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February 26, 2013. Urban Land Institute. Property Tax Appeals and Financial Opportunities Presented by a Challenging Market: Using the Tax Appeal Process and Understanding Tax Abatements and Incentives to Navigate a Down Market. Partnership for Action. State, County and Local Partners. - PowerPoint PPT Presentation
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Urban Land Institute
FEBRUARY 26, 2013
Property Tax Appeals and Financial Opportunities Presented by a Challenging Market: Using the Tax Appeal Process and Understanding Tax Abatements and Incentives to Navigate a Down Market
Partnership for Action
Lt. Governor Kim Guadagno
State, County and Local Partners
New Jersey Business
Action Center
New Jersey’s Bank
Financing small and mid-sized businesses
Administering State tax incentives to retain and grow jobs
Revitalizing communities through redevelopment initiatives
Supporting entrepreneurial development
Focus – Urban Redevelopment
City of Newark
Courtyard by Marriott Newark Downtown
In September 2012, Tucker Development’s $35 million Courtyard by Marriott became the first hotel in Newark’s downtown in over four decades.
Adjacent to the Prudential Center, the 150-room hotel includes 14,000 square feet of street-level retail; last November, it was announced that Joe’s Crab Shack would occupy nearly 5,400 square feet.
The development project generated an estimated 175 construction jobs and will create between 50-75 permanent jobs through the hotel and retail operations.
Courtyard by Marriott Newark Downtown
Economic Redevelopment & Growth Grant $6.58 million
Redevelopment Area Bonds $6.56 million
Recovery Zone Facilities Bonds (Essex County) $4.73 million
Equity* $10.0 million
First Mortgage $15.6 million
Financing Sources
*State Pension Fund
Courtyard by Marriott Newark Downtown
Without Incentives With ERG and Hub Market Range
Equity IRR 8.06% 11.10% 15%-20%
Cash-on-Cash Yield 6.18% 6.97% 8%-10%
Based on the expected generation of $28.5 million of incremental direct annual gross income, hotel occupancy and sales taxes over 20 years, and a 75% rebate of eligible taxes, there were deemed to be adequate funds to support the reimbursement of taxes to the project.
Present value of the Net Positive Benefit to the State totals $19.45 million.
Teachers Village
RBH Group is developing this $149 million retail, educational and residential project in downtown Newark, which will include 205 residential units, pre-marketed to Newark teachers; three charter schools and a daycare facility totaling 100,000 square feet; and, more than 20 on-street retail establishments.
The first phase of a larger development, Teachers Village will result in an estimated 450 construction jobs and 460 new permanent jobs.
The project was financed through a complex series of public and private investments that helped get major financial institutions to back the project after more than three years of negotiations.
Teachers Village
Urban Transit Hub Tax Credit $39.45 million
Economic Redevelopment & Growth Grant $20.5 million
Redevelopment Area Bonds $5.265 million
New Markets Tax Credits $38.9 million
Public Loans (CRDA, BCDC, City) $12.0 million
Community Development Block Grant $2.0 million
Senior Debt $31.7 million
Equity $12.7 million
Financing Sources
Teachers Village
Without Incentives With ERG and Hub Market Range
Equity IRR -6.04% 9.11% 15%-20%
Cash-on-Cash Yield 5.58% 7.25% 8%-10%
Although the potential returns appear to be below market-acceptable levels, RBH Group expressed a willingness to move forward because Teachers Village is the first phase of additional development the company plans as part of the overall SoMa Newark redevelopment plan.
In addition to the project site, RBH owns 5.9 million square feet of adjacent land, representing approximately $100 million in land purchased. RBH expects to make significant progress on additional phases in the next five to seven years, with the entire plan executed in the next 10 to 12 years.
Present value of the Net Positive Benefit to the State totals $7.4 million.