Using Revolving Funds - National Trust for Historic Preservation

Using Revolving Funds to Revitalize
Downtown Properties
Mike Starr, Georgia Cities Foundation
Kimberly Carter, Georgia Department of Community Affairs
Perry Hiott, Georgia Municipal Association
Ann Arnold, City of Rome, Georgia
Josh Rogers, NewTown Macon
Reminders
PRESENTERS
Mike Starr - Moderator
President, Georgia Cities Foundation
Kimberly Carter
DD RLF Program Manager, Georgia Department of Community Affairs
Perry Hiott
Community Development Director, Georgia Municipal Association
Ann Arnold
Downtown Development Director, City of Rome, Georgia
Josh Rogers
President & CEO, NewTown Macon
GEORGIA CITIES FOUNDATION
• 1999 - Established as a 501(c)(3) organization, through
the collaborative efforts of many organizations:



Georgia Municipal Association (GMA)
State of Georgia / Department of Community Affairs (DCA)
Georgia Chamber of Commerce
• 2008 - Awarded the Main Street Ally Award from the
Nation Trust Main Street Center.
• 2010 - Received designation as a Community
Development Financial Institution (CDFI) by the U.S.
Treasury Department’s CDFI Fund
PUBLIC - PRIVATE PARTNERSHIPS
Public Sector
+
Private Sector
+
Non-Profit Sector
Collaboration
PUBLIC + PRIVATE + NON-PROFIT
COLLABORATION IN GEORGIA
Public Sector:
• Georgia DCA (DD RLF & Main Street) / State of Georgia
• Cities & Downtown Development Authorities
Private Sector:
• Local Banks
• Downtown Property Owners, Developers & Investors
Non-Profit Sector:
• Georgia Cities Foundation & Other Non-Profits
• Robert W. Woodruff Foundation & Other Foundations
PUBLIC + PRIVATE + NON-PROFIT
COLLABORATION IN GEORGIA
Economic incentives are often
necessary to stimulate the type of
development and reinvestment
that a downtown needs.
REVOLVING LOAN PROGRAMS
Georgia Cities Foundation (GCF):
-Robert W. Woodruff Foundation
 $9.0 million grant, contingent on matching
State appropriations to DCA (for DD RLF)
-Other Foundation & Corporate Support
 To date, more than $11 million, including loan
repayments
Downtown Development Revolving
Loan Fund (DD RLF):
-State Appropriations and Loan Repayments
 $15.7 million since 2000
--Georgia Downtown Renaissance Fund
 Passed in 2014 Session (HB 128); Unfunded at
present
DD RLF & GCF LOAN
PROGRAMS
Typical Eligible Activities:






Land Acquisition
Building Acquisition
New Construction
Renovation
Historic Downtown Public Buildings (DD RLF)
Combinations
DD RLF & GCF LOAN
PROGRAMS
Ineligible Activities:





Working Capital
Operating Expenses
Refinancing of Permanent Loans
Administration
Local Revolving Loan Funds
DD RLF & GCF LOAN
PROGRAMS
Loan Terms:
 Maximum Loan Amount: $250,000
 Interest Rate: Below Market
(currently 2-3%)
 Repayment Period: 10-year term,
with 15-year amortization
DD RLF & GCF LOAN
PROGRAMS
50-40-10 Financing Structure
Example: $1,000,000 Project Cost
Acquisition: $350,000
Rehabilitation: $650,000
Conventional Financing (Bank):
Low-Interest Loan (GCF/DD RLF):
Owner/Developer’s Equity:
$500,000
$400,000
$100,000
THE DD RLF / GCF PARTNERSHIP
MYSTIC GRILL – COVINGTON
(2014)
FINANCING FOR THE MYSTIC GRILL
Source
Amount
Use
Amount
DD RLF
$250,000
Renovations
$250,000
Georgia Cities
$250,000
Renovations
$250,000
$845,000
Renovations
Furniture & Equipment
Acquisition
$285,000
$480,000
$80,000
$450,000
Acquisition
Rehabilitation
Architect / Design
$385,000
$45,000
$20,000
Bank
Owner Equity
Total Project Cost
$1,795,000
$1,795,000
MYSTIC GRILL - INTERIOR
MYSTIC GRILL – ROOFTOP
BAR AREA
• 59 New Jobs Created
SMITH HOUSE – DAHLONEGA
(2007)
FINANCING FOR THE SMITH
HOUSE
Source
Amount
Use
Amount
DD RLF
$250,000
Phase 1 Renovations
$250,000
Georgia Cities
$250,000
Phase 1 Renovations
$250,000
Bank
$500,000
Phase 1 Renovations
$500,000
Total Project Cost
$1,000,000
$1,000,000
SMITH HOUSE - DAHLONEGA
SMITH HOUSE - DAHLONEGA
SMITH HOUSE - DAHLONEGA
FLOWERS FOODS – THOMASVILLE
(2004)
FINANCING FOR FLOWERS FOODS
Source
Amount
Use
Amount
DD RLF
$250,000
Construction
$250,000
Georgia Cities
$250,000
Construction
$250,000
$1,460,000
Construction
$1,460,000
Bank
DDA Equity
Total Project Cost
$375,000
$2,335,000
Acquisition
$375,000
$2,335,000
FLOWERS FOODS - THOMASVILLE
FLOWERS FOODS - THOMASVILLE
Project Impacts
 110 employees in Phase I
 Project’s success inspired Phase II:
acquisition & rehabilitation
of the adjacent Scott Hotel
building
 Phase II brought an additional
80+ employees downtown
CAKES & ALE – DECATUR (2011)
FINANCING FOR CAKES & ALE
Source
Amount
Use
Amount
DD RLF
$184,000
Rehabilitation
$184,000
Georgia Cities
$184,000
Rehabilitation
$184,000
Bank Loan
$280,000
Rehabilitation
$280,000
Owner Improvements
$180,000
Rehabilitation
$180,000
Borrower Infusion
$92,000
Rehab / Equipment
$92,000
Total Project Cost
$920,000
$920,000
CAKES & ALE - DECATUR
CAKES & ALE - DECATUR
WILD HEAVEN CRAFT BEERS –
AVONDALE ESTATES (2014)
FINANCING FOR WILD HEAVEN
CRAFT BEERS
Source
Amount
Use
Amount
DD RLF
$175,000
Equipment / Leasehold
Improvements
$250,000
Georgia Cities
$175,000
Equipment / Leasehold
Improvements
$250,000
$900,000
Equipment
Construction
Working Capital
$452,879
$153,078
$144,043
Borrower Equity
Total Project Cost
$1,250,000
$1,250,000
WILD HEAVEN CRAFT BEERS –
AVONDALE ESTATES
© 2014, Chris Rank / Rank Studios
WILD HEAVEN CRAFT BEERS –
AVONDALE ESTATES
©2014, Chris Rank / Rank Studios
CONTACT INFORMATION
Kimberly Carter
DD RLF Program Manager
Georgia Department of
Community Affairs
404.679.0604
kim.carter@dca.ga.gov
Perry Hiott
Managing Director
Georgia Cities Foundation
678.686.6207
phiott@gmanet.com
Ann E. Arnold, CMSM
Downtown Development Director
City of Rome
607 Broad Street
PO Box 1433
Rome GA 30162-1433
Phone: (706) 236-4520
E-mail: downtown @romega.us
www.downtownRomeGa.com
The City of Seven Hills
and Three Rivers
Main Street City 1981
Great American Main Street City 2003
GEMS City 2014
Using Revolving Funds to Revitalize Downtown Properties
Hawthorn Suites
Harvest Moon Café
Honeymoon Bakery & Dark Side of the Moon
39
Total Project $4,000,000
GA Cities
$250,000
DDRLF
$250,000
Rdvlpmnt Fund $250,000
3 Commercial Spaces
Hawthorn Suites – 37 units
Added 28 in 2014
Three separate commercial projects
DCA DDRLF
2002
2007
2012
2014
$744,500
$624,000
$110,000
$206,000
$1,684,500
$200,000 Harvest Moon Café
$232,000 Honeymoon Bakery
$ 44,000 Harvest Moon Café
$ 82,000 Dark Side
$558,000
62 Jobs
Combined Loan Programs
$ 7,149,150
Reinvestment
$25,737,019
Jobs
380
National Main Streets Conference
March 31, 2015
Non-profit Solutions
• What’s NewTown’s Job?
• Improve returns relative to cost
•
•
•
Drive up rents
Maintain high occupancy
Reduce operating costs (tax credits/abatements)
•
Case studies showing appreciation
• Be the Pioneer
•
•
Market studies show demand
Current, accurate rent rates and rolls show performance
•
Coach developers and lenders
• Provide subordinated loans to lessen equity
requirements
Loft Demand vs. Supply
220
165
Close the gap
110
55
0
2011
2012
2013
2014
2015
Loft Demand vs. Supply
220
165
What happened here?
110
55
0
2011
2012
2013
2014
2015
Loft Fund
Bank Loan
65%
Project costs
Equity
10%
NewTown
25%
Loft Fund
• SunTrust purchased $5 million in bonds backed by
Bibb County Government in 2012
• Bonds are re-loaned to loft developers at “gap
financing”
• Mandated structure is minimum 10% developer’s
equity, 40% loan from NewTown, 50% loan from
traditional lender
• Less equity required
Lamar Drug Lofts
Costs
Sources of funds
Acquisition$500,000
Bank Loan$4.5 million
Construction$4.2 million
Tax Credit Syndication
Proceeds$1.4 million
Development (soft costs)$2.7 million
NewTown Loan$800,000
Deferred Developer’s Fees$700,000
Out of pocket equity$0
TOTAL COSTS$7.4 million
TOTAL FUNDS$7.4 million
Lamar Drug Lofts
Development Income
Annual Income
Developer’s Fees$700,000
Annual Income$700,000
Annual Operating Expense$150,000
Debt service$400,000
TOTAL FIRST YEAR INCOME$700,000
TOTAL ANNUAL INCOME$150,000
Return on Investment
• Out of Pocket cost of $0
• Income stream $150,000/ year
• One-time developer’s fee of $700,000
Return on Investment
Loft Resident Spending
Residents of each
new loft spend an
average of $15,000
on retail storefront
services
=
=
Revitalized
Space
100,000 sf
of vacant
space
99%
Occupied
103 loft apartments
& 14 storefronts
Renew & Expand Loan Fund
Demand= 1,100 additional units over five years
$27,885
70% Bond funded = 768 units
Average allocation of $27,885 in bond funds per loft constructed
30
%
70
%
70%
$20 million
In Additional Bond Funds Needed
70% of all lofts constructed in the past two years have been financed by NewTown
Urban Development Authority
• Tenant buildout loans, $800,000 available, up to
40% project costs or max $200,000
• Small Business Fund, $150,000 available in loans
up to $20,000 each for general business expenses
• Facade Loan Fund, $100,000 available for exterior
upgrades up to $20,000 per loan
• Main Street Micro-Lending, $16,000 available for
$1,000 no interest six-month loans
Historic Macon Foundation
• Signature revolving fund is Neighborhood
Revitalization
• HMF purchases, rehabilitates and resells historic
property, working a block at a time, until a
neighborhood is totally revitalized
• Approximately $4 million available
• Also operates loan funds at 3% interest, 5 year
repayments for facade and energy improvements
at approximately $1 million
Regional Commission
• Operates revolving loan fund for small business
finance through SBA
• Entrepreneurs can borrow up to 40% of total
project costs at a fixed interest rate for ten or
twenty year terms.
• Requires private match and job creation
• Minimum loan of $25,000 and max of $5.5 million
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