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PLANNING COMMITTEE MINUTES
For copies
of the previous minutes please contact Sally Johnson at
Phone: 203-854-7810 x 6778 or Email sjohnson@norwalkct.org
CITY OF NORWALK
FINANCE AND PLANNING COMMITTEES
SPECIAL JOINT MEETING
JULY 10, 2007
ATTENDANCE: Carvin Hillard, Finance Chairman; Matthew Miklave, Planning
Chairman; Gwen Briggs - Finance, Douglas Hempstead – Finance
& Planning , Douglas Sutton - Finance, Kelly Straniti - Finance,
Rev. Phyllis Bolden – Planning (6:25 p.m.)
OTHERS: Mayor Richard Moccia, Timothy Sheehan, Redevelopment Director; Thomas
Hamilton, Finance Director, Michael
McKinnon, IDC Financial Services
CALL TO ORDER
Chairmen Hillard and Miklave called the meeting to order at 6:10 p.m.
BUSINESS
WEST AVENUE PUBLIC INFRASTRUCTURE
Mayor Moccia commented that this project had begun during Mayor Esposito’s administration, had continued through Mayor Knopp’s administration and was now part of the current administration. He said that it was important to hold this meeting in order to let the public know the direction that the project is moving towards.
Mr. Miklave stated that this project has been under discussion for a long time and this was the stage where the City’s commitment to the project would be discussed. Mr. Miklave said that the focus would be on the financing and economic portion of the project and how to shape those components appropriately. He said that Mr. Sheehan and Mr. Hamilton would be presenting a new approach for financing the project but also stressed that no commitments had been made. He also stated that this presentation was non-partisan effort.
Mr. Sheehan then addressed the members of the Committees and the public who were present. He said that the goal of both Committees was to create an environment that would increase foot traffic and provide interesting environments along with public spaces. Mr. Sheehan then began a PowerPoint presentation, which illustrated the current state of the area with photographs and the architect’s renditions of what the proposed project would look like when completed.
Mr. Sheehan also informed the members of the Committees that Tighe and Bond had completed a report on the area, which breaks out the various components. He then defined the public components, which apparently extend from curb line to curb line. Mr. Sheehan was careful to point out that the Tighe and Bond study did not include the cost of the land acquisition or the proposed parking structures.
Rev. Bolden joined the meeting at 6:25 p.m.
Mr. Sheehan then informed the Committees that the neighboring municipalities have become very aggressive in terms of development. Bridgeport is focused on their Steel Point development while Stamford is busy with the Antares project. The Steel Point project involved Tax Increment Funding (TIF).
Currently, the tax revenues from the downtown area do not reflect a healthy economy because the tax revenue is less than what it would be for vacant property. Mr. Sheehan said that the current rates are between $1.48 and $2.11 per square foot when they should be about $5.00 per square foot.
Ms. Romano joined the meeting at 6:30 p.m.
Mr. Sheehan explained that the developers have not yet finalized the financial costs for the project, but he estimates it at approximately $100,000,000.
Mayor Moccia commented at this point that it was important to not only have commercial businesses in the area, but also to have neighborhoods to support the local businesses. Mr. Miklave agreed with Mayor Moccia. Mr. Sheehan added that having the neighborhoods and the businesses together keep the local residents in Norwalk rather than having them go out of town to purchase goods.
Because of the size of the proposed project, there is no capital budget that would be able to cover the cost of the project, so the Redevelopment Agency and the Finance Department have been working on a strategy to allow the City to participate and to cover the costs of the project. Mr. Sheehan stressed that risk mitigation was primary in the strategy plan. He also pointed out that financing opportunities for this project might become available in the future. He also reported that currently the area provides 1.3 million dollars in tax revenue to the City, but this could increase to 13.7 million in the future with the development.
Mr. Hamilton then came forward to speak about the finances and the risk involved. He stated that the City was motivated to rehabilitate the downtown area, which is the urban core. Some of the financial goals are to foster growth in the Grand List, strengthen and diversify the tax base, preserve the increase in the property tax revenues to support City Operations and to minimize the risk to the Norwalk taxpayer.
Mixed use in the project is critical to the success of the project because the goal is not to create an industrial park, but an active neighborhood. Mr. Hamilton also explained that the major portion of the newly generated taxes would be directed to supporting the police, firefighters and the City services.
He then reviewed six questions that he used to evaluate the project with the Committees because of the public and private financing involved. Mr. Hamilton said that he believes that there will be a large number of permanent positions created through the project and this would have additional tax benefits for Norwalk. Independent analysis is being done on the project to protect the Norwalk taxpayer and to minimize the risk. Mr. Hamilton then reviewed the various figures for the project including the estimated retail square footage, the number of residential units and the proposed parking garages. He also pointed out that the project would provide the area with new, refurbished streets.
Mr. Hamilton then displayed an outline of the Financing Strategy. This involves creating a Special Services District, which is authorized under the State law. This would be limited to the 19 acre project site and would entail having a supplemental tax in addition to all the regular City, State and Federal taxes. The tax rates would be $5.00/sq. ft for retail; $3.00/sq. ft. for office and $1.00/sq. ft. for residential. The District Board would be controlled by the City. This plan could generate an additional $3,417,000 in tax revenue for the City. This would be leveraging the City’s triple A bond rating.
The second component of the finance strategy is from public parking revenues. Walker Parking Consultants are currently in the process of evaluating the project independently. The projected tax revenue increase would be $4.1 million dollars per year.
The Pro Forma financing has been discussed with the rating agencies and the response has been favorable. Mr. Hamilton then displayed a number of graphs illustrating the financial debt profile of the City and reviewed the various ratios.
Mr. McKinnon of IDC Financial Services then addressed the Committees. He said that he had been the financial advisor for the City since 1985. Mr. McKinnon then reviewed the history of the debt service and stated that the debt service would remain less than 1.5%, which is very low. Mr. McKinnon also pointed out that this percentage was less than the percentage for when the Maritime Center was built.
Mr. Hamilton then reviewed the figures for the current tax revenue and the projected tax revenue, along with the Risk Mitigation plans. He stated that the City would be relying on independent consultants for protection and also informed the Committees that this was not an open-ended agreement with the developers.
The model that is being proposed is a Purchase Model, particularly in regard to the parking garages. The City will be purchasing the four proposed parking garages after the construction is complete and pre-determined milestones have been met. This same plan will also apply to the public facilities in the project.
Mr. Hamilton then outlined the steps for the plan, which are: establishing a Special Services District Ordinance; Bond Resolution, Master Development Agreement and City Land Use Approvals. Mr. Hamilton said that the timeline was approximately 18-24 months with a 36 month construction period. The purchase of the parking garages would occur upon the completion of the structures and significant pre-leasing of the retail spaces. The permanent financing is not expected to occur until 2010 or 2011.
Mayor Moccia commented that the affordable housing will be in the POKO Partners project and that he believed the 350 units will be in a 60/40 split between retail and affordable housing. He also said that this project will help Norwalk to become one fully integrated town and that the other projects (95/7 & Head of the Harbor) are just as important to the City. However, protection of the taxpayers is the number one priority.
Mr. Miklave pointed out that no development project ever started out with people who were convinced that the project would fail or that the parties involved were the wrong parties. He then asked about catastrophic events and whether the taxes would be born by the developers and those who rent the space.
Mr. Sheehan said that the Special District would cover the debt service except for parking. He then requested that one of the bond counsels respond to the issue of first rights to the assets if there was a catastrophic event. The bond counsel replied that the City would have the same priority as the other assets investment holders. Mr. Hamilton then commented that the same tax liens would be on default payment assets and the bond counsel reviewed the process for the Committees. He also added that the investors in the project must have resources.
Mr. Hempstead emphasized that there must be acceptable rates for the property in order to rent it. He also expressed concern about the maintenance over a long period of time. Mr. Hempstead said that he would need to understand how the bond issue would affect daily life. Mr. Hamilton replied that the short answer to Mr. Hempstead’s question was that it would be a dedicated fund source. Mr. Hempstead had several detailed questions about the project ranging from who would be responsible for the street sweeping to whether the City would receive any kind of equity back from the developer. Mr. Hamilton suggested that those questions be discussed at a later date.
Ms. Straniti asked about the time frame for the supplemental taxes and whether
they would be permanent or only until the debt is repaid. Mr. Hamilton reviewed
the process with her.
Mr. Krummel stated that he was stunned by the amount of public commitment to
this project. He then asked about 95/7 and the status of that project. Mr. Sheehan
reviewed the figures. Mr. Krummel said that he felt that 95/7 should have been
presented along with POKO Partners and the West Avenue project. The West Avenue
project was a much larger project than either 95/7 or POKO. Mr. Sheehan stated
that he could break out the numbers for the 95/7 project, but also pointed out
that 95/7 involved a number of different parcels.
Mr. Wells from the BET Commission asked about police and fire support. Mr. Hamilton replied that he did not have the numbers for Mr. Wells at this point, but also commented that single family dwellings in the area would have more of an impact on the police and fire.
Mr. Hamilton announced that the meeting had to adjourn at this time because the Finance Committee needed to have a special session and that the Common Council meeting would begin at 8:00 in the chambers.
ADJOURNMENT
** MR. HILLARD MOVED TO ADJOURN.
** THE MOTION PASSED UNANIMOUSLY.
The meeting adjourned at 7:45 p.m.
Respectfully submitted,
Sharon L. Soltes
Telesco Secretarial Services
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