be as a home for the Chamber of Commerce. The residential buildings nearer the center of the downtown should probably have commercial uses on the ground floor to benefit from the proximity of other daytime and nighttime activities. An alternate use for the building on the southeast corner of Dargan and Cheves would be a small hotel. This is an excellent location for such a use, as it could serve downtown business, the arts complex, and the hospital districts to the east on Cheves and to the south on Dargan. As more of the downtown is developed, it is likely that the area could support a second quality hotel.

Residential or Hotel

Existing Church

Drive-In Restaurant

On the southern portion of the same block there is an existing drive-in restaurant. The restaurant is behind another building that is currently a loan office. If this building could be acquired, a new indoor portion of the drive-in restaurant could be built along Dargan Street, with the drive-in portion behind.

G. New Office/Mixed Use

New office uses are rendered on the plan on page 10 outlined in blue. The three potential sites shown on the plan (in addition to the medical office building discussed in IIB) are shown in close-up on the next page. These sites are conceptual; there could be other sites that are suitable in addition to these. These office buildings have been located primarily where they are near existing office buildings, or where surrounding uses have sufficient volume to accommodate the larger footprint of an office building.

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O1 O2

O3

Three potential locations for additional office buildings are shown above. They are labelled for reference.

Office building site O1 is across from the City-County Complex on Irby Street at the intersection with NB Baroody. If another tall office building were to be located in the downtown, this would be a logical site for it, because it would complement the existing building across the street. The City-County complex is currently at capacity and additional office space has been located off-site. Because of this, the City and/or County might be a possible tenant for some of the space in a new office building.

One of the uses discussed for the former Post Office This distinguished building, formerly the US Post Office,(shown in the plan with purple stripes, at the would be an ideal location for City Hall.

northwest corner of Irby and Evans, and in the photo at right) is for a new City Hall. The building would be ideal for this use, as it is one of the most architecturally distinguished buildings in the downtown. This was also recommended by the first master plan, and we confirm that recommendation.

There have also been discussions about the possibility of moving the courtroom functions, now in the City-County Complex, to another building. In the long term, it might be possible to locate these facilities south of the proposed office building, creating an expanded City-County complex on the west side of Irby Street. The possible configuration of new uses, shown above left, would include a court building in the middle, another office building of similar height and style as the one at the top of the drawing, and a plaza at street level between the two.

Office site O2 is essentially an expansion of the Tech Center complex. The plan shown replaces the existing single-story building that is set back from Evans Street with two new buildings of similar height to the existing multistory building.

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Adding two new buildings creates the opportunity to add a street-level plaza along Evans Street. This gives the complex more of a campus feel and a higher quality image.

Office site O3 is located on Irby Street immediately south of Palmetto. This is an excellent site for a mid-rise office use because the buildings adjacent to it, including the old Library building and a church, are buildings of considerable presence. In general, a change from the strip-type uses to more attractive mid-rise office buildings seems an appropriate transition for Irby within the Redevelopment Area. Irby, because it serves as a vehicular gateway for the downtown and carries a moderate to large volume of traffic, is less suitable for medium-density residential (shown in quieter locations), but ideal for the higher profile and better access required for office uses.

The Florence Museum and Other Uses

Another potential “jewel in the crown” of the Dargan Street Arts & Cultural district would be the Florence Museum. The museum is currently located in a residential area to the south and west of the downtown. It is located in an

the Doctors Bruce and Lee

The concept for the new library shown at left

theme of the original museum building. entry is shown to the left of

The recommended site for the new Florence Museum is seen in the photo below, with

Library in the background.

maintains the Art Deco

A glass

the building, and a sculpture garden in the foreground.

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extremely attractive Art Deco residence and grounds, but has the disadvantage of being hard to find. This plan recommends that the museum consider relocating next to the Doctors Bruce and Lee Library.

A sketch of the concept for the new museum is shown on the preceding page. It includes 20,000 s.f. on two levels, plus a glassed-in entryway/atrium/gallery/ restaurant, with views and access to a sculpture garden adjacent to it. The site plan is shown at right.

There are three buildings shown on the plan in striped purple. These are buildings for which a specific use has not been decided. The first is the former U.S. Post Office discussed previously in this section, and recommended as the new City Hall. The second is the former McCleneghan High School building located on the southeast corner of Dargan and Elm, across from the Doctors Bruce and Lee Library. This is an attractive building on the outside. It was renovated for senior housing by the Carolina Hospital system, and was well received in its time, but changes in needs and expectations for senior housing forced its closing some years ago. At the present time the rear of this building is being used as a health club. This use is successful and should probably remain. New uses suggested for this building include artists’ studio or studio/living space, or use as an art-related magnet school. Either suggested use would fit well with the theme of the Arts & Cultural District.

Site plan for the Florence Museum, above.

The other building for which a use needs to be found The old library building has significant architecture, and

is the former library building on the northwest corner needs a new use that will preserve its integrity.

of Pine and Irby. The original portion of this building is architecturally significant and should be preserved. Uses suggested have primarily been as office space for a public or nonprofit use.

H. Open Space Recommendations

Streetscape recommendations are included in the Design Guidelines, and will not be repeated here, except to say that streetscape improvements are an essential element of downtown revitalization that should be ready to be designed and ready for implementation as new development is under construction. The public open space near the Arts complex is discussed in Section IIC. Other specific open space recommendations illustrated in the plan include an interior block

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pedestrian pathway system and two “vest-pocket” parks, one on the south side of Evans Street between two buildings, and one on the east side of Dargan in front of the State Mental Health building.

Interior Block Pedestrian Pathways

There is an opportunity to create a pedestrian pathway system from the downtown at Evans Street southward between Dargan and Irby Street all the way to the Drs. Bruce and Lee Library at the south end of the Arts & Cultural District. This is shown in detail at right. The purpose of the pathway is to provide egress from parking (usually on the interior of the block) to the street, and to provide an alternative pathway through the downtown and the Arts & Cultural District where traffic will be slower. The intention will be to make this an attractive, well-lit, and interesting pathway that can be discovered over time. It will provide access to some of the primary attractions and open spaces within the Historic and Arts & Cultural districts, including the arts complex, the Evans Street commercial area, the Poynor School, the Museum, and the Library.

Evans and Dargan Streets Parks

The plan for this area is shown in detail below left. This is a location that is currently vacant because of the demolition of a building. The site would be ideal for access between parking on the interior of the block and Evans Street. There is another vacant building on

Vest pocket park between two buildings on the south side of Evans (above left), and urban park with pavilion on Dargan (above right).

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the east side of this park, a former snack bar with an attractive Federal-style facade. The building is in poor condition, but it might be possible to save the facade and construct a small building behind it that could become a new snack bar or takeout cafe. The plan shows tables along the interior of the park, brick paving to match or complement the streetscape, and landscaping. Part of the design for this park might include a wall mural on the east facade, in keeping with the tradition of building murals elsewhere in the downtown.

The other park shown in the plan is in front of the State Mental Health building on the southeast corner of Evans and Dargan Street. This corner is now quite unattractive because although the architecture of the building is interesting, it is set back too far from the street, and parking extends to the sidewalk on both sides of the building. To address these problems, the plan shows a new park in the front of the building. Parking is moved back even with the building, and a screen wall would be constructed in front of it. This creates a generous space with room for a pavilion serving light meals, tables under high-canopy trees, and a fountain. The entrance to the building can be gated with wrought iron gates between the screen walls if this is necessary, and open during the day.

The State Mental Health building as it exists today. The building, though interesting, is set back too far, and parking extends to the sidewalks, creating a very unattractive edge to the street. Note the dumpster placed next to the sidewalk. Proposed improvements would move the parking back to the edge of the building and create an attractive open space for the downtown.

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Arts Complex concept drawing.

Evans Street concept drawing.

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III. Central Mixed Use Project ⎯ Conceptual Building Program and Financial Feasibility Assessment

Introduction

This section conveys Conceptual Building Programs for four key projects in downtown Florence, as well as case studies associated with a fifth. Each Building Program is accompanied by a financial model that depicts potential operational performance, order of magnitude capital costs for construction, supportable debt and equity, and other financial characteristics of the proposed projects.

Medical/Professional Component

A primary downtown development site is a privately owned 3.25-acre parcel bounded by Cheves on the south, Irby on the west, Dargan on the east, and the rear of the commercial buildings that face Evans. This site (denoted as Site 1 on the Master Plan) can accommodate significant development, and the consulting team believes it should be held to “highest and best use” standards to the greatest extent possible. It is understood that there is a private project proposed for the site, and the Conceptual Building Program described herein takes that component into account. A larger project is suggested, which the team believes more fully maximizes the potential for the site, both in the context of return on investment to the private sector, and as it pertains to overarching downtown revitalization goals. The Conceptual Building Program contains four primary components: a medical/professional building, a mixed use building that contains both residential and commercial uses and parking supply. These components are further discussed below.

The strong and growing healthcare industry in Florence has proved the basis for a private development project focused on providing additional space for doctors and other medical professionals. The project developers envision approximately 90,000 square feet of net usable space put to this purpose. At four levels, this project will use about 40% of available site/land area. This space would be programmed with a combination of office, lab, reception, administrative, and other uses.

The Conceptual Building Program envisions this building oriented toward Irby, with activated first floor space accommodating pharmacy, insurance, medical retail, or other use that is compatible with the overall use/purpose of this portion of the overall project. This additional space, and other non-leasable space (halls, closets, public areas, equipment rooms, etc.) bringing the estimated gross building area to 100,000 square feet.

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The team views a medical/professional building in this location as a positive development for downtown Florence in that it will attract many people each day who may also eat in local restaurants, shop, and otherwise contribute to the pedestrian environment during the daytime. It will also make a significant contribution to the tax base (particularly important when taking Tax Increment Financing potential into account), and can also contribute to the attractiveness of the built environment in downtown Florence. Development within the Design Guidelines/Zoning Overlay District context will further ensure that this project fits in with the future vision for downtown.

As the Medical/Professional component of the project is likely to be an owner-occupied space, financial feasibility is considered a neutral in terms of this analysis. Therefore, the tables that follow pertain to the Mixed Use/Residential component only. For purposes of capital cost comparisons and calculation of overall economic and fiscal impacts, it is projected that the Medical/Professional component of this project would require between $10 million and $12 million to develop.

Mixed Use/Residential Component

The Conceptual Building Program for Site 1 incorporates a significant development component on the eastern portion, facing onto Dargan. This part of the project is envisioned to include approximately 20,000 square feet of retail/ restaurant/commercial space on the ground floor, and approximately 60 to 70 condominiums on the upper three floors for a total of approximately 100,000 square feet of gross building area. See Table 1.

Table 1 Downtown Florence

Mixed Use Building Assumptions Commercial Space Costs Square footage 20,000 Building and site improvements $100 Soft costs $45 Total per SF costs $145 Total Costs $2,900,000 Rent Rate NNN $17

Condominiums # of units 60 Building and site improvements $130,000 Soft costs $40,000 Total per unit costs $170,000 Condos average unit sales price $220,000 Total Sales Revenue $13,200,000

Source: Hunter Interests Inc.

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The same health industry/regional hub market dynamic that is driving the medical/professional building is also a dynamic that we believe can support higher end multifamily condo development in downtown Florence. The close proximity of two major (and growing) hospital complexes, coupled with the changing environment in downtown Florence (new cultural and arts facilities, emergence of restaurants and entertainment venue, implementation of design guidelines, historic district designation, etc.) and a steady population growth curve, are all positives that make this project component market supportable in our view.

The residential building program assumes an average price per condominium unit of $220,000, although individual unit prices could range from $185,000 to $260,000. Total development costs for the condominiums are estimated to be approximately $10.2 million. Based on total projected sales revenue of $13.2 million minus development costs, finance/sales costs of $1.5 million, developer’s equity of $2.6 million, and required return on equity of $1.3 million, residual land value is calculated at approximately $195,000. The residual land value is an estimate of the amount that the developer could afford to pay for land, and meet their pro forma requirement for return on equity ⎯ it should not be construed as a fair market appraisal of the land. See Table 2.

Table 2 Downtown Florence Condominium Financial Projections

Total Return Required Required Development & Residual

Development Finance/ Developer's Return on Finance Cost Plus Sales Price Total Sales Land Costs Sales Costs Equity @ 25% Equity @ 50% Return on Equity per Unit Revenue Value

$10,200,000 $1,530,000 $2,550,000 $1,275,000 $13,005,000 $220,000 $13,200,000 $195,000 Source: Hunter Interests Inc.

Cash flow from the 20,000-square-foot commercial component assumes a triple-net leasing arrangement where the tenant is responsible for all expenses associated with the leased space. Total development costs for the commercial component are estimated to be approximately $2.9 million. Assuming a 7% conventional loan and a term of 30 years, the supportable debt on the project is estimated at approximately $2.9 million. Based on annual cash flow after debt service, the project could generate a minimum of $135,200 of private investment capital with actual equity contributions likely to be much greater. Based on a required developer return of 17%, the residual land value is calculated to be an estimated $126,486. Combined with the residual land value of $195,000 for the residential component, total residual land value equals approximately $321,486. See Tables 3, 4, and 5.

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Table 3 Downtown Florence Mixed Use Concept Commercial Component 10-Year Pro Forma Cash Flow

Net Operating Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenues: GBA, Commercial 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Average Occupancy 60% 70% 80% 95% 95% 95% 95% 95% 95% 95% Occupied Retail Space (RSF) 12,000 14,000 16,000 19,000 19,000 19,000 19,000 19,000 19,000 19,000 Rental Rate NNN $17.00 $17.43 $17.86 $18.31 $18.76 $19.23 $19.71 $20.21 $20.71 $21.23 Annual Total Revenue $204,000 $243,950 $285,770 $347,836 $356,532 $365,445 $374,581 $383,945 $393,544 $403,383

Expenses Unoccupied Space 8,000 6,000 4,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 Operating Expenses per SF $5.00 $5.13 $5.25 $5.38 $5.52 $5.66 $5.80 $5.94 $6.09 $6.24 Replacement Reserve $4,080 $4,879 $5,715 $6,957 $7,131 $7,309 $7,492 $7,679 $7,871 $8,068 Operating Expenses $44,080 $35,629 $26,728 $12,341 $12,650 $12,966 $13,290 $13,622 $13,963 $14,312

Net Operating Income Total Annual Revenues $159,920 $208,321 $259,042 $335,495 $343,882 $352,479 $361,291 $370,323 $379,581 $389,071 Total Annual Expenses $44,080 $35,629 $26,728 $12,341 $12,650 $12,966 $13,290 $13,622 $13,963 $14,312

Net Operating Income $115,840 $172,692 $232,314 $323,153 $331,232 $339,513 $348,001 $356,701 $365,618 $374,759 Source: Hunter Interests Inc.

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Table 4 Downtown Florence Mixed-Use Concept Commercial Component Supportable Debt/Equity

Project Cash Flow Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

NOI Commercial $115,840 $172,692 $232,314 $323,153 $331,232 $339,513 $348,001 $356,701 $365,618 $374,759 Annual Debt Service $230,824 $230,824 $230,824 $230,824 $230,824 $230,824 $230,824 $230,824 $230,824 $230,824

Annual Cash Flow -$114,984 -$58,132 $1,490 $92,330 $100,408 $108,689 $117,177 $125,877 $134,795 $143,935

Supportable Funds Supportable Equity: Required Developer Return 17% Supportable Equity $135,272

Supportable Debt: NOI YEAR 4 $323,153 Debt Coverage Ratio 1.4 Debt Service $230,824 Interest Rate 7% Loan Term 30 Supportable Debt $2,891,214

Total Supportable Funds Minimum Equity1 $135,272 4% Supportable Debt2 $2,891,214 96%

Total Supportable Funds $3,026,486 100% 1 The financial model employed in this table solves for a minimum equity requirement based on cash flow after supportable debt service. The actual financing package

will likely include significantly greater developer equity which may be structured in the form of loaned capital equal to as much as 30% of the debt required. 2 The financial model employed in this table uses conventional debt financing. The actual financing package would likely use a combination of short term construction

loans, low-interest industrial or economic development loans, and debt that could be structured at more favorable terms within the 30-year span. Source: Hunter Interests Inc.

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Table 5 Downtown Florence Mixed Use Capital Costs

Building Hard Costs Supportable Funds Gross Building Area 20,000 Minimum Equity $135,272 Hard Cost Per Square Foot $100 Conventional Debt $2,891,214 Soft Cost Per Square Foot $45 Total Supportable Funds $3,026,486

Total Development Costs $2,900,000 Project Costs $2,900,000

Residual Land Value $126,486

Condo Residences Total Development Costs $10,200,000 Residual Land Value $195,000

Total Residual Land Value, Commercial Space, Condominiums $321,486 Source: Hunter Interest Inc.

Parking Discussion

The consulting team is preparing an overall parking supply solution for the downtown as part of the Phase 2 work program. However, a brief discussion of parking as it pertains to the mixed use projects on Site 1 is warranted. There are indeed various alternatives to be considered, and this section suggests two that might fit into the overall downtown plan.

The demand for parking created by the development of both a 100,000 square foot building focused on medical/professional offices, as well as a 100,000 square foot building that includes commercial space and residential units, may vary depending upon the final mix of uses. However, for purposes of this study Hunter Interests has estimated that the buildings themselves on site will generate the need for approximately 200 spaces−mostly for use in the daytime. Additional demand from future downtown projects is anticipated to warrant an additional 200 spaces. Some of this demand will be focused on daytime needs, while other aspects will be related to evening restaurant and entertainment uses. The Performing Arts Center and Little Theater will have parking needs primarily in the evening, and an overall shared parking solution for the downtown is being pursued. These cultural attractions may, together, require about 500 spaces to accommodate patrons.

Parking Option 1 ⎯ One option for solving the parking supply issue on Site 1 while contributing to the overall solution for downtown is a combination of one below-grade parking deck, coupled with some surface and street parking. Utilizing a good portion of the site for the underground deck, it is possible to

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develop approximately 375 spaces. In addition, there is room for approximately 150 surface spaces, and approximately 50 on-street spaces along the new connections proposed in the master plan. Thus about 575 spaces, enough to accommodate all day and evening activities assuming a shared parking arrangement, are achievable on Site 1 alone. The developers of this property estimate that their project will require approximately 125 spaces for primarily daytime use, leaving 450 spaces for other visitors, residents, and the like.

While underground parking would add some costs to the overall development project, Hunter Interests believes the long-term benefit to downtown Florence, as well as the overall financial viability of the project, warrant a close examination of this option. It is estimated that the underground deck would cost a total of $6.5 million. These capital costs may be shared or borne by the public sector through the use of Tax Increment Bonds (Self-Financing Bonds) such as is planned via the establishment of the Redevelopment Area in Phase 1 of the downtown revitalization work program, and subsequent actions now being evaluated. A buyback or leaseback scenario could be part of the public/private partnership, as could inclusion of a parking solution for the area behind those buildings fronting on Evans.

Parking Option 2 ⎯ A second option would be to incorporate above ground structured parking into the development project, coupled with some on-street parking, to provide the necessary spaces. The tradeoffs are related to visual impacts (although design could incorporate buildings that essentially wrap the garages to minimize negative views), capacity (estimated total spaces achievable under this scenario would be approximately 250, leaving a surplus of only approximately 75 spaces when the other daytime and residential uses are factored in), and lesser impact on the overall parking solution for downtown. On the positive side, costs for structured parking would be less (about $3 million given lower count (250 as opposed to 375) and lower unit cost (approximately $12,000 per space as opposed to $18,000 per space), but it is less likely that the public sector would be inclined to make a substantial investment of funds into this primarily private project.

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IV. Interior Evans/Mixed Use Project ⎯ Conceptual Building Program and Financial Feasibility Assessment

This section summarizes findings and recommendations regarding the enhancement of a portion of downtown Florence, specifically the area associated with the rear of buildings fronting on the south side of Evans Street, and the surface parking area that connects with Site 1 of the Phase 2 Master Plan. The Plan depicts a variety of improvements that are summarized below, and approximate capital costs have been estimated.

Removal of damaged security screens — It is imperative that the damaged security screening on the rear of Evans Street buildings be removed in order to more accurately gauge the further redevelopment needs of this area, and to effect an important visual enhancement. Some immediate repair work will also be required. Estimated cost: $10,000−$15,000.

Installation of new lighting in parking area and new east/west connector street — As part of an overall security enhancement effort in this area, and as part of an overall beautification effort, appropriate street lighting should be installed. In addition to providing this new lighting in the parking area immediately behind the Evans Street buildings, the Illustrative Master Site Plan suggested that a new street be constructed to link Dargan and Irby on an axis running behind the Evans Street block. Estimated cost: $50,000−$100,000.

New connector street between Dargan and Irby — Construction of the street referenced above including curb, gutter, and sidewalks. This is an important street in the overall effort to open up Site 1 to both vehicular and pedestrian flows. Costs could vary widely depending on width, surfacing materials, etc. Estimated cost: $250,000−$750,000.

Pocket Park (in cut-through being purchased by the City) — This park could include a variety of components including, but not limited to, public art, a fountain, benches, planters, trash receptacles, lighting, etc. The cost of the park could vary widely depending on the quality and extent of special paving, furniture, art, etc. Estimated cost: $200,000–$300,000.

Resurface and stripe parking area — A basic but much needed improvement is the resurfacing of the parking area immediately behind the Evans Street buildings. Estimated cost: $50,000−$75,000.

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Landscaping — Landscaping of various kinds including trees, shrubs, planters, etc., could greatly enhance the subject area. Again, the cost could vary widely depending on amount, type, and quality. Estimated cost: $200,000−$250,0000.

Painting/rear façade improvements — Until the damaged security fencing is removed, the extent of work required to substantially improve the physical state of the Evans Street buildings will be unclear. It is anticipated that some relatively low cost cosmetic work (painting) can be accomplished, although there will also be more involved structural/building issues to address. Brick walls, windows, doors, etc., may all require work, which in turn will impact cost. Funds for this work might be allocated through a façade improvement grant fund, direct investment by the City of Florence/FDDC, etc. Estimated cost: $500,000−$1,000,000.

Soft costs/other — In order to implement the improvements suggested in this summary, various soft costs will be expended in the form of design and traffic engineering work, environmental assessment, civil engineering, etc. Other unforeseen costs may arise, and other opportunities that emerge may also benefit from funding. For purposes of this summary, a range of costs to cover such contingencies is set forth. Estimated cost: $100,000−$200,000.

The total capital costs for full renovation of the area behind the south side of Evans commercial band, including a new street running a block in length from Dargan to Irby, and various aesthetic improvements, would fall somewhere in the range of $1.36 million to $2.69 million. Obviously, various decisions will influence the final cost, redevelopment schedule, etc., but a dramatic transformation of this important area of downtown Florence can be accomplished through this effort. It is anticipated that funding would come from some combination of philanthropic and public sources.

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V. The Florence Little Theater ⎯ Conceptual Building Program and Financial Feasibility Assessment

The Florence Little Theater, established in 1923, has been a fixture on the City’s cultural entertainment scene for more than 82 years. It has hosted thousand of performances and served as a proud reflection of the community’s talent, spirit of enjoyment, diversity, and the importance ascribed by Florentines to the performing arts. The potential for a move from its suburban location into the heart of downtown is treated in various ways within this Phase 2 report, and represents both an important catalyst project for the revitalization effort as well as an opportunity for this venerable institution to raise its profile and beneficial impact in Florence as a whole.

The current 37 year old facility is approximately 11,000 square feet in size, and offers seating for 395, along with lobby, back-of-the-house spaces, dressing rooms, storage areas, etc. While the seating capacity and configuration is generally deemed adequate, the other support spaces are not. Some storage and work areas are forcibly accommodated in outdoor trailers and other temporary structures. There are also limitations imposed by stage size, various technical elements, and other factors such as an aging building structure. Nonetheless, the Florence Little Theater has continuously put on high-quality performances and earned a rightful place of honor in the hearts of Florence’s arts community, as well as the patron who only visits occasionally, but nonetheless benefits from the intimate yet vibrant environment.

The Florence Little Theater’s management and Board of Directors have been contemplating an expansion/relocation strategy for some time. While the specifics of that strategy have continued to evolve, essential elements have remained in force: maintain a new or refurbished facility with approximately the same number of seats, maintain its role as a community playhouse that closely involves the citizenry, and maintain an operation that remains self-supporting as the theater is today. The changes are seen to come in improvements to the support and staging areas technological capabilities, and the building structure itself. Thus, the Conceptual Building Program for the Florence Little Theater is basically an enhanced version of the existing facility; one that can even better serve the community for many decades to come.

It is with this long-term view of the future that the Florence Little Theater contemplates a move to downtown. Today, downtown Florence does not offer an especially inviting environment for a new theater venue, but that picture is changing rapidly in the face of policy makers committed to downtown revitalization and the phased strategy which is summarized in this report. As

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various catalyst projects and bold new programs converge in downtown Florence, a new era is dawning. The Florence Little Theater is poised to be on the cutting edge of this movement and stands to benefit from, and to benefit, a host of related development projects.

In terms of feasibility the move to downtown offers several benefits. These include, but are not limited to the following:

• An available location owned by the City near the heart of downtown, master planned to include future development of a companion facility⎯The Florence Center for the Arts.

• High visibility and incorporation into the City’s efforts to redevelop and market downtown including significant investment in capital improvements, special event programs, attraction of additional catalyst projects, etc.

• Proximity to what eventually will be a destination cluster of restaurants, entertainment venue, specialty retail shops, etc. in the historic district. These businesses will be an important amenity for theater goers before and after performances.

• Demonstrated support by the Drs. Bruce and Lee Foundation that has agreed to fund planning and design studies for a downtown location.

There are challenges with a downtown location as well, including ensuring adequate parking and good access, outdoor space sharing and programmatic balance with the Florence Center for the Arts, and overcoming both the perception and reality of safety in the area at this time. The consulting team is confident that these issues can be resolved, and even turned to the Little Theater’s advantage (e.g. co-sponsored events with the Florence Center for the Arts in public plazas and/or amphitheater).

In terms of capital requirements, Florence Little Theater officials estimate that a new facility would cost approximately $5 million. The capital campaign strategy suggests that these funds can be raised within a reasonable period of time.

In terms of operational/financial feasibility, the Florence Little Theater has demonstrated its ability to function “in the black” over a period of many years. There is no reason to suggest the Little Theater could not continue in its self-sustaining operational mode. In concluding then, Hunter Interests Inc. finds the Florence Little Theater Development and Relocation Plans to be essentially feasible based on the criteria summarized herein.

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VI. Florence Center for the Arts ⎯ Conceptual Building Program and Financial Feasibility Assessment

Introduction

The following building program for the Florence Performing Arts Center is generally consistent with the recommendations made in the November 2003 study conducted by ArtsMarket, titled “Florence Center for the Arts, Feasibility, Findings, and Recommendations.” Additional functional areas such as the lobby and restroom have been included in the building program to more fully dimension the facility. This report projects certain square footage space allowances that may ultimately prove larger or smaller, or be completely reprogrammed in the future, but nonetheless comprise a valid model on which capital cost estimation and various financial analyses may be conducted.

Interior Space / Seating Summary

• Main Performance Hall 1,200 seats 12,000 square feet @ 10s.f./seat 5,000-square-foot stage 17,000 square feet total

• Small Performance Hall 250 seats 2,500 square feet @ 10s.f./seat 1,000-square-foot stage 3,500 square feet total

• Lobby/Foyer — Prefunction/Intermission Space A very attractive foyer area could enhance the theater experience in many ways, and contribute to greater revenue from concessions before, during, and after the performance. This area could also potentially be rented out as space for receptions, small meetings, etc., and/or be a valued public space that encourages visitor connections. 2,500 square feet

• Art Gallery Space An area dedicated to exhibiting faculty and student work, as well as touring shows, could be located off of the lobby. 1,000 square feet

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• Educational Space An educational component in the PAC, which is envisioned as an enhancement to other arts education facilities in the area, was strongly recommended in the ArtsMarket study. 2,000 square feet

• Administrative / Box Office For the purposes of this analysis, administrative and box office functions are envisioned as being physically linked, as they often are in other facilities. 1,500 square feet

• Rehearsal/Warm-Up Area This area would accommodate approximately 40 performers. 1,000 square feet

• Dressing Rooms Dressing rooms would likely be located off of the rehearsal area. 1,000 square feet

• Storage/Flex Space This general category covers space for instruments, maintenance equipment and supplies, props, costumes, and other materials. Square footage is aggregate, and would actually be divided up into a number of spaces, closets, etc. 1,000 square feet

• Restrooms These include backstage facilities, but not those associated with dressing rooms. 6 @ 500 1,200 square feet

• Concession Area Interior concessions source. 600 square feet

• Donor/Sponsor Room Cited repeatedly as an important space for new facilities, this room should be well appointed and easily catered. This space could also be rented for various purposes, but would primarily be dedicated to rewarding significant donations, and to ongoing philanthropic support. 800 square feet

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• Mechanical HVAC and other systems. 1,200 square feet.

• Loading Area(s) The loading areas would have direct access to the stages. 1,500 square feet

Total Gross Building Area — 39,165 square feet. See Table 6.

Table 6 Florence Performing Arts Center

Conceptual Building Program Net Gross

Space Square Feet Square Feet

Main Performance Hall 17,000 17,850

Small Performance Hall 3,500 3,675

Lobby/Foyer 4,000 4,200

Art Exhibition Space 1,000 1,050

Arts Education Space 2,000 2,100

Administration/Box Office 1,500 1,575

Rehearsal/Warm-up Area 1,000 1,050

Dressing Rooms 1,000 1,050

Storage/Flex Space 1,000 1,050

Restrooms/Service 1,200 1,260

Concession Area 600 630

Donor/Sponsor Room 800 840

Mechanical 1,200 1,260

Loading 1,500 1,575

Total Net Usable Space 37,300

Gross Building Area 39,165 Source: Hunter Interests Inc.

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Capital Cost Estimates

The capital cost estimates included in this section are based on unit costs for new construction of a facility of the scale and concept illustrated herein, to project likely total development cost as of 2005. Capital costs are broken out as hard and soft costs, and the latter category is broken out in further detail. Hunter Interests’ cost estimates are based on a combination of current development costs in the region and experience with similar projects elsewhere.

The total capital cost of construction and development of the proposed performing arts center is a function of hard and soft costs. Typically, hard costs include those for materials, labor, site preparation, and certain elements that are intrinsic to outfitting such as plumbing, wiring, etc. Soft costs are those associated with design, engineering, acoustic, and other professional fees, furniture, fixtures, etc. These hard and soft costs are usually combined with a pre-opening budget, development contingency fund, and other costs to estimate a complete project development budget.

The level of quality in construction materials, fixtures, and equipment can dramatically influence the cost of a large development project such as a performing arts center, as can the architectural design (both the process and the final form), the level of technology with which the facility is outfitted, and other variables. For this capital cost estimate, we have projected a “hard cost” of $200 per square foot (2005 dollars), which is on a par with high quality construction of other well regarded concert halls, class A office space, full-service hotels, and the like. This unit cost assumes a high grade of construction materials, basic fixtures, and mechanical infrastructure, but could be exceeded if materials such as marble, granite, special metal alloys, special glass, or other exotic materials are used. The estimated hard cost of construction for the 39,165-square-foot facility outlined in the Conceptual Building Program is $7,833,000 in 2005 dollars.

Soft costs are broken out in the Development Budget Summary to allow for further understanding of the different cost bases involved, but in their aggregate form, these costs add up to an additional $86 per square foot. These additional, but necessary, costs equal $3,368,190, for a total projected development cost of $11,201,190 in 2005 dollars. See Table 7.

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Table 7 Florence Center for the Arts

Development Budget Summary Construction Budget @ $200/sq.ft. $7,833,000

Design 12% $939,960

Development Contingency 5% $391,650

Acoustic/Technical Add-ons 5% $391,650

Furnishings, Fixtures & Equipment 10% $783,300

Soils Survey, Civil 3% $234,990

Professional Fees 2% $156,660

Pre-opening Budget 5% $391,650

Taxes and Insurance 1% $78,330

Financing Costs 0% $0

Land Cost 0% $0

Sub-Total, Added Costs $3,368,190

Total Projected Cost (2005 Dollars) $11,201,190


Financial Feasibility Assessment

Hunter Interests prepared a 10-year cash flow pro forma generally based on projections in the “Budget and Operations” section of the 2003 ArtsMarket feasibility study. Deviations from the ArtsMarket study include a projection of 50 performances per year at an average ticket price of $10, for all venue combined. Start-up costs have also been factored into the first four years of operation and they may include such items as extraordinary one-time costs for marketing, signage, pre-opening budget carry over, unexpected finishing costs, etc. We subjectively estimate these costs at $200,000 in the first year, $100,000 in the second, $50,000 in the third, and $25,000 in the fourth year of operation. The average 60% capacity is consistent with the ArtsMarket study, as are most other assumptions.

The results of the cash flow analysis performed for the Florence Center for the Arts indicate that the facility may operate at a loss in excess of $400,000 annually. This is typical for a facility of this type and coverage of the gap simply needs to be factored into development planning. Coverage of the operating deficit could be accomplished by accumulating a large operating endowment, application of self-financing bond funds (resulting from the proposed TIF district), access to special tax revenue streams (i.e., future growth in hotel tax), or some combination thereof.

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Table 8 Florence Performing Arts Center Operating Cash Flow

Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Performances 50 50 50 50 50 50 50 50 50 50 Seats in Hall 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 1,450 Seat Inventory 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 72,500 Average Price $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 Event Capacity 60% 60% 60% 60% 60% 60% 60% 60% 60% 60% Outside User Perfs. In Hall 100 100 100 100 100 100 100 100 100 100 Average Rental $500 $500 $500 $500 $500 $600 $600 $600 $600 $600 Earned Revenue Ticket Sales $435,000 $435,000 $435,000 $435,000 $435,000 $435,000 $435,000 $435,000 $435,000 $435,000 Event Rentals $50,000 $50,000 $50,000 $50,000 $50,000 $60,000 $60,000 $60,000 $60,000 $60,000 Fees (Ed., Outreach, Runouts) $50,000 $51,250 $52,531 $53,845 $55,191 $56,570 $57,985 $59,434 $60,920 $62,443 Concessions, Catering, Retail-Net $62,936 $64,509 $66,122 $67,775 $69,470 $71,206 $72,986 $74,811 $76,681 $78,598 Sub-Total $597,936 $600,759 $603,653 $606,620 $609,660 $622,777 $625,971 $629,245 $632,602 $636,042

Contributed Revenue Memberships and Sponsorships $185,000 $185,000 $185,000 $185,000 $185,000 $185,000 $185,000 $185,000 $185,000 $185,000 Education Revenue $90,000 $90,900 $91,809 $92,727 $93,654 $94,591 $95,537 $96,492 $97,457 $98,432 Sub-Total $275,000 $275,900 $276,809 $277,727 $278,654 $279,591 $280,537 $281,492 $282,457 $283,432

Total Gross Revenue $872,936 $876,659 $880,462 $884,347 $888,315 $902,368 $906,508 $910,738 $915,059 $919,473

Expenses Program $391,500 $399,330 $407,317 $415,463 $423,772 $432,248 $440,893 $449,710 $458,705 $467,879 Education $81,000 $82,620 $84,272 $85,958 $87,677 $89,431 $91,219 $93,044 $94,904 $96,802 Marketing $20,000 $20,400 $20,808 $21,224 $21,649 $22,082 $22,523 $22,974 $23,433 $23,902 Stage, Tech, Building $125,500 $128,010 $130,570 $133,182 $135,845 $138,562 $141,333 $144,160 $147,043 $149,984 Fxed expenses $200,000 $204,000 $208,080 $212,242 $216,486 $220,816 $225,232 $229,737 $234,332 $239,019 Fundraising $50,000 $51,000 $52,020 $53,060 $54,122 $55,204 $56,308 $57,434 $58,583 $59,755 Administration $300,000 $306,000 $312,120 $318,362 $324,730 $331,224 $337,849 $344,606 $351,498 $358,528 Replacement Reserve $26,188 $26,712 $27,246 $27,791 $28,347 $28,914 $29,492 $30,082 $30,684 $31,297 Start up Costs $200,000 $100,000 $50,000 $25,000 $0 $0 $0 $0 $0 $0 Total Expenses $1,394,188 $1,218,072 $1,242,433 $1,267,282 $1,292,628 $1,318,480 $1,344,850 $1,371,747 $1,399,182 $1,427,165

NET OPERATING INCOME

Total Annual Revenues $872,936 $876,659 $880,462 $884,347 $888,315 $902,368 $906,508 $910,738 $915,059 $919,473 Total Annual Expenses $1,394,188 $1,218,072 $1,242,433 $1,267,282 $1,292,628 $1,318,480 $1,344,850 $1,371,747 $1,399,182 $1,427,165

NET OPERATING INCOME -$521,252 -$341,412 -$361,971 -$382,935 -$404,313 -$416,113 -$438,342 -$461,009 -$484,123 -$507,692 Source: Hunter Interests Inc.

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Table 9 Florence Performing Arts Center Supportable Debt/Equity


Total Net Operating Income -$521,252 -$341,412 -$361,971 -$382,935 -$404,313 -$416,113 -$438,342 -$461,009 -$484,123 -$507,692 Annual Debt Service -$273,525 -$273,525 -$273,525 -$273,525 -$273,525 -$273,525 -$273,525 -$273,525 -$273,525 -$273,525

Annual Cash Flow -$247,727 -$67,887 -$88,446 -$109,410 -$130,788 -$142,587 -$164,817 -$187,484 -$210,598 -$234,167

Supportable Funds Supportable Equity: Required Developer Return 17% Supportable Equity -$698,459

Supportable Debt: NOI YEAR 4 -$382,935 Debt Coverage Ratio 1.4 Debt Service -$273,525 Interest Rate 7% Loan Term 30 Supportable Debt -$3,426,074

Total Supportable Funds Minimum Equity1 -$698,459 17%

Supportable Debt2 -$3,426,074 83%

Total Supportable Funds -$4,124,533 100% 1 The financial model employed in this table solves for a minimum equity requirement based on cash flow after supportable debt service. The actual financing package will likely include significantly greater developer equity which may be structured in the form of loaned capital equal to as much as 30% of the debt required. 2 The financial model employed in this table uses conventional debt financing. The actual financing package would likely use a combination of short term construction loans, low-interest industrial or economic development loans, and debt that could be structured at more favorable terms within the 30-year span. Source: Hunter Interests Inc.

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VII. Restaurant/Entertainment Center Prototype ⎯ Conceptual Building Program and Financial Feasibility Assessment

Introduction

Restaurants, arts and entertainment venue, and specialty retail are at the heart of many successful downtown revitalization efforts. As commercial uses and traditional retail have moved out to shopping centers and malls, downtowns have increasingly become places where people want to live and recreate. The entertainment components of a downtown can create excitement, draw people, help define its character, and provide a theme for the city’s nightlife. A mix of dining opportunities is an integral element of a vital downtown area and one that can also become an entertainment destination.

In Florence, we envision this type of renaissance taking place, and there are various locations where restaurants and other synergistic businesses can locate. The combination of dining and live entertainment in a single setting can become a destination attraction and entertainment anchor in its own right, and essentially pave the way for other new restaurant and nightclub ventures. In this Conceptual Building Program, a sample concept is described in order to allow for financial analysis, and to suggest a possible project for a Florence entrepreneur to undertake. It is one for which we believe there is market support, and that could anchor the “restaurant row” envisioned for downtown.

Conceptual Building Program: Tropical/Caribbean or Beach-Themed Venue

Restaurants all have themes, even if they are inadvertent, but the type of cuisine, atmosphere, ambience, decorations, music, etc., all serve to define the places that we go to eat and be entertained. So-called “eatertainment” is a catch-word that speaks to the enjoyment of sharing a good meal with friends or family, and to the overall dining experience that we hope to enjoy. At the other end of the spectrum are places like the Olive Garden, Rain Forest Café, Outback Steakhouse, Ruby Tuesdays, TGI Fridays, and others that have become brands in and of themselves.

This Conceptual Building Program suggests that a restaurant/entertainment venue with either a Tropical/Caribbean or Beach theme may be quite successful in downtown Florence. The Caribbean, with its beautiful environment, distinctive musical themes, varied cuisine, and generally positive image makes good elements of a venue for Florence. Similarly, the Carolina beach areas are famous for their own style, music (beach music), seafood offerings, and generally active entertainment scene. The proximity of Florence to Myrtle Beach may make the connection to this theme stronger, but both offer opportunities for a venue to set itself apart from others that are located more toward I−95.

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We envision a themed restaurant and nightclub that is of sufficient size to accommodate 200 to 250 patrons seated, a bar area, a dance floor and bandstand, a banquet room, kitchen, restrooms and back-of-the-house functions. The gross building area should be between 7,000 and 8,000 square feet in order to provide adequate space for operations. The restaurant/nightclub should occupy existing ground floor space in downtown Florence, preferably in a highly visible location on Evans or Dargan Street.


Projected operational characteristics are subject to certain unknowns at this time. However, reasonable assumptions have been made founded on basic restaurant industry principles. Income is calculated on the basis of projected revenue per net usable square foot. The building program for the themed restaurant/nightclub assumes a gross building area of 7,500 square feet. Of this, space for kitchens, storage, etc., will reduce the revenue-generating space to about 6,000 square feet.

We estimate revenue per square foot to be $100 in the first year of operation, increasing by 1% per year in each subsequent year. Total annual revenue is projected to be approximately $600,000 in the first year. Operating expenses include cost of goods sold, payroll, utilities, insurance, supplies, repairs and maintenance, marketing, etc. Based on industry standards, these expenses are projected to be 80% of total revenues, or $498,000 in the first year of operation.

The results of the cash flow analysis performed for the themed restaurant/nightclub indicate that the enterprise can generate revenues in excess of costs to produce a positive net operating income (NOI). At stabilization in the fourth year, NOI is projected to be approximately $105,091. The project could also afford debt service and equity investment as well. Solving for minimum equity and maximum debt, it is estimated that the project could support in excess of $1 million. See Tables 10, 11, and 12.

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Table 10 Restaurant/Entertainment Venue Pro Forma Cash Flow

Net Operating Income Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Revenues Total Gross Building Area 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 Revenue Space 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 6,000 Revenue per Square Foot $100.00 $101.00 $102.01 $103.03 $104.06 $105.10 $106.15 $107.21 $108.29 $109.37 Annual Total Revenue $600,000 $606,000 $612,060 $618,181 $624,362 $630,606 $636,912 $643,281 $649,714 $656,211

Expenses Operating Expenses @ 80% $480,000 $484,800 $489,648 $494,544 $499,490 $504,485 $509,530 $514,625 $519,771 $524,969 Replacement Reserve @ 3% $18,000 $18,180 $18,362 $18,545 $18,731 $18,918 $19,107 $19,298 $19,491 $19,686 Expenses and Reserve $498,000 $502,980 $508,010 $513,090 $518,221 $523,403 $528,637 $533,923 $539,263 $544,655

Net Operating Income Total Annual Revenues $600,000 $606,000 $612,060 $618,181 $624,362 $630,606 $636,912 $643,281 $649,714 $656,211 Total Annual Expenses $498,000 $502,980 $508,010 $513,090 $518,221 $523,403 $528,637 $533,923 $539,263 $544,655


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Table 11 Restaurant/Entertainment Venue - Supportable Debt/Equity


Total Net Operating Income $102,000 $103,020 $104,050 $105,091 $106,142 $107,203 $108,275 $109,358 $110,451 $111,556 Annual Debt Service $75,065 $75,065 $75,065 $75,065 $75,065 $75,065 $75,065 $75,065 $75,065 $75,065

Annual Cash Flow $26,935 $27,955 $28,985 $30,026 $31,077 $32,138 $33,210 $34,293 $35,387 $36,491

Supportable Funds Supportable Equity: Required Developer Return 17% Supportable Equity $141,304

Supportable Debt: NOI YEAR 4 $105,091 Debt Coverage Ratio 1.4 Debt Service $75,065 Interest Rate 7% Loan Term 30 Supportable Debt $940,234

Total Supportable Funds Minimum Equity1 $141,304 13% Supportable Debt2 $940,234 87%

Total Supportable Funds $1,081,537 100% 1 The financial model employed in this table solves for a minimum equity requirement based on cash flow after supportable debt service. The actual financing package will likely include significantly greater developer equity which may be structured in the form of loaned capital equal to as much as 30% of the debt required. 2 The financial model employed in this table uses conventional debt financing. The actual financing package would likely use a combination of short term construction loans, low-interest industrial or economic development loans, and debt that could be structured at more favorable terms within the 30-year span. Source: Hunter Interests Inc.

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Table 12 Restaurant/Entertainment Venue - Capital Costs

Building Hard Costs Supportable Funds Gross Building Area 7,500 Minimum Equity $141,304 Hard Cost Per Square Foot $90 Conventional Debt $940,234 Soft Cost Per Square Foot $45 Total Supportable Funds $1,081,537

Total Development Costs $1,012,500 Project Costs $1,012,500

Residual Land Value $69,037 Source: Hunter Interest Inc.

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VIII. Business Incubator Conceptual Building Program and Financial Feasibility Assessment

Introduction

This section sets forth capital cost projections, as well as cash flow pro forma projections for a Business Incubator in Florence, South Carolina. Generally, business incubators provide opportunities for business start-ups that have potential to create wealth for entrepreneurs with limited capital and prospective owner/operators, as well as creating jobs, education, and skill sets for low- and moderate-income residents of a community. Business incubators typically offer affordable shared rental space, office facilities, administrative services, and technical assistance, thereby minimizing costly startup and equipment costs. In Florence, the Business Incubator could serve a population that might be displaced from a gentrifying downtown, and could further contribute to urban revitalization, economic development, and community empowerment.

Business incubators vary in size, funding, and focus, and the accompanying financial calculations reflect a generic program applicable to a wide variety of startup firms. A business incubator in Florence could house a variety of startup companies including technology/communications, restaurants (including catering, and food and beverage production), artists, not-for-profits, light manufacturing, consulting, service providers, educational institutions, and other entrepreneurial pursuits. Case studies of food and beverage incubators, a hybrid that Florence may wish to consider, are including at the end of this section.

The general approach would be for space to be provided as needed, and as appropriate based on a tenant’s ability to pay. For example, a start up requiring primarily a desk, phone, computer, etc., may only require 50 square feet or less, while a more elaborate venture may require 500 or 1,000 square feet. Thus, the smaller space would rent for $25 per month ($300 per year), while the larger space would rent for $250 per month to $500 per month.

The operational format of leasing space is suggested as an approach that will enable the Business Incubator to sustain itself. The City/FDDC could further subsidize or support tenants through the application of grant funding, provision of free or reduced price telephone and computer services, permitting of small block lease arrangements (partial weeks, week, partial month, month, bi-annual, annual, etc.).

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Conceptual Building Program

The Florence Downtown Development Corporation envisions a business incubator of approximately 30,000 square feet in a newly constructed building, and the accompanying pro forma projects a net leasable area of 25,000 s.f. The building could contain a variety of office and meeting spaces to address different startup needs. Other usable space could include commercial-grade kitchens, artist studio space, a commercial storefront, café, a museum/showcase area for a Multi-Cultural Center and/or other non-profit, and other specialized spaces as appropriate for the incubator’s tenants.

Capital Costs

Hunter Interests projected building costs based on new construction for a facility. Hard costs (materials such as steel, concrete, and other construction materials, etc.) are calculated using $100 per s.f. Soft costs (financing, architectural and design services, permitting, etc.) are about 30% of hard costs, or $28 per s.f. Total building/development costs add up to $128 per s.f. or about $3.8 million to build a 30,000 s.f. building. The financial pro forma assumes that the City or other entity will donate land to the project.

Building costs constitute the majority of up-front expenses for this venture. To reduce building costs, the City/FDDC could consider constructing a “value engineered” building. These buildings are basically steel buildings that can be constructed for about 60% of the cost of masonry or other construction. This would reduce the capital cost of the facility to approximately $2.2 million. This option could reduce both hard and soft costs by approximately 40%. See Table 13.

A third alternative would be the adaptive re-use of an existing building in downtown Florence. There are several candidates for such conversion, although costs of rehabbing a building can often approach that of new construction when environmental, technological, HVAC, and other considerations are taken into account.

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Table 13 Florence Business Incubator


Building Costs (Traditional) Square footage 30,000 Land costs $0 Hard costs $100 Soft costs $28

Total per SF costs $128 Total Costs $3,840,000

Building Costs (Value Engineered) Square footage $30,000 Land costs $0 Hard costs $50 Soft costs $16

Total per SF costs $26 Total Costs $2,280,000



Operating Revenues

The cash flow pro forma projects a below market rental rate of $6 for the first three years of operation. This rate could perhaps increase to $7 in Years 4 through 7, and increase again to $8 in Years 8 through 10. This rental rate was derived from a number of case studies that documented rental rates for business incubators, and compares favorably with current cost of space in downtown Florence. See Table 14.

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Table 2 Florence Business Incubator Cash Flow Pro Forma

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenues: Gross Building Area 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Net Rentable Area 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Average Occupancy 60% 70% 80% 95% 95% 95% 95% 95% 95% 95%

Occupied Space (RSF) 15,000 17,500 20,000 23,750 23,750 23,750 23,750 23,750 23,750 23,750 Rental Rate $6 $6 $6 $7 $7 $7 $7 $8 $8 $8 Rental Net $90,000 $105,000 $120,000 $166,250 $166,250 $166,250 $166,250 $190,000 $190,000 $190,000 Retail Net $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000 $15,000.00

Gross Revenues $105,000 $120,000 $135,000 $181,250 $181,250 $181,250 $181,250 $205,000 $205,000 $205,000

Operating Expenses: Startup Costs $ 200,000.00 $ 150,000.00 $ 100,000.00 $ 50,000.00 $ - $ - $ - $ - $ - $ - Replacement Reserve $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 $5,000 General/Administrative $100,000 $100,000 $100,000 $120,000 $120,000 $120,000 $120,000 $130,000 $130,000 $130,000 Fixed Costs $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 Development $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000 $20,000

Gross Expenses $155,000 $155,000 $155,000 $175,000 $175,000 $175,000 $175,000 $185,000 $185,000 $185,000

Net Operating Income -$50,000 -$35,000 -$20,000 $6,250 $6,250 $6,250 $6,250 $20,000 $20,000 $20,000 Source: Hunter Interests Inc.

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The cash flow pro forma projects a steady increase in occupancy, with the building reaching 95% occupancy by Year 4. The first year, the pro forma assumes a 60% occupancy rate. As interest in the business incubator increases and the facility and its programs mature in Years 2 and 3, the occupancy rate is expected to increase correspondingly, to 70%, and then 80%. Years 4 through 10 assume a fully occupied building. See Table 14.

In Year 1, average occupancy is assumed to be 60%, with a rental rate of $6 per s.f. This generates net revenue for the business incubator of $90,000. In Year 2, average occupancy is assumed to be 70%. This generates net revenue of $105,000 for the business incubator. In Year 3, the occupancy is assumed to be 80%. This generates net revenue of $120,000 for the business incubator. In year 4, the occupancy is assumed to be 90%. This generates net revenue of $166,250 for the business incubator. As occupancy and rental rates increase over the first 10 years, the business incubator will incur progressively more revenue.

An additional revenue stream could come from a retail area, where tenants could sell their wares in a storefront or a café, as appropriate. Products might include specialty food or beverage items, arts and crafts products, or catering services. The business incubator could manage the retail area, buy products directly from its businesses, and sell them at a small markup rate. The cash flow pro forma accounts for an additional $15,000 from this revenue stream.

The cash flow pro forma indicates that gross revenues, which are equal to the sum of rental income, and the retail net in this model, increase over time. At stabilization the incubator is expected to generate approximately $180,000 in annual revenues.

Operating Expenses

The pro forma depicts several categories of operating expenses. Startup costs are expected to be about $200,000 in the first year, and decrease by $50,000 in each of the following three years. Startup costs could include such things as office equipment including computers, telephones, copy and fax machines, and specialized equipment on an as-needed basis for startup companies such as commercial grade ovens, freezers, packaging equipment, etc. One-time costs for signage, initial marketing materials, etc., are also included in this category.

A replacement reserve of $5,000 has been included in the pro forma for contingency purposes, and normal replacement of furniture, fixtures, and equipment.

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General administrative costs include salaries for a manager, and two to three administrative assistants who would answer phones, help with accounting matters, and otherwise run the daily operations of the building. This would allow the tenant entrepreneurs to focus on starting their business without dealing with small operational details. The administration could also include specialized staff who could train entrepreneurs in web design, marketing, writing business plans, computer use, etc.

Administrative costs could be decreased by creating a volunteer or internship program with local business owners, teachers, and students who could donate their time and expertise to classes, workshops, and one-on-one development on specialty food marketing, business networking, financial planning, market research and access, technical assistance, computer technology services, etc. Officials from Frances Marion University have expressed an interest in participating in such cooperative programs, and other local community colleges and academic institutions might be similarly engaged.

General administrative costs are assumed to be $100,000 for the first three years, and as the building fills with more occupants, to increase to $120,000 in Year 4 and to $130,000 in Year 8.

Fixed costs are set at $30,000, and include utilities, maintenance such as snow removal, and other elements that keep an office building running smoothly.

Development costs are set at $20,000 per year. Development costs include marketing, recruitment, and retention. The average tenancy at a business incubator is about three years. In order to maintain a financially solvent program, new businesses must constantly be recruited to fill the space of the “graduating” firms.

Net Operating Income

The cash flow pro forma indicates that gross operating expenses, which are equal to the sum of startup costs, replacement reserve, general administrative costs, fixed costs, and development costs, will increase marginally as the business incubator gets off the ground (which has been accounted for by including startup costs for Years 1 through 4), and as occupancy increases. In Years 1 through 3, gross expenses are $155,000. By Year 4, gross expenses will increase to $175,000, and by Year 8, gross expenses will be $185,000.

The cash flow pro forma shows that the business incubator will operate at a net loss for the first three years, and break even at Year 4. By Year 10, the business incubator will make a yearly net profit of approximately $20,000, essentially depicting a break-even operation that is considered an achievement for this type of facility.

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Conclusion

The benefits that the community reaps in terms of economic development, job creation, and empowerment of minority communities are important benefits of business incubators. Business incubators work because the sum is greater than its parts. A business incubator tenant could network with similar companies and build professional, mutually beneficial relationships within the building. For example, a gourmet food production company could hire the adjoining marketing/design firm to create labels and packaging for its product. Similarly, catering companies could provide lunch services to be enjoyed by the building’s tenants as well as other visitors and workers in the downtown. Furthermore, tenants could share information and generate joint ventures, such as buying supplies together, that enable them to enjoy economies of scale typical of much larger businesses.

Some incubators generate enough income from rent and retail revenues to cover expenses, while others are supported by outside funding such as grants or public assistance. HII has built a financial model for the City of Florence depicting a facility that is marginally self-sufficient. Development planning should incorporate the potential need for ongoing subsidies, although if the lease/retail model is adhered to, these may either not be needed, or at the very least kept to a minimum.

In terms of cost/benefit relationships, the investment in a Business Incubator in Florence can be seen as generating significant rewards both in the short and long term. As the economic base in downtown Florence evolves, many opportunities will be generated, and the Incubator can help to positively position existing business owners/operators, as well as individuals that may be newly attracted to the area. By providing a place that instills entrepreneurial spirit, channels practical guidance and advice, and offers an environment for networking, learning, and growth, the Florence Business Incubator will benefit the entire community and play a key role in the revitalization of downtown.

Hybrid Incubator Case Studies

This sub-section conveys observations and findings on business incubators generally, and food and beverage incubators specifically. Food and beverage incubators vary in size, funding, and purpose, and these differences are reflected in two case studies described below. General funding information is included in a separate section of the document. This section also sets forth a preliminary set of recommendations to guide the City of Florence as it prepares to set up a similar project.

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Food and beverage incubators nurture entrepreneurs by providing resources such as affordable rental space, shared kitchen facilities, administrative services, and technical assistance, thereby minimizing startup and equipment costs. While the incubator handles administrative details and overhead problems, tenants can concentrate on operations, production, and marketing, giving the start-up a greater chance at long-term success. Food and beverage incubators encourage job creation, economic development, and community revitalization. The case studies below provide a brief overview of different possibilities for food and beverage incubators.

Case Study 1: Coulee Region Business Center, La Crosse, WI

• The Coulee Center in La Crosse, WI, opened in March 1993 and was fully occupied within 14 months. The first incubator tenant, RiverFront Industries, employed developmentally disabled people. A 15,000-square-foot addition was put on the building in 1997 and a kitchen was constructed in that addition in 1999. After moving to several different spaces, a new one-story, 20,000-square-foot building was constructed with the proceeds from the sale of another building, as well as a $377,000 federal grant from HUD’s Office of Community Services, a $100,000 state community-based Economic Development Grant, and a $40,000 grant and $90,000 low-interest community block grant loan from the City of La Crosse. Student labor and staff expertise from Western Wisconsin Technical College also contributed to the project.

• Up to seven businesses can lease the kitchen, depending on the hours they need it. Tenants lease the kitchen for a variety of reasons: one tenant serves local employees lunch several days a week and has her own catering company; one leases the kitchen to clean his equipment, because food preparers who sell to the public are required by city, county, state, and federal health department regulations to clean their equipment in a commercial kitchen; and one uses the kitchen once a month to bake 30 or 40 specialty cheesecakes in a few hours. The kitchen can also be used as a back-up by city restaurants, so if, for example, their ovens went down, they could rent space and keep operating.

• Kitchen tenants pay an hourly rate based on the time of day. Prime time, from 6:00 a.m. to noon costs the highest rate of $13.50/hour. Tenants pay $12.50/hour to use the kitchen between 1 p.m. and 9 p.m. and $12/hour after 9 p.m. and on weekends. The kitchen can also be rented for $20/hour for catering events or class reunions.

• Technical aid on financial issues (for example, an accountant costs $6 an hour at the center) and marketing and networking are part of the package.

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• In Wisconsin, 87% of businesses that start out in incubator programs are still operating after five years, though this statistic is higher than the nationwide success rate. Of the 28 incubator businesses that started at the Coulee Center, 12 have moved into their own spaces. The average tenancy has been two years and eight months. There are more than 600 incubators in the United States, including 30 in Wisconsin.

Case Study 2: Community Food and Beverage Incubator (CKI), Athens, OH

• The 8,000 square foot Community Kitchen Incubator (CKI) opened in 1996, and is owned and operated by the Appalachian Center for Economic Networks (ACEnet). The ACEnet complex is host to a number of different types of businesses, including light manufacturing, consulting, and service-provider firms.

• The CKI project was helped through its early design and development by a number of local organizations, including Rural Action, ACEnet, and Community Foods Initiative. Initial funding for the project came in the form of grants from local, state and federal sources, as well as from long-term loans. Many volunteers also contributed their time and skills to the project.

• Facilities include rental offices, a retail space where area food businesses can showcase their products, and a 2,500 square foot multi-use commercial kitchen.

• The Food Ventures program (an effort by ACEnet to focus specifically on food production) has three full-time, and several part-time employees who offer classes, workshops, and one-on-one development on specialty food marketing, business networking, financial planning, market research and access, technical assistance, and computer technology services.

• The three primary factors that affect rates for CKI users are frequency of use, types of use, and ability to pay. The CKI depends almost entirely on rental income and fees paid by its users to finance the costs of developing, implementing, and maintaining Food Ventures’ programs, facilities, equipment, licenses, permits, supplies, and paying monthly mortgage, utility, maintenance, and insurance bills.

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General Observations

Some food and beverage facilities are operated within, or are spin-offs of, larger business incubators such as the two aforementioned case studies. Most community facilities offer shared-use equipment—single kitchens available to several users—rather than private kitchens. There are many food business types that could be part of a food and beverage incubator project, including food processing; food producing; restaurant, bakery, etc.; wine producer; other beverages; caterer; or retail storefront to sell the products. Common food products made at this type of incubator include preserves, sauces, condiments, jams, jellies, bakery products, juices, oils, vinegars, wines and beers, meat products, smoked products, dry mixes, and pasta. Tenants may be full-time, part-time, working for a supplementary income, or working as a hobby or because they are retired. Facilities that may be needed in a kitchen incubator include labeling machines, packing machines, cooling, scales, packing tables, dish washer, stainless steel table, freezer, boilers, commercial mixers, food processors, dehydration/drying equipment, oven, pitting, smoker, etc.

Food and Beverage Incubator Costs

A survey by Indian Pacific Management of 14 food and beverage incubators indicates that hourly rents for a shared-use kitchen varied from $6.25 to $50, or by production run. Nine of the 14 kitchens were in rural locations, and the rest were in urban locations. Most kitchens were non-profit organizations. Generally, the kitchens were more likely to break even as the number of tenants, average hours of use per month, and hourly rates increased.

The same survey reported capital costs for shared use kitchens. Building costs ranged from $155,000 to more than $2 million, depending on the size of the building. Four buildings cost $336,000 or less, three buildings cost between $532,000 and $800,000, and four buildings cost $1 million or more. Two places rented space, and thus did not have building costs. One incubator’s financial data were not available.

Total capital costs also ranged widely. Only one food and beverage incubator had capital costs less than $100,000. Six had total capital costs ranging from $215,000 to $642,000, and six had costs of $1 million or more. Generally these costs were funded by a combination of grants and loans. Ten of 13 incubators had more funding from grants than loans.

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Equipment costs ranged from $30,000 to $1.2 million. Three kitchens’ equipment costs were less than $100,000, and only one was over $1 million. Nine kitchens’ equipment costs ranged from $110,000 to $385,000. Some examples of kitchen equipment costs are: bench-top automatic labeling machine⎯$7000; Cyrovac⎯$5000; cool room and freezer room⎯$10,000 each; multiple scales⎯$2500 each; dishwasher⎯$3000; commercial mixer⎯$5000; food processor⎯$3000; food smoker and dehydrator⎯$9000; gas range⎯$6000; 10-tray oven⎯$10,000; refrigerator⎯$5000; and sinks⎯$6000.

Funding Sources

Financial self-sufficiency is a key issue facing community facilities and food and beverage incubators. Some generate enough income from rent to cover expenses, while others are supported by outside funding such as grants or public assistance. Food and beverage incubators are expensive to establish and maintain, and are usually funded by several different sources including local, state, and federal loans and grants. Other institutions such as economic development corporations and small business and entrepreneurial incubators may also contribute.

• The Federal Renewal Communities program offers federal income tax savings and other incentives to encourage businesses to locate to or expand operations within Renewal Communities and to hire Renewal Community residents.

• The US Small Business Administration (SBA) has several programs:

¾ The Federal State Technology Partnership Program (FAST) helps fund programs that increase the success of small innovative businesses in participating states.

¾ The SBA helps small business by making guaranteed loans available by private lending institutions, providing long-term financing for fixed asset acquisition, and allowing would-be entrepreneurs to test innovative ventures.

¾ The SBA’s program WNET is designed to provide mentors for women starting businesses.

• Universities and state and local governments offer regulatory and technical assistance.

• State-supported food and beverage incubators have tapped into government programs like state welfare-to-work programs.

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• Local Community Development Councils can be a source for small, low-interest loans as well as a resource for learning about local banks that make loans to small businesses.

• Local communities may provide matching funds for capital ventures.

Next Steps

Accurately identifying the need for a food and beverage incubator before it is built will contribute to its success. Florence could start by identifying goals, needs, and potential clients for the incubator. The city could identify existing community facilities as potential buildings for adaptive re-use, and encourage community members to get involved and use their talents such as marketing, accounting, label design, etc. The city could then secure an inexpensive venue and use grant funds to upgrade the building/equipment for project use. Some preliminary questions to ask are:

• Is there a sufficient market to justify developing the concept? Is there demand in the area for products such as sustainable agriculture, a farmers market, bakery, etc.? Is the city near a large urban center?

• What are the goals? Networking? Training? Job creation and economic development? Low income and minority representation? Diversification of the local economy?

• What local, state, and federal resources are available and appropriate for such a venture? Are there universities and companies nearby that could add value and/or become partners?

• Are there community members who could be appropriate tenants for a food and beverage incubator? Have they expressed interest in such a project? Is there community support for such a venture? Is there leadership for such a venture?

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IX. Destination Grocery Store ⎯ Conceptual Building Program and Financial Feasibility Assessment

Introduction

This section of the report sets forth a development discussion and cash flow pro forma projections for a destination grocery store in Florence, South Carolina. A destination grocery store could become a focal point to a mixed use, revitalized downtown, and could serve as an important draw for potential downtown residents, and as a community hub as the downtown establishes an expanded residential component. Furthermore, the proposed farmers’ market and business incubator could provide additional incentives for a commercial grocery store to locate in the downtown, and could partner in a symbiotic and mutually beneficial relationship between like-minded businesses.

Grocery stores vary in size, type, and specialty, and are categorized as conventional, upscale, discount, etc. The accompanying financial calculations reflect a sample program applicable to a variety of grocery stores. Some examples of niche type grocery stores that might be attracted to a downtown location include the following:

Whole Foods is the world’s #1 natural foods chain. Whole Foods sells food and other items that are free of pesticides, preservatives, sweeteners, and cruelty, and carries more than 1,200 items and nutritional supplements in six lines of private label products. Whole Foods has more than 160 stores in 28 states, DC, Canada, and the UK.

Trader Joe’s is the #2 natural foods chain. Trader Joe’s prides itself on selling high quality products at value prices. The 215 stores in 18 mostly West and East coast states sell upscale vegan, vegetarian, and omnivorian grocery fare, wine, cheese, organic produce, and nutritional supplements. The company’s speciality is its line of more than 2,000 private-label products, including beverages (it’s signature Charles Shaw brand sells for $2 a bottle), which contain minimally processed ingredients. Trader Joe’s has been described as a warehouse store crossed with specialty grocery. To keep costs down, its stores have no service departments, buy directly from manufacturers, and average about 10,000 s.f.

Wild Oats is the #3 natural foods supermarket chain in the United States in terms of sales. The company runs about 110 full-service stores in 24 states and British Columbia, Canada. Its stores provide natural, organic, and traditional grocery items and environmentally friendly household products. Most stores also have

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bakeries, coffee and juice bars, and massage therapists. The stores operate under the Capers Community Market, Henry’s Farmers Markets, Sun Harvest Farms, and the Wild Oats Natural Marketplace names.

Bristol Farms operates about a dozen upscale specialty supermarkets in California’s Los Angeles, Orange,and Ventura Counties. Smaller than traditional supermarkets, (stores average about 14,000 s.f.), more than two-thirds of the company’s sales come from fresh products. This chain is owned by grocery giant Albertsons, a national chain headquartered in Idaho.

Cost Plus World Markets are designed to resemble upscale Third World Markets. World Market has more than 235 stores in 30 states, and sells exotic coffees, chocolate, candy, and beverages including wine, as well as furniture, rugs, baskets, and ceramics. Much of what it sells is imported, but it also has its own private label. Its motto is “50 countries, one store.”

As the Florence Downtown Revitalization Strategy is implemented, a grocery store could be the subject of an RFQ/RFP solicitation and/or the subject of informal market testing with prospective companies. It is our sense that a smaller, niche type store as profiled herein would be the most likely candidate for a downtown location (based on its placement elsewhere), but this is by no means a comprehensive list of prospective partners for downtown Florence, not does it preclude the potential of attracting a larger more conventional supermarket. If the decision is made to actively pursue a grocery store, then all models should be considered live candidates until proven otherwise.

Conceptual Building Program

The Florence Downtown Development Corporation envisions a grocery store of approximately 60,000 s.f. in a newly constructed building. The accompanying pro forma projects an area of 40,000 s.f. devoted to floor sales, and 20,000 s.f. used for stock/storage. A smaller facility might be appropriate given the streamlined operations as suggested in the store profiles above. Therefore, overall development costs might be less than suggested. However, a larger more traditional supermarket would tend to cost more to build and to operate than suggested. These figures should be viewed as mid-range projections for planning purposes only.

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Hunter Interests Inc. projected building costs based on new construction for a facility. Hard costs (materials such as steel, concrete, and other construction materials, etc.) are calculated using $115 per s.f. Soft costs (financing, architectural and design services, permitting, etc.) are about 30% of hard costs, or $35 per s.f. Total building/development costs add up to $150 per s.f. or about $8.97 million to build a 60,000 s.f. grocery store. The pro forma assumes that the City or other entity will donate land to the project. See Table 15.

Table 15 Destination Grocery Store

Building Assumptions

Building Costs Square footage (gross) 60,000 Square footage (floor sales) 40,000 Square footage (stock) 20,000 Land costs $0 Hard costs $115 Soft costs (30% of hard costs) $35

Total per SF costs $150 Total Costs $8,970,000 Source: Hunter Interests Inc.

Financial/Operational Projections

The cash flow from operations on a grocery store can vary widely depending on numerous variables including such things a size, market/discount orientation, labor market, debt service, land costs, carrying costs, etc. The projections set forth herein are very basic, meant for illustrative and development planning purposes only. Additional financial feasibility and due diligence would be required before a more accurate picture of net operating income and other financial/operating characteristics could be realized.

The pro forma assumes $250 in sales per square foot at a consistent occupancy rate of 95% from Year 1 to Year 10, for total annual gross revenues of $9.5 million. This calculation uses 40,000 as the total sales square footage and is consistent with successful operations in midsize markets.

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Total operating expenses are calculated using $215 per square foot and 40,000 as the total usable square footage, for a gross expense total of $8.4 million. These expenses would include such categories as cost of goods sold, wages, salaries and benefits, utility costs (which can be high given freezers and other cold storage requirements), marketing and advertising, and so forth.

The high operating costs of a grocery store preclude large profit margins. Annual net operating income based on broad assumptions is $900,000 million, or 9% of gross revenues. See Table 16.

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Table 16 Destination Grocery Store Cash Flow Pro Forma

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Revenues: Gross Building Area 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 60,000 Floor Sales Square Footage 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Sales Per Square Foot $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 Sales Per Square Foot 95% 95% 95% 95% 95% 95% 95% 95% 95% 95% Retail Net $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 Gross Revenues $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000 $9,500,000

Operating Expenses: Cost Per Square Foot $215 $215 $215 $215 $215 $215 $215 $215 $215 $215 Fixed Costs $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 Gross Expenses $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000 $8,600,000


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Conclusion

A downtown grocery store will benefit the community in terms of economic development, job creation, and residential services. A nearby grocery store could become a major selling point to downtown residential development and influence Florence’s urban vitality. Technical Memorandum #4 discussed the potential of a business incubator and a downtown grocery store could become a strategic partner with a business incubator and the farmers market, and further add to downtown’s renaissance.

Further site planning and development research should be undertaken as the Florence Downtown Development Strategy unfolds in the next building/ development cycle that will encompass approximately three to four years.

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X. Economic and Fiscal Impact Analysis

Fiscal Impact Analysis

The fiscal impact analysis projects estimated values for the various development components that span actual projected construction costs, outfitting, and furnishings. We have presented a projection of tax revenue based on local practices that assess property based on a percentage of its fair market value. Tax revenues for commercial projects are calculated based on the estimated development costs (replacement value), and represent net new tax revenue generation. Residential taxes are calculated based on aggregate sales. It is assumed that publicly owned properties such as the business incubator, Center for the Arts, Little Theater, and Florence Museum are not subject to property taxes.

Property located within the City limits of Florence is taxed based on a millage rate set by the City of Florence City Council. The millage rate is applied to the property's assessed value. Assessments are as follows: residential property is assessed at 4% of fair market value; rental real property and business real property are assessed at 6% of fair market value; business personal property is assessed at 10.5% of fair market value. Property is taxed at a rate of $60.80 per $1,000 of assessed value in the City of Florence.

Based on these assumptions, we estimate that new taxable real property in the immediate downtown area will have an assessment of approximately $162.8 million, which will in turn generate an estimated $681,714 in property tax revenues annually. See Table 17.

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Table 17 Downtown Florence Fiscal and Economic Impact Summary

Taxable Basis Personal Assessed Property Project Real Estate Property Value Tax Professional O ffice $10,000,000 $2,000,000 $810,000 $49,248 M ixed-U se Project

Comm ercial $2,900,000 $580,000 $234,900 $14,282 Residential $13,200,000 N /A $792,000 $48,154

Grocery $8,000,000 $1,600,000 $648,000 $39,398 Incubator N/A N /A N /A N /A D ow ntown A daptive Re-U se $15,000,000 $3,000,000 $1,215,000 $73,872 Future O ffice $37,500,000 $7,500,000 $3,037,500 $184,680 Future Residential $20,000,000 N /A $1,200,000 $72,960 Future Commercial $31,250,000 $6,250,000 $1,250,000 $76,000 Florence Center for the Arts N/A N /A N /A N/A L ittle T heater N/A N /A N /A N/A Florence M useum N/A N /A N /A N/A H otel $15,000,000 $3,000,000 $1,215,000 $73,872 O ther $10,000,000 $2,000,000 $810,000 $49,248 Total $162,850,000 $25,930,000 $12,493,650 $681,714 Source: C ity of Florence; H unter Interests Inc.

Economic Impact Analysis

Development of the new commercial enterprises will create permanent jobs in the community, and generate significant wages that will, in turn, be re-spent throughout the local economy. A discussion of indirect impacts associated with this ripple effect is included in our analysis; however, the direct jobs and wages created through the development are perhaps of the greatest importance in assessing economic benefits of the project.

There will be a wide variety of direct full-time employment (FTE) generated through the operation and management of new commercial enterprises in . Although commercial office development does not, in and of itself, create employment, desirable office space in an appealing environment will attract tenants from other areas around the City, as well as expanding firms and new firms entering the Florence market. To estimate job creation, we have used a combination of data provided by the International Economic Development Council (IEDC), the Statistical Abstract of the United States, and various industry resources to make the most accurate projections possible. The analysis also

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employs reasonable estimates regarding staffing and wage levels, along with a range of estimated average salaries. Note that average salaries include high-paying executive positions, as well as lower-paying service or maintenance jobs, and therefore should not be misconstrued as the mean salary level. We estimate that new commercial operations will create 2,838 new full-time equivalent jobs with total direct wages and salaries of approximately $115.7 million. See Table 18.

Table 18 Downtown Florence Development Employment, Salaries and W ages

Mid-Point Estimated FTE Estmated Average Income Total Direct

Development Job Range Mid- Salary Range Mid- W ages & Component Low High Point Low High Point Salaries

Professional Office 400 600 500 $37,440 $56,160 $46,800 $23,400,000 Mixed-Use Project 80 120 100 $19,200 $28,800 $24,000 $2,400,000 Grocery 20 30 25 $25,096 $37,644 $31,370 $784,250 Incubator 2 4 3 $22,400 $33,600 $28,000 $84,000 Downtown Adaptive Re-Use 10 14 12 $19,200 $28,800 $24,000 $288,000 Future Office 1,120 1,680 1,400 $37,440 $56,160 $46,800 $65,520,000 Future Commercial 480 720 600 $24,800 $37,200 $31,000 $18,600,000 Florence Center for the Arts 12 18 15 $31,120 $46,680 $38,900 $583,500 Little Theater 2 4 3 $31,120 $46,680 $38,900 $116,700 Florence M useum 4 6 5 $21,032 $31,548 $26,290 $131,450 Hotel 60 90 75 $15,320 $22,980 $19,150 $1,436,250 Other 80 120 100 $19,200 $28,800 $24,000 $2,400,000 Totals 2,838 $115,744,150 Source: Statistical Abstract of the United States; Hunter Interests Inc.

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Wages and salaries paid to workers get re-spent throughout the economy with most being spent on typical living expenditures such as housing, food, transportation, clothing, etc., which in turn provide wages for workers in those industries. According to the regional input-output modeling system (RIMS II), wages earned by employees in new operations will be re-spent approximately 2.6 times. We calculate that a total of 3,406 indirect jobs will be supported by new operations with additional annual indirect earnings equaling approximately $185.2 million. See Table 19.

Table 19 Downtown Florence Projects

Local Employment and Earnings Impact

D irect FT E Jobs 2,838 Indirect/D irect R elationship* 1.2:1 Indirect Jobs 3,406 D irect W ages and Salaries $115,744,150 Earning M ulitplier* 2.6 T otal A dditional Earnings $300,934,790 T otal Indirect Earnings $185,190,640 * Based on RIM S II model. Source: U.S. Chamber of Commerce

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XI. Funding and Finance Strategy

Introduction

The funding and finance strategy for the downtown Florence revitalization effort will be a combination of public and private investments in a wide range of infrastructure, adaptive re-use, new construction, and other aspects of development. There will be a combination of overarching policy and programmatic elements such as the potential for designating the downtown core as a National Register Historic District, and the larger Redevelopment Area as a Tax Increment Finance District. There will be a combination of private equity investment and serviceable debt in various forms, and there will be contributions from philanthropic sources to cover certain costs associated primarily with cultural and/or historic components. In this section an overview of the roles of public, private, and philanthropic sectors is provided, along with a description of potential incentives and other programs that may beneficially influence the funding and finance environment in downtown Florence.

The Role of Private Investment

Based on the capital investment and cost estimates summarized in Section X, it is projected that the private sector will contribute more than $150 million to the redevelopment of the immediate downtown area in Florence. This investment will accrue over time as individual projects are developed, and a combination of equity and debt are acquired for development funding. The Conceptual Building Programs and Financial Feasibility Assessments section provides suggestions as to supportable levels of debt and equity for certain key catalyst projects, but the ultimate funding and finance mechanisms for these and other projects will be determined in the more focused context of real time development.

Private investment, in one form or another, is expected to cover approximately two-thirds of the overall cost of redevelopment in the downtown. This a significant element of the Downtown Florence Revitalization Strategy, and one that bears fostering as implementation continues. While private sector participation in many development components is anticipated, this will only occur if public/private partnerships are well planned and executed. Conversely, public dollars should be invested with the intent of leveraging private dollars whenever possible.

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The Role of Public Sector Investment

It is projected that the public sector will invest approximately $20 million over time in the redevelopment of the immediate downtown area. A summary of these costs and a brief description of funding and finance approach for each of these components are as follows:

• Infrastructure Improvements ⎯ New streets and roads, streetscape and landscape improvements are an essential aspect of the revitalization strategy. Not counting a program to place power and telephone lines underground, Order of magnitude costs is estimated to be approximately $10 million. These funds will be generated by the TIF, and may be augmented by SCDOT funding, federal transportation grants, and other sources.

• Structured Parking ⎯ New parking structures developed over time could be funded through the TIF. The establishment of a parking authority and/or other financing entity will be further evaluated for suitability during implementation and development. Costs for the essential structured parking envisioned by the Phase 2 study are estimated to be approximately $10 million.

The Role of Philanthropic Investment

The revitalization of downtown Florence is anticipated to attract philanthropic and institutional support in various forms. Direct funding for projects such as the new Little Theater, from foundations including the Drs. Bruce and Lee Foundation is an important element. Other grants and programs that focus on educational and/or environmental facilities for example may also be available.

Other funds may be raised through campaigns for specific projects such as the Florence Center for the Arts, the Florence Museum, and the proposed Multicultural Center, public art at new gateways, landscaping and beautification efforts, etc. Foundations, trusts, and various granting authorities may constitute key sources of these funds. Civic organizations that are affiliated with Florence might be encouraged to contribute grants, sponsorships, or other support for special projects.

Tax Increment Financing

A significant source of public funding for capital improvements may come from the establishment of all or part of the Redevelopment Area as a tax increment finance district, also known as a Self Financing District. Such an approach has

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been used successfully throughout South Carolina, and the range of development suggested by the Downtown Florence Revitalization Strategy can drive significant incremental property tax revenue increases, which in turn can be used to service bonds issued to fund projects.

Tax Increment Financing (TIF) is a mechanism utilized in redevelopment areas such as downtown Florence. In essence, a TIF district uses the increment between existing tax revenue, and tax revenue generated from new development over a specified period of time (e.g., 10 years) to fund capital improvements (i.e., roads, utilities, trolley line, etc.). For example, if the current yearly tax revenue for a property inside a TIF district is $10,000 per year, and once new development occurs the tax revenue will be $100,000 per year, this would make the tax increment $90,000 per year. If the TIF district were put in place for 15 years, then $1.35 million would be generated for capital improvements.

Preliminary estimates indicate that new development in the immediate downtown area alone will generate an estimated $160 million in added taxable property value to the district over a period of 10 to 15 years. The assessed value of real estate determines the taxing basis, and at this time owner occupied residential properties are assessed at 4% of fair market value, business real properties are assessed at 6% of appraised value, and business personal property is assessed at 10.5% of fair market value. Based on the fiscal analysis, this would yield an increment (at build-out) of approximately $12.5 million in net new taxable assessments that would generate approximately $682,000 in annual revenues at 2005 tax rates.

A feasibility analysis that treats the potential for a TIF district, and the bondable revenues that it would generate, will be completed as part of the Phase 3 work program for the revitalization effort.

Tax Incentives

Both the Federal Government and the State of South Carolina offer various tax incentives for the rehabilitation of older buildings, historic or otherwise, under specific criteria. The following descriptions of these incentives are in general terms only, and should not be construed as tax advice. The provisions of the Internal Revenue Code governing tax incentives for the rehabilitation of historic buildings and non-historic buildings built before 1936 are extremely complex. Provisions of the tax code regarding at-risk rules, passive activity limitation, and alternative minimum tax can affect a taxpayer’s ability to use these tax credits. Potential developers and/or investors are strongly advised to consult an accountant, tax attorney, or other professional tax advisor, legal counsel, or the Internal Revenue Service for help in determining whether these incentives pertain to their own situations.

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Federal Historic Preservation Tax Incentives

The Federal Historic Preservation Tax Incentives program is one of the nation's most successful and cost-effective community revitalization programs. The program fosters private sector rehabilitation of historic buildings and promotes economic revitalization. It also provides a strong alternative to government ownership and management of such historic properties. In the short run, eligible projects that use the incentives can gain a significant cash infusion up front, which can be used to finance the rehabilitation or generate higher long-term returns by freeing up capital for other investments.

The Federal Historic Preservation Tax Incentives are available for buildings that are National Historic Landmarks, that are listed in the National Register, and that contribute to National Register Historic Districts and certain local historic districts. Properties must be income producing and must be rehabilitated according to standards set by the Secretary of the Interior.

Since 1976, the National Park Service (NPS) has administered the program in partnership with the Internal Revenue Service and with State Historic Preservation Officers (SHPO). The Historic Preservation Tax Incentives have proven an invaluable tool in revitalizing communities and preserving the historic places that give cities, towns, and rural areas their special character. Through this program, abandoned or under-used factories, warehouses, schools, retail stores, apartments, hotels, houses, and offices throughout the country have been restored to re-use in a manner that maintains their historic character.

Current Tax Incentives for preservation, established by the Tax Reform Act of 1986 include a 20% tax credit for the certified rehabilitation of certified historic structures, and a 10% tax credit for the rehabilitation of non-historic, nonresidential buildings built before 1936. A tax credit differs from an income tax deduction. An income tax deduction lowers the amount of income subject to taxation. A tax credit, however, lowers the amount of tax owed. In general, a dollar of tax credit reduces the amount of income tax owed by one dollar.

• The 20% rehabilitation tax credit equals 20% of the amount spent in a certified rehabilitation of a certified historic structure.

• The 10% rehabilitation tax credit equals 10% of the amount spent to rehabilitate a non-historic building built before 1936.

The National Park Service must approve, or “certify,” all rehabilitation projects seeking the 20% rehabilitation tax credit. A certified rehabilitation is a rehabilitation of a certified historic structure that is approved by the NPS as being consistent with the historic character of the property and, where applicable, the

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district in which it is located. The NPS assumes that some alteration of the historic building will occur to provide for an efficient use. However, the project must not damage, destroy, or cover materials or features, whether interior or exterior, that help define the building’s historic character.

• To be eligible for the 20% rehabilitation tax credit, a project must also meet the following basic tax requirements of the Internal Revenue Code.

• The building must be depreciable. That is, it must be used in a trade or business or held for the production of income. It may be used for offices, for commercial, industrial or agricultural enterprises, or for rental housing. It may not serve exclusively as the owner’s private residence.

• The rehabilitation must be substantial. That is, during a 24-month period selected by the taxpayer, rehabilitation expenditures must exceed the greater of $5,000 or the adjusted basis of the building and its structural components. The adjusted basis is generally the purchase price, minus the cost of land, plus improvements already made, minus depreciation already taken. Once the substantial rehabilitation test is met, all qualified expenditures, including those incurred outside of the measuring period, qualify for the credit.

• If the rehabilitation is completed in phases, the same rules apply, except that a 60-month measuring period applies. This phase rule is available only if: (1) there is a set of architectural plans and specifications for all phases of the rehabilitation, and (2) it can reasonably be expected that all phases of the rehabilitation will be completed.

• The property must be placed in service (that is, returned to use). The rehabilitation tax credit is generally allowed in the taxable year the rehabilitated property is placed in service.

• The building must be a certified historic structure when it is placed in service; if it is not yet a certified historic structure when it is placed in service, the owner must have requested on or before the date that the building was placed in service a determination from the NPS that the building is a certified historic structure, and have a reasonable expectation that the determination will be granted. (This means, generally, for buildings not individually listed in the National Register of Historic Places, that Part 1 of the Historic Preservation Certification Application must have been filed before the building was placed in service.)

• Qualified rehabilitation expenditures include costs associated with the work undertaken on the historic building, as well as architectural and engineering fees, site survey fees, legal expenses, development fees, and other

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construction-related costs, if such costs are added to the basis of the property and are determined to be reasonable and related to the services performed. They do not include costs of acquiring or furnishing the building, new additions that expand the existing building, new building construction, or parking lots, sidewalks, landscaping, or other facilities related to the building.

The 10% rehabilitation tax credit is available for the rehabilitation of non-historic buildings built before 1936.

As with the 20% rehabilitation tax credit, the 10% credit applies only to buildings—not to ships, bridges or other structures. The rehabilitation must be substantial, exceeding either $5,000 or the adjusted basis of the property, whichever is greater, and the property must be depreciable.

The 10% credit applies only to buildings rehabilitated for non-residential uses. Rental housing would thus not qualify. Hotels, however, would qualify. They are considered to be in commercial use, not residential.

A building that has been moved is ineligible for the 10% rehabilitation credit. (A moved certified historic structure, however, can still be eligible for the 20% credit.) Furthermore, projects undertaken for the 10% credit must meet a specific physical test for retention of external walls and internal structural framework:

• At least 50% of the building’s walls existing at the time the rehabilitation began must remain in place as external walls at the work’s conclusion.

• At least 75% of the building’s existing external walls must remain in place as either external or internal walls.

• At least 75% of the building’s internal structural framework must remain in place.

The owner must hold the building for five full years after completing the rehabilitation, or pay back the credit. If the owner disposes of the building within a year after it is placed in service, 100% of the credit is recaptured. For properties held between one and five years, the tax credit recapture amount is reduced by 20% per year.

The National Park Service or the State Historical Preservation Officer may inspect a rehabilitated property at any time during the five-year period. The NPS may revoke certification if work was not done as described in the Historic Preservation Certification Application, or if unapproved alterations were made for up to five years after certification of the rehabilitation. The NPS will notify the IRS of such revocations.

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South Carolina Historic Rehabilitation Incentives

On January 1, 2003, a law took effect creating tax credits for rehabilitation expenses on historic buildings located in South Carolina. The Historic Rehabilitation Incentive Act contains a provision allowing for a 10% state income tax credit for qualified rehabilitation expenditures for income-producing certified historic structures that also qualify for the 20% federal income tax credit for rehabilitation.

The standard review by the SHPO and the NPS fulfills the requirements for the state income tax credit. The law allows taxpayers to claim the credit by attaching to their state return a copy of the section of the federal return showing the federal credit claimed, along with any other information required by the South Carolina Department of Revenue.

The state income tax credit must be taken in equal installments over a five-year period, beginning in the year in which the property is placed in service. Any unused portion of the credit installment may be carried forward for the succeeding five years.

All project work must be consistent with Secretary of the Interior’s Standards for Rehabilitation, and the entire project must be reviewed and approved by the State Historic Preservation Officer before it starts. Only projects pre-approved by the SHPO in writing will be eligible for the credit.

Brownfields Tax Incentive

While much of the greater downtown Florence area appears on the surface to be unaffected by environmental concerns, some sites such as the former junkyard and surrounding land do, in fact, have serious environmental remediation issues. In order to encourage interest in the redevelopment of brownfields sites, the Environmental Protection Agency (EPA), the Department of the Treasury, and its other Federal partners created incentives for potential developers. Under the tax incentive, certain environmental cleanup costs at targeted sites may be fully deducted by eligible taxpayers in the year in which they are incurred. The EPA defines “brownfields” as “abandoned, idled, or underused industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived contamination.” These properties may be large or small, urban or rural, former factories, or warehouses.

The Brownfields Tax Incentive is not a tax credit, but reduces the tax burden indirectly by lowering taxable income. The incentive does this by allowing the property owner to claim many eligible cleanup costs as a current expense, rather

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than capitalizing them as long-term assets. This allows companies to reduce their current income, allowing them to capture tax savings in the present rather than the future.

The Brownfields Tax Incentive is designed to create economic growth in disadvantaged areas by encouraging the redevelopment of brownfields. The incentive primarily targets regions with low household income levels, as well as areas with a historical commitment to brownfields redevelopment. Eligible property must fall into at least one of the four categories designated below:

• Census tracts with a poverty rate of 20% or more.

• Census tracts with a population of less than 2,000 people. More than 75% of the tract must be zoned for commercial or industrial use, and the tract must be located next door to other census tracts with poverty rates of 20% or more.

• All federally designated Empowerment Zones or Enterprise Communities.

• EPA Brownfields Pilot sites designated prior to February 1997.

When determining eligibility based on census data criteria, 1990 census data must be used. Data from more recent census samples is not permitted under the Brownfields Tax Incentive, which requires the use of data from the last decennial, or ten-year, census.

Taxpayer requirements state that the property be held in ownership by the taxpayer, and the property must be held for business or income generation purposes. Some types of long-term lease arrangements may qualify brownfields incentives. Taxpayers should consult with their tax counsel to determine whether their circumstances qualify.

The Textile Communities Revitalization Act ⎯ While Florence was not historically a textile mill town per se, investigation into possible application of this act is none-the-less warranted. This initiative is designed to provide an incentive for investors to redevelop old textile mills and mill communities that have been harmed by the decline of the textile industry in South Carolina. Proposed elements include: a credit against real property taxes levied by local taxing entities equal to 25% of the investment in the eligible site as so improved, renovated, or redeveloped; a credit against personal or corporate income tax and/or business license fees as imposed by the South Carolina Department of Revenue against the person equal to 25% of the investment in the eligible site as so improved, renovated, or redeveloped; and other elements that could positively impact feasibility of textile mill redevelopment.

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HUBZone

Hunter Interests Inc. researched the Small Business Administration’s (SBA) Historically Underutilized Business Zone (HUBZone) and its potential application to the City of Florence.

HUBZones aim to stimulate economic development, empowerment, and job creation in urban and rural communities by providing more access to Federal contracting preferences to small businesses. A small business must meet all of the following criteria to qualify for the HUBZone program:

• It must be located in a HUBZone. • It must be owned and controlled by one or more U.S. citizens. • At least 35% of its employees must reside in a HUBZone.

Companies must apply to certify to become a qualified HUBZone Small Business Concern. The basis of the application is the company’s income or employment data. These data serve as the basis of further calculations based on three elements.

• Is the company in a qualified census tract? • Is the company in a qualified “non-metropolitan county?” • Is the company within the boundaries of a federally recognized Indian

reservation?

There are 174 small businesses in South Carolina in the database of certified companies. This number includes three businesses in Florence, SC. All of these firms are within MSA 2655. These are:

• Conner Personnel Services at 1001 Wentworth Drive, 29501 • Ful Dek Marketing and Distribution Service Inc. at 1016 Foxhall Drive,

29501 • Spectrum Group LLC landscaping, construction, lobbying, management

consulting, and business brokerage firm at 1023 West Marion, 29503

HII Recommendation: Small Florence businesses that meet the criteria to qualify for HUBZone certification and are interested in federal contracting preferences should apply. For further information, contact: [email protected] or call 202-205-8885.

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XII. Phased Implementation Strategy

The Downtown Florence Revitalization Strategy has now been expressed in two phases. Phase 1 focused on the development of zoning overlay districts, design guidelines, formation of a design review board, market analysis, and other key foundation steps. At this writing (May 2005), the overlay districts and design guidelines are about to be adopted, and the physical characteristics of downtown Florence will begin to improve as new development adheres to cohesive rules, and historic areas receive the attention and preservation-focused efforts they deserve. Phase 2 of the revitalization effort is summarized in this report, which only represents the beginning of a process that will unfold for years to come. A third phase of the work program is about to begin that will include implementation steps as laid out in this Phase 2 report such as developer solicitation and the formation of a Tax Increment Finance District.

It is important to understand that there is no hard and fast delineation between these phases in terms of time, but rather they overlap in a fashion that only future action and outcomes will ultimately determine. Taken together, implementation of all three phases of the Downtown Florence Revitalization Strategy is expected to take approximately 10 years. However, many tangible results can be achieved in the near term (from the present through a three-year time frame) and others will accrue at a tempo that will be determined in part by the continuing public will of elected officials, market response to a changing downtown environment, and other variables.

Some components of the Downtown Florence Revitalization Strategy will emerge sooner than others, such as the redevelopment of the Evans St. corridor and the development parcel directly to the south. Others such as the construction of the Florence Center for the Arts and relocation of the Florence Museum may take longer. Still others, such as the relocation of the Florence Little Theater could happen fairly quickly given the current availability of land (City-owned parcel) and the expressed support of the City’s largest philanthropic entity—the Drs. Bruce and Lee Foundation. In short, implementation of the Downtown Florence Revitalization Strategy will be a fluid process, and one that can now be guided and induced to occur for the benefit of the community’s future.

The implementation of the Downtown Florence Revitalization Strategy is, in fact, already underway as the zoning overlay districts and design guidelines prepare to become ordinances, and other actions begin to take hold. Indeed, the implementation of the revitalization effort really goes back to the preparation of the HDR Master Plan, public visioning and outreach efforts pursued at that time, and the dedication of Florence City government and its Mayor to the cause.

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Next up will be important steps referenced in greater detail elsewhere in this report, including establishment of the TIF, developer/investor solicitation, execution of the marketing strategy, etc. The key now is to build on the momentum created to date, and to trigger the market response that will ultimately be required for a completely revitalized downtown Florence.

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XIII. Marketing Strategy

Introduction and Approach

The marketing strategy for downtown Florence includes several important elements that provide the foundation for a four-tier approach to achieving successful results. The marketing strategy is designed to be:

• Practical, effective, and immediate-action oriented

The marketing strategy is designed to result in the development of:

• The downtown Florence as a regional destination

The marketing strategy is designed to produce identifiable:

• Goals and benchmarks

Tier One ⎯ Marketing Development Opportunities

Central to the downtown Florence marketing strategy are development opportunities and projects whose completion is essential to the revitalization effort. Taking these projects to market, attracting developers and partners, and assisting in fostering implementation, are “hands on” marketing efforts. The recommended process for achieving these goals consists of six basic steps:

• Packaging projects

Each project has its own set of distinct characteristics, and it must be positioned to appeal to the developer segment that is most likely to undertake the development effort. Many elements of the Florence Illustrative Master Plan can be used to craft the appropriate message for marketing a project, including results from financial feasibility assessments, market analysis results, physical planning of the downtown area, etc. The perspective renderings may be used to illustrate future development potentials to the market, and funding and finance opportunities may be suggested as well. In addition, information on how the City of Florence, the Florence Downtown Development Corporation, and the public sector at large may be able to facilitate, or participate, in development opportunities will also be helpful. Pertinent information, coupled with graphic illustrations, provides the basis for packaging downtown Florence projects and preparing them for market.

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• The developer solicitation process

As projects are packaged, they are taken to market through a process of developer solicitation. Typically, and especially for a diverse and challenging development field such as downtown Florence, local, regional, and national development companies are targeted for the marketing effort. In some cases, the marketing process focuses on specialized companies, such as those who may develop and operate hotels only, or those that do adaptive re-use historic projects, or residential development only, but in other cases a shotgun approach is used to capture all those who may be interested in a mixed use project. This approach can also be used as a tool to simply get the message out that Florence, South Carolina, and the historic downtown area are open for business. It is recommended that solicitation fields include as many prospective interested parties as possible, and it is not unusual for that number to be between 400 and 800. The developer solicitation process typically employs a two-part process: a Request for Interest and Qualification; and, a Request for Proposals.

• Requests for Interest and Qualifications (RFQ)

This document solicits expressions of interest in particular projects, and requests that information on the respondents’ development experience, financial capability, etc. be provided. The Request for Interest and Qualifications (RFQ) should be fairly easy to respond to, in terms of time required, documentation required, etc., and is designed to capture a field of prospective and interested development companies. Often, the development company will assemble a team for the response that includes an architect, construction company, bank, etc. The RFQ document is essentially wrapped in the project packaging materials described above, and the full information packet sent first class mail.

• Request for Proposals (RFP)

Once responses to an RFQ are received, a competitive environment has been created that serves to ensure a developer will, in fact, be brought on to complete the project, that developers will put their best effort forward in order to win the opportunity, and that the city or other involved entities have a selection of partners to choose from. Depending on the number of RFQ responses, the decision can be made to short-list developers that will be invited to respond to a formal Request for Proposal. Often, it may be advisable to allow all RFQ respondents the opportunity to submit an RFP, as teaming and partnering can sometimes be encouraged, and the competitive field otherwise maintained. The RFP is a more detailed document that can require a financing and business plan, proof of financial solidarity, experience, and ability to complete projects.

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• Selection and implementation

Typically, respondents to the RFP are invited to make a formal presentation, and then one development company is identified as the preferred candidate and designated as Master Developer for a set period of time. This essentially begins the project implementation process, and is marked by the execution of a simple Memorandum of Understanding (MOU) that sets forth an agreement to enter into formal real estate development negotiations. In Florence, the FDDC may choose to select individual developers for specific projects, rather than a Master Developer for a large area of downtown, but the process is essentially the same.

• Development agreements

During a period of time subsequent to the execution of the MOU, a series of contractual agreements must be negotiated that set forth all aspects of the public/private partnership that now is emerging. Depending on the project, a Master Development Agreement, Operating Agreement, Purchase and Sale Agreement, or other documents will be required to fully address all development issues that are involved. Execution of these contracts is, in essence, the last element of “hands on” marketing that closes the deal and moves the project into actual development.

Tier Two ⎯ Marketing the Plan and the Process

In addition to marketing specific development projects as described above, more generalized marketing efforts must also be undertaken to ensure that the message of revitalization in downtown Florence is not lost, and that focus and interest are maintained. Marketing the plan and the process can take many forms, but five key recommendations are as follows:

• Continuing public outreach

The communications strategy described in Section 12, Phased Implementation Strategy is, in part, geared toward continuing the public outreach process. Please refer to this discussion for detail on the public outreach effort.

• Special events ⎯ “progress parties”

The marketing strategy includes development of a special events program, specifically designed for the downtown Florence revitalization process, and could include “progress parties” or festive events held to mark visible progress in the area. These need not necessarily be large or expensive events, but people, action,

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music, balloons, and food, will inevitably draw interest, and even a modest gathering should be viewed as a positive result of this aspect of the marketing strategy. These special events could be built around such existing successful events as the Pecan Festival.

• Historic and cultural themes

A keystone of the entire Downtown Florence Revitalization Strategy is the use of the area’s historic and cultural roots to make it a special and unique destination for regional visitors. Recommendations include seeking designation as a National Register Historic District, and development of “pocket museums” that feature multi-cultural assets, railroad history, civil war history, etc. This category of marketing the plan and the process calls for cultivating and accentuating everything that is historic about the downtown, and Florence in general. Interest groups, history buffs, and organizations including the Florence Museum can help implement this aspect of the marketing strategy.

• Graphic/audiovisual potentials

The Downtown Florence Revitalization Strategy includes many graphic illustrations of the sites, buildings, and future development plans that will be the subject of the marketing strategy. These can and should be used in many ways including the developer solicitation and public outreach processes. They may be used in PowerPoint presentations, as part of video presentations, or in various print media. Additional graphic illustrations may be desirable at some point to reflect new projects, ideas, and progress.

• Local, state, and federal level presentations

Marketing the plan and the process should also include a strategy to reach out to those individuals, policy makers, and decision makers in government that may influence development trends and future potential within the City. A list of appropriate agencies, departments, offices, etc. should be compiled, purpose of meeting or presentation set, and then a tailored message of the Revitalization Strategy delivered by FDDC officials or representatives of one of the many support groups associated with downtown revitalization effort as described in Section XII, Phased Implementation Strategy.

Tier Three ⎯ Marketing Key Components

Downtown Florence has many interesting and important components that should be the subject of special attention within the marketing strategy. In some cases, these components will be the subject of the project packaging and developer

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solicitation process, and thus benefit from the exposure that will provide. However, it is recommended that a parallel effort be mounted to focus attention on the role these components play in the history and future of Florence. Following are examples of key components and suggestions as to marketable elements:

• The Little Theater and its role in the community, as well as its potential role in the revitalization of downtown through a relocation and expansion effort

• The Florence Museum through its historic role, and its own role in downtown revitalization through relocation and expansion

• The Florence Center for the Arts in its mission to develop a facility downtown, and any intermediate presence such as a semi-permanent tent structure, sponsored arts events, etc.

• The Drs. Bruce and Lee Library, which has served, and will continue to serve, as a testament to Florence’s commitment to education and learning

• Other potential cultural facilities such as a Science South development project, a Multi-Cultural Center, adjunct museums, etc.

• The proposed Florence Business Incubator that can serve to reposition downtown merchants, property owners, and others in the area, for new opportunities that will emerge as the revitalization process takes hold

• The proposed downtown location for a farmers’ market, linked to the County farmers’ market that can draw from a regional population base

• Opportunities for new downtown residential and commercial projects, including examples of successful endeavors such as Oscar’s Salon, and proposed projects such as upper-floor conversions of historic buildings

Tier Four ⎯ Synergy With Other Marketing and Branding Efforts

The marketing strategy for downtown Florence should be in sync with other marketing efforts being undertaken in the City of Florence and elsewhere. These should include, but not necessarily be limited to, the following:

• The special events efforts

• The Florence Chamber of Commerce

• The Florence County Convention and Visitors Bureau

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• The State of South Carolina tourism bureau

• Florence civic, business, and cultural organizations and associations

Taken together, application of the four-tier marketing approach for downtown Florence can result in tangible effects, a new image, a sense of pride, and other aspects of a fully revitalized downtown area. The marketing effort should not be viewed as a one-time requirement, however. Indeed, plans must include a long-term commitment to the marketing effort, and the allocation of necessary resources to accomplish the goals and objectives inherent in the marketing and revitalization effort.

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Appendix

Observations/Comments on the February 26–28 Trip to Florence

We felt it would be helpful to summarize the comments received from the various groups and individuals we met with on our most recent trip to Florence. Some observations/comments:

• The majority of groups and individuals with whom we spoke felt positive about the plan as it is evolving.

• Representatives of both hospitals in the Florence area, Carolina Hospitals and McLeod, expressed support for the plan and a willingness to make non-critical properties available that will further the goals of the plan. This support is critical to the revitalization of the downtown.

• The Concerned Citizens group expressed concerns that investment in the northern part of the redevelopment area would not take place at all, or would not take place to the same extent. We feel that the right destination attraction on the Recycling property will be critical to the redevelopment of this area, and that pursuit of an appropriate use should be a high priority. In addition, the business incubator and the grocery store concept should also be vigorously pursued to ensure adequate help for minority entrepreneurs who wish to participate in the revitalization of the downtown.

• There is an urgent need for the DDC to build a database of existing buildings in the historic district and eventually in all three districts within the study area. This database should include address, pictures, number of floors, square feet per floor, historic value, structural condition, assessed value, ownership, availability, and real estate representation, if any. This will greatly enhance the ability of the DDC to facilitate redevelopment of the downtown.

• The three cultural groups (The Florence Museum, the Florence Little Theater, and the Center for the Arts) approved the general locations shown for their venues. Each felt positive about having separate and independent venues, allowing them to succeed on their own without worrying about the viability, identity, or program of the other venues.

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Each brought up some concerns with relocating to the downtown, however, as listed below:

¾ All three groups expressed concern regarding safety in the downtown.

¾ Each group will need assurances that there will be adequate, nearby, safe, and well-lit parking.

¾ Each group was concerned about overlap of uses from the other groups. Specifically, the Museum and the Little Theater expressed concern that the program for the Center for the Arts might interfere with each group’s ability to remain in the black. Care should be taken to ensure the viability of each organization through negotiation of programs. This is perhaps more incumbent on the Center for the Arts group since they are a new organization. Specifically, any gallery space and the smaller theater venue in the Center for the Arts program should be examined more closely. Regarding programming, the Little Theater was concerned about whether the CA group planned to put on touring Broadway-type theater productions, which they felt would be in direct competition with them. They also felt that the small 300-seat theater in the CA building program would threaten their ability to sustain their own similarly sized theater. If it is possible to eliminate the smaller theater in the Arts building, this might have the benefit of reducing the projected operating costs of the complex.

• Several local and regional developers have expressed an increased interest in the downtown. Particular interests expressed include new office, both new residential and residential in rehabbed downtown buildings, senior housing, and restaurants. However, most expressed concern about the safety and environment of the downtown at the present time and said that before they invest or decide to stay in the downtown that they must feel confident that the downtown will be substantially crime-free and that the environment will be substantially improved. Existing downtown business owners both small and large related recent stories of vandalism and theft and stated that they did not feel that the police are doing an adequate job to address these problems.

• More consideration should be given to new uses for the McLenahan School. It seems that viability of the facility for senior housing is marginal because the amenities are no longer competitive with newer products. One suggestion was to return the building to its use as a school, and use it as a magnet school for the arts. This location would be ideal since it is near the new Library and the planned location for other cultural uses. It might also include artists’ studio space. The existing health club facilities could remain.

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Documents

The Downtown Florence Revitalization Strategy · B. Medical/Mixed Use Project This project, shown at right, occurs within the Downtown Central District. The project evolved from the