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Agenda 06-22-06 (2) From: 08/22/2008 11:28 __~.- '. '._',,"" ",," '--'O:-""T"'..~-.'..'''''''.'''''''-''''' . .....,_._..~~-.~..----:-.....,. 1372 P.001/002 f BOYNTON BEACH C.R.A. SPECIAL MEETING JUNE 22. 2006 5:55 P.M. HOLIDAY INN CATALINA 1601 N. CONGRESS AVENUE BOYNTON BEACH, FLORIDA AGENDA I. Call to order II. Approval of the Agenda m. Old Business A. Consider.don of the RFP for MLK Corridor BOYNTON BEACH CoMMUNITY IEDEVElOPMINT AGENCY 639 E. Ocean Ave. Sfe. 103 Boynton Beach, FL 33435 Offtce: 561-737..J256 · Fax: 561-737..J258 www.boyntonbeachcra.org err The City of Boynton Beach DEVELOPMENT DEPARTMENT DIRECTOR'S OFFICE ]O(} J~'. HO} '.V'l'nv IJRA ('IJ IJor LA'I A HI) P.O. IJOX :JJO JJO}'.V'l'O.v nl~~'I(.'IJ. FLORIDA :J:J.J2.-i-O:J]O TEl.; 3(J] -742-6:J72 J;~LY; ;,}(j] - 742-(}()SfJ II 'IF II '.IJO} '.VTO.V-IJFJA ('fl. ON(; From: Sent: To: Cc: Subject: Greene, Quintus Wednesday, June 21, 2006 5:07 PM Bright, Lisa Brooks, Vivian; Bressner, Kurt; Cheraf, James; Hawkins, Wilfred Heart of Boynton RFP Lisa - The attached memo was prepared yesterday (Tuesday) afternoon prior to the action taken by the City Commission last night regarding the then pending Heart of Boynton eminent domain cases. As expected, it has taken some time to determine whether or not there is any point in sending it out now. However, the decision is that, the City Commission action notwithstanding, there is still a need for certain items to be addressed in the Request for Proposals (RFP) that the CRA Board is expected to review and approve Thursday evening. Accordingly, we are requesting that the attached memo be shared with your board members. In addition to the items identified in the memo there is also a concern that a development proposal prepared in accord with the RFP as currently drafted may not be consistent vvith the ordinance adopting the Heart of Boynton Community Redevelopment Plan. DEPARTMENT OF DEVELOPMENT Memorandum DO 06-018 TO: FROM: DATE: RE: Lisa Bright, CRA Executive Director Quintus Greene, Development Director 06/20/06 Heart of Boynton Request for Proposals It is gratifying that the CRA Board has decided to issue a Request for Proposals (RFP) for redevelopment in the Heart of Boynton (HOB) Community. It is apparent that it is in everyone's interest that the selection of a developer to implement part of the redevelopment plan for this community be as open, fair and competitive as possible. It is equally important that the RFP document itself faithfully represent the expressed will of the community and not be seen to be biased in any way toward any of the development entities that may have expressed an interest in the project. It is with this in mind that the following observations, concerns and recommendations are offered regarding the draft Request for Proposals. I am pleased that you were able to use much of the draft RFP that was provided to you in April of this year. However, I am concerned about some of the changes that were made from that original draft that could have a significant impact, not only on the ability of the RFP to attract a range of qualified developers, but also on the nature of the development that eventually occurs in the community. The first of these concerns involves designating project boundary as being along 10th Avenue (Martin Luther King Blvd.) between Seacrest and Federal Highway. Unlike, most Requests for Proposals, the issuing agency in this case does not have complete land control in the designated project area. This fact alone may make this a difficult proposal to sell and act as a deterrent to some otherwise very capable developers. Any selected developer will have the unenviable task of not only trying to negotiate property acquisition with the issuing agency, but also with no less than 25 separate residential property owners, of whom at least six are homesteaded, in addition to at least three churches and a charter school. Since the city no longer has the ability to exercise eminent domain for economic development purposes, anyone of these property owners, for reasons of emotional attachment alone, could hold out and delay the implementation of the project for years. For this reason, I think it would make more sense for the designated project area in the RFP to be limited to the previously defined Phase I area along Martin Luther King Blvd. between Seacrest and N.E. 1st Street. Assuming the City is successful in its current court filings, the City and/or the CRA will control all of the land in this area with the exception of five parcels (owned by four separate individuals ). S:\DevelopmentlAdministrationIMemorandums\2006106_018 Bright - CRA,doc DO Memorandum 06-018 Heart of Boynton Request for Proposals 06/22/06 Pg. 2 of 3 None of these privately owned parcels in this Phase I area is residential and all of the owners are absentee investors, who are more likely to be guided by purely economic rather than emotional considerations. As a result, the opportunity to assemble a manageable 5 to 7 acre developable parcel is much greater and would, therefore, be a more attractive option to potential developers. Moreover, it should also be noted that there is no inherent requirement, obligation or community expectation that the redevelopment of the entire Martin Luther King Blvd. Corridor, from Seacrest to Federal Highway, be done at one time or by only one developer. On the contrary, at the City Commission Meeting of April 15, 2003, development of the Phase I area received broad community support and was the only part of the Heart of Boynton Plan formally approved by the City Commission for implementation. The so-called "Phase 2" Heart of Boynton project, between N.E. 1st street and Federal Highway, was an artificial invention solely for the benefit of one particular development entity. Therefore, it is recommended that the project area described in the RFP reflect the established Phase I area only. The second area of concern involves the elimination of the word "scale" from the project description. As has been mentioned on a number of occasions, the Heart of Boynton is primarily a single and two family neighborhood and deserves the same consideration being given to its character, scale and integrity as any other single and two family neighborhood in the city. While the plan calls for multi- family housing in the Martin Luther King Corridor, the plan itself (page 69) provides an example of how this can be achieved while at the same time preserving the community scale. It is expected that potential developers will insist that market forces require an increase in multi-family {jensities. Thus, our proposed Mixed-Use Zoning for the area has taken this fact into consideration. However, it is important to let potential developers know, up front in the RFP, that there remains an expectation, regardless of density, that overall community scale will be respected. It is not our intent to tell them how to do it, only that it should be done. Accordingly, it is recommended that the word "scale" be added back to the project description. The third area of concern also involves the project description. In particular the elimination of the following paragraph contained in the original draft RFP. "Consistent with code requirements, It is expected that the physical features and density of the new development will compliment (not replicate) the existing character of the community. Accordingly, building heights should not exceed 45 feet and the style, color and building materials should reflect the open, airy sub-tropical characteristics of south Florida and the Caribbean (Floribbean)." Although there has admittedly been some controversy about limiting development to a maximum height of 45 feet in the Heart of Boynton (character and scale again), one need only to look at the Harbors development adjacent to Intracoastal Park, on Federal Highway and Gateway (which is 43 feet in height) to get an idea of the impact that any structures over 45 feet in height along Martin Luther King Blvd. would have when backed up to the one story single family homes on N.E. 9th and 11th Avenues. The height issue aside, however, this paragraph is essential for any potential developer to understand that their proposal will also be evaluated, in part, on the extent that it respects and reflects the urban S\DEVELOPMENTIADMINISTRATION\MEMORANDUMS\2006{)6_018 BRIGHT - CRADOC DD Memorandum 06-018 Heart of Boynton Request for Proposals 06/22/06 Pg. 3 of 3 design concepts inherent in the adopted Community Development Plan. For example, both the new Wilson Recreation Center and the proposed Sea crest Village development on the former Boynton Terrace site reflect several of the design elements suggested by this paragraph. Therefore, It is recommended that the foregoing paragraph be re-inserted as part of the project description in the RFP. Finally, it has been noted that the paragraph in the original draft that addressed the possible role of the non-profit faith based Community Development Corporations (CDC's) in the area has also been eliminated. One of the reasons that these organizations were formed was to provide an opportunity for a community based development entity to partner with a private, for profit, developer in the redevelopment of the community. This grew out of concerns by residents that, as has so often happened in other historically African-American communities, outside developers would come in and "take over" and "gentrify" the community without any significant local involvement. Accordingly, it is recommended that language be inserted in the RFP asking the potential developer to address what role, if any, they see for participation by a local faith based CDC in their proposed development. S \DEVELOPMENT\ADMINISTRATION\MEMORANDUrvlS\2006 06-018 BRIGHT - CRADOC DRAFT Request for Proposals Heart of Boynton Community Redevelopment Project The City of Boynton Beach, Florida is soliciting proposals from qualified development organizations to implement Phase One of the Heart of Boynton Redevelopment Project Background: The City of Boynton Beach, with a population of about 63,000, is the third largest city in Palm Beach County, Florida, It is located approximately 45 miles north of Miami and 15 miles south of West Palm Beach. This puts it in the heart of southeast Florida's rapidly growing tri-county Miami-Dade/Broward/Palm Beach Metropolitan area. By virtue of its location, Boynton Beach has direct access to the Inter-coastal waterway and both Interstate 95 and the Florida Turnpike. It also has a market of more than 6 million people within a two-hour radius and ready access to three international airports, two major rail lines, as well as the Tri-Rail regional commuter rail system, In spite of its size and location, however, a perception developed over the years that Boynton Beach was destined to lag behind similarly situated neighboring communities. Unlike cities such as Delray Beach and Lake Worth, for example, Boynton Beach has been slow in attracting new, residential and commercial development to the older parts of the city east of Interstate 95, including its traditional downtown area. In late 2000 the Boynton Beach City Commission directed staff to take certain steps, which would eventually have the effect of altering this perception. The first of these steps involved converting the City's Community Redevelopment Agency, a tax increment financed redevelopment body under F.S. Chapter 163, into a semi-independent body with its own Board of Directors and updating the Community Redevelopment Plan for the agency. Staff determined that this plan update should be accomplished in five parts, each representing a specific geographic sector of the Community Redevelopment Area. Beginning with the adoption of the Federal Highway Corridor Plan, the first of the five part CRA plan update, the City has introduced new mixed-use land use and zoning in the corridor which has had the effect of attracting new residentially based mixed use development to the city's downtown core as well as other locations in the corridor. The Heart of Boynton Community Redevelopment Plan represents the second of the five-part CRA plan update. The area consists of approximately 338 acres located immediately north and west of the historic downtown core of the city. According to the 2000 census, the area contained 3,193 people, 89 percent of whom were African- American with a median household income of approximately $27,100. Given the location, history and demographic makeup of the community, there is a natural concern that redevelopment would mean "gentrification" and displacement of existing residents. Partly to allay these concerns, the City of Boynton Beach has assured the two faith based non-profit Community Development Corporations in the area of its commitment to their participation in the redevelopment effort, either as the developer of specific components or as an equity partner of the selected for profit developer. Page 2 Project Description: The goal of the Heart of Boynton plan is to promote the physical and social revitalization of the community through selective property acquisition and clearance, combined with new single family and multi-family housing infill development. The objective is to introduce the kind of housing and amenities that would create an environment attractive to moderate-income families and young professionals, while maintaining the basic character, scale and integrity of the community as a whole, To this end, an approximate four square block area, centered on the intersection of Seacrest and Martin Luther King Blvd, (10th Ave.), has been selected as the site for Phase One of this redevelopment effort. The selection of this location was influenced both by its high visibility and the opportunity to remove several long-standing blighting influences in the core of the community. The City of Boynton Beach, along with the Community Redevelopment Agency, has initiated the process of land assembly by acquiring all privately held property in this immediate area. The existing residents will be relocated and the site will be cleared of all buildings and offered for redevelopment. While most parcels in this area will be acquired through negotiation, it is expected that it may be necessary to take a few parcels through the condemnation process, which could impact the timing of acquisition. The area east of Seacrest to HE 1st Street between gth A venue and the middle of the block between MLK and 11th Avenue, consisting of approximately 5 acres has been selected for a new mixed use development composed of multi-family housing and neighborhood scale retail and service uses. This area has been designated Phase 1 and is currently zoned C-2 Neighborhood Commercial and R-2 Duplex Residential. Funding for property acquisition will come primarily from the tax increment funds of the City of Boynton Beach Community Redevelopment Agency. Subsequent phases of the project will include a continuation of new mixed-use development east along MLK Blvd. from NE 1st Street to Federal Hwy., in the area between 9th Avenue and the middle of the block between MLK Blvd. and 11th Avenue. In addition the area west of Seacrest to NW 1st Street between MLK Blvd. and 11th Avenue, consisting of approximately 5.3 acres, has been designated for new single family housing (estimated at 25 units) and the area along the south side of MLK, immediately west of Seacrest will become part of an expanded Sarah Sims Park Consistent with code requirements, It is expected that the physical features and density of the new development will compliment (not replicate) the existing character of the community. Accordingly, building heights should not exceed 45 feet and the style, color and building materials should reflect the open, airy sub- tropical characteristics of south Florida and the Caribbean (Floribbean). Page 3 The Proposal: The development proposal should include the following: . A written general statement of the qualifications of the proposing firm or entity, including examples of experience with similar projects, as well as background information on the principals. A copy of the most recent Federal Form 254 should be provided, if available. If the selected development entity is a public corporation, it may also be asked to provide copies of its annual report or SEC filings as appropriate. · A detailed description of the proposed project, with text and graphics. This should include a schematic site layout plan, with parking locations and typical floor plans and elevation diagrams as appropriate. · A preliminary estimate of the total project cost, including any required infrastructure costs, along with the types and sources of financing. . A statement outlining the role, if any, a local non-profit Community Development Corporation would play in the proposed development project. · A promotional PowerPoint presentation, consisting of up to 10 slides should be available for a possible post submission interview. Evaluation and Selection: A seven-member committee composed of Community Redevelopment Agency and City of Boynton Beach staff, as well as selected members of the Heart of Boynton Community will conduct the initial evaluation. Of particular importance to the Committee will be the compatibility of the project with the desired character of the community, the developers experience with projects in similar communities and how the developer views the role of the local community development corporations. The best Phase 1 sub-area development proposals will be presented in a PowerPoint slide presentation before public officials and a group of community residents. Following this public presentation, a developer will be selected and the City and/or the Community Redevelopment Agency will then negotiate a contract for the sale of land. Page 4 Submittal Requirements: To be considered, ten bound copies of the Development Proposal should be submitted to the following: Boynton Beach, FL 33425 Submittals should be received not later than 5:00 pm Eastern Time on Friday, ,2006. A pre-proposal meeting will be held on , 2006, at Boynton Beach, FL 33425. The purpose of the meeting will be to introduce the City's project team and answer any outstanding questions regarding the community, the project or the submittal and evaluation process. Contacts: All correspondence and requests for information regarding the Heart of Boynton community, in general, and this project in particular, should be directed to: Boynton Beach, FL 33425 Telephone: Fax E-mail Revised April 21, 2006 BOYNTON BEACH COMMUNITY REDEVELOPMENT AGENCY HEART OF BOYNTON COMMUNITY REDEVELOPMENT PROJECT MLK CORRIDOR ~uest for Proposal (RFP) The Boynton Beach Community Redevelopment Agency (CRA) is soliciting proposals for a Master Developer for the Martin Luther King ("MLK") Corridor in the Heart of Boynton ("HOB"). Interested parties should familiarize themselves with the HOB Community Redevelopment Plan which is available online at www.bovntonbeachcra.orq. ' Background: The City of Boynton Beach has a population of about 66,000, making it the third largest city in Palm Beach County, Florida. It is located approximately 45 miles north of Miami and 15 miles south .of West Palm Beach. This places Boynton Beach in the heart of southeast Florida's rapidly growing tri-county Miami- Dade/Broward/Palm Beach Metropolitan area, Boynton Beach has direct access to the Intracoastal Waterway and both Interstate 95 and the Florida Turnpike. .It,also has a market of more than 6 million people within a two-hour radius and easy access to three international airports, two major rail lines, and the Tri-Rail regional commuter rail system. The HOB area consists of approximately 338 acres northwest of the historic downtown. According to the 2000 census, the area contained 3,193 people, 89 percent of whom were African-American with a median household income of approximately $27,100. Project Description: The MLK Corridor project area is the area described as 10th Avenue east of Seacrest Boulevard and Federal Highway, and from N.E, 9th Avenue and the middle of the block between MLK and 11th Avenue (see attached map). The goal of the HOB Plan is to promote both physical and social revitalization of the community. To achieve this goal, it is necessary to introduce new housing, a neighborhood pedestrian retail corridor and other public amenities creating an environment attractive to moderate-income families and young professionals while maintaining the character and integrity of the cornmunity as a whole and must provide opportunities for existing residents that do not meet the aforementioned criteria, The CRA and the City of Boynton Beach ("City") have acquired more than fifteen properties in the subject area and plans are under way to acquire an additional nine properties. It is the intent of the CRA and the City to sell its real property in this area. The area is currently zoned C-2 Neighborhood Commercial and R-2 Duplex Residential. However, the City is in the process of amending the land use and zoning to the Mixed-use Low 1 designation which allows up to 20 units per acre, The Treasure Coast Regional Planning Council (TCRPC) recently completed a Feasibility Study on the HOB Plan, This report is available online at www,boyntonbeachcra,orq and will provide further guidance to the development proposal. The development proposal should identify a cohesive plan for a mixed-use development composed of multifamily housing and neighborhood reta.il with service uses. Proposal Criteria: The development proposal must include the following: . Name and address of the proposing firm or entity. . A list of the professional team members, historical background information on the principals and a description of their experience with similar projects, . A qualifications statement of the proposing firm or entity, including verifiable examples of experience, photographs, addresses and project information. Additionally, documented experience in the redevelopment of an MLK Corridor of like size or like experience is required, . A copy of the most recent Federal Form 254 should be provided, if available. If the selected development entity is a public corporation, it may also be asked to provide copies of its annual report or SEC filings as appropriate. . A certificate of good standing from the Secretary of State, Division of Corporations. . Proof of financial capability to complete a project of this scope (financial information should be submitted in a separate, sealed envelope or package and marked 'confidential'). 2 · Preliminary development pro forma, to include the amount the proposer is offering to pay for the land, · Detailed description of the proposed project with text and graphics. This should include a schematic site layout plan, with parking locations and typical floor plans and elevation diagrams as appropriate. · Outline of the proposed plan must generally adhere to the adopted HOB Plan and the Treasure Coast Regional Planning Council Feasibility Study (available upon request from the CRA). · A signed written statement of a willingness to purchase the CRA and City's MLK Corridor property. · A signed written statement that the proposer will agree to their development plan being subject to future policy determinations of the CRA Board as outlined in the Treasure Coast Regional Planning Council Feasibility Study. · A promotional power point presentation, Only those proposers meeting every criterion will be invited to present their proposal to CRA Board during its selection meeting. Evaluation and Selection: A three-member selection committee comprised of a CRA representative, a City representative and a member of the Heart of Boynton Community will conduct the evaluation. The committee will select the top two development proposals which will be presented by the proposers at a CRA Board meeting for final selection, However, the committee is not obligated to select any proposal and may re-issue this Request for Proposals if necessary. Timeline: June 23, 2006 June 30, 2006 July 24, 2006 July 28, 2006 Publication of Notice of the RFP Pre-proposal Meeting for Interested Parties Proposal packages due by 4:00 p.m. Review and selection of top two proposals (This meeting will be held pursuant to the Govemment-in-the-Sunshine Law, Section 286,011, Florida Statutes, however, public comments, inquiries and/or objections will not be taken at this meeting), Presentation of top two proposals to CRA Board meeting and selection of rnaster developer August 8, 2006 3 Submittal Requirements: Provide twelve bound copies of the Development Proposal to: Lisa Bright Executive Director Boynton Beach CRA 915 S, Federal Highway Boynton Beach, FL 33435 Submittals must be received no later than 4:00 p.m, EST on Monday, July 24, 2006 at the CRA offices located at 915 S. Federal Highway in Boynton Beach, The failure to strictly meet this deadline will result in the submittal being rejected and returned unopened. Any question regarding whether a submittal has been submitted timely shall be resolved by reference to the time kept at the CRA office by the CRA's receptionist or other delegated representative for the receipt of the submittals. A pre-proposal informational meeting will be held on June 30, 2006 at 10:00 a.m. at the CRA Offices, 915.s. Federal Highway in Boynton Beach, The purpose of the meeting will be to answer any outstanding questions regarding the project and attendance is strongly encouraged. Contacts: All correspondence and requests for information regarding the Heart of Boynton community, in general, and this project in particular, should be directed to: Lisa Bright CRA Executive Director Boynton Beach CRA 915 S. Federal Highway Boynton Beach, FL 33435 E-mail brooksvi@cLboynton-beach.fl.us Telephone: (561) 737-3256 Non-Discrimination The selected developer, its successors and assigns, agree that no person shall on the grounds of race, color, disability, national origin, religion, age, familial status, sex, or sexual orientation be subjected to discrimination. Should such discrimination occur, the CRA will provide notice to the Developer of a breach of this condition and thereafter, Developer has 15 days to demand arbitration as to the claim of discrimination, The parties will then mutually agree to an arbitrator and if they cannot agree, the auspices of the American Arbitration Association 4 will govern. This arbitration is independent of any other actions being taken by other agencies. However, a finding by any other agency or court that such discrimination has occurred may be relied upon by the CRA as conclusive proof of a breach of this provision. If Developer does not demand arbitration within 15 days, or if arbitration is conducted and it is determined by the arbitrator that discrimination occurred, the CRA shall have the right to terminate any such Agreement it has entered into with Developer and pursue any and all other lawful remedies. Protests Any and all decisions by the CRA or committee to modify the schedule described herein, request additional information, reject insufficient. or unclear proposals, formulate an objective point system for review, rate and rank proposals, negotiate agreements, abandon negotiations, approve agreements, etc., shall be at the CRA's or committee's sole discretion and no protests whatsoever shall be considered by the CRA or committee. Submittal of a reply to this RFP on the part of any and all proposers constitutes acceptance of this policy. Formation of Contract The existence of a contractual relationship between the parties is contingent upon the terms and conditions of the contract being negotiated to the satisfaction of both parties and the execution of said contract by both parties. The winning proposer will be granted a contract for a period yet to be determined. The contract documents shall include, but not be limited to, terms and conditions of this RFP, the submitted proposal inclusive of qualifications, the negotiated services as agreed by both parties, and the ordering mechanism. Permits, Taxes and Licenses Proposer shall at its own expense obtain all necessary permits, pay all licenses, fees and taxes, required to comply with all local ordinances, state and federal laws, rules and regulations applicable to the business to be carried on under the contract. Public Records Florida law provides that records of a public agency shall at all times be open for personal inspection by any person. Section 119.01, F,S., The Public Records Law. Information and materials received by the CRA, in connection with a subrnittal shall be deemed to be public records subject to public inspection. However, certain exernptions to the public records law are statutorily provided for in Section 119.07, F.S. If the Proposer believes any of the information contained in its Submittal of Proposals is exernpt from the Public Records Law, then the Proposer must in its response specifically identify the material which is deemed 5 to be exempt and cite the legal authority for the exemption and the CRA will evaluate the material to determine whether it is exempt from the Public Records Law. Otherwise, the CRA will treat all materials received as public records, Public Entity Crimes "A person or affiliate who has been placed on the convicted vendor list following a conviction for a public entity crime may not submit Proposals, bids or qualifications (as applicable), in response to a solicitation for said products/services in support of a public entity, and may not submit qualifications, a proposal or bid on a contract with a public entity for the construction or repair of a public building or public work, may not submit bids on leases of real property to a public entity, may not be awarded or perform work as a contractor, supplier, subcontractor, or consultant under a contract with any public entity, and may not transact business with any public entity in excess of the threshold amount provided in Section 287.017, for CATEGORY TWO for a period of 36 months from the date of being placed on the convicted vendor list." Drug Free Workplace Certification All Proposers must complete and sign the attached "Drug Free Workplace Certification by Vendor", and submit it with their Proposals. Failure to do so may result in rejection of your proposal. 6 1:IClienl DocumentslBoynton Beach CRAI2419,0111MISCIMLK Corridor RFP.doc 7 CERTIFICATION OF DRUG FREE WORKPLACE PROGRAM I certify the firm of responding to this RFP maintains a drug-free workplace program, and that the following conditions a re met: (1) We publish a statement notifying employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the workplace; and specifying that actions will be taken against employees for violations of such programs. (2) We inform employees about the dangers of drug abuse in the workplace, the company's policy of maintaining a drug-free workplace, any available drug counseling, rehabilitation, and employee assistance programs, and the penalties that may be imposed upon employees for drug abuse violations. (3) We give each employee engaged in providing the commodities or contractual services included in this RFP a copy of the statement specified in Subsection (1). (4) In the statement specified in Subsection (1), we notify the employee that, as a condition of working in the commodities or contractual services covered under this RFP, they will abide by the terms of the statement; and will notify the employer of any conviction of, or plea of guilty or nolo contendere to any violation of Chapter 893 or any controlled substance law of the United States or any state, for a violation occurring in the workplace no later than five (5) days after such conviction. (5) We impose a sanction on, or require the satisfactory participation in a drug abuse assistance or rehabilitation program if such is available in the employee's community, by any employee who is convicted, (6) We make a good faith effort to continue to maintain a drug-free workplace through implementation of this section, As the person authorized to sign the statement, I certify that this firm complies fully with the above requirements. Authorized Signature: Date Name & Title (typed) 8 9 BOYNTON BEACH COMMUNITY REDEVELOPMENT AGENCY Heart of Boynton Neighborhood Concept Plan - Economic Analysis (May 2006) Executive Summary The Treasure Coast Regional Planning Council (TCRPC) was requested by the Boynton Beach Community Redevelopment Agency (CRA) to provide an assessment of the "Heart of Boynton" Neighborhood Concept Plan (a portion of the Heart of Boynton Community Redevelopment Plan). As part of the scope of work, the CRA requested that an economic analysis of the redevelopment district be conducted, with a focus on historic and future market conditions, current land supply, densities, and development potential based on proposed land use and zoning modifications. The analysis includes estimated phasing, pricing, and absorption of residential and non-residential uses, considering area supply and demand conditions, as these factors are relevant in developing a master plan for future redevelopment success within the area. To complete this scope, TCRPC retained Metrostudy, a nationally recognized firm specializing in market and economic analysis. This executive summary describes the general framework along with summary findings and recommendations of the review. "Heart of Boynton" Plan and Market Overview In 200 I, the CRA adopted the "Heart of Boynton Community Redevelopment Plan," which assessed land use and general market conditions of the district and set forth a series of planning (land use and zoning, land assembly, and re-organization) and program recommendations. The CRA conducted some of the recommended activities, such as land acquisition and limited public improvements; however, the land use and zoning recommendations were not implemented completely. From a market standpoint, past redevelopment efforts in the Heart of Boynton District have suffered due to three main issues: (I) lack of a successful "seed" project, spurring further construction activity; (2) a small, loosely organized downtown area without a concentrated commercial/retail core area from which to expand; and (3) limited development incentives such as subsidized land costs, increased density, or flexible development regulations that would allow for innovative design features. Overall demand for housing has softened in south Florida, due to affordability issues, increasing interest rates, and resale supply. A final challenge is the market acceptance of the surrounding community, Competition from a number of other attached and multifamily projects in more desirable areas poses an additional threat to development in the Heart of Boynton District. Economic Analysis of "Heart of Boynton" Plan It:'R P"'C ~.!.r.2stucty DRAFT (rev. Mar 2(06) The Heart of Boynton District does have some competitive advantages, including location near a major highway and along tv,'o main north-south roadways. close proximity to the beach and other retail activity as well as a number of large employers and its inclusion within a designated redevelopment area. Community infrastructure, in terms of schools, parks and community centers, are mostly in place, reducing the cost needed to support any additional population increases brought on by new development. However, no comprehensive evaluation has been conducted to determine need for additional water or wastewater infrastructure or capacity given increased residential development activity in the District. Pricing, Phasing and Absorption Based upon the proposed land use and zoning plan in the 200 I Heart of Boynton Plan, a maximum of 895 new units could be allowed for those areas east of Seacrest Boulevard via density increases if the plan's corresponding recommendations were implemented, Recent CRA discussions suggest 15% (or 134 units of the 895) should be set-aside for workforce housing, Market-Rate Pricing and Absorption: Pricing of Heart of Boynton units will depend on a number of factors, such as design, development timeline, and state of the housing market. If left solely to market forces, the Heart of Boynton District would likely not see any significant amount of redevelopment until nearby "seed projects" were well established, and demand for downto\vn housing increased, If the design, amenities, and pricing were on par with what has been experienced in other CRAs in southeast Florida, a laO-unit town-home or low-rise condominium project could see a sales pace upwards to ten-to-fifteen units a month. Modified Pricing and Absorption: If the Heart of Boynton District were to receive assistance from the CRA in terms of land acquisition and assemblage, developers should be able to offer more affordable products that are not solely market-driven and can better address the needs of the neighborhood, To complete the plan evaluation, four different development scenarios were modeled to estimate unit prices based on housing densities: Scenario 1: 10.8 units per acre (per 2001 Plan recommendations) Scenario 2: 20 units per acre Scenario 3: 30 units per acre Scenario 4: 40 units per acre Each scenario was evaluated in terms of product type, construction costs, likely absorption, land prices, and developer profit. Economic Analysis of "H~art of Boynton" Plan JJ-';'.Rll ~.!!~study II DRAFT (rn' Mil\' 2(06) General Findings and Recommendations Based on the analysis, the following existing conditions may hinder successful redevelopment activities in the Heart of Boynton CRA: · Current densities will not yield financially feasible projects given land costs, construction prices, and market conditions unless CRA participation occurs, · The Community Redevelopment Agency appears to have overpaid for the land that it purchased, at an average price of $1.1 million per acre, which has artificially inflated land costs for the private sector. · There is a "market imbalance" between land costs and product pricing that will need to be pro-actively addressed by the CRA for housing products of appropriate scale, density and type to be constructed. Successful redevelopment of the Heart of Boynton District will hinge on the CRA's success to acquire and assemble land for future housing in a manner that can enhance and maintain the community's cultural continuity. A controlled phasing plan, which utilizes both market forces and CRA assistance, would allow for the redevelopment of the Heart of Boynton area to occur over the next ten years, given favorable economic conditions. The densities in the 200 I HOB plan are too low for pure, unassisted market response at this time, but with focused density increases and CRA financial assistance, it appears that appropriately scaled residential development can occur. The density increased should be tied to specific CRA goals, such as workforce housing or housing geared to residents of the neighborhood. If the CRA is focused, specific CRA-assisted development should serve as a catalyst to help lead the market in desired redevelopment activity with TIF reimbursement to the agency over time, The ideal phasing of development within the Heart of Boynton is difficult to determine, given market forces and challenges. There are three likely situations that will occur, each depending upon how the CRA and City of Boynton Beach decide to proceed: · Let the Market Dictate Development · CRA-Assisted Development · CRA Promotes Initial Development, Then Allows Market To Take Over The CRA would be well-served to look to comparable redevelopment communities with similar conditions, such as the Delray Beach CRA and its programmatic approach to the West Atlantic neighborhood, to develop and implement programs for the Heart of Boynton. To create a catalyst project for the neighborhood, the CRA should seek to develop a public/private partnership with an interested developer to create a catalyst pilot project, cautiously sized to ensure successful absorption but big enough to create energy for adjacent properties. Finally, it appears the Heart of Boynton District would be benefited by a community-based discussion to address concerns related to density increases, building heights, stagnation of development activity, and CRA plans to Economic Analysis of "Heal1 of Boynton" Plan 't'r: R I' C ~.!.~study iii DRAFr (reI'. Mar 200(j) stimulate development in the area, With the afore-noted steps, it appears the Heart of Boynton District can redevelop in a manner that v"ill create housing for its residents, provide new \\iorkforce and market-rate housing for the community to improve its sustainability, and ultimately, provide financial benefit (reimbursement) to the larger eRA district. Economic Analvsis of "Heart of Bovnton" P!an ~ ~.!!~study , J;. T...... ~ 1\ IJRI\FT (Ii'\'. M<I' 20061 Introduction The Treasure Coast Regional Planning Council (TCRPC) was requested by the Boynton Beach Community Redevelopment Agency (CRA) to provide an assessment of the "Heart of Boynton" (HOB) Neighborhood Concept Plan, which provides redevelopment analysis and recommendations for one of five districts within the CRA. In particular, TCRPC was asked to focus upon the densities recommended in the 200 I Plan and determine their economic viability versus alternate density scenarios. This analysis included an economic evaluation of the redevelopment district, with a focus on historic and future market conditions, current land supply, and development potential based on proposed land use and zoning modifications. The analysis includes estimated phasing, pricing and absorption of residential and non-residential uses, considering area supply and demand conditions, as these factors are relevant in developing a master plan for future redevelopment success within the area. To complete this scope, TCRPC retained Metrostudy, a nationally recognized firm specializing in market and economic analysis. The analysis, findings and recommendations are set forth below. "Heart of Boynton" Overview The Boynton Beach CRA was initially established in 1981 with a l80-acre focus on properties east of Federal Highway. Over time, the agency was expanded to include a total of 1,614 acres, spread among five districts: Federal Highway, Heart of Boynton, Boynton Beach Boulevard, Town Square, and Ocean Avenue. The Heart of Boynton District, consisting of approximately 350 acres, is the western-most portion of the CRA and was included in the CRA as part of its 1996 expansion. The district is generally located south of the Boynton Beach canal and Martin Luther King, Jr. Blvd., north of Boynton Beach Boulevard, west of North Federal Highway, and east of 1-95, and it is centered around Seacrest Boulevard which runs north/south through its center. According to CRA presentations on the agency's website, the following five goals are noted in particular: · Maintain Character · Encourage Home Ownership · Repopulate · Minimize Gentrification Economic Analysis of "Heart of Boynton" Plan 'f C R P ~. ~~2study - ,--- : -- --,; -~'~.: i;-:~.~~~f!:T .;'r:,;k:'(,i .' ~~4)~~;31" ~- ,.~..~_.. . ;-''f , '7~~.:,t--"._. _. ,- ~:_::"'l,.:_.___ .' : ,1/ ' ----... . . , 'f ':\';';"', i)~ ~.--~_.:~~-_.-. '-'. . -: . ~ ~ ._1 {, :H ! , ., wr. ., eRA Area _____ ,If 01' B page I DRAFT (rn'. May 2(00) . Maintain Community Scale (SOURCE: Heart of Boynton powerpoint, CRA website, April 2006) Review of 2001 Heart of Boynton Plan In 200 I, the CRA adopted the "Heart of Boynton Community Redevelopment Plan" after extensive public input spanning six months, The plan documented the socioeconomic and demographic conditions in the district, noting it was of lower income and economic viability than the other districts within the agency's purview, According to the Plan, more than four hundred residents participated in the process, The Plan utilized census data to indicate the Heart of Boynton district contained approximately 3,200 residents who were predominately African- American. Median income of the district was indicated to be low, averagmg $27,134 annual per household, HEART OF BOYNTON COMMUNITY REDEVELOPMENT PLAN Strategic Planning Group, Inc. Econornict. I PWuting I EeooomOe o-.~ PO 801 ssot." J_""~ Fllnn451'O PI!OIW 1&ICI~ 21,1. P!...j.ft fill lJl4.lf "1'31-)OK The 200 I HOB Plan documented the land use characteristics as mixed, with residential predominating the district west of Seacrest Boulevard, and a mix of mostly commercial and industrial with a lower quantity of residential east of Seacrest Boulevard. Densities in the district were relatively low, ranging from roughly 5 to 7.26 du/acre for low density residential (single family and duplex) to 9.86 du/acre for multi-family residential. l!1 ,.1. ..".........'. '..... .If;~.'l\:~...'...}. 41r~""- ; ..~. -.':'. ".-'1...... "If,: '<'1"1"1" . '. ..: ". t' , ; . J.tli". .J.. '<l ,,I........., \lIt.11If'" 1/1 ':f'-" 1","'..I.Id. "__"11"'/' ..:rs-......:...:-:. ..: I.'..~ _-.."..:,"'.'. ~t" --~-. <II.' "-'wnII.. "W : :. ...,....'~~ :." ~.' ....-.... :i!!l. ~..'i ~ I' '.. ,.I".....~..~I .!.... '..'...'...:,.....'.. ...... :\;'.. .....'.. 11."~ '.,' ..,. . --. : . '1' '. ".".' ",..:. I:t.:', I ':1 :j .' ,"f' '.,....;, r!'D ;""" -Mi:. "J.>,' .,. ,."J{,' -.,,~: - ... ",..'. j'n~. l,j ... ~ ......,.. -'!II""" P -_...- =. ~:-.~ ,..... . 1IT'1I ". J "~f:'" .t ""'!'= -~ J _!! ...::~ ! -; -~t -n A .... III'" ............,....- ... ..' Economic Analysis of "Heart of Roynton" Plan ilR"P'! ~.!.'l',study , RMPI'iCH'''-'~ 't-.C As,,"'."'!"; r ...' 1--....-. f ,=::.;:;;::. ( ---...I....,. I~-.-- ... . :::::-..::::- I --~ l.-~ A lIIIII_ . . " - ..............-.. -- ,,,1 \felt) C page :2 DRAFT (/(', ,Hm' 20(}(J) The District contained several notable parks, such as Wilson Center, Sara Sims, Palmetto Park, and Barton Park, gardens, and two schools: Poinciana and Galaxy Elementary, Property ownership in the Heart of Boynton district was described as highly fragmented, with 1151 individual parcels. There were 889 separate property owners, mostly local, with 414 owner-occupied parcels. The property platting within the district appeared to be similar in size to other residential and mixed- use districts along the FEC corridor in the southeast Florida region. Platting seemed to indicate a general pattern of six lots per acre (roughly .16 acres per lot), with an unusual series of curvilinear streets immediately west of Seacrest Boulevard in the center and southern portions of the District. The lot platting pattern presented challenges for land assembly, a point well-emphasized in the report. Economic Analysis of "Heart of Boynton" Plan 1 (' R I' C ~~study i ..1 ,- .::-_'- f"'"''-.-, PlnIII-'1zI ~;:.';:~ ____llll -- r....' M"pD page 3 DRA~T (rev. Muv 2006) 200 I Plan Recommendations The 200 I HOB Plan contained a series of land use, zoning, and programmatic recommendations for the future redevelopment success of the district. These are generally discussed below, Property Reorganization Instead of maintaining the fifteen separate neighborhoods, the 200 I HOB Plan recommended the neighborhoods be consolidated and reorganized as follows: . West of Seacrest Boulevard (approximately 210 acres) to remain single-family residential (reorganized into three neighborhoods) . East of Seacrest Boulevard (approximately 140 acres) to become mixed-use redevelopment (extensive reorganization of neighborhoods and uses to promote single-family, multi-family, and mixed uses as well as improved and better organized civic/public uses (e.g., Wilson Center, Palmetto Park, Galaxy Elementary School) . . --.~, I. __~_ __'~~___ . "..., '. .,=~-- ::== ' I' ~~:..._ _r "VrrL ~ , ~~. ." -=..-' 0......- -- -- ----- I ':"~...--=-__=-=---__~~ Seven new neighborhoods were recommended in the Plan, including Poinciana Heights, Ridgewood, Boynton Hills, Martin Luther King, Jr., Boynton Terrace, Shepard Addition, and Arden Park. Future Land Use & Zoning J/rlf) r The 200 I HOB Plan analyzed land use and zoning in the district at length and concluded that new zoning and FLUM categories would facilitate redevelopment. The new categories would modify permissible uses, densities, and building heights as follows, Future Land Use Map Recommendations: West of Seacrest Boulevard: the predominate Single Family Residential (allowing 4,84 du/acre) was recommended to continue, along with a limited supply of Recreation and Public Use FLU, East of Seacrest Boulevard: significant changes were recommended. In addition to maintaining a relatively limited supply of Family Residential (4,84 du/acre) along with Manufacturing along the FEC rail corridor, two categories were recommended ex tensi vel y: Economic Analysis of "Heart of Bovnton" Plan m.f! ~.!!2study page 4 DRAFT (rn /vlul' 2006\ A. Multi-Family Residential FLUM: 10 du/acre and 45' maXImum building height (both north and south along the Martin Luther King, Jr. Boulevard, as well as fronting Seacrest Boulevard to its east) B. Multi-Use Light FLUM: 40 du/acre and 75' maximum building height (predominately in the southeastern quadrant of the HOB District, including the Boynton Beach Boulevard frontage) Building height limits of 35 feet for Single Family Residential and 45 feet for all other uses were recommended. The FLUM recommendations are iHustrated in the following map, '~I'- i , i Multi-Family Residential FLUM 10,8 dulae & 45' max. height ....;.'; --- --- ~==.... ,-; ::::.. ::.::- ..... LIllI...... ~ _ ~ W'I. ....._........ .....,.,.. R..... Mal'F Zoning Recommendations: The 200 I HOB Plan also contains zoning recommendations that correspond to the future land use recommendations. · In the R-3 zoning district (multi-family residential), the plan recommends a density increase to 10.8 du/acre with a maximum building height of 45 feet. · In the MX Light district (mixed-use with light industrial as well), when the City's land development regulations are evaluated, the recommended zoning varies according to roadway frontage. Economic Analysis of "Heart of Boynton" Plan T {' R P C ~l~study page 5 DRAFT (rev, May 2006) o For properties fronting major roadways (e,g" "collectors" or "arterials" such as Scacrest Boulevard or Boynton Beach Boulevard), the recommended zoning ranges from twenty to forty du/acre \vith a maximum building height of 45 to 75 feet. o For properties fronting local streets, the recommended zoning would allow 20 du/acre and a maximum building height of 4S feet. The zoning recommendations are illustrated on the following map. , , , I 1: R-3 Zoning 10.8 dulac & 45' max. height 1,1 \..,' , Ii- -- . , -:. " ........ltIIII.. . . . . - ....- .... ....-................,. ~.... - ~....v i\h//) G Program Recommendations In addition to the geographic recommendations (neighborhood reorganization, zoning and FLUM changes), the 2001 HOB Plan also recommended a series of programmatic actions to be undertaken by the CRA, including: · Cherry Hills Redevelopment: neighborhood. City leadership; updated plan and replat . Neighborhood Formation: grass-roots leadership evolving into neighborhood associations and elected neighborhood leadership, including fa<;ade grant and gateway signage investment by CRA. . Public and Civic Improvements: redevelopment of Wilson Center and expansion of Palmetto Park, Later CRA documents indicate significant planning activities have been undertaken for these improvements, Economic Analysis of "Heart of Bllynton" Plan ~ !:!i!t.!!'~study - page h [JR.'\FT (/1'\ Mill 2 ()()() ) · Streetscape Improvements: recommended along Seacrest and Martin Luther King, Jr. Boulevards. These improvements were generally designed in the 2001 HOB Plan and later documents include detailed design drawings. Funding for these improvements is identified in the draft CRA 2030 Plan. Cherry Hills (for replatting & redevelopment as traditional single- family neighborhood) -.------------------.-------, I ' I ( I ,fl i! -' I :,,1'1, 1.11 : . . 1--- I . "':J_~.._ Martin Luther King, Jr. Corridor (for redevelopment as multi. , family neighborhood, including City Public Works Complex) i ~. . Southeast Quedrant (as n_ CBD with . ' . redevelopment of ~ - Government Center) ,I -I ,. ..M':':_ --:'_ -_._._._ "..._...__< -.",_~_'" ,-.-.-----~.".._...,-_._.__.._~____l -.. . . -:. -: " .......lIIeI.. . . - - - ..,. ----... --- ro....l1 MapH eRA Activity in Heart of' Boynton District (2001-2()()6) Based on CRA budget and plan documents, it appears the residential neighborhoods west of Seacrest Boulevard have experienced some successful infill development and new development, which was confirmed by field research. West of Seacrest Boulevard, the residential neighborhoods appeared to have experienced a slow but steady rate of infill development and redevelopment. Several public and civic improvements were designed and completed, along with community gardens, The large- scale streetscape improvements in the plan were planned and designed, but not constructed. East of Seacrest Boulevard, the City and CRA have begun to set the stage for development. The land use and zoning recommendations have been implemented in part. Although the City was unsuccessful in accomplishing district-wide changes in land use and zoning, it did amend its Comprehensive Plan to allow individual owners to request changes on a parcel-by-parcel basis. Economic Analysis of "Heart of Boynton" Plan lTm ~l~study page 7 DRAF-T (reI', IV/O\' 2006) The Martin Luther King, Jr. Corridor received a good bit of CRA focus, and the agency's website contained a number of images depicting idealized building footprints and elevations to create a "gateway" into the Heart of Boynton District. In addition, the corridor was further detailed into a series of phases, \vith Phase I focusing on the Seaer'est and Martin Luther King, Jr. Boulevards; Phase II in the center of the Seacrest/Dixie Highway block; and Phase III along the eastern end of the corridor at the Martin Luther King, Jr. Boulevard/FEC railroad intersection. The images depict a series of two- to four-story mixed-use buildings, with office and retail uses at the ground floor and residential uses on the upper floors, Martin Luther King, Jr. Corridor IIII(/ge :2 Phase I conceptual diagram (intersection of Seacrest & Martin Luther King, Jr. boulevards) SOURCE: Bom/oll Beach CRA .re"site InlUf.;C( Economic Analysis of "Heart of Hoynton" Plan !'tR"Pt' ~.!r~,study {II/(/l': / n. , ;!" , ,j. ;. P.... Q j '.- - ,Jio,. - ~~C';T' illt.J' := 5eacrest and MLK Intersection Suggested mid-block condition for Phase II (three slortes. mixcd-use, parking to rcar) SOURCt': Bom/oll Beach eRA ,re/nite lilLi,'.;:' Phase III conceptual diagram (mtersectlOn of :Vlartin LlIll1e. King. Jr. Hilt! & D"ie Highway) SOURCI-. limn/Oil I!ewil CRA liT/nili' II 'I,,' ~ i' pa~(' (>-; DRAFT (rn .t1u\' 20()(JI Land Assembly A number of properties within the HOB district changed hands in the five- year study time frame (361 of the 1151 parcels, or 31 % of the district). While there appears to have been a significant amount of property transactions in the northeast quadrant (along the Martin Luther King, J r. Boulevard), sales activity appears to have been spread throughout the entire district over the study period, The CRA also engaged in considerable land acquisition activity over the five-year study period, acquiring fifteen parcels which represent approximately 2.65 acres at a cost of roughly $2,9 Million. Reviews of property records indicate the CRA was the most among the most active purchasers of properties In the district over the study period. . . :),~(~".:, . ">~ ;f~~~ [\! \l ". ~~~ ---~ Map I Map} . 1 'I f: " .! .~.. .saPIV~2Ol>1.4SZL~ .a2OOt-25lJU _ZUI'l_lt4lDls _2OO).6Z1.Dls _2IllM.Q)l4Il ifm"2OO$.12"1aI _2m&. tllDb C:;M)s-.Qlll.Pwoo.idId.106loti "'~ " 'S ~!i U ..- d ""01 :5: tc dl~ '0'" ....r-.i iO", ~~ -0 Economic Analysis of "Heart of Boynton" Plan ',C R P (." ~.!r~study page 9 DRAFT (rel'. Mil\' 2(06) Of the 914 residential lots in the District, 470 or just ov~r 51 (7(' indicate owner-occupancy with homestead exemptions, an increase in home ownership from the 200 I conditions as reported in the HOB Plan. ~.!!''?study Heart of Boynton Redevelopment Area Owner Occupied Units .+. .\111/' K Assessed values in the District remain somewhat low, as redevelopment activity has been limited to smaller parcels. \111/) r Economic Analvsis uf "Heart uf Bln own" Plan ftr"li ~.!r.!?.study - page lO [) R\ FT (J'c \ /vldr 2 IJIJ6i Vacant lots are located throughout the district; however, as indicated in the following map, there is a clear concentration north and south of Martin Luther King, Jr. Boulevard, especially east of Seacrest Boulevard. ~.!!2study MapM Infrastructure Review Based on interviews with City staff, the infrastructure in the Heart of Boynton neighborhood appears suitable for low-density residential development; however, higher densities will require improvements, which will require analysis on a case-by-case basis. Details regarding water and wastewater infrastructure are summarized below. Local Sewer System & Improvements: According to discussions with the City's Utilities Department, any necessary water or sewer improvements will need to be determined on a case-by-case basis. The sewer system in the Heart of Boynton district is a gravity system installed in public right-of-way with no pump stations. The area is of high elevation with limited infiltration. Larger lines are located along Boynton Beach Boulevard (12-inch) and 3rd Street (lO-inch connecting east below the FEC railroad) while 8-inch lines are in place along the balance of streets in the district. While this system could likely serve a low- to moderate-density pattern of development (e.g., four to ten dwelling units per acre), higher density development will require local improvements to provide increased capacity. No cost estimates for the local improvements have been generated to date, and it is anticipated that redevelopment projects will fund the localized improvements necessitated by their development. Large-Scale Sewer Improvements: Economic Analysis of "Heart of Boynton" Plan 'tCH Pc,,' ~.!!~study page II DRAI'T (rev. Mil." 2006) In addition to localized improvement", larger-scale system-wide improvements were also identified in 2002/03. Assuming densities of 40 to gO dwelling units per acre in the central business district, Heart of Boynton district, and along the coastal edge of the CRA the need for additional pumping stations and pressure mains throughout the downtown area was identified, which represents a potential cost of S 10-12 Million, These improvements have been included in the City's capital improvements program: however, no funding has been identified, Localized Water System & Improvements: The local water system within the Heart of Boynton district is anticipated to require more extensive improvements than the sewer system, Most existing lines are relatively small (4, 6, and 8-inch lines), with larger water mains running north/south along Seacrest Boulevard (l4-inch), north/south along Third A venue (20- to 24-inch), A 30-inch east/west line is proposed along Boynton Beach Boulevard. While the existing lines are sufficient for single-family residential, they are undersized to provide sufficient fire f10ws for multi-family residential. Improvements are anticipated to be determined on a case- by-case basis as development is proposed, depending on the layout of the projects, and funding is anticipated to be provided the redevelopment necessitating the improvements, Large-Scale Water Improvements: From a macro perspective, there are significant improvements anticipated for the water system generally. The Utilities Department estimates a need for five million gallons of additional capacity by 2009 with an additional five to ten-million gallon increase by 2014. These improvements have not yet been assigned cost estimates or funding sources. Economic Analysis of "Heart of Hoyntun" Plan 1.1':JU:.\.: !!!.!t,!r~study pag~ 1:2 IlRAFT (/('\' Mil) 200(,) Current 'Iarket Conditions (Regional and Local) The housing market is starting to slow, both regionally and locally. The ' wdown was postponed by a longer-than-expected period of low mortgage rates, a aho ~ stronger- than-expected speculator demand. Now, a return to a normal mar et'ii a pears to be finally beginning. ! There are a few factors that will assert themselves and bring about a more moderate housing market both nationally and in South Florida. Some buyers accelerated their buying decision, buying a home in 2005 when they ordinarily would have waited until 2006 because of the threat of higher interest rates, That means some of the sales that would have occurred in 2006 already occurred, which may take away some of the demand from 2006. Many investors who bought homes in 2005 with the intention of marketing them for a profit will be doing just that in the next six to twelve months, meaning that builders will not need to build as many homes. Some demand will be filled by inventory that is already built, and in the hands of speculators. This is especially true in South Florida, Home prices are so far ahead of incomes in many parts of the country that sales will have to slow. The property tax increase that comes along with a move-up purchase is starting to deter some people from movjng. The resale market is finally startjng to show weakness as had been forecast. Homes are stayjng on the market longer, and some listings are expiring. This will worsen as more speculator units get listed. The next few months will be critical in determining the shape of the South Florjda housing market, as sales during the winter months are historicall y strong, due to the influence of snowbirds and new retirees. There is also some concern that home sales in South Florida will be hurt by the psychological residue from two years of hurricanes. Home sales certainly did not fall at all after last year's four hurricanes, but will two years in a row dim prospective buyers' view of south Florida? There probably will be some buyers who will be put off by the perceived higher level of risk of dislocation and inconvenience. There will actually be a boost to new home demand, however, as people who already live in South Florida upgrade from a pre-Andrew, pre-new-building-code home to a new, much hardier, more secure home. The negative effect may end up being greater than the positive effect; the people who will want to upgrade to a new home will be able to do so only if there is a sufficient number of newcomers ready to buy all the older homes that they want to vacate. Economic Analysis of "Heart of Boynton" Plan TeRPe ~study page 12 DRAFf (rev. Mo.v 2(J(J()j So far, the retiree segment has shown the most trepidation, Lind they Lire not the primary buying group for this area. Overall demand for housing has softened in South Florida, due to affordability issues, increasing interest rates, and the threat of a housing bubble, Those buyers that have been in the market for a second home or place to retire are holding off on their decision until prices become more favorable, Some decline in demand over the past three months can also be attributed to those buyers who bought in 2005 in order to secure a 100ver mortgage payment. While this is a short term concern. it does partially explain the slowdown in housing sales these past few months. Although demand has decreased, the "need" for new residential development in Palm Beach County generally and the Heart of Boynton District specifically continues to remain strong as there is a deficiency in new housing for those residents wishing to purchase a home. While the employment base surrounding the Heart of Boynton District is substantial, it typically caters to low-wage, entry-level labor who are unable to afford new housing in this area, given the recent price escalations. The other key demographic demand driver relates to household types, sizes, and configurations, Single people and "OINKs" (double-income, no kids) comprise a huge share of the population now, and they are naturals for condominium ownership, The old traditional "married with children" household now represents only 24% of households (down from 40% in 1970), and singles with children comprise IOc/c. Together, these groups, who both incline toward suburban housing, comprise only 34% of the population, which means 66% of the population does NOT need a suburban dwelling, While short-term housing demand is soft, it is projected to increase over the long term with a continued influx of second home residents, retirees and upwardly mobile downtown workers. Palm Beach County differs from other areas throughout the nation as it has become a "destination" with a desirable urban environment. Whereas a majority of urban housing demand throughout the nation is generated by downtown workers and is predominantly rental in nature, there is a greater preponderance for ownership by retirees and second-home residents as well as downtown workers wishing to lock in a low interest -rate mortgage. It is clear that there is a need for new hollsing-in-thisarea, based upon the fact that the average price for condominiums and attached homes' s!-lrrounding the project site is substantially higher than what is seen throughout other areas in the county. Given the location and projected price point of Spanish River Villag~, the project will most likely appeal to a younger bu yer.' / The level of residential development in southern Palm Beach County has decreased over the past few years due to a lack of developable land, triggering a decrease in housing supply, even with the inclusion of a number of redevelopment projects along Federal Highway, Supply is projected to continue to decline in the future, particularly for single- family and attached housing, In the short term, however, housing supply has increased, Economic Analysis or "Heart or Hoynton" Plan ~c R P ( ~.!.~.study {lilge 1_' llRAFT (,e\ ,\1", 2U(6) due to investors "dumping" units onto the market at an increasing rate. This buildup of investor supply will affect the sales pace at new communities, as buyers will have more choices from which to choose. Metrostudy believes that there is at least a two-year supply o,f ~ousing that needs to ~e absorbe~~. 'ilse~s before d~velop,ers can ~each a sales pace simIlar to what was seen In 2003. T levels'; of absorption WItnessed In 2004 and 2005 I will most likely not be seen for at Ie Unext live years. Anticipated Market Conditions (Regional and Local) Predicting the future shape of the housing market is extremely difficult, given the myriad of socioeconomic and psychological variables involved in building and purchasing a home. There are, however, a number of demographic and socioeconomic indicators as well as a qualitative understanding of the area that can provide some insight into the future market conditions. We do know that the amount of vacant land that can be developed both in Palm Beach County and Boynton Beach has decreased substantially over time, and this trend will continue in the future as there is a finite amount of land remaining for housing. This land constraint is already driving infill redevelopment along the coastal areas, which to date has been very successful. As of 2005, there were approximately 73 Million "Baby Boomers" between the ages of 41 and 59. Because they are in their peak earning years, second-home purchases and retirement housing, which have been on the rise over the past few years, are projected to increase over the next fifteen years as the majority of the Boomers enter their 50s. Specific housing markets, such as upscale townhome communities and downtown condominium projects, should benefit from this demographic shift as the Boomers have more personal capital than other sociodemographic segments. The amount of new housing available to the Boomers in Miami-Dade, Broward, and Palm Beach counties is decreasing fairly rapidly as there are relatively few large vacant tracts of land available for development. As the production of new housing decreases in these counties, builders have shifted their attention northward to St. Lucie and Indian River counties. However, these northern counties do not have the amenity base that Palm Beach County has, so demand from the Boomer segment for housing within the county is projected to remain high. Retiree demand is also projected to increase as well. The number of people turning 65 on an annual basis will double-{)ver the next lourteen years. This is evident from the ( , , , increase in births from two ~illion to four/M'illion between 1940 and 1954. Between 2015 and 2025, retiree demand will continue ~drun at a strong pace. Therefore, if current housing trends persist (construction of retiree and vacation homes in warm climates), Palm Beach County will continue to see new housing, although not at the levels experienced earlier this decade. Economic Analy,;is of "Heart of Boynton" Plan h:: R P t,,' ~.!!'~study page 14 DRAFT (reI', Mo\' 2006) Figure 1: Births ill the United States ~ 1900 to 1980 . )oo.;),~,o 4,000ocm 3,500000 ;"1,000,000 11m Baby --.. Generation "3 DOO,OOO 2.~OOOOO 1,500,000 1,000,000 500,000 So~r:e g 'T <D Xl 0 U S, \..ensus :::: ...... '" 0'\ 0" ~ 0' :?: C> _ ~ 0 ~, ~ _ ~ ~ w : _ ~ ~ ~ On a local level, reductions in land supply have been an issue for decades, particularly east of Interstate 95, Most coastal communities are nearing build-out, as continued housing demand pressure has necessitated the development of any remaining large vacant parcels, Boynton Beach is one of these municipalities, with the last remaining agricultural lands along Congress Avenue being developed into mixed-use communities. Because of these land constraints, the area is now beginning to experience a shift towards redevelopment projects near the coast. While this will add to the amount of future housing supply within the city, it is unlikely to appease overall demand concerns over the next ten to fifteen years, as the desire to move closer to the beach and entertainment centers will be just as strong, if not stronger, in the future as it is today. Housing demand, measured by job growth and population, continues to increase at a steady rate, as the desire to live and work in South Florida remains strong. The University of Florida's Bureau of Economic and Business Research predicts that the three-county area (Miami-Dade, Broward, and Palm Beach) will experience a 2% annual growth in jobs through 2013, Population is also projected to increase substantially over the next few decades, due to the continued migration of retirees and baby boomers. Combined, these two trends will continue to force housing prices to increase to levels that are out of the reach of many potential homebuyers, Metrostudy believes that the disparity between housing supply and housing demand will continue to strengthen over time, even with the inclusion of planned redevelopment projects within the coastal areas, Increasing demand will likely force housing prices upwards, although price appreciation will likely occur at more historic levels. While overall demand for housing will increase, most projects will only be affordable to those buyers such as retirees and second-home buyers who have past equity or who earn a salary substantially above median income levels, Those buyers who cannot afford these Economic Analysis of "Heart or Rovnton" Plan ~~ ~.!.~.study . page I ~ DRAfT (r{'\ AIm 200(J) redevelopment projects will be relegated to rental housing, older, less desirable homes or will likely move out of the area. Unregulated redevelopment of the Heart of Boynton area will likely result in housing that will be unattainable to the area's residents or buyers whose household earns the a median income, as future market conditions will continue to place a premium on land east of Interstate 95 and near U.S. I, even if the area is socioeconomically depressed. The Boynton Beach CRA will be well served to continue to purchase land and mandate affordable housing initiatives in this area, as the push for upscale housing in and around the U.S. I corridor continues to grow not only in Boynton Beach but throughout South Florida. "Heart of Boynton" Market Development patterns throughout Boynton Beach over the last few decades have generally mimicked other coastal communities across South Florida, with most new residential and commercial projects being built in the western portions of the city. Within the past few years, a surge of infill development has occurred in the Quantum Park area between Congress A venue and Interstate 95, as much of the land formerly owned by Motorola, the Winchester Family, and Quantum Partners is now in the process of being developed into townhome and condominium communities. Existing and future projects such as Parkside Village, Canterbury, and Renaissance Commons will add upwards of 808 units to the area, with another 1,678 condominium units planned on the Winchester Parcel (a.k.a. Boynton Village). Residential construction within the City's designated CRA boundary (see map series for boundary map of CRA) during this time period has, as would be expected, been relatively slow, due to diminished land supply and lack of demand for housing in this area. Most residential development in the area occurred prior to the 1980s, and typically consists of older "scattered lot" single-family homes and low-rise condominiums. Those projects that were constructed more recently are generally located along Federal Highway and consist of either townhomes or condominiums. The CRA includes a wide variety of residents, from wealthy professionals and second- home owners residing in single-family homes along the Intracoastal Waterway to blue collar and retail workers in the Heart of Boynton area. There is also a substantial retiree base along Federal Highway, particularly within the numerous condominium communities that stretch along the entire length of the CRA. This heterogeneous assortment of homeowners and prospective buyers is a strength for the redevelopment of this corridor, and it will likely drive buyer demand across all product lines. Residential and commercial revitalization initiatives within the Heart of Boynton District over the past ten years have been lacking when compared to other redevelopment areas in South Florida, due to a number of socioeconomic, political, and economic forces. As with many other coastal cities, most infill development activity has been in the form of townhomes and low-rise condominiums, most of which are either located on Federal Economic Analysis of "Heart of Boynton" Plan Y C R P C ~.!!'2study rage 16 DRAFT (reL Mol' 2006) Highway or along each community's primary e;lst-west corridor. Construction of infill housing on parcels away from these corridors typically only occurs once urban renevial efforts have matured, ;lnd the urban core has gentrified to a point where dem;lnd for housing spreads outwards into more blighted areas. Delray Beach is ;l prime example of this process, with Lake Worth beginning to experience an infill housing renaissance \vith the construction of new townhome projects on both Dixie and Federal Highways, These projects ;lre a result of redevelopment efforts along the Lake/Lucerne corridor and are occurring even without a strong infill program, The Heart of Boynton (HOB) district has a number of strengths and weaknesses that will affect the marketability of any new development constructed within the neighborhood. The section east of Seacrest Boulevard that is targeted for redevelopment is currently dominated by single-family scattered lot development, attached rental units, and a few commercial businesses, A majority of the residential units have considerable wear, with most units being built prior to the 1980s. A considerable percentage of residential development in this general area has an attached product component, signaling that there is demand in this area for higher density development. Advantages The Heart of Boynton redevelopment district does have some competitive advantages, including: . Being located near a major highway (Boynton Beach Boulevard) and along two main north-south roadways (Seacrest Boulevard and Federal Highway); . Being within minutes to the beach, the Boynton Beach Mall, and other retail activity and destinations along Congress A venue; . A location near a number of large employers in West Palm Beach and Boca Raton, and within minutes to retail jobs along Congress A venue and Boynton Beach Boulevard; and . A location within a designated redevelopment area. . Land within the Heart of Boynton is relatively inexpensive when compared against other neighborhoods east of Interstate 95 and west of U,S, Highway I. This could work to the advantage to both the CRA and private developers when attempting to assemble property, although recent land purchases by the CRA were substantially above market value. Much of the land east of Seacrest Boulevard consists either of rental units, commercial structures, or vacant land, which would also be of benefit for land assembly, Economic Analysis of "Heart of Hoynllln" Plan 1l.:..B.1J: ~.!!~study page 17 llR,,\FT (,n MilY 2IJI(6) · Community infrastructure, in terms of schools, parks and community centers, are mostly in place, reducing the cost needed to support any additional population increases brought on by new development. Concerns From a market standpoint, past redevelopment efforts in the Heart of Boynton District have suffered due to three main issues: (1) lack of a successful "seed" project, spurring further construction activity; (2) a small, loosely organized downtown area without a concentrated commercial/retail core area from which expand; and (3) limited development incentives such as subsidized land costs, increased density, or flexible development regulations that would allow for innovative design features. There is also an issue of finite demand, notable for infill housing in redevelopment areas (especially during the early stages) as these units tend to be desired by a smaller segment of the buyer pool, whereby buyers seek a maintenance-free urban lifestyle and are not concerned about the perception of residing in a socio-economically depressed area. Most urban "pioneers" have been attracted to areas in downtown Delray Beach, Lake Worth, West Palm Beach and Deerfield Beach, leaving other areas such as Boynton Beach and Riviera Beach to investors or buyers with longer-term visions. In addition, overall demand for housing has softened in south Florida, due to affordability issues, increasing interest rates and resale supply. Some buyers that have been in the market for a second home or place to retire are holding off on their decisions until prices become more favorable. Even some professionals and working class families are beginning to postpone housing purchases, as they believe that prices will drop over the next six months to a year. This does not bode well for n~w construction projects within the Heart of Boynton over the next few years, unless units, priced at a point that is well below the going rate for other projects in the area. i Most economists believe that this slowdown could very well continue over the next twelve to twenty-four months, until investor supply (which has nearly doubled the amount of housing currently on the market within the last four months) is slowly absorbed by true user demand. While the need for new housing remains strong, the increase of townhomes and condominium units for sale in the area will most likely impact unit absorption in the subject area. A final challenge facing the Heart of Boynton, aside from the overall weakening of the housing market, is the market acceptance of the surrounding community. The adjacent residential areas generally consist of older single-family homes, duplexes, and low-rise apartments that were built in the 1960s and 1970s. Many of the retail centers and businesses located along Seacrest A venue, Boynton Beach Boulevard and Federal Highway cater to a socioeconomic segment not typically associated with market-rate townhomes. Competition from a number of other attached and multi-family projects in more desirable areas will also pose additional challenges to development in this area. Economic Analysis of "Heart of Boynton" Plan 'ff' RI""G ~.!.~study rage 18 DRAfT (rei', Mur 20(6) These concerns \vill be eased if (In-going and speculative redevelopment efforts along Ocean Avenue and Federal Highway take hold within the next year. Competitive Projects Within Bo) nton CRA Although there are currently no new residential projects being constructed within the HOB district, there are a substantial number of projects either under construction or planned for future development within the overall CRA area that could pose some measure of competition should redevelopment efforts begin, I According to City of Boynton Beach Planning Division records. there are twenty residential projects within the CRA that are either in the pi peline or under construction, representing nearly 2,800 new units in competition for a shrinking pool of buyers. As indicated in the map of Acti ve/Future Residential Projects. a vast majority of these projects located along Federal Highway, as this corridor IS within close proximity to the beach and provides direct access to other downtown areas. Unlike Delray Beach, Boca Raton and other coastal communities in Broward County, development along the Federal Highway corridor in Boynton Beach is just beginning to reach its potential, as demand for urban coastal living by second home buyers and retirees is expanding past "known" destinations, --- ~ ==::;:.., c..""!'-__ ,~- ..-- l:ft:'" -~",.......-.. -'" -- ~..... 1::"_ ,.,..~......- \1,,1' \ Of the twenty residential projects within the CRA, three are likely to pr()vide the most) competition, particularly if any development planned within the HOB-IS above I1TIifktt rate, These projects: Promenade at Boynton, The Arches, and Coastline Commons are located within close proximity to the HOB District and could provide upwai'ds of 750 new condominium units when completed. The following is a brief summary of each of the three most competitive projects, Economic Analysis of "Heart of Hoynt""" Plan ~., ~.!!'~study page IlJ DIU, rT 1,('1 ,Hi/\ 2(06) Promenade at Boynton Located on Federal Highway just north of Boynton Beach Boulevard and developed by Panther Real Estate Partners, Promenade at Boynton includes 318 condominium and 28 townhome units, as well as 68 hotel suites. Originally marketed during the peak of the housing boom in 2005, every unit was reserved in short order. Recently, the developer refunded the reservation deposits due to the escalating costs of construction materials, which made the project unprofitable, based on the original selling price, As of April, two units types remain for sale: the two bedroom, two bathroom 1,230 square foot "A" model priced at $400,000 and the 1,650 square foot three bedroom, 2.5 bathroom "B" model priced at $600,000. .',/'------\ ,//.----~. f .' \ (The ArChev ' ~ by ,We! Co~munities. The Arches is a 276 mixed-use development located along Ocean A venue just west of Federal Highway. Land is currently being cleared for the first phase of development along the south side of Ocean A venue, but units have yet to be marketed to the public. This project, along with Marina Village, represents the cornerstones to downtown redevelopment in Boynton Beach. The mixed-use nature of this project will allow for needed retail and office space, in addition to providing residential units needs to support new businesses along the corridor. Given its desirable location, the project will likely command price points that would cannibalize and above market rate activity in the HOB. - ,----- ---------::-------) c;-lU ,1'/'-_ /' S& ,2 u \ Coastline Commons 'OC/ "Ll!!:"ted on_t~ of Federal Highway just south of Royuton Reach Roulevard, CoaSilIiieCommons is a 150 unit condominium project planned for construction within the next year. Given the project's location and size, it will likely cater to buyers who want to live in downtown Boynton Beach but cannot afford Marina Village or The Arches. While final design and pricing has not been established to date, it will likely pose substantial competition to any above market rate project in the HOB, unless the design is marketed to affluent buyers. The buyer profiles for each of these developments will be broad, based on varying locations and price points. Buyers for the Promenade and Coastline Commons projects will likely consist of retirees, second-home buyers, some empty nesters, and a few pioneering professionals who will buy on the idea that the area will gain value over time. Those buyers who purchase units at The Arches will most likely include some retirees but mostly empty nesters and professionals who will be attracted to the price point and new retail businesses located on the first floor of the project. This development will have the Economic Analysis of "Heart of Boynton" Plan T e R P ( , !!!.e.!!'~study page 20 DRAFT (rev MUI 2(06) greatest percentage of pioneers, as the project most resembles traditional redevelopment projects seen in other areas across South Florida, The absorption of these units will have a direct impact on development within the HOB, Absorption of the following projects into the downtown Boynton Beach market is difficult to gauge, due to the fact that they are the first redevelopments projects in the area and that each of these projects have a different construction timeline, Given absorption levels for projects in Delray Beach, Lake Worth and West Palm Beach as well as the current market climate, these units could be sold and built within five years if the development climate is positive, but up to ten years if the market goes through a prolonged slowdown, If these projects do not sell as well as anticipated, it is extremely unlikely that any above market rate project within the HOB will be successful, as these projects are located in the most desirable of areas from a market standpoint. HOB DCH'lopmcnt Potcntial Development potential for the Heart of Boynton district will be determined not only by zoning thresholds proposed by the CRA but also by market factors, which include land prices, construction costs, unit sizes and profit margins. While the redevelopment of this neighborhood is being directed by the City and CRA under a master plan, the eventual success or failure of the project will be dictated by market forces, In order to determine the intluence of the aforementioned market forces on the redevelopment of this district, a number of assumptions were made based on qmlitative and quantitative data gathered over the previous two months, Given the current volatility in the housing market, these assumptions were modeled not to provide detailed answers but to instead guide possible future development decisions. Five implicit assumptions were made regarding development within the HOB District: . Assembled land prices would average $1, I 00,000 an acre, . Construction costs would begin at $130 per square foot for the lowest density product proposed and increase to $165 per square foot for the highest density product modeled, . Unit sizes proposed for construction would generally mImiC other CRAs and include product that are most desirable to families, retirees, and non-professionals that are more price-sensitive than other buyer segments. . Profit from a development using these other assumptions would average 1 Y7e of total revenue. This is less than the profit margin received by some developers Economic Analysis of .'Heart of Koynlon'. Plan M: R P (. ~.!!'~study page 21 DRAFT (ICI' l'dIlV 2()()IJI during the boom but above the 6% to 8% usually required by a developer in order to cover costs. · Proposed sales prices start at $200,000 for the 950 square foot multi-family unit and increase to $265,000 for the 1,350 townhome unit. Each assumption is discussed in more detail below. The assembled land price figure of $1,100,000 per acre was determined based on the \, \\ average price the CRA paid for lots within the HOB over the past two years. This ' amount was substantially higher than the land prices initially modeled as part of this analysis, and will pose significant issues for future land purchases, As a comparison to other large land purchases within the CRA, the 3.54 acre Promenade at Boynton site was sold in 2005 for $5,400,000, or roughly $1.37 million an acre. The 11.25 acre Gulfstream Lumber site was also sold in 2005 for $14,950,000 or $1.33 million an acre, Sunshine Square, which is located directly to the south of the Gulfstream Lumber property, was sold recently for $17,500,000, or $1.32 million per acre on a 13.22 acre site. It is surmised the properties noted above have a much higher price point due to their prominent locations along Federal Highway, and further, their locations within neighborhoods that are perceived to be of higher value than that of the Heart of Boynton District. It was difficult to determine a price per acre land value within the HOB District as no large parcels of land have been recently sold in the area, given the neighborhood's design as a "scattered lot" single-family community. The $1,100,000 an acre figure represents current assembled land prices, which will likely increase over time as redevelopment begins to occur in earnest within the Heart of Boynton neighborhood. Construction costs have risen dramatically over the past few years, due to strong demand and shortages in labor and materials. The prices utilized for this study reflect these factors and represent the current pricing used by local developers when assessing a potential project. These figures are general in nature and can change depending on the design and architecture or a specific project. While construction costs are projected to stabilize and possibly decline in the near future as housing demand slows, outside forces such as hurricanes and national economic trends can cause these prices to escalate rapidly over a short period of time. Finally, while the unit sizes modeled for this report are considered to be on par with other redevelopment areas in South Florida, they are not fixed and can be modified as the market allows. Most projects within CRAs tend to provide smaller product lines, in order to reduce costs so that buyers can more easily afford a condominium or townhome unit. The 1,350 square foot (under air) townhomes utilized in the model represents an achievable product line, both in terms of price and buyer demand. The same can be said with the smaller units modeled for low-rise multi-family development. Larger unit sizes are certainly in demand by various buyer segments in this market; however, given the location and current condition of the surrounding community, it is best to model product Economic Analvsis of "Heart of Bovnton" Plan T C R ~ ~.!.~study - page 22 DRAfT (rev Mar 2(06) \ 0 (','J \ lines that can be purchased by surrounding residents as well as those outside the community looking to buy an affordable home, A more diverse product line can be achieved in the future once buyers begin to see the effects of redevelopment. Modeling Scenarios Four specific scenarios were modeled for the Heart of Boynton district. These were based on proposed CRA land use and zoning thresholds as well as housing densities evidenced in other CRAs throughout South Florida, Each model analyzed density at 10,8 units per acre, 20 units per acre, 30 units per acre, and 40 units per acre, The following is a breakdow'n of each density threshold. Scenario 1: 10.8 units per acre The most likely product to be built on land with a density threshold of 10,8 units per acre are townhomes, as detached single-family units require more land and multifamily units are typically reserved for higher density properties, Given the assumption that land will be available at $ L 100,000 an acre, each parcel at this threshold would have a land cost of $101,852 per unit. Again, assuming that the average product size would be 1,350 square feet under air with an average construction cost of $130 per square foot, the total "hard" cost per unit would be $175,500. The construction cost figure also includes site work and other "soft" costs such as permitting and design. Add land costs to this figure and the total development cost for a townhome at this density is $277,352. Given the current market price of $280,000 for a similar size unit with a redevelopment area, and a developer would realize earnings of only $2,648 per unit or .9% of total costs. This is well below the assumed 15% threshold for income necessary for development in this area. Land costs of $650,000 to $700,000 per acre would have to be achieved for a townhome project with 1,350 square foot homes at 10.8 units per acre to be successful from an earnings standpoint, which is lower than the average cost of land modeled within the Heart of Boynton district. To become more desirable strictly from an earnings standpoint, townhome development mllst either: 1) allow subsides for larger townhome units, or 2) reduce the size of the units to a point where land costs are less of a factor. Economic Analysis of "Heart of Boynton' Plao Ie R P (' ~~study .,.,."..,,....,,.~.i:< page 2.~ [)RAF[ (II'\' MII1 20Ur,! Figure 2: Projected Earning Based on Adjusted Land Price (10.8 DUlac) $300,000 $27,778 $203,278 $280,000 $76,722 27.4% $350,000 $32,407 $207,907 $280,000 $72,093 25.7% $400,000 $37,037 $212,537 $280,000 $67,463 24.1% $450,000 $41,667 $217,167 $280,000 $62,833 22.4% $500,000 $46,296 $221,796 $280,000 $58,204 20.8% $550,000 $50,926 $226,426 $280,000 $53,574 19.1% $600,000 $55,556 $231,056 $280,000 $48,944 17.50/0 $650,000 $60,185 $235,685 $280,000 $44,315 15.8% $700,000 $64,815 $240,315 $280,000 $39,685 14.2% $750,000 $69,444 $244,944 $280,000 $35,056 12.5% $800,000 $74,074 $249,574 $280,000 $30,426 10.9% $850,000 $78,704 $254,204 $280,000 $25,796 9.2% $900,000 $83,333 $258,833 $280,000 $21,167 7.6% $950,000 $87,963 $263,463 $280,000 $16,537 5.9% $1,000,000 $92,593 $268,093 $280,000 $11,907 4.3% $1,050,000 $97,222 $272,722 $280,000 $7,278 2.6% $1,100,000 $101,852 $277,352 $280,000 $2,648 0.9% Source: Metrostudy Assumptions: 1) 1,350 sq. It units (under air) 2) Construction cost of $130 per square foot 3) Total Hard Costs per Unit of $175,500 The table above projects possible earnings based on adjustable land costs. Reduced land costs per acre would increase returns for a 1,350 square foot unit, and therefore would be more desired by developers. As land costs increase, the profit margin is reduced to a point where development of townhomes or any other product becomes undesirable. Economic Analysis of "Heart of Boynton" Plan 1 (: R P C ~.!!~study page 24 DRAFT (re,', Mar 2006j Figure 3: Projected Earning Based 011 Adjusted Unit Si::es (10.8 DUlac) Projected Earnings for Townhomes at 10.8 DUlAc. Based on Va in Unit Sizes ~;, 5ize'1 1,100 1,150 1,200 1,2S0 1,300 1,350 1,400 1,4S0 1,500 1,550 1,600 1,650 1,700 .,.".,.~ ~rd cost Unit 2 $143,000 $149,500 $156,000 $162,500 $169,000 $175,500 $182,000 $188,500 $195,000 $201,500 $208,000 $214,500 $221,000 TotaIDev. costs 3 $244,852 $251,352 $257,852 $264,352 $270,852 $277,352 $283,852 $290,352 $296,852 $303,352 $309,852 $316,352 $322,852 Assumptions: 1 Unit sizes under air 2 Construction cost of $130 per square foot l Land Costs of $11 million an acre p~A'igi",' ~ sale Pri'ee " t.Jrilt $265,000 $20,148 $265,000 $13,648 $265,000 $7,148 $265,000 $648 $265,000 ($5,852) $265,000 ($12.352) $265,000 ($18,852) $265,000 ($25,352) $265,000 ($31,852) $265,000 ($38,352) $265,000 ($44,852) $265,000 ($51,352) $265,000 ($57,852) Source: Metrostudy Another means of determining the most appropriate density and product for the Heart of Boynton district involves projecting the success of townhomes based on adjustable unit sizes, This demonstrates what specific unit sizes would be desired by developers when planning a project. As illustrated in the table above, the 1,350 square foot unit originally modeled at $280,000 per unit would not be successful, as it would not provide the income needed by a developer to cover aU costs. A reduction of the unit size down to less than I, 100 square feet under air would supply adequate income flow, but this would like reduce overall absorption as demand for townhomes below 1,100 square foot is low, The final table below represents "optimal" sales prices based on adjusted unit sizes and fixed earnings of 15%. Pricing ranges from $281,580 for a 1,100 square foot unit under air to $371,280 for a 1,700 square foot unit. Given that most townhome projects within redevelopment areas are below 1,500 square feet under air, it can be assumed that townhomes within the Heart of Boynton would have to be priced in the low- to mid- $300,000s in order to be succe~sfuL This does not appear to be a marketable price point for the HOB District. Economic Analysis of '"Heart of Boynton" Plan 1}.:..a~~ ~.!.J!l.study page 25 DRAFT (rev. jH(/\ ]O()() I Figure 4: Sales Prices Based on Fixed Earnings and Adjustable Unit Sizes (10.8 DUlac) Optimal Sales Price of Townhomes at 10.8 DUlAc. Based on Fixed Profit and Va in Unit Sizes unit 151%$1 1,100 1,150 1,200 1,250 1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650 1,700 " ,;'I"'qta!, H.ard , 'CQSt"I't.fflit 2 $143,000 $149,500 $156,000 $162,500 $169,000 $175,500 $182,000 $188,500 $195,000 $201,500 $208,000 $214,500 $221,000 '.}.~~!'iIII~!l~ " . 'i~' ,Cost ' $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 Assumptions: 1 Unit sizes under air 2 Construction cost of $130 per square foot J Land Costs of $1.1 million an acre Xotafl)ev' /~ 'CciStS ~ "'<Sit $244,852 $281,580 $251,352 $289,055 $257,852 $296,530 $264,352 $304,005 $270,852 $311,480 $277,352 $318,955 $283,852 $326,430 $290,352 $333,905 $296,852 $341,380 $303,352 $348,855 $309,852 $356,330 $316,352 $363,805 $322,852 $371,280 ,.'~!'"I~" . , ,i, Unit $36,728 $37,703 $38,678 $39,653 $40,628 $41,603 $42,578 $43,553 $44,528 $45,503 $46,478 $47,453 $48,428 ~l'Q!nt Earnl s 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15,0% 15.0% 15.0% 15,0% 15.0% 15.0% The 10.8 units per acre threshold will allow for moderately priced townhome units, so long as the proposed unit sizes are comparable to those currently located in other redevelopment areas. This type of product is in demand by many first-time home buyers and price-sensitive families and should sell well. Units would typically be two to three stories with attached or on-street parking, and typical product types are illustrated below. Land subsidies must be considered if larger town home units are desired within the Heart of Boynton district, as current land and construction costs would push prices to a point where buyer demand would be substantially reduced. Source: Metrostudy Typical Townhouse Profile 15 du/acre SOURCE: Dover Kohl and Partners Economic Analysis of "Heart of Boynton" Plan :LC,Ji.p {; !!1!l.!r~study [//loge 6 Typical Townhouse Profile 9 du/acre PHOTO: TCRPC Im({~{~ 7 page 26 DRAFf (rev. Mar 2006) Scenario 2: 20 units per acre At 20 units per acre, the most likely product to he built are low-rise multi-family units, flats, and carriage homes, as townhomes units require more land, and mid-rise condominium units are typically reserved for higher density properties, Again, given the assumption that land will be available at $1,100,000 an acre, each unit at this threshold would have a land cost of $55,000 per unit. Assuming the average product size would he 1,150 square feet under air (typical unit size for low-rise product within redevelopment areas) with an average construction cost of $145 per square foot, the total "hard" cost per unit \vould be S 166,750, The construction cost figure includes site work and other "soft" costs such as permitting and design, Total development cost for a condominium unit at this density including land costs is $221,750, Given the current market price of $235,000 for a similar size unit with a redevelopment area, and the developer could realize earnings of S 13,250 per unit or 5.60/c of total costs. While above the ,9% earned for townhomes at 10,8 acres a unit, this profit margin is well below the typical earnings potential needed by developers and investors. A verage land costs hetween $650,000 to $800,000 per acre would have to be achieved for a condominium project with 1,150 square foot units at 20 units per acre to be successful. This product line works well with the current development climate, but price incentives will again need to be utilized by the eRA to supplement development costs, Figure 5: Projected Earning Based on Adjusted Land Price (20 DUlac) Projected Earnings for Condominiums at 20 DU/ Ac. Based on Variable Land Prices Land Cost per Land Cost per Total Dev. Proposed Avg. Earnings Percent Acre Unit Costs Sale Price oer Unit Earnings $300,000 $15,000 $181,750 $235,000 $53,250 22.7% $350,000 $17,500 $184,250 $235,000 $50,750 21.6% $400,000 $20,000 $186,750 $235,000 $48,250 20.5% $450,000 $22,500 $189,250 $235,000 $45,750 19.5% $500,000 $25,000 $191,750 $235,000 $43,250 18.4% $550,000 $27,500 $194,250 $235,000 $40,750 17 .30/0 $600,000 $30,000 $196,750 $235,000 $38,250 16.3% $650,000 $32,500 $199,250 $235,000 $35,750 15.20/0 $700,000 $35,000 $201,750 $235,000 $33,250 14.10/0 $750,000 $37,500 $204,250 $235,000 $30,750 13.1 a/a $800,000 $40,000 $206,750 $235,000 $28,250 12.0% $850,000 $42,500 $209.250 $235.000 $25,750 11.0% $900,000 $45,000 $211,750 $235,000 $23,250 9.90/0 $1,000,000 $50,000 $216,750 $235,000 $lS,25C1 7.80/0 $1,050,000 $52,500 $219,250 $235,000 $15,750 6.70/0 $1,100,000 $55,000 $22l,l50 $235,000 $LJ,250 5.6% Source: Metrostudy Assumptions: 1) 1,150 sq, ft units (under a,,) 2) Construction cost of $145 per SQuare foot 3) Total Hard Costs per Unit of $166,750 The table above projects possible earnings based on adjustable land costs, Development of these units are viable even with land prices over what has been modeled in this report Economic Analvsis of "Heart of Boynton" Plan OJ C R P (~ !!!!.!rl?study , :;;;t5S.~~ page 27 DRAfT (rn iVloI ]00(,) ($1,100,000 an acre), This density threshold again requires subsidies, with reduced land costs per acre allowing for an increase of returns for aI, 150 square foot unit along with providing for lower sales prices and/or increased unit sizes. In order for this density threshold to be undesirable to developers, land prices would have to average around 750,000 per acre. Figure 6: Projected Earning Based on Adjusted Unit Sizes (20 DUlac) Unit size l' 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Projected Earnings for Condominiums at 20 DU/ Ac. Based on Va in Unit Sizes "I9tal..~~.'.'.t... Cost : unit 2 $116,000 $123,250 $130,500 $137,750 $145,000 $152,250 $159,500 $166,750 $174,000 $181,250 $188,500 $195,750 $203,000 ToiafDev. ec)Sts3 $171,000 $178,250 $185,500 $192,750 $200,000 $207,250 $214,500 $221,750 $229,000 $236,250 $243,500 $250,750 $258,000 Assumptions: 1 Unit sizes under air 2 Construction cost of $145 per square foot 3 Land Costs of $1.1 million an acre p~ Avg. SalePrlce $235,000 $235,000 $235,000 $235,000 $235,000 $235,000 $235,000 $235,000 $235,000 ~~235,000 $235,000 $235,000 $235,000 Source: Metrostudy Earnings ,'. r Unit $64,000 $56,750 $49,500 $42,250 $35,000 $27,750 $20,500 $13,250 $6,000 ($1,250) ($8,500) ($15,750) ($23,000) .' Percent ;~rrit ' 27.2% 24.1% 21.1% 18.0% 14.9% 11.8% 8.7% 5.6% 2.6% -0.5% -3.6% -6.7% -9.8% As indicated in the table above, the 1,150 square foot unit originally modeled at $235,000 per unit would be more successful than the townhome density, but it would not provide the income needed by a developer to cover all costs. Any reduction of the unit size downwards would allow for the reduction of sales prices, which would be even more desirable to those buyers who are price sensitive (although at a lower absorption rate), Conversely, an increase in unit size is possible, although earnings would be reduced. The table below represents "optimal" sales prices based on adjusted unit sizes and fixed earnings of 15%. Pricing ranges from $196,650 for an 800 square foot unit under air to $296,700 for a 1,400 square foot unit. Given that most condominium projects within redevelopment areas are below 1,200 square feet under air, it can be assumed that condominium units within the Heart of Boynton would be priced in the low- to mid- $200,000's. Economic Analysis of "Heart of Boynton" Plan :Lc R P ( ~,U~study page 28 DRAF-T (rev. Mar 20(6) Figure 7: Sales Prices Based on Fixed Earnings and Adjustahle Unit Sizes (20 DUlac) Optimal Sales Price of Condominiums at 20 DU/ Ac. Based on Fixed Profit and Varyino Unit Sizes Unit Overall Land Total Hard Total Dev. Proposed,i\vg. Earnings Percent Size I Cost cost per Unit 2 Costs 3 Sale PrIce oerUnlt Earninas 800 $1,100,000 $116,000 $171,000 $196,650 $25,650 15.0% 850 $1,100,000 $123,250 $178,250 $204,988 $26,738 15.0% 900 $1,100,000 $130,500 $185,500 $213,325 $27,825 15.0% 950 $1,100,000 $137,750 $192,750 $221,663 $28,913 15,0% 1,000 $1,100,000 $145,000 $200,000 $230,000 $30,000 15,0% 1,050 $1,100,000 $152,250 $207,250 $238,338 $31,088 15.0% 1,100 $1,100,000 $159,500 $214,500 $246,675 $32,175 15.0% 1,150 $1,100,000 $166,750 $221,750 $2S5,013 $33,263 15,0% 1,200 $1,100,000 $174,000 $229,000 $263,3S0 $34,350 15.0% 1,250 $1,100,000 $181,250 $236,250 $271,688 $35,438 15,0% 1,300 $1,100,000 $188,500 $243,500 $280,025 $36,525 15.0% 1,350 $1,100,000 $195,750 $250,750 $288,363 $37,613 15.0% 1,400 $1,100,000 $203,000 $258,000 $296,700 $38,700 15.0% Source: ~1etrostudy i I AssumptIons: I 1 Unit sizes under air 2 Construction cost of $145 per square foot I ] Land Costs of $1.1 million an acre I According to the results of the model, the 20 units per acre threshold provides the best fit considering current market conditions, A sales price of roughly $229,138 can be achieved given the average unit size of I, l50 utilized for modeling purposes. This price is roughly $35,000 less than the townhome product, is also in demand by many first time home buyers and price sensitive families, and should sell well. Smaller unit sizes allow for reduced prices and open up the marketing of these units to a larger buyer base. Typical product types would be two to three stories, as ill ustrated below, which is consistent with other redevelopment districts in the Region. Some land subsidies may be necessary to bring land costs down to S800,000 per acre or if larger condominium units are desired, Typical Low,Rise Condominium Profiles (two to three stories) 15 to 20 du/(/ue PHOTOS: TCRPC 11i1U.l.!.( 8. Economic Analvsis of "Heart of Bovnton" Plan T C R P C !!i!'.!.~study , ,z~ page ~9 DRAFT (1('\ ,Hm 2()()(, I Scenario 3: 30 units per acre As densities rise, the cost of development also increases, as it takes more materials, specialized machinery, and labor to build structures with multiple stories. Fortunately for low-rise development, this increase in price can be offset by higher density, allowing the sales price of a unit to remain fairly stable, with only a moderate decrease in earnings for the same unit in a 20 du/acre scenario, Like the 20 unit per acre density, the most likely products to be built at 30 du/acre are low-rise multi-family units, flats, and carriage homes. Given the assumption that land will be available at $1,100,000 an acre, each unit at this threshold would have a land cost of $36,667 per unit. Assuming that the average product size would be 1,050 square feet under air with an average construction cost of $160 per square foot, the total "hard" cost per unit would be $168,000. The construction cost figure includes site work and other "soft" costs such as permitting and design. The unit size modeled for this density is smaller than a similar product type at 20 units per acre, as it is assumed that with increased density comes a greater desire to maximize space. Total development costs for a condominium unit at this density including land costs i~ $204,667. Given the current market price of $225,000 for a similar size unit with a redevelopment area, and the developer could realize earnings of $20,333 per unit or 9% of total costs. This is above the .9% earned for townhomes at 10.8 acres a unit and 5.6% earned for those condominium units at 20 units per acre, but just above what a developer would consider being profitable. Average land costs of under $1,000,000 per acre would have to be achieved for a condominium project with 1,050 square foot units at 30 units per acre to be successful, not far off the modeled land price, Like the condominiums proposed at 20 units per acre, the product line works well with the current development climate, but some price incentives will need to be utilized by the CRA to supplement development costs. Construction at this density level will yield higher earnings when compared to the lower density condominiums, although greater profit could be realized through lower construction costs (scaled back architectural features and reduced amenity package ). Economic Analysis of "Heart of Boynton" Plan !" (' R P C !!!!t.!.~study page 30 DRAFT (rev, Mil\' 2(06) Figure 8: Projected Eurnillg Bused Oil Adjusted LUlld Price (30 DU/oc) Projected Earnings for Condominiums at 30 DU/ Ac. Based on Variable Land Prices land Cost per land Cost per Total Dev. Proposed Avg. Earnings Percent Acre Unit Costs " Sale Price oer Unit Earnlnas $300,000 $10,000 $178,000 $225,000 $47,000 20.9% $350,000 $11,667 $179,667 $225,000 $45,333 20,10/0 I $400,000 $13,333 $181,333 $225,000 $43,667 19.40/0 $450,000 $15,000 $183,000 $225,000 $42,000 18.70/0 i $ 500,000 $16,667 $184,667 $225,000 $40,333 17.9% $550,000 $18,333 $186,333 $225,000 538,667 17.2% $600,000 $20,QOO $188,000 $225,000 $37,000 16.4% $650,000 $21,667 $189,667 $225,000 $35,333 15.70/0 $700,000 $23,333 $191,333 $225,000 $33,667 15.00/0 $750,000 $25,000 $193,000 $22.5,000 $32,000 14,20/0 $800,000 $26,667 $194,667 $225,000 $30,333 13.5% $850,000 $28,333 $196,333 $225,000 $28,667 12.7% $900,000 $30,000 $198,000 $225,000 $27,000 12.00/0 $1,000,000 $33,333 $201,333 $225,000 $23,667 10.50/0 $1,050,000 $35,000 $203,000 $225,000 $22,000 9.80/0 51,100,000 536,667 $204,667 $225,000 520,333 9.00/0 , Source: Metrostudy Assumptions' I) 1,050 sq. ft units (under air) 2) Construction cost of $160 per square foot 3) Total Hard Costs per Urllt of $168,000 Based on land prices, development of condominiums at 30 units per acre can easily be achieved at the proposed sale price if land costs are at or below $600,000 an acre, Reduced land costs per acre would increase returns for a 1,050 square foot unit, and therefore would be more desired by developers. With land costs over $600,000, the profit margin is reduced to a point where developer might either attempt to reduce unit sizes and construction costs or raise prices. However, earnings received from higher land prices, while lower, are not at a point that would dissuade development at this density, Economic Analysis of "Heart (If Hoynton" Plan ~ ~.!.~,study rage :1 1 DRA~I (UT Mu\ 200n) Figure 9: Projected Earning Based on Adjusted Unit Sizes (30 DUlac) Projected Earnings for Condominiums at 30 DU/ Ac. Based on Va in Unit Sizes Unit:, SIze!' 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 '"J"Qta~~l'd't:~;";r..' Dev",,! Qit , tJnit't:;(','toStS"l', $128,000 $164,667 $136,000 $172,667 $144,000 $180,667 $152,000 $188,667 $160,000 $196,667 $168,000 $204,667 $176,000 $212,667 $184,000 $220,667 $192,000 $228,667 $200,000 $236,667 $208,000 $244,667 $216,000 $252,667 $224,000 $260,667 'Pr6posecfA\iQ. . Sale Price $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 $225,000 Source: Metrostudy Assumptions: 1 Unit sizes under air 2 Construction cost of $160 per square foot 3 Land Costs of $1.1 million an acre f=:~mlfl~' .. , '!.Joit $60,333 $52,333 $44,333 $36,333 $28,333 $20,333 $12,333 $4,333 ($3,667) ($11,667) ($19,667) ($27,667) ($35,667) P~t ;, Eiiffiin" S 26.8% 23.3% 19.7% 16.1% 12.6% 9.0% 5.5% 1.9% -1.6% -5.2% -8.7% -12.3% -15.9% The 1,050 square foot unit originally modeled at $225,000 per unit would be moderately successful from an earnings standpoint. A reduction of the unit size down below 1,050 square feet under air would provide increased income flow, but would begin reducing the amount of potential buyers, as demand for units under 1,000 square feet is more limited. A substantial increase in the unit size is not viable, unless the price point is raised accordingl y. The table below represents "optimal" sales prices based on adjusted unit sizes and fixed earnings of 15 %. Pricing ranges from $167,517 for an 800 square foot unit under air to $274,467 for a 1,400 square foot unit. These prices are somewhat lower than those for condominiums at a lower density, but not necessary enough to advocate increased density thresholds as a stand-alone measure throughout the Heart of Boynton District. Economic Analysis of "'Heart of Boynton" Plan 1 r R P C ~.!!2study page 32 DRAFT (rev, May 2(06) Figure JO: Sales Prices Based on Fixed Earnings muJ Adjustahle Unit Sizes f30 DUlac) Unit Size 1 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 Optimal Sales Price of Condominiums at 30 DUlAc. Based on Fixed Profit and Va in Unit Sizes Overall tMKI, east;! $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 $1,100,000 Total Hard COst Unit 2 $128,000 $136,000 $144,000 $152,000 $160,000 $168,000 $176,000 $184,000 $192,000 $200,000 $208,000 $216,000 $224,000 Assumptions: 1 Unit sizes under air 2 Construction cost of $160 per square foot ] Land Costs of $1.1 mllllon an acre Total Dev. Costs 3 $164,667 $172,667 $180,667 $188,667 $196,667 $204,667 $212,667 $220,667 $228,667 $236,667 $244,667 $252,667 $260,667 Source: Metrostudy Proposed Avg. Sale Price $189,367 $198,567 $207,767 $216,967 $226,167 $235,367 $244,567 $253,767 $262,967 $272,167 $281,367 $290,567 $299,767 ", ~rnings . er Unit $24,700 $25,900 $27,100 $28,300 $29,500 $30,700 $31,900 $33,100 $34,300 $35,500 $36,700 $37,900 $39,100 Percent Earnin s 15.0% 15,0% 15.0% 15,0% 15.0% 15,0% 15,0% 15.0% 15.0% 15,0% 15,0% 15.0% 15.0% Density at 30 units per acre could work in this area, given the unit sizes and land/sales prices utilized in the model. A sales price of roughly $235,167 can be achieved given the average unit size of 1,050 square feet under air. While high, it is actually less than the price of a 1,050 square foot unit at 20 units per acre. Even with the increased density, the associated rise in construction costs negates some of the advantages associated with having more units. Typical product types would include three and four story condominium buildings, as illustrated below. which is comparable with other redevelopment districts in the Region. This density will become more desirable if and when construction costs are reduced to a point where the price difference between the two densities is less pronounced. - Various Tvpical Low,Rise Condominium Profiles (three tofour stories) 24 to 38 du/acre SOURCE: Density by Design, ULI Economic Analysis of .'Heart of Hoy"tu".. Pbn I,sa.~ ~~~study II/luge 9 page .~.~ DR,\FT (reI ',fm 21JO(J) Scenario 4: 40 units per acre The final density modeled for this report al10ws for 40 units per acre. This threshold, like the 30 units per acre previously discussed, is currently not allowed in the Heart of Boynton District or within the zoning designations proposed by the eRA, but it has been included in this report in order to determine the viability of higher densities, given current market conditions. Mid-rise condominiums represent the most economIC use for land with a density threshold of 40 units per acre. Given the assumption that land will be available at $1,100,000 an acre, each parcel at this threshold would have a land cost of $27 ,500 per unit. Assuming that the average product size would be 950 square feet under air with an average construction cost of $175 per square foot, the total "hard" cost per unit would be $166,250. The construction cost figure also includes site work and other "soft" costs such as permitting and design. Adding land costs to this figure, the total development cost for a condominium unit at this density is $193,750. The current market price of a similar sized unit within other redevelopment areas is roughly $215,000, and the developer could realize earnings of $21,250 per unit or 9.9% of total costs. Development of a mid-rise condominium unit wil1 be a profitable venture, but below the 15% earnings most developers seek for residential projects, Figure 11: Projected Earning Based on Adjusted Land Price (40 DUlac) Projected Earnings for Condominiums at 40 DUlAc. Based on Variable Land Prices Land Cost per Land Cost per Total Dev. PropQSed Avg. Earnings Percent Acre Unit Costs Sale Price oer Unit Earninas $300,000 $7,500 $173,750 $215,000 $41,250 19.2% $350,000 $8,750 $175,000 $215,000 $40,000 18.6% $400,000 $10,000 $176,250 $215,000 $38,750 18.0% $450,000 $11,250 $177,500 $215,000 $37,500 17.4% $500,000 $12,500 $178,750 $215,000 $36,250 16.9% $550,000 $13,750 $180,000 $215,000 $35,000 16.3% $600,000 $15,000 $181,250 $215,000 $33,750 15.7% $650,000 $16,250 $182,500 $215,000 $32,500 15.1% $700,000 $17,500 $183,750 $215,000 $31,250 14.50/0 $750,000 $18,750 $185,000 $215,000 $30,000 14.00/0 $800,000 $20,000 $186,250 $215,000 $28,750 13.4% $850,000 $21,250 $187,500 $215,000 $27,500 12.8% $900,000 $22,500 $188,750 $215,000 $26,250 12.2% $1,000,000 $25,000 $191,250 $215,000 $23,750 11.0% $1,050,000 $26,250 $192,500 $215,000 $22,500 10.50/0 $1,100,000 $27,500 $193,750 $215,000 $21,250 9.90/0 Source: Metrostudy Assumpbons: 1) 950 sq. ft units (under air) 2) Construction cost of $175 per square foot 3) Total Hard Costs per Unit of $166,250 Economic Analysis of "Heart of Boynton" Plan LS~"\U~ !!!!t.!!~study page 34 DRAFT (rev. Mu\' 2006) As with the other densities modeled for this report, earnings steadily increase as land costs decrease, gi ven a constant sales price. Based on a sales price of S2l5 ,000 for a 950 square foot unit under air, land must be priced around 'il650,000 an acre in order to receive earnings of around l5~" Increased land prices would require either an increase in sales price or reduction in the amount of income received from the project. Figure 12: Projected Eurning Bused on A(!justed Unit Si:::.cs (40 DUlac) Projected Earnings for Condominiums at 40 DUlAc. Based on Va in Unit Sizes Unit Size 1 800 850 900 950 1,000 1,050 1,100 1.150 1,200 1,250 1,300 1,350 1,400 Total Hard Cost r Unit 2 $140,000 $148,750 $157,500 $166,250 $175,000 $183,750 $192,500 $201,250 $210,000 $218,750 $227,500 $236,250 $245,000 Total Dev. Costs 3 $167,500 $176,250 $185,000 $193,750 $202,500 $211,250 $220,000 $228,750 $237,500 $246,250 $255,000 $263,750 $272,500 Assum ptlons: I UnIt sizes under air 2 Construction cost of $175 per square foot ) Land Costs of $1.1 million an acre PrQPOSE!Cl Avg. ~ Price $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 $215,000 Source: Metrostudy Earnings Unit $47,500 $38,750 $30,000 $21,250 $12,500 $3,750 ($5,000) ($13,750) ($22,500) ($31,250) ($40,000) ( $48,750) ($57,500) Percent Earnln s 22,10/0 18.00/0 14.0% 9.90/0 5.80/0 1.70/0 -2.30/0 -6.40/0 -10.5% -14.5% -18.6% -22.7% -26.7% Earnings potential for a project at 40 units per acre is higher when compared against the other condominium densities, due to increased construction costs and a lower sales price (due to an average unit size that is smaller than the other two thresholds). Unit sizes would have to average between 850 to 900 square feet under air in order to provide the earnings necessary for a developer to consider a project. A reduction in construction costs through design modifications could allow for larger unit sizes, so long as the developer is willing to possibly incur reduced earnings, Economic Analysis of "Heart of [{o"nlon" Plan iL I~ I:'~ !!!!,.!.~study page .1) DRAFT (rn M!/\' 200f,) Figure 13: Sales Prices Based on Fixed Earnings and Adjustable Unit Sizes (40 DUlac) Optimal Profit of Condominiums at 40 QU/ Ac. Based on Fixed Profit and Va In Unit 5izes Unit SIze I 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 OWlnIUnd T..,Hard 'WdQSt')' 'tdst" tJnIt2 $1,100,000 $140,000 $1,100,000 $148,750 $1,100,000 $157,500 $1,100,000 $166,250 $1,100,000 $175,000 $1,100,000 $183,750 $1,100,000 $192,500 $1,100,000 $201,250 $1,100,000 $210,000 $1,100.000 $218,750 $1,100,000 $227,500 $1,100,000 $236,250 $1,100,000 $245,000 TotaI,oev. CoSts 3 $167,500 $176,250 $185,000 $193,750 $202,500 $211,250 $220,000 $228,750 $237,500 $246,250 $255,000 $263,750 $272,500 Source: Metrostudy Assumptions: I Unit sizes under air 2 Construction cost of $175 per square foot ] Land Costs of $1.1 million an acre Propased A~ SaIePrlte' $192,625 $202,688 $212,750 $222.813 $232,875 $242,938 $253,000 $263,063 $273.125 $283,188 $293,250 $303,313 $313,375 I3nlngs ,.. Unit"'" . $25,125 $26,438 $27,750 $29,063 $30,375 $31,688 $33,000 $34,313 $35,625 $36,938 $38,250 $39,563 $40,875 PeralIIt 15.0% 15.0% 15.0% 15.0% 15,0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0% As depicted in the table above, the 40 units per acre threshold can provide affordable housing for the community, although land subsidies would be required for a developer to earn 15% on the project. A sales price of roughly $222,813 can be achieved, given the average unit size of 950 utilized for modeling purposes. This price is actually a bit higher than the similar sized units under the 20 and 30 units per acre model, due to increased construction costs. The increased density, however, would provide more units to those first time home buyers and price sensitive families, and should sell well. Unlike the other densities geared towards multifamily development, there is less need for land subsidies, so long as the cost of land per acre remains around $1,100,000 per acre. Land subsidies should be considered for this density, however, if larger condominium units are desired and the price of land substantially increases. Typical product types (illustrated below) would be dense, urban condominium projects at four stories, perhaps climbing to six stories if carefully planned and located with appropriate transitional relationships across streets and to adjacent structures. Typical Mid-Rise Condominium Profiles (three to five stories) 44 dulacre SOURCE: Density by Design, ULl Economic Analysis of "Hearl of Boynton" Plan '~~ ~.!r~study , rage 36 DRAFT (rev, Mor 2006) According to the results of the model, the most desirable density for the Heart of Boynton district is between 30 to 40 units per acre, as this provides the best balance between unit size, sales price and earnings potential. This threshold can succeed without the need of subsidies, so long as land prices are not excessively high, The other multifamily densities can also \vork in this area, but are subject to possible reduced earnings and unit sizes that might not be as desirable to buyers. The advantage of these higher densities is that more units could be built in the area, which would provide for greater opportunity of home ownership for first time buyers and working class families, The disadvantage to building higher density units, outside of increased construction and infrastructure costs, is that the area east of Seacrest Boulevard would lose its identity, as the size and scale of dense multifamily development differ sharply from the existing scattered lot residential development. To protect and enhance existing development with the HOB District. careful consideration should be given to the design regulations, building heights, roadway dimensions and height-to-width ratios across streets, streetscapes, and transitional relationships between structures as higher densities are considered, Townhomes proposed on land with a density of 10.8 units per acre would provide a better fit within the existing community, and not incur many of the issues associated with higher density multi-family development such as increased traffic and higher demands on utility infrastructure. Because of the lower density per acre, this type of development is more sensitive to land prices, even with reduced construction costs, As previously noted, in order for townhomes to be financially successful at this density, they need to have unit sizes under I, I 00 square feet under air, as larger units would either require an increase in sales price or land subsidies. From a "pure" market perspective, having higher densities (40 units to the acre and greater) throughout the Heart of Boynton would allow for a variety of multi-family development opportunities and potentially provide for up to 2,000 of affordable units at or below market rate. There is demand throughout South Florida for affordable housing, and this area has enough land for a number of large multi-family developments. From a neighborhood perspective, higher densities would not only stress infrastructure but also damage the strong sense of community within the Heart of Boynton District. Lower density redevelopment places less demand on community resources and is a more desirable fit, in terms of design and scale, In time, if the area becomes more a known "place", higher densities could be considered, particularly if the added density generates demand for retail and office development. Bu}'cr Profilc:'. The buyer profiles for these units will vary by location, product type and price, but will generally follow the guidelines listed below: Townhomes (10.8 DUlAc" 1,350 sq, ft. avg,) Families with both heads of households working OINKs (Double Income No Kids) Economic AnalySIS "f "Heart "f H"ynt"n" Plan T C R p t ~~,study ;J.~ pag~ ,~7 DR,''\I'T (re' ,'vfill' 2()()(,j Low Rise Condos (20 DUlAc., 1,150 sq. ft. avg,) Some families, especially those with single head of household DINKS, Single Professionals, Some retirees LowlMid Rise Condos (30 DUlAc., 1,050 sq. ft. avg.) OINKS, Single Professionals, Retirees, Empty Nesters, a few single parent families, roommates Mid Rise Condos (40 DUlAc., 950 sq. ft. avg.) Single professionals, retirees, roommates, a few DINKS Given the current socioeconomic profile of the Heart of Boynton District, most residents consist of families, with a smaller percentage of retirees, roommates and single parent households. The product types most associated with these types of buyers are single- family homes for families and townhomeslcondos for single parent households and condominiums for retirees and roommates. Based on the current composition of residents and projected buyer profiles for this neighborhood, it is believed that townhomes and low rise condominiums would be the most desired product. The construction of higher density multi-family units, while desirable from an earnings standpoint, would not necessarily benefit those families in the community who are seeking housing, and would likely attract pioneers and other buyers from outside the area seeking an affordable home. While land subsidies would be needed for the construction of townhomes and low rise condominium units, it would provide for better community cohesion and allow for some internal migration into these new projects. Economic Analysis of "Heart of Boynton" Plan r C R P C ~.!!"~study page J 8 DRAFT (re... May 2006) Tax Increment Financing .\nalysis In addition to analyzing the market feasibility of the various density scenarios for redevelopment of the Heart of Boynton District, a generalized analysis of the potential tax increment financing (TIF) yield was estimated for each, It should be noted these projections relate only to the areas designated for density increases in the 200 I HOB Plan, These projections do not include other redevelopment activity in the District. especially west of Seacrest Boulevard as no density increases were recommended in that portion of the District. These twenty-year projections were calculated with the most conservative set of commonly utilized assumptions for the projection of TIF revenues, Millage rates for both the City and County were assumed to be constant throughout the TIF timeframe. All residential was assumed to be owner-occupied with homestead exemptions, thereby capping increased valuations at 3% annually. Assessed values were established at 85% of anticipated market values, allowing a 15% reduction for time on market, realtor fees, and similar discounts from full assessment. Projected new non- residential development was projected to be sold at $20 per square foot, but assessed at 85% to allow for the afore-described discounts, 1 0.8 DulAc Scenario The assumed product types were townhouses (quantity 497) at a median sales price of $265,000 and low-rise condominiums (quantity 308) at a median sales price of $235,000, An eight-year total absorption timeframe was assumed for the 805 total units. Non-residential development was estimated to be 50,000 square feet with a four-year absorption timeframe. 20 DulAc Scenario The assumed product type was low- to mid-rise condominium (quantity 1228) with a median sales price of $235,000. The higher quantity of units suggested a longer absorption timeframe of twelve years for the 1228 units, Non-residential development for this scenario was also estimated to be 50,000 square feet with a four-year absorption timeframe, 30-40 DulAc Scenario The two higher density scenarios were blended for the third TIF projection. The assumed product types were: . Low- to mid-rise condos at 20 du/acre (quantity 380) with a median sales price of $235,000; . Mid-rise condos at 30 du/acre (quantity 810) with a median sales price of S225,000; and . High-rise condos at 40 du/acre (quantity 100) with a median sales price of $215,000, The 1,800 total new residential units were projected to require an absorption timeframe of fifteen years, with a delayed initial phase due to likely project size, Economic Analysis of "Heart of Hoyn(on" Plan \:l~JU:=1.: !!l!t.!.~.study pag~ 3X DRAFT (rei ;vlu\' 2()()()} Non-residential development was estimated to be 100,000 square feet with an absorption of eight years. Given these three scenarios, the potential TIF yield over twenty years is illustrated in the following table. Given a bond financing threshold of $750,000 to support a $10 Million TIP bond, it appears the 20 du/acre scenario would yield nearly $850,000 by 2010/00, followed by the 30/40 du/acre scenario nearing $1 Million in 2011/12, and finally the 10 du/acre scenario nearing $800,000 in 2012/13. Potential TIF Yield Given Various Density Scenarios 10 du/ac* 20 du/ac* 30-40 du/ac* 2006/07 $0 $0 $0 2007/08 $121,395 $201,010 $0 2008/09 $246,432 $408,050 $229,472 2009/10 $375,220 $621,302 $465,828 2010/11 $507,872 $840,951 $709,275 2011/12 $644,356 $1,064,256 $960,025 2012/13 $784,935 $1,294,261 $1,218,298 2013/14 $808,484 $1,531,165 $1,484,319 2014/15 $832,738 $1,775,177 $1,758,321 2015/16 $857,720 $2,026,509 $2,040,543 2016/17 $883,452 $2,285,382 $2,328,298 2017/18 $909,955 $2,552,020 $2,624,686 2018/19 $937,254 $2,826,657 $2,929,965 2019/20 $965,372 $2,911,457 $3,244,403 2020/21 $994,333 $2,998,801 $3,568,274 2021/22 $1,024,163 $3,088,765 $3,901,861 2022/23 $1,054,888 $3,181,428 $4,245,456 2023/24 $1,086,534 $3,276,871 $4,599,359 2024/25 $1,119,130 $3,375,177 $4,963,878 2025/26 $1,152,704 $3,476,432 $5,339,334 Estimated Totals $15,185,542 $36,259,239 $46,611,596 (20 years) Green highlight = approximate TIF necessary to support $10M bond 'NOTE: Assumes price points & absorption as described in this report, Figure /4 Economic Analysis of "Heart of Boynton" Plan ,I: (' R P ~- !!!!.!.~study page 39 DRAf'T (rei'. Mur 2006) When the various TIF projections are charted over time as indicated below, it is clear the highest potential TIF revenues are associated with the highest density scenario, However, it is important to reemphasize the manner in which the density is developed (particularly the building height) with either positive or negatively impact surrounding property values), HEART OF BOYNTON Potential TIF Generation Given Various Development Scenarios 56,000000 $5,000,000 ~ '" ~ E '" 54,000,000 '" ~ .5- c: ~ $3,000,000 c: 0 " <D 0 ~ <J) 52,000,000 a: :"i ..J 0 0 $1,000,000 SO 30,40 du/ac Scenario: $46M total over 20 yrs -10 dU/ac' -20 duiac. -30-40 du!ac' 10 du/ac Scenario: $15M total over 20 yrs ~~~-------~-~---~-~-- "___~.._.-.J ~~~#~~~~~~#~~~#~##$~# ####~~~~~~~~~~###### TIME Fi;!.lIre J 5 Economic Analysis llf "Hearl of Hoyn!lln" Plan 'I C I< P C ~.!r!?study ~ page --H) DRAFT (11'\ ,HuI2(1)()j Pricing, Phasing and Absorption within Heart of Boynton District Based upon the proposed zoning plan developed by the CRA for the Heart of Boynton area, a maximum of 895 new units could theoretically be allowed for those areas east of Seacrest A venue that would receive density increases should the proposed zoning be approved. This amount will most likely be lower, as this maximum threshold assumes that all land within these designated areas would be built to the highest density allowed. Product Type , DefISilV Construction CasP $130 $145 $160 $175 Total De\'. COsts $277,352 $221,750 $204,667 $193,750 PropQsed. Avg; SaIePrtc:.t! $265,000 $235,000 $225,000 $215,000 Townhomes Low Rise Condommiums Low Rise Condommiums Mid Rise Condominiums Source: Metrostudy 1 Estimate based on cost of CRA purchased properties within HOB 2 Unit sizes based off similar product within CRA and other areas east of Interstate 95 3 Based on estimates from development community, per square foot Figure 16 Of the 895 units conceivable in a build-out scenario, recent CRA recommendations suggest 15%, or 134 units, should be set aside for workforce housing. According to Palm Beach County guidelines, workforce housing is defined as housing designed to be affordable to those households earning incomes ranging between $32,000 and $75,000. Based upon these proposed thresholds, land within the R-I and UR-3 zoning designation will consist of townhomes of varying density, with the MU Low 1 designated area consisting of low rise (four stories and below) condominium units, Proposed Mixed-Use ZoninG Existing Parcels 76 64 152 292 Acres in, HOB Disbict 12.37 15.41 45.99 73.77 Proposed Threshold 7.26 DUlAc. 20 DUlAc. 10,8 DUlAc. Max Units Allowed 90 308 497 895 150fe Workforce HouslnQ 14 46 75 134 R-1 MU Low 1 UR-3 Totals Source: Boynton Beach eRA and Metrostudy Figure 17 Economic Analysis of "Heart of Boynton" Plan 'Ie R P ('" ~~study page 41 DRAF'T (rev. May 2006) Given that roughly 80(}'0 of the land under the proposed zoning scheme \vauld have densities below eleven units per acre, most of the land area would likely consist of townhomes and carriage homes, if developed according to the Heart of Boynton plan. The MU Low-l pockets along Federal Highway and Seacrest Boulevard provide an appropriate scale for the area and will likely provide needed affordable housing, as these types of units can be built and sold at a price point that is more attainable than with the townhome units, Market-Rate Pricing: Pricing of Heart of Boynton units will depend on a number of factors, such as design, development timeline, and state of the housing market. Nearby developments outside the Heart of Boynton, such as The Arches and Promenade at Boynton, represent the types of "seed projects" necessary to boost redevelopment activity throughout the CRA, While these projects represent roughly 622 units, they are in various stages of development and likely several years away from completion and occupancy, In addition, there are another estimated twenty-four projects either in the planning stages or under construction, totaling roughly 2,800 new residential units pending within the CRA. If left solely to market forces, the Heart of Boynton district would likely not see any significant amount of redevelopment until (l) the nearby "seed projects" were well established with significant absorption, and (2) demand for downtown housing increases among those same buyer segments that initially flocked to Delray Beach and Lake Worth. Pricing for units in this scenario (without CRA subsidy or other action) would be at market value, which, based on current projects in other CRA areas, would range on average from $350,000 to $600,000 for townhomes and $250,000 to $400,000 for low rise condominium units (new construction, not conversions), These prices will likely be 20% to 30% higher in five to ten years, Proposed Zoning, East of Seacrest Blvd, as recommended in Heart of Boynton Community Redevelopment Plan Market-Rate Absorption: Absorption for future market rate units is difficult to determine, given the multitude of variables associated with the housing market. Nonetheless, it is reasonable to assume a 100-unit townhome or low rise condominium project could see a sales pace upwards to ten-to-fifteen units a month if the design, amenities, and pricing were on par with what has been experienced in other CRA's. This assumes that the aforementioned "seed projects" were successful, and retail development along Ocean Avenue and Federal Highway were to increase and diversify. This trend would, however, likely produce significant displacement and gentrification of the Heart of Boynton district. There is a risk that absorption will decrease should density levels be increased to 30 or 40 units an acre. Given the district's current socioeconomic profile, new residential development would likely be preferred mainly by families attempting to purchase their Economic Analysis of "Heart or BOynton" Plan ,L1,;..~ ~.tr~study page 42 DRAFT (rei' ,'-'1(/\ 2IJIJ(,! first home or wanting to upgrade to a larger home. Higher density levels, which would likely be in the form of mid-rise condominium development, are not as desirable to the family buyer segment, and therefore, higher density products would likely negatively affect absorption levels until the HOB area becomes more attractive to those buyer segments (single professionals, second home buyers, retirees) who typically reside in condominiums. There are a number of examples of developments within CRA areas in South Florida that provide for both townhomes and condominium units (typically in the form of coach homes). This range of product tends to receive the highest absorption levels, as the development tends to appeal to a larger buyer segment. Given the current development environment within the HOB, a project including roughly 75% townhomes, with the remaining 25% delegated to garden or coach homes could very well provide an absorption pace around 15 units a month, so long as the prices were at or below market rate. Modified Pricing & Absorption: Should this area receive assistance by the CRA in terms of land acqUisItIOn and assemblage, developers should be able to offer a more affordable product that is not solely market-driven. Given these incentives, pricing for townhomes within the HOB area could range from $200,000 to $300,000, with low-rise condominiums priced from $150,000 to $250,000 if development were to occur over the next few years. Even at these reduced price points, buyers will have to be convinced that (I) redevelopment efforts will transform the area into a "destination," and (2) that their investment will increase in value over time, These lower prices would also allow residents within the Heart of Boynton specifically and Boynton Beach generally to purchase units, instead of having a buyer profile specifically consisting of second home buyers, pioneers and investors. Absorption in this lower price scenario is likely to be higher, with a sales pace of at least twenty units a month for a 100-unit project. This extremely aggressive absorption pace is due to well-documented and publicized need for affordable housing across Palm Beach County. Investor demand would also likely be high, given the product type and low price point. Phasing: One of the more difficult aspects of the analysis to project is the likely phasing of development within the Heart of Boynton. There are three likely situations that could occur, each of which depends upon how the CRA and City of Boynton Beach decide to proceed. Option I: Let the Market Dictate Development Redevelopment within the Heart of Boynton district will likely be slow over the next three to five years, until the "seed" projects are occupied, and retail development receives the carrying capacity needed to sustain a profit. Most development will be geared to Economic Analysis of "Heart of Boynton" Plan 'i C' R e.s.;: !!!!t~study page 43 DRAFT' (rev, M(/v 2000) professionals, second home buyers, and retirees searching for a more urban lifestyle. Gentrification is likely to occur in earnest, which will be retlected in the surrounding business base, and may jeopardize the stability of the single-family neighborhoods west of Seacrest Boulevard, The CRA will likely not have to provide much in terms of incentives, other than some possible land assemblage, Due to higher price points and assuming strong absorption, the agency would receive additional tax proceeds, and it is likely that developers would be more willing to assist in infrastructure development costs, Option 2: CRA-Assisted Development Instead of solely relying on the market to dictate terms of development, the CRA could offer development incentives and concessions in order to draw development to the Heart of Boynton district. Development could begin within the next year or two, and it should not be as dependent on other projects outside the immediate redevelopment area, Because of the lower price point, the design and amenity packages offered in many of these projects will be basic in nature, which could keep the area from experiencing significant price increases over time, Taxes received from new development would be lower, and the City/CRA would probably be responsible for a greater percentage of infrastructure development. Because absorption is likely to be high, most CRA-assisted development could occur over the next five or so years, There would likely be more of a rush to develop, instead of a gradual phasing program, which are both a positive and a concern. Option 3: CRA Promotes Initial Development, Then Allows Market To Take Over Basically a combination of scenarios I and 2, this third scenario would provide a phasing schedule that would most likely be agreeable to surrounding residents, the City, and developers. Over the first year, the CRA would purchase and assemble, as well as work with the City to ensure that adequate infrastructure would be provided to the district. In years two and three, the CRA would work with developers and offer incentives to provide for a few projects totaling 150 or so units, The CRA' s current land ownership in the HOB district Uust over two acres) creates an immediate opportunity to offer CRA land at a reduced price to entice desired development quickly, These projects, at their reduced price points, will most likely sell quickly to local residents as well as to others needing affordable housing. With these projects established (in addition to the developments along Ocean A venue and Federal Highway), demand for housing and retail activity in the area should begin to increase, which would drive demand for market rate housing in and around the Heart of Boynton area. The CRA would then be in a position to shift funding from builder incentives to other programs that would assist the area (e,g" down-payment assistance, residential role model recruitment). Builders would then be in more of a position after five years to build homes without the need of assistance, as demand for market rate housing in the area will have increased to a sustainable level. Economic Analysis of "Heart of Boynton" Plan ;~~ !!!!'.!r~study page 4-4- DRAFr (re\' 1'1'111\ 20GoI I<indings and Recommendations Findings: Of the five redevelopment districts in the Boynton Beach CRA, the Heart of Boynton District is the most difficult to redevelop. It is located off the beaten track, literally "across the tracks" from the more visible and marketable other districts under the agency's purview. While redevelopment activity has allowed the other districts to prosper, the HOB District has remained stagnant, with no significant private redevelopment activity since the adoption of the HOB Plan in 2001. The economic analysis conducted by TCRPC, in conjunction with MetroStudy, has identified several key conditions which present obstacles to successful redevelopment in the Heart of Boynton District. . Current densities will not yield financially feasible projects given land costs, construction prices, and market conditions unless CRA participation occurs. . r . y' \ j \"'-''1 'I; !\\ .' The Community Redevelopment Agency appears to have overpaid for the land-- --1 \ ~~ '\ that it purchased, at an average price of $1.1 million per acre, which appears to I have artificially inflated some land costs for the private sector. . There is a "market imbalance" between land costs and feasible product pricing in the Heart of Boynton District that will need to be pro-actively addressed by the CRA for housing products of appropriate scale, density and type to be constructed. In addition to these specific conditions in the District, other general market factors, such as a softening market, some oversupply of residential products, and competition from other residential projects (both within the Boynton Beach CRA as well as other competing CRAs) creates considerable challenges for the City and CRA. Although these obstacles are noted, a carefully crafted redevelopment approach can yield successful, appropriate, sustainable redevelopment in the Heart of Boynton District if the CRA and City are willing to lead the effort. Focusing on the Heart of Boynton District will potentially draw revenues and staff energies away from other important CRA projects; however, without specific focus, the Heart of Boynton District will either continue to stagnate or be pressured by developers for inappropriately high densities and building heights to offset market conditions. This is the wrong justification to increase densities and building heights, Instead, the CRA should participate proactively and comprehensively to effectuate a wholistic redevelopment strategy, with renewed community input and appropriate residential and non-residential products, Economic Analysis of "Heart of Boynton" Plan :{ (' R rr !!!!t.!.~study page 45 DRAFT (rev. Muy 2006) Recommendations: (1) Don't Give Densitv Awav. Instead. Use It As CRA/Citv Currency. Local governments and public agencies such as CRAs maintain two types of incentives for development: regulatory incentives (e.g., density increases, higher building heights, reduced parking requirements) and financial incentives (e,g., cash contributions or reimbursement; waivers for infrastructure, impact, or other fees; financial assistance for infrastructure or land costs), Financial incentives are the more visible form of public participation, but regulatory incentives also confer considerable value upon property with "entitlements." Density and other entitlements derived through thc regulatory process of land use, zoning, and ''Density is Currency" site plan approvals provide a form of SOURCE: TCRPC currency for local governments and Fi 'llle /(J agencies that can either be (a) given away (see illustration below) or (b) utilized to set standards for development or achieve community goals as part of the transaction, Although the HOB 200 I Plan recommended increasing densities in the district, the City had not increased the densities at the time of this evaluation. A primary question for analysis in this study was the financial feasibility of the densities recommended in the 2001 Plan. Accordingly, it was determined that land values had risen in the district, and at the 2001 plan's recommended densities (specifically the 10.8 du/acre density recommended along Martin Luther King, Jr. Boulevard), a strict market analysis suggests the lower densities are too low for pure, unassisted market response at this time (given rapidly rising construction costs, projected price points, and projected absorption and phasing), As the City and CRA consider increasing densities for properties within the Heart of Boynton District, the densities recommended for the MX Light (20 to 40 du/acre) appear appropriate; however, in the R-3 zoning district along the Martin Luther King, J 1'. corridors, it appears that slightly higher density (30 du/acre) and building heights (two to four stories) can be appropriately accommodated to address the market imbalance (see map illustration), '~ ,',', It ~'N' ,~~ - .i{i7~ ',..~~:- ~~ :-rr,'~~ !~ ~___" .... /......:;.:1..-: ,I' ~n'~ '. 1'/-; ~,~( :..IA> ~ "',CL'~. :\~!a3-~;3~~- '.),;;\\? ."1 t;~f~j ,':'". ;, - '\~ .-",'".. '(_"'N', I J.-,' ~:~~':~, /(~:r(7 ,'- ','-" ",' ._'-::;-.-=-'--~-~-~-_.~:.:!:-- >~-.::.:- ; ,'.- C4;'If\.#~ :,'~.Jl.:< oW . :~~'!' ~ ... ~ T(fl.H!> Use the "value-gap" so that density incentives can have and maintain meaning and financial importance SOURCE: TCRPC Economic Analysis of "Hearl of Boynton" Plan ~ ~.!!~5tudy , \# <,..' ~ ... 'i I '; J ~ page 46 DRAFT (1('\ lvl(/\' 2006 i The CRA and City need to carefully consider and evaluate any density and building height increases. If done incorrectly, density and height increases will harm community cohesion, gentrify the neighborhood, and likely lower absorption rates, depending on when development would occur. The lower density zoning districts (such as the 10.8 du/acre in R-3) provide the CRA flexibility needed for lower density townhome development, with the possible inclusion of some single-family or carriage homes. The moderate 20 du/acre density in MX Light will allow mid-rise residential. Each of these densities can be reasonably provided in product types that are within the 45-foot height limit, a limit important to maintain the scale relationships east and west of Seacrest Boulevard. If higher densities are envisioned in the district, the eastern edge of the Martin Luther King, J r. Boulevard corridor (as it nears Railroad A venue, the FEC railroad, and Dixie Highway) could be designed appropriately with up to 40 du/acre in a four- to six-story profile of buildings, so long as the roadway and adjacent properties are designed to complement. However, the City and CRA should tie any density and/or building height increases to specific CRA goals, such as (a) providing a minimum percentage (e.g., 15%) of workforce housing; (b) offering product types geared to house residents of the Heart of Boynton District; or (c) developer fronting costs associated with infrastructure, streetscaping, and other public improvements for future TIF reimbursement. Finally, any unusual density increases (such as 40 du/acre at the eastern edge of Martin Luther King, Jr. Boulevard) should be time-limited to prevent additional developer speculation, Appropriate time limitations used in other communities require full plans be submitted to the City within twelve months, construction to break ground within twenty-four months, and completion of phases according to a pre-negotiated schedule. What the proposed zoning thresholds do not necessarily allow for is increased retail activity, as the amount of units allowed will not provide for a user base great enough for a shopping center or larger-scale retail center such as those in Boca Raton (Mizner Park) or West Palm Beach (City Place). Density would have to be increased to inappropriate levels (over 100 units to the acre) throughout much of the area east of Seacrest Boulevard for any large scale retail center to even become remotely viable. By allowing these densities and space for commercial development, the community would be radically Economic Analysis of "Heart of Boynton" Plan , r C R P C ~~stucly page 47 DRAFT (rev. May 2006) transformed, and the single-family neighborhoods west of Seacrest Boulevard would be severely and negatively impacted, There are three likely phasing scenarios which will occur, depending upon the level of leadership and assistance offered by the City and CRA: (a) Let The Market Dictate: (b) CRA-Assisted Development; and (c) Hybrid (CRA Leads; Market Takes Over), Each of these three has been discussed in the body of this report. A controlled phasing plan, which utilizes both market forces and CRA assistance, would allow for the redevelopment of the Heart of Boynton area to occur over the next ten years, given favorable economic conditions. Housing demand in this neighborhood, however. will continue to hinge on the success of surrounding new development within the CRA, Failure to create a sustainable downtown along Federal Highway, with significant residential occupancies, will hurt long-term demand, and force the City and CRA to subsidize future development within the Heart of Boynton district over a long.er period of time, (2) Maintain an Appropriate Scale The consideration of appropriate densities and building heights hinge upon the appropriateness of the scale relationship between structures and across roadways, The Heart of Boynton District is a moderate urban district, with lower densities and a lower scale of development west of Seacrest Boulevard. To assist in the evaluation of alternate densities and building heights, the height-to-width ratios of buildings-to-buildings across roadways is helpful. As illustrated in the images below, the ideal height-to-width ratio is one-to-one in urban setting, which helps create a sense of spatial enclosure, Good urban planning suggests the tighter the ratio of height-to-width, the stronger the sense of place, which often corresponds with higher real estate values and increased natural surveillance (e.g" "eyes on the street") with good design amenities such as front porches and balconies, >) ( I f , i ~~;::~ '-. ;.~~..:M:CMNCiICIGHT+OP-vLtc:-."ACii '! _._..L.--.._~";""'_, The major roadway network in the Heart of Boynton District includes Seacrest Boulevard (at four lanes) and Martin Luther King, 11'. Boulevard (at two lanes), The roadway improvements envisioned for these two roadways will improve their appearance and function with medians, on-street parking, landscape and streetscape treatment. Likewise, proper building placement and building heights will enhance both the roadway design and function as well as the values and desirability of corresponding pri vate development. Economic Analysis of "Heart of Bo\nlon" Plan f(" Q P { - !!!!'.u~study ~~ page 4X [WAFT (rn ,11,/\ 2()()o) Example of more and less desirable height-to-width ratios, Lower ratios, such as the one-fa-three ratio illustrated on the left, create well-defined, better-performing urban space. SOURCE: TCRPC As increased densities and building heights are considered for the Heart of Boynton District, they should be tested to determine various scenarios and resulting height -to- width relationships. (3) Develop a Pilot Project The Heart of Boynton needs a success story to attract quality, desired development. To create a catalyst project for the neighborhood, the CRA should seek to develop a public/private partnership with an interested developer to create a catalyst pilot project, cautiously sized to ensure successful absorption but big enough to create energy for adjacent properties. The project should have good visibility (e.g., Seacrest Boulevard, Martin Luther King, Jr. Boulevard) with a good-sized project storyboard to announce its arrival. (4) Acknowledge Market Imbalance As has been well-documented in this report, there exists a market imbalance in the Heart of Boynton District, which has negatively affected the rate of development and redevelopment in the neighborhood. While the CRA purchased properties at an average price of $1.1 Million per acre, private developers were acquiring nearby properties for roughly $1.3 Million per acre for projects of significantly higher density, visibility, and profile (e.g., Promenade, Sunshine Square, Causeway Lumber site). While these other locations are appropriate for higher density, higher scale development, augmented with water views and proximity to other highly-valued projects, the Heart of Boynton District is considerably different. The appropriate scale of the HOB District is lower-scale development with low-to-moderate densities, such as what exists in the District (five du/acre single-family residential neighborhoods and some low-rise residential) or what would reasonably complement that pattern (low- to mid-rise residential at no more than forty du/acre). Instead of risking the gentrification of the District, the CRA can play an appropriate role in addressing the market imbalance to subsidize projects as necessary for Economic Analysis of "Heart of Boynton" Plan 'foo[- R P ~' ~.!!<,?study page 49 DRAf-. (rev. Milr 2006) appropriate product types, CRAs exist in part tu address market Imbalances and bring investors into neighborhoods where they might not otherwise invest. The CRA can utilize TIF revenues to reduce land costs, provide infrastructure and other public improvements, and subsidize home acquisition via homebuyer assistance and other appropriate programs, (5) Look to Successful Examples in Comparable Communities The Boynton Beach CRA is among several dozen successful CRAs along Florida's southeastern coast, many of whom have districts similar to the Heart of Boynton. The CRA would be well-served to look to comparable redevelopment communities with similar conditions, such as the Delray Beach CRA and its programmatic approach to the West Atlantic neighborhood, to develop and implement programs for the Heart of Boynton, Delray Beach has successfully created a community-based redevelopment coalition, with participation by residents and property owners, limited gentrification spillover from East Atlantic A venue, and created a successful program of redevelopment geared to residents of the West Atlantic community, rather than allowing displacement. The City and CRA partnered for community planning initiatives, infrastructure improvements, land acquisition, and residential and commercial incentives, (6) PubliclPrivate Participation is Key The Heart of Boynton District will be difficult to redevelop, quickly evidenced by its five-year history of relatively stagnation as compared to neighboring districts of prosperity and active development activity, To accomplish a redevelopment program, the CRA will need to partner with the private sector to address the market imbalance. CRA documents indicate its recent bonding of approximately $17 Million will likely require a delay before additional bond funds can be pursued, Accordingly, the CRA should carefully pursue experienced redevelopers with sufficient capital to front the capital costs necessary to get some initial projects in motion in exchange for TIF reimbursement in later years. (7) Community-Based Design Discussion Finally, it appears the Heart of Boynton District could utilize an updated community- based design discussion as land use and zoning changes are considered, As market conditions have changed, different development measures (density and building height changes) may be necessary to accomplish redevelopment in the District. Accordingly, the well-attended community meetings that accompanied the development and adoption of the 200 I Plan should be replicated, at least in part, as new comprehensive redevelopment recommendations are brought forward, A community-based advocacy group, such as Delray Beach's West Atlantic redevelopment coalition, can assist the City and CRA in communicating with residents, encouraging meaningful public participation, and stabilizing the community. Recent redevelopment proposals appear to have attracted the community's attention. This creates an opportunity for the CRA to capitalize on this Economic Analvsis of "Heart of" Bovnton" Plan ,~ ~.!!'!?,study . page )() DRAFT II'('\' Mur 2()()(j) energy and focus it into productive dialogue for the betterment of the(~strict. The District, and community as a whole, would be benefited by a coMmunity-based discussion to address concerns related to density increases, building heights, stagnation of development activity, and CRA plans to stimulate development in the area. With the afore-noted steps, it appears the Heart of Boynton District can redevelop in a manner that will create housing for its residents, provide new workforce and market-rate housing for the community to improve its sustainability, and ultimately, provide financial benefit (reimbursement) to the larger CRA district. Successful redevelopment of the Heart of Boynton is contingent upon the CRA's and City's willingness to lead the effort aggressively, but cautiously so as not to threaten the character and heritage that makes the community unique. The general themes of the Heart of Boynton 200 I Plan can be accomplished, but only with leadership, public investment, and community ownership in the ideas and their implementation. Economic Analysis of "Heart of Boynton" Plan Lt R P .(' ~.!!2study page 5\ DRAI'I (re\' MilY 2006)