Housing Options Study - Military Growth Task Force

Transcription

HOUSING OPTIONS STUDY
PREPARED FOR:
PREPARED BY:
DISCLAIMER
This study was prepared under contract with North Carolina's Eastern Region, with financial support from the Office of
Economic Adjustment, Department of Defense. The content reflects the views of North Carolina's Eastern Region and does
not necessarily reflect the views of the Office of Economic Adjustment.
ACKNOWLEDGEMENTS
MILITARY GROWTH TASK FORCE
Mark Sutherland
Jay Bender
Executive Director
Deputy Director
TECHNICAL ADVISORY COMMITTEE
Don Baumgardner
Kyle Breuer
Scott Chase
Reggie Goodson
Jim Jennings
Larry Moolenaar
Sheila Pierce
Scott Shuford
Mike Thompson
Chuck Uzzell
Craven County Planning
Pender County Planning
City of Havelock Planning
City of Jacksonville Planning
Carteret County Planning
Eastern Carolina COG
Jacksonville-Onslow Economic Development
Onslow County Planning
First Citizens Bank
BB&T
CONSULTANT TEAM
Frank Warren
Jessica Rossi
Matt Noonkester
Charles Dalton
Warren & Associates
Warren & Associates
Kimley-Horn & Associates
Real Data
Housing Options Study: Executive Summary
Executive Summary
Warren & Associates was hired by the Military Growth Task
Force (MGTF) to determine the financial feasibility and fiscal
impact of a variety of housing types that would serve the needs
of a rapidly growing and diverse population in North Carolina’s
Eastern Region. Jurisdictions within the nine-county MGTF
region are seeking to accommodate growth in locations that
support a variety of formats and densities that maximize public
service efficiency and minimize infrastructure investment.
Completed in 2009, the Regional Growth Management Plan
(RGMP) measured the impacts of adding 11,477 new service
members and civilian employees. This represents the single
largest job growth event in the State of North Carolina since the
World War II era. Indirect civilian growth generated by military
investments and natural population increases are anticipated to
add another 40,157 residents. While the economic recession has
delayed some of the projected civilian growth, the MGTF region
should remain poised for a significant influx of population.
1. Process Overview
This comprehensive analysis identifies market opportunities for
alternative housing concepts, recommends locations that could
be financially feasible, and calculates the fiscal impacts of new
development on the respective local jurisdictions. Potential
implementation strategies are also recommended.
Market feasibility was analyzed for the areas surrounding MCAS
Cherry Point and Marine Corps Base Camp Lejeune/MCAS New
June 2011
River. Location is the primary factor influencing market
feasibility. Market data was obtained from local sources,
including realtors, developers, and appraisers.
Six alternative housing concepts and locations were selected with
guidance from MGTF staff and a Technical Advisory
Committee. The 10-member Technical Advisory Committee
was comprised of local planning staff, economic developers, and
lenders. Building on initiatives highlighted in the RGMP
Housing Section, sustainable and smart growth principles
influenced selections.
Based on findings in the market feasibility analysis, selected
housing concepts were analyzed using cash flow models to show
prospective rental or for-sale revenue streams compared to
construction costs, debt service, and required developer returns.
Density and unit type outputs from each model were then used to
generate a conceptual master plan, as well as aerial and streetview images, for each Focus Area.
The scenarios were then analyzed to determine their respective
impacts on county and municipal governments. Ad valorem
taxes and other revenues were forecasted, as well as annual costs
to serve new population. One-time development fees and capital
expenditures were also estimated. For each jurisdiction, the
current budget was reviewed prior to completing interviews with
available department heads.
Fiscal impact results for each focus area were compared to (1.)
build-out of the same site based on current zoning; and (2.) a
i
single-family detached subdivision, with an equivalent number
of units in an unincorporated area.
Implementation recommendations vary by location, housing
type, and density. Strategies investigated in this analysis include
land assembly, public investment in infrastructure, changes in
land use regulations, public/private partnerships, and
development bonuses.
2. Focus Area #1: Havelock City Center
In the 2009 Comprehensive Plan for the City of Havelock,
residents indicated a desire for a ‘city center’ that provides for a
variety of commercial, social, and recreational activities.
2.1 Project Description
Part of a master-planned community on 45
acres with City Center future land use
designation
Assumes sale of 16 acres for multi-family
rental development include
240 apartment units contained in four
separate buildings
Unit mix consists of one-, two-,
and three- bedroom units
Community amenities
include club house and
swimming pool
Surface parking
June 2011
2.2 Financial Feasibility
The financial feasibility of apartments on the Havelock City
Center site was tested using cash flow models to show
prospective rental revenue streams compared to construction
costs, debt service, and required developer returns.
As shown in the table below, the aggregate unit mix proposed for
this site is 40% one-bedrooms; 45% two-bedrooms; and 15%
three-bedrooms. The two- and three-bedroom units would target
military households at the near-by Cherry Point base.
Proposed Unit Mix and Rents, 2011
Unit Type
1 Bedroom (small)
1 Bedroom (large)
2 Bedroom
3 Bedroom
Total/Avg.
Avg.
Avg.
Units Mix % Sq.Ft. Rent
625
24
10%
$645
750
72
30%
$750
108
45% 1,100
$960
36
15% 1,300 $1,095
978
240 100%
$886
Rent/
Sq.Ft.
$1.03
$1.00
$0.87
$0.84
$0.91
Source: Warren & Associates
In order to reach an 8% yield, which is considered a minimum
rate of return threshold to attract private capital, an average rent
of $886, or $0.91 per square foot, must be reached. Monthly
rents would range from $645 for a small one-bedroom to $1,095
for a family-friendly three-bedroom.
The average pro forma rent per square foot of $0.91 is 24.6%
higher than the Cherry Point market average, and 5.8% higher
than the Class “A” average. The higher rent per square foot
could be achievable for newer product included as part of a
larger mixed-use development at City Center.
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2.3 Net Fiscal Impacts
Fiscal impact results for each HOS development were compared
to two alternative scenarios: (1.) by-right zoning; and (2.) singlefamily detached. Given zoning regulations and environmental
constraints, approximately 60 single-family detached units and
32,670 square feet of commercial could be supported under the
by-right scenario for City Center. Fiscal impacts were also
prepared for a 240-unit single-family development located
outside the City of Havelock in unincorporated Craven County.
The HOS scenario has the highest net annual revenue for the City
of Havelock after build-out, and essentially breaks even for
Craven County. With a lower residential density and sales taxgenerating commercial, the by-right scenario has the highest net
annual revenue for Craven County. This scenario also produces
positive net annual revenue for the City of Havelock.
Annual Net Revenue Comparison, Focus Area #1
Located in unincorporated Craven County, the single-family
scenario has no net impact on the City of Havelock. Negative
net annual revenue for Craven County is primarily due to the
provision of social, health, and education services.
The graph below shows the combined City of Havelock/Craven
County net revenue for the three scenarios. HOS provides the
greatest combined post build-out annual net revenue of
$181,508, followed by the by-right scenario’s $109,840. Given
the high cost of schooling, the 240 single-family units would
generate an annual net impact of negative $50,266.
Annual Combined City and County Net
Revenue Comparison, Focus Area #1
$350,000
$300,000
$250,000
$200,000
$181,508
$150,000
$109,840
$100,000
$350,000
City of Havelock
$300,000
$50,000
Craven County
$250,000
$0
$200,000
$50,000
$150,000
$100,000
-$50,266
HOS
$100,000
By-Right
Single-Family
$50,000
3. Net Fiscal Impact Comparison
$0
$50,000
$100,000
HOS
June 2011
By-Right
Single-Family
The housing scenarios proposed by this analysis are generally
higher density than surrounding developments. Additionally,
many of the scenarios are infill or redevelopment opportunities.
iii
The HOS scenarios typically generate more revenue than the byright or single-family alternatives.
Combined Net Revenue Comparison, HOS, By-Right, and Single-Family
$500,000
HOS
$400,000
$300,000
By-Right
Single-Family
KEY FISCAL IMPACT FINDINGS:
 Housing is typically lucrative to cities, which do not
provide social, health, or education services attributable
to counties
 For this same reason, commercial is a more lucrative
development pattern for counties
$200,000
$100,000
 For combined city/county net revenues, dense, in-fill
development generally brings more net revenue
than single-use single-family outside incorporated
areas
$0
$100,000
$200,000
#1
(Havelock)
#3
#2
(Jacksonville) (Jacksonville)
#4
(Onslow)
#5
(Pender)
#6
(Carteret)
Focus Area
Cities in the MGTF region receive positive fiscal benefits from
most housing types. This is primarily because they are not
responsible for the provision of health, social, and education
services attributable to counties. For this reason, counties
receive more positive return from commercial development.
Single-family development located outside the urban fringe
resulted in negative net revenue in all scenarios except Pender
County. Due to the comparatively high level of
intergovernmental transfer revenue and revenue-neutral
wastewater service, Pender County is an outlier in this analysis.
 The cost of serving single-family residential in
unincorporated areas generally results in net negative
or lower combined city/county revenue
4. Implementation
In order to attract private capital to the proposed HOS concepts,
some level of public incentives could be required to offset onetime development costs and/or inadequate post-completion
operating returns. These incentives could be a combination of
policy changes, and direct or indirect financial investments.
4.1 Policy Incentives
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•
June 2011
Accelerated Entitlement
Flexible Entitlement
Density Bonus
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4.2 Financial Incentives
4.2.1
Development Period
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•
•
•
•
•
•
•
•
•
•
4.2.2
Site Acquisition and Preparation
Special Assessment Bonds
Tax Increment Finance
Synthetic TIF
Infrastructure Grant
General Obligation Bonds
Revenue Bonds
Community Development Block Grants
New Markets Tax Credits
Business Improvement Districts
Low-Interest Loans
Post-Completion Operating Subsidies
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•
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Property Tax Credit
Government Master Lease of Commercial Space
Government Master Lease of Parking Spaces
Tenant Rent Subsidy
June 2011
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TABLE OF CONTENTS
1.
2.
3.
4.
5.
Introduction .......................................................................................................................................................................................................... 1
1.1
Technical Advisory Committee....................................................................................................................................................................... 2
1.2
Process Overview .......................................................................................................................................................................................... 3
Market Feasibility ................................................................................................................................................................................................. 4
2.1
Cherry Point ................................................................................................................................................................................................... 4
2.2
Camp Lejeune/MCAS New River ................................................................................................................................................................... 8
Focus Area #1: Havelock City Center .............................................................................................................................................................. 15
3.1
Site Selection ............................................................................................................................................................................................... 15
3.2
Project Description ....................................................................................................................................................................................... 16
3.3
Financial Feasibility ...................................................................................................................................................................................... 19
3.4
Fiscal Impact Analysis .................................................................................................................................................................................. 21
Focus Area #2: NC-24 Corridor......................................................................................................................................................................... 27
4.1
Site Selection ............................................................................................................................................................................................... 27
4.2
4.3
4.4
Focus Area #3: Downtown Jacksonville .......................................................................................................................................................... 39
5.1
Site Selection ............................................................................................................................................................................................... 39
5.2
5.3
Financial Feasibility - Rental ........................................................................................................................................................................ 42
5.4
Financial Feasibility – For-Sale .................................................................................................................................................................... 45
5.5
6.
7.
8.
9.
Focus Area #4: Sneads Ferry............................................................................................................................................................................ 53
6.1
Site Selection ............................................................................................................................................................................................... 53
6.2
6.3
6.4
Focus Area #5: Pender County ......................................................................................................................................................................... 62
7.1
Site Selection ............................................................................................................................................................................................... 62
7.2
7.3
7.4
Focus Area #6: Carteret County ....................................................................................................................................................................... 72
8.1
By-Right Comparison Description ................................................................................................................................................................ 72
8.2
Gross Revenue ............................................................................................................................................................................................ 72
8.3
Expenditures ................................................................................................................................................................................................ 73
8.4
Net Revenue ................................................................................................................................................................................................ 74
Fiscal Impact Comparison ................................................................................................................................................................................ 75
10. Implementation Strategies ................................................................................................................................................................................ 77
10.1
Policy Incentives .......................................................................................................................................................................................... 77
10.2
Financial Incentives ...................................................................................................................................................................................... 77
10.3
Case Study: Focus Area #3 ......................................................................................................................................................................... 80
Appendix I: Pro Forma Background ........................................................................................................................................................................ 83
LIST OF TABLES
Table 1: Comparable Single-Family Communities, Craven County, 2010 ......................................................................................................................................................................... 6
Table 2: Comparable Single-Family Pricing, Craven County, 2010 ................................................................................................................................................................................... 6
Table 3: BAH Amounts, MCAS Cherry Point, 2010 ........................................................................................................................................................................................................... 7
Table 4: Housing Demand Forecast, Craven County, 2007-2011 ..................................................................................................................................................................................... 8
Table 5: Comparable Apartment Communities, Onslow County, 2010 ............................................................................................................................................................................ 10
Table 6: Comparable Single-Family Communities, Onslow County, 2010 ....................................................................................................................................................................... 11
Table 7: Comparable Single-Family Pricing, Onslow County, 2010 ................................................................................................................................................................................. 11
Table 8: Comparable Townhouse Communities, Onslow County, 2010 .......................................................................................................................................................................... 12
Table 9: Comparable Single-Family Pricing, Onslow County, 2010 ................................................................................................................................................................................. 12
Table 10: BAH Amounts, Camp Lejeune/New River, 2010.............................................................................................................................................................................................. 13
Table 11: Housing Demand Forecast, Onslow County, 2007-2011 ................................................................................................................................................................................. 14
Table 12: Proposed Unit Mix and Rents, 2011 ................................................................................................................................................................................................................ 20
Table 13: Annual Gross Revenue at Build-Out, City of Havelock .................................................................................................................................................................................... 21
Table 14: Annual Expenditures at Build-Out, City of Havelock ........................................................................................................................................................................................ 22
Table 15: Annual Gross Revenue at Build-Out, Craven County ...................................................................................................................................................................................... 23
Table 16: Annual Expenditures at Build-Out, Craven County .......................................................................................................................................................................................... 24
Table 18: Annual Gross Revenue at Build-Out, City of Jacksonville ............................................................................................................................................................................... 33
Table 19: Annual Expenditures at Build-Out, City of Jacksonville.................................................................................................................................................................................... 34
Table 20: Annual Gross Revenue at Build-Out, Onslow County ...................................................................................................................................................................................... 35
Table 21: Annual Expenditures at Build-Out, Onslow County .......................................................................................................................................................................................... 36
Table 23: Comparable Downtown Apartments, 2010 ...................................................................................................................................................................................................... 44
Table 25: Annual Gross Revenue at Build-Out, City of Jacksonville ................................................................................................................................................................................ 47
Table 26: Annual Expenditures at Build-Out, City of Jacksonville.................................................................................................................................................................................... 48
Table 32: Annual Gross Revenue at Build-Out, Pender County ...................................................................................................................................................................................... 69
Table 33: Annual Expenditures at Build-Out, Pender County .......................................................................................................................................................................................... 70
Table 34: Annual Gross Revenue at Build-Out, Carteret County ..................................................................................................................................................................................... 73
Table 35: Annual Expenditures at Build-Out, Carteret Cty............................................................................................................................................................................................... 73
LIST OF GRAPHS
Graph 1: Occupancy Rates, 2007-2010 ............................................................................................................................................................................................................................ 5
Graph 2: Average Rent/Sq.Ft. by Apartment Class, 2010 ................................................................................................................................................................................................. 5
Graph 3: Single-Family Closings, Craven County, 2006-2009........................................................................................................................................................................................... 5
Graph 4: Housing Affordability for Civilians, Craven County, 2010 .................................................................................................................................................................................... 7
Graph 5: Housing Affordability for Military, Cherry Point, 2010 .......................................................................................................................................................................................... 8
Graph 6: Occupancy Rates, 2007-2010 ............................................................................................................................................................................................................................ 8
Graph 7: Average Rent/Sq.Ft. by Apartment Class, 2010 ................................................................................................................................................................................................. 9
Graph 8: New and Resale Closings, 2007-2010(1h) ....................................................................................................................................................................................................... 10
Graph 9: Average New Closing Price, 2007-2010(1h) ..................................................................................................................................................................................................... 10
Graph 10: New and Resale Closings, 2007-2010(1h) ..................................................................................................................................................................................................... 11
Graph 11: Average New Closing Price, 2007-2010(1h) ................................................................................................................................................................................................... 12
Graph 12: Housing Affordability for Civilians, Onslow County, 2010................................................................................................................................................................................ 13
Graph 13: Housing Affordability for Military, Camp Lejeune, 2010 .................................................................................................................................................................................. 14
Graph 14: Rent/Sq.Ft. Comparison, 2010 ....................................................................................................................................................................................................................... 20
Graph 15: Annual Gross Revenue Shares at Build-Out, City of Havelock ....................................................................................................................................................................... 22
Graph 16: Annual Net Revenue at Build-Out, City of Havelock ....................................................................................................................................................................................... 23
Graph 17: Annual Gross Revenue Shares at Build-Out, Craven County ......................................................................................................................................................................... 24
Graph 18: Annual Net Revenue at Build-Out, Craven County ......................................................................................................................................................................................... 25
Graph 19: Annual Net Revenue Comparison, Focus Area #1 ......................................................................................................................................................................................... 25
Graph 20: Annual Combined City and County Net Revenue Comparison, Focus Area #1 .............................................................................................................................................. 26
Graph 22: Annual Gross Revenue Shares at Build-Out, City of Jacksonville ................................................................................................................................................................... 34
Graph 23: Net Revenue at Build-Out, City of Jacksonville............................................................................................................................................................................................... 35
Graph 24: Gross Revenue at Build-Out, Onslow County ................................................................................................................................................................................................. 35
Graph 25: Annual Net Revenue at Build-Out, Onslow County ......................................................................................................................................................................................... 37
Graph 27: Annual Combined City and County Net Revenue Comparison, Focus Area #2 .............................................................................................................................................. 38
Graph 29: Rent/Sq.Ft. Comparison with Incentives, 2010 ............................................................................................................................................................................................... 44
Graph 30: Sale Price Comparison, 2010 ......................................................................................................................................................................................................................... 46
Graph 31: Annual Gross Revenue Shares at Build-Out, City of Jacksonville ................................................................................................................................................................... 48
Graph 32: Net Revenue at Build-Out, City of Jacksonville............................................................................................................................................................................................... 49
Graph 36: Annual Combined Net Revenue Comparison, Focus Area #3 ........................................................................................................................................................................ 52
Graph 37: Sales Price Comparison, 2010 ....................................................................................................................................................................................................................... 58
Graph 40: Estimated Cost Burden for Civilian Residents, 2010....................................................................................................................................................................................... 65
Graph 41: Estimated Cost Burden for Military Residents, 2010 ....................................................................................................................................................................................... 65
Graph 46: Gross Revenue at Build-Out, Pender County ................................................................................................................................................................................................. 70
Graph 47: Annual Net Revenue at Build-Out, Pender County ......................................................................................................................................................................................... 71
Graph 48: Gross Revenue at Build-Out, Carteret County ................................................................................................................................................................................................ 73
Graph 49: Annual Net Revenue at Build-Out, Carteret County ........................................................................................................................................................................................ 74
Graph 50: Combined Net Revenue Comparison, HOS and By-Right .............................................................................................................................................................................. 76
Graph 52: Rent/Sq.Ft. Comparison with Incentives, 2010 ............................................................................................................................................................................................... 82
LIST OF MAPS
Map 1: MGTF North Carolina’s Eastern Region ................................................................................................................................................................................................................ 1
Map 2: Cherry Point Market Area...................................................................................................................................................................................................................................... 4
Map 3: Camp Lejeune Market Area .................................................................................................................................................................................................................................. 9
Map 4: Focus Area #1, City of Havelock ......................................................................................................................................................................................................................... 15
Map 5: Focus Area #2, City of Jacksonville..................................................................................................................................................................................................................... 27
Map 6: Focus Area #3, City of Jacksonville..................................................................................................................................................................................................................... 39
Map 7: Focus Area #4, Onslow County ........................................................................................................................................................................................................................... 53
Map 8: Focus Area #5, Pender County ........................................................................................................................................................................................................................... 62
Housing Options Study
1.
Introduction
Warren & Associates was hired by the Military Growth Task
Force (MGTF) to determine the market potential for, and fiscal
impact of, a variety of housing types that would serve the needs
of a rapidly growing and diverse population in North Carolina’s
Eastern Region. Jurisdictions within the nine-county MGTF
region are seeking to accommodate growth in locations that
support a variety of formats and densities that maximize public
service efficiency and minimize major infrastructure investments.
The Regional Growth Management Plan (RGMP) measured the
impacts of adding 11,477 new service members and civilian
employees to the following counties:
•
•
•
•
•
•
•
Carteret
Craven
Duplin
Jones
Onslow
Pamlico
Pender
Since the completion of the RGMP in 2009, Lenoir and Wayne
counties have been included as part of MGTF (Map 1). Housing
demand in this analysis does not include deficits that may occur
in the two newly added counties.
The addition of 11,477 new service members and civilian
employees represents the single largest job growth event in the
State of North Carolina since the World War II era. Indirect
June 2011
Map 1: MGTF North Carolina’s Eastern Region
1
civilian growth generated by military investments and natural
growth are anticipated to add another 40,157 residents.
•
While the economic recession has delayed some of the projected
civilian growth, primarily due to non-military job losses and a
record drop in national mobility, the MGTF region should remain
poised for a significant influx of population. As a result, the
primary premise of the RGMP Housing Section is still a relevant
guide for public policy. As stated in RGMP, “Provision of a
variety of housing types that meets the demands of new residents
of all income levels is a critical component in improving the
region’s quality of life for current and future residents.”
•
Findings in the RGMP Housing Section impacted the types and
locations of housing concepts analyzed as part of this study.
These findings included the following:
•
•
•
•
By 2011, a housing deficit of 1,742 units is expected in
the region, based on current housing supply and the
military’s definition of adequate housing.
Civilians and military personnel seeking available and
affordable rental housing in the region are having a more
difficult time finding suitable properties.
A variety of housing types are needed to meet the
preferences of new residents expected in the region.
Long-term solutions for a sustainable housing strategy
will require cooperation between local, state, and federal
government agencies, private developers, financial
institutions, and the U.S. Marine Corps.
June 2011
Tight credit markets will continue to constrain new
residential development in the region for the short-term
planning horizon.
Local officials for the U.S. Marine Corps are fully
committed to initiatives underway by cities and counties
in the region to meet future military family housing
needs off-base.
With military and civilian housing demand well vetted through
the RGMP process, the goal of the Housing Options Study is to
define and test the market and financial feasibility of specific
development opportunities, focusing on alternative concepts to
traditional suburban single-family neighborhoods and
freestanding apartment communities. The fiscal impact of
location-specific projects are estimated for the respective counties
and municipalities.
1.1
Technical Advisory Committee
A Technical Advisory Committee was created to guide in the
selection of sites and housing concepts, as well as validate market
and fiscal findings. Four meetings were held throughout the 12month process to obtain feedback from the committee. Primarily
composed of local planning staff, the committee included:
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Don Baumgardner, Craven County Planning
Kyle Breuer, Pender County Planning
Scott Chase, City of Havelock Planning
Reggie Goodson, City of Jacksonville Planning
Jim Jennings, Carteret County Planning
Larry Moolenaar, Eastern Carolina COG
2
•
•
•
•
1.2
Sheila Pierce, Jacksonville-Onslow Economic Dev.
Scott Shuford, Onslow County Planning
Mike Thompson, First Citizens Bank
Chuck Uzzell, BB&T
Process Overview
This comprehensive analysis identifies market opportunities for
alternative housing concepts, recommends locations that would
be competitive for financially feasible projects, and calculates the
fiscal impacts of new development on the respective jurisdictions.
Potential implementation strategies are also recommended.
Market feasibility was analyzed for the areas surrounding MCAS
Cherry Point and Marine Corps Base Camp Lejeune. Location is
the primary factor influencing market feasibility. Market
feasibility was tested using local sources, including interviews
with realtors, developers, and appraisers. The Basic Allowance
for Housing (BAH) was a critical component of the market
feasibility, acknowledging the impact of affordability for military
households on the region’s housing supply.
Alternative housing concepts and locations were selected with
guidance by MGTF staff and the Project Advisory Committee.
Building on initiatives highlighted in the RGMP Housing
Section, sustainable and smart growth principles also influenced
selections. The overriding objective in site and location selection
was to create alternative development scenarios that promote
community and environmental sustainability, targeting all market
segments by household type and income.
June 2011
Based on findings in the market feasibility analysis, as well as
input from the Technical Advisory Committee, housing concepts
were analyzed using cash flow models to show prospective rental
or for-sale revenue streams compared to construction costs, debt
service, and required developer returns. Density and unit type
outputs from each model were then used to generate a conceptual
master plan, as well as aerial and street-view images, for each
Focus Area.
Scenarios with market and financial feasibility were then
analyzed to determine their respective impacts on county and
municipal governments. Ad valorem taxes and other revenue
were forecasted, as well as annual costs to serve new population.
In addition, one-time development fees and capital expenditures
were also analyzed. For each jurisdiction, the current budget was
reviewed prior to completing interviews with available
department heads.
Fiscal impact results for each focus area were then compared to:
•
•
“By-right” development at build-out; number of units
determined by current zoning of the focus area.
Single-family detached subdivision with an equivalent
number of units as the proposed concept, built outside the
urban fringe.
Implementation recommendations vary by location, housing type,
and density. Suggested implementation strategies investigated in
this analysis include land assembly, public investment in
infrastructure, changes in land use regulations, public/private
partnerships, and development bonuses.
3
2.
Market Feasibility
This section presents the market feasibility findings for the two
areas surrounding MCAS Cherry Point and Marine Corps Base
Camp Lejeune. Analyses included in this section include pricing
and absorption of for-sale and rental product based on household
growth, incomes, and housing preferences for the target market.
2.1
Cherry Point
Market data for the MCAS Cherry Point market covers Craven
County, including the jurisdictions of New Bern and Havelock
(Map 2). Residential rental data was provided by Real Data, and
for-sale information was gathered by interviews with local
realtors and developers.
2.1.1 Rental
There are approximately 1,650 apartments in communities of 25
units or more in the Cherry Point Market. Overall, the product is
aging, with the newest market-rate community completed in
2000. The larger apartment communities are primarily located in
New Bern, and contain up to 230 units.
Due to the limited supply of new product, occupancy rates in the
Cherry Point Market have remained high. The reported
occupancy rate was approximately 94% in 2010, a decline from
98% in 2007 (Graph 1).
Map 2: Cherry Point Market Area
June 2011
4
Graph 1: Occupancy Rates, 2007-2010
2.1.2 For-Sale (Detached and Townhouse)
100.0%
93.7%
90.0%
85.0%
Between 2006 and 2009, single-family closings declined in all
price categories, including entry level (Graph 3). Closings
include both new and resale units. During the same time period,
nearly 80% of all closings were priced less than $240,000. The
average annual closing price in first-half 2010 was reported at
$169,900, a decline from the $176,300 annual average in 2009.
80.0%
75.0%
2007
2010
The average unit in 2010 contained 861 square feet, with a quoted
monthly rent of $629, or $0.73 per square foot. As shown in
Graph 2, newer “Class A” product achieved average rents of
$0.86 per square foot in 2010, a 17.8% premium over the market
average. “Class A” includes any community completed since
2000.
Graph 2: Average Rent/Sq.Ft. by Apartment Class, 2010
$1.00
$0.95
$0.90
Rent/Sq.Ft.
$0.85
$350,000+
$240,000-$349,999
3,000
$140,000-$239,999
$0-$139,999
2,500
2,000
1,500
1,000
500
$0.86
0
$0.80
2006
$0.75
2007
2008
2009
Overall Average = $0.73
$0.74
$0.70
$0.65
$0.67
$0.60
$0.55
$0.50
A
June 2011
Graph 3: Single-Family Closings, Craven County, 2006-2009
3,500
Single-Family Closings
95.0%
Occupancy Rate
For-sale residential data was provided through two primary
sources: single-family closing data reported by the Multiple
Listing Service and comparable community data, including
insight from local developers.
98.1%
B
C
In order to confirm pricing for new single-family development,
four comparable communities were analyzed for unit size,
pricing, and absorption. As shown in Table 1, over 2,300 new
residential units are either under construction or proposed in the
comparable communities.
5
Table 1: Comparable Single-Family Communities, Craven County, 2010
Single-Family Detached Units
Community
Carolina Colours
Longleaf Pines
Brices Crossing
Craeberne Forest
Total
Address
Waterscape Way
Thurman Road
Old Airport Road
Trent Creek Road
Builder/
Year
Est.
Under
Developer
Started Comp. Constr. Prop. Total
Land Concepts and Solutions 2005
100
6 1,506 1,600
Lawrence Land Company
2008
78
8 132 218
Lawrence Land Company
2006
112
5
76 193
Neuse Builders
2008
110
7 183 300
400
26 1,897 2,311
The comparable communities are primarily located along the US70 corridor, in close proximity to the City of New Bern. Overall,
the communities were 17.3% complete in mid-2010, with nearly
1,900 remaining to be built.
As shown in Table 2, comparable single-family units in Craven
County range in size from 1,200 square feet at Brices Crossing to
4,000 square feet at Carolina Colours. Pricing for new singlefamily units ranges from $140,000 to $700,000.
Table 2: Comparable Single-Family Pricing, Craven County, 2010
Unit Size (Sq.Ft.)
Price
Community
Min.
Max.
Min.
Max.
Carolina Colours
1,700
4,000 $200,000 $700,000
Longleaf Pines
1,400
2,100 $165,000 $220,000
Brices Crossing
1,200
2,500 $140,000 $220,000
Craeberne Forest
1,600
2,400 $141,900 $199,900
2.1.3 Rental/For-Sale Cost Comparison
The Regional Growth Management Plan estimated the monthly
impact for civilian and military home-ownership using median
housing value by county. The impact estimate is inclusive of
down-payment, mortgage, property tax, utilities, and insurance.
The monthly cost-to-own for civilians is $986, while the military
June 2011
cost is $1,092. The military cost to own is slightly higher than
civilians due to specialized mortgage lending that does not
require a down-payment.
Based on market findings, the average monthly rent in the Cherry
Point market is estimated at $629. The average monthly rent in a
Class “A” unit is $720. Renting a Class “A” apartment is lower
than home ownership by 37% and 52% for civilians and military,
respectively.
2.1.4 Housing Affordability
Relative housing affordability was calculated for both civilian
and military residents. Civilian housing affordability is based on
average monthly household income as reported by the Economic
and Social Research Institute (ESRI). In 2010, the average
monthly income for Craven County was estimated at $4,566.
Using a moderate cost burden ratio of 30%, the average
supportable housing expenditure threshold in Craven County
equates to $1,370 for civilians.
As shown in Graph 4, an average monthly surplus is estimated
for monthly mortgage and rent payments, as well as Class “A”
rent. Average monthly surplus is calculated as the difference
between the $1,370 average supportable housing expenditure and
average market cost (as demonstrated in Section 2.1.3). For
civilians, rental housing has a monthly surplus of $741, followed
by $650 for Class “A” rental properties and $384 for mortgage
payments.
6
Graph 4: Housing Affordability for Civilians, Craven County, 2010
$1,600
Average Monthly Surplus
Average Monthly Payment
$1,400
$1,200
$384
$1,000
$741
$650
$800
$600
$400
$200
$0
Mortgage
Rental
Class A Rental
Military housing affordability is based on the most recently
published Basic Allowance for Housing (BAH) amounts. BAH
is calculated each year by pay-grade, and includes separate
amounts for military with and without dependents (Table 3).
Based on information provided by MCAS Cherry Point, the
following assumptions were made in order to calculate average
housing affordability:
•
•
•
Pay-grades E-1 through E-5 live on base
Pay-grades O-1 through O-4 make up an estimated 70%
share of total off-base military
The estimated shares of dependents for pay-grades O-1
through O-4 are as follows:
o O-1: 30%
o O-2: 45%
o O-3: 75%
o O-4: 85%
June 2011
Table 3: BAH Amounts, MCAS Cherry Point, 2010
Pay
Grade
E-6
E-7
E-8
E-9
W-1
W-2
W-3
W-4
W-5
O-1
O-2
O-3
O-4
O-5
O-6
O-7
O-8
O-9
O-10
MCAS Cherry Point
With
Without
Description
Dependents Dependents
Staff Sergeant
$1,410.00
$1,056.00
Gunnery Sergeant
$1,497.00
$1,122.00
Master Seargeant
$1,590.00
$1,227.00
Sergeant Major
$1,671.00
$1,296.00
Warrant Officer, One
$1,410.00
$1,065.00
Chief Warrant Officer, Two
$1,536.00
$1,224.00
Chief Warrant Officer, Three
$1,650.00
$1,305.00
Chief Warrant Officer, Four
$1,677.00
$1,431.00
Chief Warrant Officer, Five
$1,707.00
$1,518.00
Second Lieutenant
$1,206.00
$1,014.00
First Lieutenant
$1,404.00
$1,152.00
Captain
$1,647.00
$1,326.00
Major
$1,719.00
$1,506.00
Lieutenant Colonel
$1,770.00
$1,560.00
Colonel
$1,788.00
$1,650.00
Brigadier General
$1,806.00
$1,683.00
Major General
$1,806.00
$1,683.00
Lieutenant General
$1,806.00
$1,683.00
General
$1,806.00
$1,683.00
Source: w w w .defenselink.mil/militarypay
Housing affordability was calculated for the most common offbase pay-grades: O-1 through O-4. In 2010, these pay-grades
received a monthly BAH of $1,206 to $1,719 with dependents or
$1,014 to $1,506 without dependents.
Based on average housing costs, as demonstrated in Section
2.1.3, both Class “A” rent and a monthly mortgage payment fall
below all four BAH ranges for O-1 through O-4 (Graph 5). It
should be noted that each range includes monthly allowances
with and without dependents.
7
Graph 5: Housing Affordability for Military, Cherry Point, 2010
Camp Lejeune/MCAS New River
Data for the Camp Lejeune/MCAS New River market covers
Onslow and Pender counties, including the City of Jacksonville.
Market data from Pender County’s coastal communities, such as
Surf City and Topsail Beach, is excluded from this analysis.
Mortgage
“A” Rent
O-4
2.2
O-3
2.2.1 Rental
O-2
O-1
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
2.1.5 Forecasted Housing Demand
Onslow County currently has approximately 5,350 rental units,
with an occupancy rate of 95.7% in 2010 (Graph 6). The
occupancy rate has decreased slightly from 96.3% in 2007,
partially due to new completions in the market in the past two
years. The comparatively high occupancy rate indicates that
demand remains strong surrounding Camp Lejeune.
Graph 6: Occupancy Rates, 2007-2010
100.0%
95.0%
Occupancy Rate
The RGMP forecasted housing demand in Craven County
through 2011. As shown in Table 3, total forecasted housing
demand in Craven County is expected to be 3,378 units.
However, based on feedback from the Technical Advisory
Committee, it was assumed that 85% of the military and 50% of
the civilian demand has already arrived. This equates to a
remaining housing demand for approximately 1,000 for-sale and
530 rental units in Craven County.
96.3%
95.7%
2007
2010
90.0%
85.0%
80.0%
Table 4: Housing Demand Forecast,
Craven County, 2007-2011
Tenure
Owner
Renter
Total
Civilian Military Total
1,956
159 2,115
974
289 1,263
2,930
448 3,378
75.0%
Source: RGMP
June 2011
8
The average market-rate apartment unit in Onslow County
contains approximately 880 square feet, and rents for $760 per
month, or $0.86 per square foot. As shown in Graph 7, newer
Class “A” rental product rents for $0.91 per square foot, a 5.8%
premium over the average.
Graph 7: Average Rent/Sq.Ft. by Apartment Class, 2010
$1.00
$0.95
$0.90
$0.91
Overall Average = $0.86
Rent/Sq.Ft.
$0.85
$0.84
$0.80
$0.81
$0.75
$0.70
$0.65
$0.60
$0.55
$0.50
A
B
C
Five comparable market-rate apartment communities were
selected based on location, age, and quality of product.
Completed between 2006 and 2010, the five communities contain
a total of 961 units (Table 5). The average 1,172-square-foot
comparable unit rents for $1,084, or $0.93 per square foot, an
8.1% premium over the market average of $0.86.
Map 3: Camp Lejeune Market Area
June 2011
9
Table 5: Comparable Apartment Communities, Onslow County, 2010
Year
Unit Mix
Total Occ.
Avg.
Community
Location
Built 1-BR 2-BR 3-BR 4-BR Units Rate
Sq.Ft.
Arlington West
5049 Western Blvd 2010
80
186
25
0 291 97.9% 1,170
Abbington Place
475 McDaniel Dr
2004
60
120
60
0 240 96.7% 1,150
Puller Place @ Carolina Forest 100 Delaney Dr
2006
72
144
24
0 240 96.7% 1,113
Liberty Pointe at Piney Green 1000 Yorktown Ln 2010
2
66
42
10 120 50.0% 1,401
Crown
190 Valencia Dr
2009
24
36
0
0
60 100.0% 1,040
Total/Average
238
552
151
10 951 91.4% 1,172
Share
25.0% 58.0% 15.9% 1.1%
Graph 8: New and Resale Closings, 2007-2010(1h)
Avg. Avg. Rent/
Rent Sq.Ft.
$1,058
$0.90
$968
$0.84
$993
$0.89
$1,613
$1.15
$975
$0.94
$1,084
$0.93
2,500
New
Resale
2,000
1,500
It should be noted that the Camp Lejeune market has experienced
a swell of development activity over the last two years. In
addition to the 470 new units completed over the last two years,
over 2,500 new units have been proposed, primarily in the City of
Jacksonville, through 2014.
Closings
Source: Real Data; Warren & Associates
1,000
500
0
2007
2008
2009
2010(1h)
2.2.2 For-Sale Detached - Onslow
The average sales price for new detached for-sale product
declined 13.8% between 2007 and 2009 (Graph 9). However,
new sales prices stabilized at approximately $189,000 between
2009 and first-half 2010.
Graph 9: Average New Closing Price, 2007-2010(1h)
$250,000
Average Sales Price (New Construction)
Onslow County averaged approximately 2,650 closings annually
between 2007 and 2009 (Graph 8). Total closings remained
relatively constant during this period in contrast to the national
downturn due to the recession. The share of new construction
closings increased from 30% in 2007 to 45% in 2009. Based on
first-half data, 2010 should match or exceed 2009 sales,
particularly for new homes.
$240,000
$230,000
$220,000
$214,783
$210,000
$204,447
$200,000
$189,932
$188,637
2009
2010(1h)
$190,000
$180,000
$170,000
$160,000
$150,000
2007
June 2011
2008
10
In order to confirm pricing of new for-sale detached product, six
comparable communities were analyzed in Onslow County. As
shown in Table 6, the comparable communities are proposed to
have over 3,300 total units. Approximately 38% of the units are
completed, 4% are under construction, and 58% remain proposed.
Table 6: Comparable Single-Family Communities, Onslow County, 2010
Community
Carolina Forest
Williamsburg Plantation
Blue Creek Estates
The Bluffs
Sterling Farms
Carolina Plantations
Total
Single-Family Detached
Year
Est.
Under
Address
Approved Comp. Constr. Prop. Total
Western Blvd.
2001
400
50
121 571
Williamsburg Pkwy.
1996
592
14
894 1,500
Navy Blue
2009
11
6
109 126
Gumbranch Road
2009
20
14
134 168
Military Cutoff Road
2007
250
30
201 481
Ramsey Road
2010
3
30
467 500
1,276
144 1,926 3,346
2.2.3 For-Sale Detached – Pender
For-sale detached trends were analyzed separately for Pender
County. Based on the findings of the RGMP, Pender County is
likely to experience a housing deficit through 2011. Drawn by
the close proximity to both Jacksonville and Wilmington, many
residents have located in the Hampstead area along US-17.
Pender County averaged approximately 500 closings annually
between 2007 and 2009 (Graph 10). Total new and resale
closings declined from 650 in 2007 to fewer than 400 in 2009.
The share of new construction closings has decreased each year,
from 31% in 2007 to 14% in first-half 2010.
Graph 10: New and Resale Closings, 2007-2010(1h)
1,000
Annual absorption paces range from 20 to 75 units annually.
Opening in 2007, Sterling Farms has had the highest annual
absorption of the six communities, at about 100 houses per year.
Table 7: Comparable Single-Family Pricing, Onslow County, 2010
Unit Size (Sq.Ft.)
Price
Community
Min.
Max.
Min.
Max.
Carolina Forest
1,251
3,390 $152,900 $238,500
Blue Creek Estates
1,400
1,700 $189,000 $220,000
Williamsburg Plantation
1,500
2,970 $199,950 $339,000
The Bluffs
1,700
2,600 $190,000 $270,000
Sterling Farms
1,300
3,000 $175,000 $275,000
Carolina Plantations
1,500
3,000 $150,000 $260,000
June 2011
Resale
800
700
600
Closings
The comparable single-family units in Onslow County range in
size from 1,250 to 3,400 square feet (Table 7). Pricing for new
single-family units ranges from $150,000 to $340,000. Each of
the six comparable communities offers detached units for less
than $200,000.
New
900
500
400
300
200
100
0
2007
2008
2009
2010(1h)
The average sales price for new detached for-sale product
declined 22.8% between 2007 and first-half 2010 (Graph 11).
New product sales prices averaged approximately $225,000 in
first-half 2010.
11
Graph 11: Average New Closing Price, 2007-2010(1h)
Average Sales Price (New Construction)
$330,000
$310,000
$291,961
$290,991
$290,000
$275,108
Based on the two comparable communities, townhouses in the
Camp Lejeune market are generally priced from $118,000 to
$139,000 for 1,000 to 1,500 square feet (Table 9). This equates
to an average price per square foot between $92 and $118.
$270,000
Table 9: Comparable Single-Family Pricing, Onslow County, 2010
$250,000
$225,282
$230,000
$210,000
$190,000
Community
The Gables
Carolina Forest
Size (Sq.Ft.)
Price
Price/Sq.Ft.
Min. Max.
Min.
Max.
Min.
Max.
1,000 1,200 $118,000 $118,000 $118.00 $98.33
1,173 1,520 $117,900 $139,900 $100.51 $92.04
$170,000
2.2.5 Rental/For-Sale Cost Comparison
$150,000
2007
2008
2009
2010(1h)
2.2.4 For-Sale Townhouses – Onslow
Onslow County has had 171 new construction townhouse sales
between 2009 and 2010, averaging 14.25 per month. Townhouse
product offers an affordable ownership option for off-base
military and civilian residents.
There are currently two communities offering new attached forsale product, with a total of 532 units (Table 8). The
communities are 58.6% completed. Both comparable
communities are located in the City of Jacksonville.
Table 8: Comparable Townhouse Communities, Onslow County, 2010
Townhouse Units
Year
Est.
Under
Community
Address
Started Comp. Constr. Prop. Total
The Gables
Gum Branch Rd.
2009
112
16
24 152
Carolina Forest Western Blvd.
2001
200
30
150 380
Total
312
46
174 532
June 2011
Based on findings in the RGMP, the monthly cost-to-own for
civilians in Onslow County is $1,051, while the military cost is
$1,165. The cost-to-own estimates are inclusive of downpayment, mortgage, property tax, utilities, and insurance. The
military cost to own is slightly higher than civilians due to
specialized mortgage lending that does not require a downpayment.
The Camp Lejeune apartment market had an average monthly
rent of $760 in 2010. However, Class “A” product has a higher
average rent of $946. The cost of renting a Class “A” apartment
unit is 11% and 2% less than home ownership for civilians and
off-base military, respectively.
2.2.6 Housing Affordability
Based on ESRI estimates, the average monthly income in Onslow
County is approximately $4,420. Assuming a 30% housing cost
burden ratio, the supportable average housing expenditure
threshold in Onslow County is $1,325 for civilians.
12
As shown in Graph 12, an average monthly surplus is estimated
for monthly mortgage and rent payments, as well as Class “A”
rent. Average monthly surplus is calculated as the difference
between the 30% housing expenditure threshold and average
market cost (as demonstrated in Section 2.2.6). For civilians,
rental housing has a monthly surplus of $565, followed by $379
for Class “A” rental properties and $274 for mortgage payments.
Graph 12: Housing Affordability for Civilians, Onslow County, 2010
$1,600
Average Monthly Surplus
Average Monthly Payment
$1,400
$1,200
$274
$379
$565
$1,000
$800
$600
$400
$200
$0
Mortgage
Rental
Class A Rental
Similar to the Cherry Point market, military housing affordability
is based on the most recently published Base Allowance for
Housing (BAH). BAH is calculated each year by pay-grade, and
includes separate amounts for military with and without
dependents (Table 10). Based on information provided from
Camp Lejeune, the following assumptions were made in order to
calculate average housing affordability:
June 2011
•
•
•
Pay-grades E-1 through E-6 live on base
Pay-grades E-6 through E-8 and O-2 through O-3 make
up an estimated 75% share of total off-base military
Dependent shares range from 45% for O-2 to 88% for E-8
Table 10: BAH Amounts, Camp Lejeune/New River, 2010
MCB Camp Lejune
MCAS New River
Pay
With
Without
Grade Description
Dependents Dependents
E-6
Staff Sergeant
$1,341.00
$1,011.00
E-7
Gunnery Sergeant
$1,395.00
$1,047.00
E-8
Master Seargeant
$1,458.00
$1,134.00
E-9
Sergeant Major
$1,548.00
$1,215.00
W-1
Warrant Officer, One
$1,344.00
$1,032.00
W-2
Chief Warrant Officer, Two
$1,422.00
$1,134.00
W-3
Chief Warrant Officer, Three
$1,494.00
$1,224.00
W-4
Chief Warrant Officer, Four
$1,569.00
$1,356.00
W-5
Chief Warrant Officer, Five
$1,653.00
$1,410.00
O-1
Second Lieutenant
$1,113.00
$1,008.00
O-2
First Lieutenant
$1,335.00
$1,071.00
O-3
Captain
$1,491.00
$1,248.00
O-4
Major
$1,689.00
$1,404.00
O-5
Lieutenant Colonel
$1,827.00
$1,437.00
O-6
Colonel
$1,845.00
$1,494.00
O-7
Brigadier General
$1,863.00
$1,524.00
O-8
Major General
$1,863.00
$1,524.00
O-9
Lieutenant General
$1,863.00
$1,524.00
O-10
General
$1,863.00
$1,524.00
Source: w w w .defenselink.mil/militarypay
Housing affordability was calculated for the most common offbase pay-grades. In 2010, these pay-grades received a monthly
BAH of $1,335 to $1,491 with dependents or $1,011 to $1,248
without dependents.
Based on average housing costs, as demonstrated in Section
2.2.6, Class “A” rent falls below the BAH ranges (Graph 13). An
average mortgage payment falls below the BAH range for O-3,
13
but within the range for E-6 through E-8 and O-2. It should be
noted that each range includes monthly allowances with and
without dependents.
“A” Rent
Mortgage
Graph 13: Housing Affordability for Military, Camp Lejeune, 2010
O-3
O-2
E-8
E-7
E-6
$500
$750
$1,000
$1,250
$1,500
$1,750
$2,000
2.2.7 Forecasted Housing Demand
RGMP forecasted housing demand in Onslow County through
2011. As shown in Table 11, total forecasted housing demand in
Onslow County is expected to be 8,799 units. Based on feedback
from the Technical Advisory Committee, it was assumed that
95% of the military and 50% of the civilian demand has already
arrived. This equates to a remaining housing demand for
approximately 2,000 new for-sale and 1,500 rental units.
Table 11: Housing Demand Forecast,
Onslow County, 2007-2011
Tenure
Owner
Renter
Total
Civilian Military Total
3,947
713 4,660
2,843
1,296 4,139
6,790
2,009 8,799
Source: RGMP
June 2011
14
3.
Focus Area #1: Havelock City Center
3.1
Site Selection
Based on the Cherry Point market findings, the City of Havelock
has limited new housing stock, including both for-sale and rental
product. As a result, military personnel based at Cherry Point
and professionals working in Havelock often opt to live closer to
New Bern or Morehead City.
In the most recent Comprehensive Plan for the City of Havelock,
completed in 2009, residents indicated a desire for a ‘city center’
that provides for a variety of commercial, social, and recreational
activities. The area identified in the Comprehensive Plan is north
of the bridge crossing Slocum Creek on US-70, in the vicinity of
Slocum Avenue (Map 4). The Plan identifies this area as prime
for future redevelopment.
Renderings and graphics of
City Center were included
as part of the planning
process. Site plans show a
mixed-use development
with a “Main Street” feel,
including a variety of
residential units, groundlevel retail, office, and a
civic campus. A riverfront
park is also depicted.
Map 4: Focus Area #1, City of Havelock
June 2011
15
3.2
Project Description
Part of a master-planned community on 45 acres
with City Center future land use designation
Assumes sale of 16 acres for multi-family rental
development include
240 apartment units contained in four separate
buildings
Unit mix consists of one-, two-, and threebedroom units
Community amenities include club
house and swimming pool
Surface parking
Apartment
Site
Figure 1: Focus Area #1 Site Plan
June 2011
16
Figure 2: Focus Area #1 Aerial View
June 2011
17
Figure 3: Focus Area #1 Street View
June 2011
18
3.3
Financial Feasibility
The financial feasibility of apartments on the Havelock City
Center site was tested using cash flow models to show
prospective rental revenue streams compared to construction
costs, debt service, and required developer returns. Findings
from the financial feasibility analysis were incorporated into the
site plan and project images demonstrated in Section 3.2.
Numerous assumptions were utilized as part of the financial
feasibility analysis. Assumptions were based on comparable
community performance, as well as local market information
gathered through interviews.
PRO FORMA ASSUMPTIONS
Land Cost:
$10,980 / door
Hard Construction:
$45 / square foot
Building Efficiency:
85%
Absorption Pace:
12 units / month
Stabilized Vacancy:
7%
Operating Expenses:
$3,600 / unit
Loan to Cost Ratio:
75%
Construction Loan:
6%
Inflation:
2010 constant $
June 2011
Density and unit mix assumptions were held constant in the pro
forma to solve for rent that would produce an initial yield of 8%.
Initial yield is defined as the net operating income divided by the
total development cost. An 8% yield is a widely adopted
investment performance threshold in the multi-family industry.
Ultimately, the project is assumed to be sold after five years at a
capitalization rate of 7.5%. Capitalization rates are the ratio
between the annual net operating income produced by an asset
and its current market value.
Construction costs are
projected for four three-story
garden apartment buildings
with brick and hardi-plank
siding. The costs also
include an allowance for a
clubhouse with amenity
areas, as well as a pool.
Interior unit features are
assumed to include black
appliances, carpeting, and
solid-surface countertops.
The photographs to the right
illustrate a similar level of
construction and interior
feature quality.
As shown in Table 12, the
aggregate unit mix proposed for this site is 40% one-bedrooms;
45% two-bedrooms; and 15% three-bedrooms. The two- and
19
three-bedroom units would target military households at the nearby Cherry Point base.
Table 12: Proposed Unit Mix and Rents, 2011
Unit Type
1 Bedroom (small)
1 Bedroom (large)
2 Bedroom
3 Bedroom
Total/Avg.
Avg.
Avg.
625
24
10%
$645
750
72
30%
$750
108
45% 1,100
$960
36
15% 1,300 $1,095
978
240 100%
$886
Rent/
Sq.Ft.
$1.03
$1.00
$0.87
$0.84
$0.91
higher than the Cherry Point market average, and 5.8% higher
than the Class “A” average (Graph 14). The higher rent per
square foot reflects newer product included as part of a larger
mixed-use development at City Center.
Graph 14: Rent/Sq.Ft. Comparison, 2010
$1.00
$0.95
ProForma Rent/SF = $0.91
$0.90
$0.85
In order to reach an 8% yield, given the pro forma assumptions,
an average rent of $886, or $0.91 per square foot, must be
reached. Average monthly rents would range from $645 for a
small one-bedroom unit to $1,095 for a family-friendly threebedroom.
$0.86
$0.80
$0.75
$0.70
$0.73
$0.65
$0.60
$0.55
The total project cost for the 16-acre site in Havelock City Center
is estimated at $20.6 million. Based on the proposed unit mix
and rents, the stabilized net operating income after the first year
of construction would be $1.6 million. This equates to an initial
yield of 8.0% and an internal rate of return after a five year hold
of 18.26%.
Financial Summary
Equity Investment
Loan Amount
$5,161,602 25.00%
$15,484,806 75.00%
Total Project Cost
$20,646,408
NOI - Year 1
Initial Yield (Overall)
IRR (5 yr hold):
June 2011
$1,652,306
8.00%
18.62%
$0.50
Avg. Rent/SF
Avg. "A" Rent/SF
The Havelock City Center apartment site is a viable project,
particularly if it is delivered as part of a mixed-use development.
Retail in City Center will add value by driving additional
amenities within walking distance of the project. Immediate
access to the US-70 corridor is another attractive feature of this
site.
It is important to note that larger national institutional real estate
investors and developers would be hesitant to pursue this site due
to the tertiary nature of the market. National developers will
perceive this smaller market as a higher level of risk.
20
Construction of new apartments in Havelock is a more realistic
opportunity for a local or regional developer.
3.4
Fiscal Impact Analysis
A fiscal analysis was performed on the Housing Options Study
(HOS) scenario described in Section 3.2 in order to demonstrate
the impact of housing types, patterns, and densities on revenues
and expenditures at the city- and county-level beginning the first
year after build-out. Results are reported in 2010 constant dollars
to eliminate the impacts of inflation and appreciation.
3.4.1 By-Right and Single-Family Comparison Descriptions
The current zoning of the 16-acre site in Focus Area #1
is a mixture of Highway Commercial (three acres fronting US70) and Residential Mobile Home (remaining 13 acres of the
site). For the three-acre commercial portion of Focus Area #1,
assuming a 0.25 Floor Area Ratio (FAR), approximately 32,670
square feet of retail could be accommodated at build-out. Floor
Area Ratio is defined as the total square feet of a building divided
by the size of the property. Given zoning regulations and
environmental constraints, approximately 60 single-family
detached units could be supported. Based on feedback from the
City of Havelock, this analysis assumes stick-build single-family
units, not mobile homes.
By-Right.
Fiscal impacts were also prepared for a 240-unit
single-family development located outside the City of Havleock
municipal limits in Craven County. For this comparison, public
services are assumed to be provided by the County.
Single-Family.
June 2011
3.4.2 City of Havelock
A primary source of annual revenue for City of
Havelock is ad valorem taxes, including those generated by real
and personal property. Analyses were also performed to account
for sales taxes, privilege licenses, and user fees.
Gross Revenue.
Based on the current City of Havelock property tax rate of $0.465
per $100 value, the HOS scenario could generate gross annual
revenue of $313,598 in the first year after build-out (Table 13).
The real property value of the apartment community in the HOS
scenario was based on a 7.5% cap rate, as demonstrated in the pro
forma. Personal property revenue, calculated for vehicles, totals
$13,700 annually. Lacking any commercial development on the
apartment site, no sales tax revenue was calculated. Additionally,
solid waste removal fees were assumed to be paid to a private
company.
Table 13: Annual Gross Revenue at Build-Out, City of Havelock
Focus Area #1 Unincorp.
Category
HOS By-Right SF Site
Real Property
$104,833 $64,919
$0
Personal Property - Vehicles $13,700
$4,696
$0
Sales Tax
$0
$2,205
$0
Privilege License Fees
$50
$1,784
$0
Water Usage Fees
$60,964 $17,217
$0
Wastewater Usage Fees
$134,051 $37,637
$0
Solid Waste Fees
$0
$9,124
$0
Total
$313,598 $137,582
$0
Note: In 2010 dollars.
Note: Unincorporated single-family site has same nunber of units as HOS.
Sources: City of Havelock; Craven County; Warren & Associates
21
By-right build-out of the land includes a mixture of single-family
detached housing, as well as commercial fronting on US-70. The
combination of these uses could generate annual revenue of
$137,582 to the City of Havelock. With only 60 residential units,
as opposed to 240 for the HOS scenario, revenue streams in
almost all cases are lower. Approximately $2,205 annually could
be generated in sales taxes from the 32,670 square feet of new
commercial space.
The alternative single-family development scenario is assumed to
be located outside the municipal boundaries of the City of
Havelock. As such, all of the gross revenue is applied only to
Craven County.
As shown in Graph 15, wastewater usage fees are likely to
generate the largest source of annual revenues at 42.7%. Real
property tax revenue could make up an additional 33.4%. No
revenue is assumed for sales tax or solid waste removal.
Graph 15: Annual Gross Revenue Shares at Build-Out, City of Havelock
Based on the current services provided by the City
of Havelock, the cost to serve the HOS scenario is estimated at
$132,889 in the first year after build-out. Public services, such as
police, fire, and emergency management, total $102,031
annually. The cost to provide parks and recreation services is
only calculated for residential uses, equating to $7,998 for 240
units. There is no estimated cost to the City of Havelock for
private road maintenance and solid waste collection at the
apartment site.
Expenditures.
Table 14: Annual Expenditures at Build-Out, City of Havelock
Category
Police
Fire/Rescue/EMS
Road Maintenance
Solid Waste/Recycling
Public Works/Utilities
Parks and Recreation
General Administration
Total
HOS
By-Right SF Site
$42,027 $16,984
$0
$60,004 $22,047
$0
$0
$3,174
$0
$0 $12,081
$0
$1,083
$320
$0
$7,998
$2,058
$0
$21,778 $12,790
$0
$132,889 $69,453
$0
HOS - Havelock Revenue
Real Property
Personal Property - Vehicles
Privilege License Fees
Note: Unincorp. single-family site has same nunber of units as HOS.
Sources: City of Havelock; Warren & Associates
Water Usage Fees
33.4%
42.7%
19.4%
4.4%
The cost to serve the by-right comparison is estimated to cost the
City of Havelock $69,453 annually, approximately 88% lower
than the HOS scenario. The reduced cost is primarily due to a
lower density, equating to fewer households. Similar to gross
revenues, all costs to serve the single-family comparison are
assumed to be provided by Craven County.
0.02%
Net revenue is gross revenue less total
expenditures. For the City of Havelock, the HOS scenario has
Net Revenue.
June 2011
22
the largest annual net revenue of $180,709, versus $68,128 for
the by-right development (Graph 16). The difference is primarily
due to higher density and taxable value in the HOS scenario. The
City of Havelock would not receive any net revenue from the
single-family scenario.
Graph 16: Annual Net Revenue at Build-Out, City of Havelock
$350,000
Annual Revenue
Annual Expenditures
$300,000
$250,000
Table 15: Annual Gross Revenue at Build-Out, Craven County
Focus Area #1
Category
HOS By-Right
Real Property - General Fund $106,592 $62,146
Real Property - Fire Capital
$0
$0
$13,930
$4,775
Sales Tax - General Fund
$0 $15,951
Sales Tax - School Capital
$0
$4,631
Sales, Services, and Other
$37,829
$9,734
$0
$1,691
Intergovernmental Transfers
$1,322
$340
Total
$159,673 $99,269
Unincorp.
SF Site
$170,208
$18,576
$18,973
$0
$0
$38,678
$6,384
$1,351
$254,170
Net Revenue =
$180,709
$200,000
Sources: City of Havelock; Craven County; Warren & Associates
$150,000
Net Revenue =
$68,128
$100,000
$50,000
$0
HOS
By-Right
Single-Family
3.4.3 Craven County
Craven County would receive annual revenue
under all three scenarios. Based on the current tax rate of
$0.5241 per $100 value, which includes a separate fire rate, the
HOS scenario could generate $159,673 in annual gross revenue to
Craven County (Table 15). Real property taxes would make up
the largest portion of revenue at $106,592, followed by $37,829
for Sales, Service, and Other. Sales, Service, and Other include
revenues from beer and wine, franchise fees, and other user fees.
Gross Revenue.
June 2011
The multiple use by-right scenario could generate $99,269
annually at build-out. The single-family scenario would likely
generate the highest annual gross revenue of $254,170. With 240
detached residential units, the single-family scenario has a higher
taxable value than either the HOS or by-right.
As shown in Graph 17, real property taxes are likely to generate
the largest source of annual revenues at 66.8%.
Intergovernmental transfers could make up another 23.7%. Retail
proposed as part of the remainder of Havelock City Center is not
included in this analysis, so no sales tax revenue is calculated.
23
Graph 17: Annual Gross Revenue Shares at Build-Out, Craven County
HOS - Craven Revenue
Real Property - General Fund
0.8%
23.7%
8.7%
66.8%
Table 16: Annual Expenditures at Build-Out, Craven County
Category
HOS
By-Right SF Site
Social Services
$37,673
$9,694
$38,517
Health Services
$10,826
$2,786
$11,069
Craven County Schools
$84,205 $37,069 $162,017
Craven Community College
$19,668
$5,061
$20,108
$0
$0
$12,880
Sheriff
$0
$0
$35,323
Fire Marshall/EMS
$0
$0
$5,545
Volunteer Fire (Township #6)
$0
$0
$8,891
Craven County Library System
$2,226
$573
$1,856
$0
$0
$1,518
$4,276
$2,374
$6,712
Total
$158,874 $57,557 $304,436
North Carolina counties are charged with
providing all school, social, and health services. Municipalities
do not provide revenue streams to cover these services. The HOS
scenario would have an annual Craven County expenditure of
$158,874 (Table 16). The by-right scenario would have the
lowest annual expenditure of $57,557, while the single-family
detached scenario would have the highest at $304,436. The
higher cost for the single-family scenario is due to the fact that
Craven County is assumed to provide all services to this
development. The other scenarios rely on services provided by
the City of Havelock. Expenditure categories with no cost listed
indicate services that are provided by the City of Havelock.
Expenditures.
June 2011
Sources: Craven County; Warren & Associates
In all three scenarios Craven County Schools comprise the largest
share of annual expenditures. Based on feedback from the
County, more students per household are assumed for the byright and single-family developments than the apartment units in
HOS. The local cost per student, provided by Public Schools of
North Carolina, is consistent between all three scenarios. All
intergovernmental transfers for schooling are excluded.
CRAVEN COUNTY SCHOOL ASSUMPTIONS
Students/
Household
Cost/
Student
Single-Family:
0.55
$1,292
Apartments:
0.27
$1,292
24
Graph 19: Annual Net Revenue Comparison, Focus Area #1
For Craven County, the HOS scenario has expected
annual net revenue of $799; meaning the cost to serve the
apartment community essentially equates to the revenue. The byright development has the largest net revenue for the County of
$41,712 annually, primarily due to fewer residential units and the
presence of commercial that generates sales tax revenue and
requires comparatively fewer services (Graph 18). The singlefamily scenario is expected to have negative net revenue of
$50,266 annually.
$200,000
Graph 18: Annual Net Revenue at Build-Out, Craven County
$50,000
Net Revenue.
$450,000
City of Havelock
$300,000
Craven County
$250,000
$150,000
$100,000
$50,000
$0
$100,000
Annual Revenue
$400,000
$350,000
HOS
By-Right
Single-Family
Annual Expenditures
$350,000
$300,000
Net Revenue =
-$50,266
$250,000
$200,000
Net Revenue = $799
With a lower residential density and sales tax-generating
commercial, the by-right scenario has the highest net annual
revenue for Craven County. This scenario also produces positive
net annual revenue for the City of Havelock.
$150,000
$100,000
Net Revenue =
$41,712
$50,000
$0
HOS
By-Right
Single-Family
3.4.4 Focus Area #1 Net Revenue Summary
This section compares the annual net revenue for the three
scenarios presented for Focus Area #1. The HOS scenario has
the highest net annual revenue for the City of Havelock, and
essentially breaks even for Craven County (Graph 19).
June 2011
The single-family scenario has no net impact on the City of
Havelock, but has negative net annual revenue for Craven
County. The negative net annual revenue is primarily due to the
provision of services, particularly social, health, and education.
Graph 20 shows the combined City of Havelock/Craven County
net revenue for the three scenarios. HOS provides the greatest
combined net revenue of $181,508, followed by the by-right
scenario’s $109,840. Given the high cost of schooling, the 240unit single-family development would generate an annual net
impact of negative $50,266.
25
Graph 20: Annual Combined City and County Net
$350,000
$300,000
$250,000
$200,000
$181,508
$150,000
$109,840
$100,000
$50,000
$0
$50,000
-$50,266
$100,000
HOS
June 2011
By-Right
Single-Family
26
4. Focus Area #2: NC-24 Corridor
4.1
Site Selection
The NC-24 corridor is an outdated commercial corridor in close
proximity to the proposed new main gate at Camp Lejeune (Map
5). In June 2010, the City of Jacksonville completed a NC-24
Corridor Study. Future land uses suggested for the NC-24
corridor included multi-family residential, retail, and office. A
second phase of the study is currently underway, and will provide
refined recommendations for future land use and transportation
scenarios along the corridor.
Additional attention will be placed on this corridor due to the
relocation of the main gate to Camp Lejeune, planned just west of
Camp Knox Road. This transportation project will include 7.5
miles of new roads and eight bridges. Residential uses in the
vicinity will provide the potential for pedestrian access to the
military base.
June 2011
Map 5: Focus Area #2, City of Jacksonville
27
4.2
Project Description
Multi-use development on 12.3 acres in the
vicinity of Liberty Drive/NC-24.
Two 1.3-acre retail pads sold for pharmacy
and small-shop retail development
Site includes 216 multi-family units on
remaining 9.7 acres
Unit mix consists of one-, two-, and threebedroom floorplans
Individual buildings vary in size, containing
between 15 and 54 units
Community amenities include detached
garages, clubhouse, and pool
Surface parking
June 2011
28
June 2011
29
June 2011
30
4.3
Pro forma assumptions for Focus Area #2 are based on
comparable community performance, as well as local market
information gathered through interviews. Similar to Focus Area
#1, the pro forma held density and unit mix assumptions constant
while solving for rents to achieve an initial yield of 8%. An 8%
yield is a widely adopted investment performance threshold in the
multi-family industry. Ultimately, the project is assumed to be
sold after five years at a capitalization rate of 7.5%.
Land Cost:
$11,000 / door
Hard Construction:
$47 / square foot
$5,000 / garage
82%
Absorption Pace:
15 units / month
Stabilized Vacancy:
7%
Operating Expenses:
$3,700 / unit
Loan to Cost Ratio:
75%
Construction Loan:
6%
Inflation:
2010 constant $
Project costs include master planning of the 12.3-acre site, as well
as development of the multi-family component. Retail pads are
June 2011
assumed to be sold between three and four years after
construction begins on the apartments. Retail is planned as a
14,000-square-foot pharmacy and a 12,000-square-foot strip
shopping center.
Construction costs are projected
for three-story wood-frame
apartment buildings flat roofs,
as well as 48 detached garages
that will be available to
residents at an additional
monthly cost. The costs also
include an allowance for a
clubhouse with amenity areas,
as well as a pool. Interior unit
features are assumed to include
black appliances, carpeting, and
solid-surface countertops. The
photographs to the right
illustrate a similar level of
construction and interior feature
quality.
As shown in Table 17, the aggregate unit mix proposed for this
site is 50% one-bedrooms; 39% two-bedrooms; and 11% threebedrooms. With its proximity to the new main gate, this site
would be more appropriate for a higher-share of one-bedroom
units than the proposed development as part of the Havelock City
Center.
31
Unit Type
1 Bedroom (small)
1 Bedroom (large)
2 Bedroom
3 Bedroom
Units
36
72
84
24
216
Avg.
Avg.
Mix % Sq.Ft. Rent
625
17%
$675
750
33%
$750
39% 1,050
$995
11% 1,300 $1,150
907
100%
$877
Rent/
Sq.Ft.
$1.08
$1.00
$0.95
$0.88
$0.97
higher than the Camp Lejeune market average, and 6.6% higher
than the Class “A” average (Graph 21). The higher rent per
square foot reflects newer multi-use product and the inclusion of
high quality community amenities and detached garages.
$1.10
In order to reach an 8% yield, given the pro forma assumptions,
an average rent of $877, or $0.97 per square foot, must be
reached. Average monthly rents would range from $675 for a
small one-bedroom unit to $1,150 for a family-friendly threebedroom.
$1.00
$0.90
$0.91
$0.80
$0.86
$0.70
The total project cost for the Focus Area #2 site is estimated at
$18.6 million, including $2.4 million for land purchase. Based
on the proposed unit mix and rents, the stabilized net operating
income after the first year of construction is estimated at $1.49
million. This equates to an initial yield of 8.0% and an internal
rate of return after a five year hold of 18.85%.
Financial Summary
Equity Investment
$
4,659,513 25.00%
Loan Amount
$
13,978,539 75.00%
Total Project Cost
$
18,638,052
NOI - Year 1
$
1,490,974
IRR (5 yr hold):
June 2011
8.00%
18.85%
$0.60
$0.50
Avg. Rent/SF
Avg. "A" Rent/SF
The Focus Area #2 apartment site is a viable project, particularly
with retail amenities in walking distance of the community.
Attractive features of the site include superior visibility and
accessibility from NC-24, as well as proximity to the proposed
main gate to Camp Lejeune. Although the site does not have a
significant amount of open space, it is in walking distance to the
Rails-to-Trails greenway.
It is important to note that the vast majority of national
institutional real estate investors and developers would be
hesitant to pursue this project due to the tertiary nature of the
32
market. National developers will perceive this smaller market as
a higher level of risk. Construction of new apartment projects in
Jacksonville is more of an opportunity for a local or regional
developer, especially one with experience in military markets.
4.4
A fiscal analysis was performed on the Housing Options Study
(HOS) scenario described in Section 4.2 in order to demonstrate
the impact of housing types, patterns, and densities on expected
revenues and expenditures at the city- and county-level beginning
in the first year after build-out. All results are reported in 2010
constant dollars to eliminate the impact of inflation and real
property appreciation.
The current B-1 (business) zoning on the site requires a
50-foot buffer along all major thoroughfares, leaving 7.9
developable acres. Based on B-1 zoning regulations and
feedback from the City of Jacksonville, the site is assumed to
include all commercial retail square footage. Based on a
0.25floor area ratio (FAR), building-out Focus Area #2 under
current zoning yields approximately 86,000 square feet of retail.
Potential uses could include a grocery, pharmacy, and strip
shopping center.
By-Right.
single-family development located outside municipal limits in
Onslow County. For this comparison, all public services are
assumed to be provided by the County.
Single-Family.
4.4.2 City of Jacksonville
The primary source of annual revenue for the
City of Jacksonville is ad valorem taxes, including those
generated by real and personal property. Analyses were also
performed to account for sales taxes, privilege licenses, and user
fees.
Gross Revenue.
Based on the current City of Jacksonville property tax rate of
$0.538 per $100 value, the HOS scenario could generate gross
annual revenue of $332,886 in the first year after build-out (Table
18). The property tax rate includes a $0.038 tax reserved
specifically for the construction of a new public safety
headquarters. The real property value of the apartment
community in the HOS scenario was based on a 7.5% cap rate.
Total value for the commercial uses was based on comparable
sales, equating to an average of $125 per square foot. Sales tax
revenue was calculated for the commercial square footage in each
scenario.
Table 18: Annual Gross Revenue at Build-Out, City of Jacksonville
Category
Real Property - Public Safety HQ
Sales Tax
Business Licenses
Water Usage Fees
Solid Waste
Stormwater Fees
Total
HOS
By-Right SF Site
$117,624 $53,794
$0
$9,041
$4,135
$0
$16,697
$0
$0
$7,898 $26,165
$0
$2,056
$6,927
$0
$61,533
$6,697
$0
$112,701 $12,891
$0
$0
$0
$0
$5,337
$6,405
$0
$332,886 $117,014
$0
Sources: City of Jacksonville; Onslow County; Warren & Associates
June 2011
33
The 86,000 square feet of retail in the by-right scenario could
generate annual revenue of $117,014 to the City of Jacksonville.
Real property tax revenue would make the largest share with
$53,794 annually, followed by sales tax at $26,165.
The single-family development is assumed to be located outside
the municipal boundaries of the City of Jacksonville. As a result,
all of the gross revenue is applied only to Onslow County.
the largest source of annual revenues for the HOS scenario at
35.3%. Wastewater user fee revenue could make up an additional
33.9%. Solid waste removal is assumed to be collected by a
private company; no fees are calculated for the City of
Jacksonville.
Graph 22: Annual Gross Revenue Shares at Build-Out, City of Jacksonville
HOS- Jacksonville Revenue
1.6%
35.3%
33.9%
Based on the current level-of-service provided by
the City of Jacksonville, the cost to serve the HOS scenario is
estimated at $181,081 in the first year after build-out (Table 19).
Police and fire services are expected to have annual expenditures
of $87,672 and $59,952, respectively. Combined, emergency
services make up 81.5% of the annual cost to the City. General
administration expenditures of $16,288 annually include
numerous departments, such as management, legal, planning, and
human resources. There is no estimated cost to the City of
Jacksonville for private road maintenance and solid waste
collection at the apartment site
Expenditures.
Table 19: Annual Expenditures at Build-Out, City of Jacksonville
Category
Police
Fire/Rescue
Road Maintenance
Solid Waste
Total
HOS
By-Right SF Site
$87,672 $18,775
$0
$59,952 $12,839
$0
$0
$0
$0
$0
$0
$0
$3,581
$242
$0
$13,589
$0
$0
$16,288
$6,582
$0
$181,081 $38,439
$0
Sources: City of Jacksonville; Warren & Associates
5.0%
18.5%
Sales Tax
2.7%
Business Licenses
Water Usage Fees
Stormwater Fees
June 2011
2.4%
0.6%
The retail-only by-right scenario is expected to have an annual
expenditure of $38,439. Similar to HOS, police and fire services
make up the largest share of expenditures at 82.2%. No annual
expenditures are calculated for the alternative single-family
scenario as all services are assumed to be provided by Onslow
County.
34
expenditures. For the City of Jacksonville, the HOS scenario has
the largest annual net revenue of $151,805, versus $78,576 for
the by-right development (Graph 23). The difference is primarily
due to the higher taxable value of the HOS scenario. The City of
Jacksonville would not receive any net revenue from the singlefamily scenario.
Net Revenue.
Graph 23: Net Revenue at Build-Out, City of Jacksonville
$350,000
$300,000
Category
Real Property
Sales Tax - Public Safety
Sales, Services and Other
Total
Focus Area #2
HOS
By-Right
$117,703 $62,451
$18,001
$0
$12,241 $36,050
$5,199 $15,311
$1,645
$4,845
$34,352
$0
$2,297
$0
$191,439 $118,658
Unincorp.
SF Site
$212,976
$24,517
$0
$0
$0
$35,091
$2,347
$274,931
Annual Revenue
Annual Expenditures
Net Revenue =
$151,805
$250,000
Table 20: Annual Gross Revenue at Build-Out, Onslow County
the largest source of annual revenues for the HOS scenario, at
61.5%. Sales, Services, and Other could make up another 17.9%.
$200,000
$150,000
$100,000
Graph 24: Gross Revenue at Build-Out, Onslow County
Net Revenue =
$78,576
HOS - Onslow Revenue
$50,000
1.2%
$0
HOS
By-Right
0.9%
Single-Family
17.9%
2.7%
4.4.3 Onslow County
Onslow County would receive annual revenue
under all three scenarios. Based on the current tax rate of $0.58
per $100 in value, the HOS scenario could generate $191,439 in
annual gross revenue to Onslow County (Table 20). Real
property taxes would make up the largest portion of revenue at
$117,703, followed by $34,352 for Sales, Service, and Other.
Sales, Service, and Other include revenues from beer and wine,
franchise fees, and other user fees.
6.4%
9.4%
Gross Revenue.
June 2011
61.5%
Real Property
Sales, Services and Other
35
The by-right scenario, with only retail uses, could generate
$118,658 annually at build-out. Sales tax revenue is expected to
be highest under the by-right scenario. Sales taxes are broken
into the different designations for use. It is important to note that
Sales, Services, and Other and Intergovernmental Transfers to the
County are based on households, so no revenue is generated by
the by-right scenario.
The single-family scenario on an alternative site outside the City
of Jacksonville would likely generate the highest annual gross
County revenue of $274,931. With 216 detached residential
units, the single-family scenario has a higher taxable value than
either the HOS or by-right. There is no sales tax revenue
calculated for the single-family scenario.
Social, health, and education services are provided
by Onslow County to all residents. In each fiscal impact
scenario, these services are only provided to residential uses.
Additionally, all state and federal intergovernmental transfers for
these expenditures have been excluded. For Focus Area #2, the
by-right scenario has no annual expenditures for these services.
Expenditures.
The HOS scenario would have an annual Onslow County
expenditure of $153,688 (Table 21). The by-right scenario would
have the lowest annual expenditure of $8,506, while the singlefamily detached scenario would have the highest at $291,278.
The higher cost for the single-family scenario is due to the fact
that Onslow County is assumed to provide all services to this
the City of Jacksonville. Expenditure categories with no cost
listed indicate services that are provided by the City.
June 2011
Table 21: Annual Expenditures at Build-Out, Onslow County
Focus Area #2
Category
HOS
By-Right
Social Services
$50,240
$0
Health Services
$6,377
$0
Onslow County Schools
$58,950
$0
Coastal Carolina Community College $11,150
$0
Sheriff
$0
$0
Volunteer Fire/Rescue
$0
$0
EMS
$18,975
$5,922
Onslow County Library System
$2,381
$0
$0
$0
$5,615
$2,584
Total
$153,688
$8,506
Unincorp.
SF Site
$51,320
$6,514
$151,232
$11,390
$32,135
$8,055
$16,791
$2,432
$1,581
$9,827
$291,278
Sources: Onslow County; Warren & Associates
In the HOS and single-family scenarios, Onslow County Schools
make up the largest share of annual expenditures. Based on
feedback from the County, more students per household are
assumed for the single-family developments than the apartment
units in HOS. The $1,340 local cost per student, provided by
Public Schools of North Carolina, is consistent between both
scenarios.
ONSLOW COUNTY SCHOOL ASSUMPTIONS
Students/
Household
Cost/
Student
Single-Family:
0.55
$1,340
Apartments:
0.30
$1,340
36
For Onslow County, the HOS scenario has
expected annual net revenue of $37,751. The by-right
development has the largest net revenue for the County of
$110,151 annually (Graph 25). Non-residential developments are
a source of positive net revenue to counties due to the low cost of
service. Again, counties do not provide social, health, or
education services to non-residential uses. The single-family
scenario is expected to have annual net revenue of negative
$16,347.
Net Revenue.
Graph 25: Annual Net Revenue at Build-Out, Onslow County
$400,000
City of Jacksonville
$350,000
Onslow County
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
$50,000
HOS
By-Right
Single-Family
$400,000
Annual Revenue
$350,000
Annual Expenditures
$300,000
Net Revenue =
-$16,347
$250,000
$200,000
Net Revenue =
$37,751
$150,000
The by-right scenario would provide higher net revenue to
Onslow County. Necessary services such as police and fire
would be provided by the City of Jacksonville. With no
residential uses, Onslow County would have very limited annual
expenditures. For this reason, commercial developments are very
lucrative to counties.
$100,000
Net Revenue =
$110,151
$50,000
$0
HOS
By-Right
Single-Family
the highest net annual revenue for the City of Jacksonville (Graph
26). The retail included as part of the HOS scenario helps to offset high-cost County services, equating to net revenue.
June 2011
The single-family scenario has no net impact on the City of
Jacksonville, but has negative net annual revenue for Onslow
County. The negative net annual revenue is primarily due to the
provision of services, particularly social, health, and education.
Graph 27 shows the combined City of Jacksonville/Onslow
County net revenue for the three scenarios. The HOS and byright scenarios are expected to provide similar combined net
revenues at $189,556 and $188,727, respectively. The high cost
of education to Onslow County is the primary reason why the
216-unit single-family development would generate an annual net
impact of negative $16,347.
37
Graph 27: Annual Combined City and County Net
$400,000
$350,000
$300,000
$250,000
$200,000
$189,556
$188,727
$150,000
$100,000
$50,000
$0
-$16,347
$50,000
$100,000
HOS
June 2011
By-Right
Single-Family
38
5. Focus Area #3: Downtown Jacksonville
5.1
Site Selection
The City of Jacksonville completed a Downtown Master Plan in
2007. Recommendations in the plan call for a mixture of uses,
pedestrian-scale streets, vibrant buildings, and active public
spaces. Major employers include the City of Jacksonville and
Onslow County public administration, as well as the Onslow
County judicial functions. Downtown Jacksonville currently
offers significant potential for redevelopment or infill, and was
identified by the City of Jacksonville as a priority for this HOS
study. Focus Area #3 is shown on Map 6.
Map 6: Focus Area #3, City of Jacksonville
June 2011
39
5.2
Project Description
Mixed-use development on 3
acres in Downtown Jacksonville
Two, three-story buildings include
75 rental multi-family units with
10,000 square feet of street-level
retail
Unit mix consists of efficiency,
one-, two-, and three-bedroom
floorplans
Community amenities include
outdoor open space, grilling
area, and pedestrian
connections to employment,
retail, and recreation
June 2011
Surface parking in a private lot
and on-street
40
June 2011
41
5.3
Financial Feasibility - Rental
Two financial models were investigated for the mixed-use Focus
Area #3. Both models include multi-family units and 10,000
square feet of retail, but different ownership structures were
compared. This section outlines the results of the cash-flow
models.
Apartment pro forma assumptions for Focus Area #3 are based on
comparable community performance, as well as local market
information gathered through interviews. Density, unit mix, and
rents were adjusted to achieve an initial yield of 8% in order to
attract investor interest. An 8% yield is a widely adopted
investment performance threshold in the rental multi-family
industry. The project is assumed to be sold after five years at a
capitalization rate of 7.5%.
Project costs include construction of two, three-story buildings on
a three acre site in downtown Jacksonville. One building would
be mixed-use, wrapping the corner to create a prime retail space.
This building will be a mix of ground-level steel-frame
construction with wood-frame above. The all-residential building
would be constructed as wood-frame. Both buildings would have
brick facades and flat roofs.
Construction costs include limited shared amenities. A small
outdoor grilling area and open space would be provided. The
street-level retail would provide another important amenity. It is
important to note that a 20% vacancy rate was assumed for the
commercial. Until additional development occurs in downtown
June 2011
Jacksonville, income from the residential portion of this project
would likely subsidize retail rents.
Land Cost:
$7,568 / door
Hard Construction:
$57.50 / square foot
$100 / commercial
100%
Absorption Pace:
6 units / month
Stabilized Vacancy:
7%
Operating Expenses:
$4,000 / unit
Loan to Cost Ratio:
75%
Construction Loan:
6%
Inflation:
2010 constant $
site is 13% efficiencies; 47% one-bedrooms; 33% two-bedrooms;
and 7% three-bedrooms. The urban nature of Focus Area #3
would likely attract a target market of young professionals and
military personnel, with very limited families. As a result, a
higher-share of efficiencies and one-bedroom are proposed for
Focus Area #3 than Focus Areas #1 or #2.
42
Unit Type
Efficiency
1 Bedroom
2 Bedroom
3 Bedroom
Total/Avg.
Units
10
35
25
5
75
Avg.
Avg.
Mix % Sq.Ft. Rent
500
13%
$745
725
47%
$950
33% 1,050 $1,155
7% 1,300 $1,290
842 $1,014
100%
Financial Summary
Equity Investment
Loan Amount
Total Project Cost
Rent/
Sq.Ft.
$1.49
$1.31
$1.10
$0.99
$1.20
NOI - Year 1
IRR (5 yr hold):
$ 2,104,610 25.00%
$ 6,313,830 75.00%
$ 8,418,440
$
673,414
8.00%
19.37%
Given the pro forma assumptions, and a required 8% yield, an
average rent of $1,014, or $1.20 per square foot, must be reached.
Average monthly rents would range from $745 for an efficiency
unit to $1,290 for a three-bedroom. Higher rents are needed to
support the construction costs of a mixed-use building, as well as
subsidize the rents for street-level retail. Securing successful
retail tenants could help stabilize the rents for the entire project.
than the Class “A” average (Graph 28). This level of premium in
downtown Jacksonville is likely unjustified. However,
public/private partnerships or financial incentives from the City
of Jacksonville could bridge the gap between pro forma and
current market rents.
$8.4 million. Based on the proposed unit mix and rents, the
stabilized net operating income after the first year of construction
is estimated at $673,414. The net operating income includes
rental income from the street-level retail. This equates to an
initial yield of 8.0% and an internal rate of return after a five year
hold of 19.37%.
$1.45
$1.35
$1.25
$1.15
$1.05
$0.95
$0.91
$0.85
$0.86
$0.75
Avg. Rent/SF
June 2011
Avg. "A" Rent/SF
43
It should be noted that typical downtown residential
developments achieve a premium over the surrounding surburban
market. This is due to increased accessibility to civic, retail,
entertainment, or employment uses. Data on seven comparable
downtown apartment developments throughout the Southeast
were compiled to demonstrate potential rent premiums. As
shown in Table 23, selected developments contain between 53
and 116 units; similar in size to Focus Area #3. Rent per square
foot premiums at the time of completion ranged from 2.9% at
Metropolitan Lofts in Jacksonville, Florida to 48.6% at Hancock
in Roanoke.
Table 23: Comparable Downtown Apartments, 2010
Rent/Sq.Ft. Comparison1
Year Total
Site %
Development
Location
Open Units Site
Market Premium
Hancock
Roanoke, VA
2008
58 $1.04 $0.70
48.6%
Gallery Lofts
Winston-Salem, NC 2009
82 $1.08 $0.84
28.3%
Mayton Transfer Lofts
Petersburg, VA
2008 111 $1.14 $0.89
28.1%
Shockoe-Bobbber Flats Richmond, VA
2010
40 $1.63 $1.39
17.1%
Winston Factory Lofts Winston-Salem, NC 2009
85 $0.96 $0.84
14.4%
American Tobacco
Durham, NC
2008
53 $1.19 $1.12
6.2%
Metropolitan Lofts
Jacksonville, FL
2006 116 $1.07 $1.04
2.9%
1
was donated to a developer, the required pro forma rent per
square foot to reach an 8% yield would be reduced to $1.14.
However, if the land purchase and site work (grading and parking
lot construction) costs are omitted from the cash-flow model, the
required average rent per square foot falls to $1.03. This is a
more feasible 13% rent premium over the current Class “A”
average.
Graph 29: Rent/Sq.Ft. Comparison with Incentives, 2010
$1.45
$1.35
$1.25
ProForma Rent/SF
$1.15
No Land Cost
$1.05
No Land or Site Work Cost
$0.95
$0.91
$0.85
$0.86
$0.75
Avg. Rent/SF
Avg. "A" Rent/SF
Rent/Sq.Ft. comparison taken from the first reporting period after all units completed.
Source: Real Data
While it is likely that a project in downtown Jacksonville could
achieve a rent premium over the surrounding Camp Lejeune
market, the premium is unlikely to be as high as 30%. This is
due to limited retail, dining, and entertainment opportunities
currently available in downtown.
Graph 29 demonstrates how financial incentives could assist in
lowering the development costs for Focus Area #3. If the land
June 2011
Assuming some financial participation by the City of
Jacksonville or Onslow County, the Focus Area #3 apartment site
could be a viable project. However, it is important to note that
national or institutional real estate investors or developers would
be hesitant to pursue the Jacksonville market. National
developers will perceive this smaller market as a higher level of
risk. Construction of new apartments in downtown Jacksonville
would be more realistic for a local developer.
44
5.4
Financial Feasibility – For-Sale
A second cash flow model was created using the same site plan to
determine the viability of downtown Jacksonville condominiums.
The project includes 56 units with 10,000 square feet of
commercial space. The number of proposed units is reduced
from the rental model because larger units would be required to
meet market demand. The two buildings utilize the same
floorplates as the rental model, and are both three-stories in
height. Interior finishes are assumed to be superior for
condominiums. Again, community amenities would be very
limited.
Pro forma assumptions for the for-sale condominium model are
based on comparable community performance, as well as local
market information gathered through interviews. Density, unit
mix, and sales prices were adjusted to achieve at least an equity
return multiple of 2.0 in order to attract investor interest. Equity
multiple, also known as return on investment, is the sum of the
total money returned to an investor over a hold period divided by
the initial investment amount. An equity return multiple of 2.0 is
a widely adopted investment performance threshold for
condominium projects.
It is important to note that in this model the street-level retail
spaces would be sold to private owners. It is assumed that 4,000
square feet of retail space would be sold prior to construction
start, with an additional 2,000 square feet sold every year after.
In order to achieve an equity return multiple of 2.0, retail space
would need to be sold at $160 per square foot, or approximately
$320,000 per unit.
June 2011
Land Cost:
$10,135 / door
Hard Construction:
$60 / square foot
$100 / commercial
100%
Absorption Pace:
3-5 units / month
Retail Sales:
2,000-4,000 sq.ft
Loan to Cost Ratio:
75%
Construction Loan:
6%
Inflation:
2010 constant $
site is 7% one-bedrooms; 61% two-bedrooms; and 32% threebedrooms. The for-sale nature of this model, as well as
competitive product in the Camp Lejeune market, indicate a
target market seeking predominately two- and three-bedrooms.
Buyers would most likely be young professionals employed by
private firms or local government, with limited demand from the
military market.
45
Unit Type
1 Bedroom
2 Bedroom
3 Bedroom
Total/Avg.
Units
4
34
18
56
Avg.
Avg. Sale Price/
Mix % Sq.Ft. Price
Sq.Ft.
7%
725
$130,000 $179
61% 1,050
$177,000 $169
32% 1,350
$198,000 $147
100% 1,123
$180,393 $161
detached units in the Camp Lejeune market. As shown in the
graph, the projected sales price for the two- and three-bedroom
condominium units would be significantly higher than
townhouses of the same size currently being sold in the City of
Jacksonville. Additionally, some single-family detached product
would be more affordable than the smaller condominium units.
Financial Summary
Equity Investment
Loan Amount
Total Project Cost
$ 2,110,851 25.00%
$ 6,332,553 75.00%
$ 8,443,403
Net Income:
Equity Return Multiple:
IRR:
$ 4,224,807
2.00
59.21%
For-sale condominium units at Focus Area #3 would compete
directly with the established townhouse and single-family market
surrounding Camp Lejeune. The blue bars in Graph 30 represent
the current range of sales prices for townhouses and single-family
June 2011
Project 3-BR
Project 2-BR
Project 1-BR
Market Detached
The total project cost for the Focus Area #3 condominiums is
estimated at $8.4 million. Based on the proposed unit mix and
rents, the net income for this deal would be $4.2 million. This
equates to an equity return multiple of 2.0 and an internal rate of
return of 59.21%.
Market Attached
Graph 30: Sale Price Comparison, 2010
Given the pro forma assumptions, in order to reach an equity
return multiple of 2.0, an average purchase price of $180,393, or
$161 per square foot, must be reached. Average sales prices
would range from $130,000 for a one-bedroom unit to $198,000
for a three-bedroom.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
Condominium product in downtown Jacksonville, as
demonstrated in Focus Area #3, is currently not viable. Given the
lack of retail services and entertainment and cultural amenities in
downtown Jacksonville, a sales price premium for this project
would be unjustified. Pricing of townhouse and single-family
product within three miles of the site would be highly
competitive, offering more space for a lower cost. Additionally,
it is unlikely that the gap between required condominium pricing
and existing townhouse and single-family pricing could be
bridged by public sector incentives.
46
5.5
5.5.2 City of Jacksonville
The fiscal impact analysis for Focus Area #3 was only performed
on the apartment (rental) model, as this was determined to be
more viable than condominiums. Similar to the other five focus
areas, all results are reported in 2010 constant dollars to eliminate
the impact of inflation and real property appreciation.
Gross Revenue.
Based on the current City of Jacksonville property tax rate of
$0.538 per $100 value, the HOS scenario could generate gross
annual revenue of $122,602 in the first year after build-out (Table
25). The property tax rate includes a $0.038 tax reserved
specifically for the construction of a new public safety
headquarters. The real property value of the apartment
community in the HOS scenario was based on a 7.5% cap rate.
Total value for the commercial uses was based on comparable
sales, equating to an average of $110 per square foot. Sales tax
revenue was calculated for the commercial square footage in each
scenario.
The threeacre site utilized in this
analysis is currently
zoned Central
Business District
(CBD). CBD zoning
regulations are very
flexible, allowing for
residential, retail,
civic, and office uses.
Based on feedback from the City of Jacksonville, the site would
likely be developed with ground-level retail and second-story
office. Using the same building footprints as shown in the HOS
site plan yields approximately 28,000 square feet of both retail
and office uses at build-out. Total non-residential square footage
would be 56,000.
By-Right.
Onslow County. For this comparison, all public services are
assumed to be provided by the County.
Single-Family.
The primary source of annual revenue for the
City of Jacksonville is ad valorem taxes, including those
generated by real and personal property. Analyses were also
performed to account for sales taxes, privilege licenses, and user
fees.
Table 25: Annual Gross Revenue at Build-Out, City of Jacksonville
Category
HOS
By-Right SF Site
$45,488 $30,775
$0
$3,496
$2,365
$0
$4,831
$0
$0
Sales Tax
$2,390
$6,692
$0
Business Licenses
$590
$1,742
$0
Water User Fees
$22,472
$8,132
$0
Wastwater User Fees
$41,244 $15,653
$0
Solid Waste
$0
$0
$0
Stormwater Fees
$2,091
$2,091
$0
Total
$122,602 $67,451
$0
June 2011
47
the largest source of annual revenues for the HOS scenario at
37.1%. Wastewater user fee revenue could make up an additional
33.6%. Solid waste removal is assumed to be collected by a
private company; no fees are calculated for the City of
Jacksonville.
Graph 31: Annual Gross Revenue Shares at Build-Out, City of Jacksonville
HOS - Jacksonville Revenue
1.7%
Based on the current level-of-service provided by
the City of Jacksonville, the cost to serve the HOS scenario is
estimated at $73,686 in the first year after build-out (Table 26).
Police and fire services are expected to have annual expenditures
of $36,570 and $25,007, respectively. Combined, emergency
services make up 83.5% of the annual cost to the City. General
administration expenditures of $6,114 annually include numerous
departments, such as management, legal, planning, and human
resources. There is no estimated cost to the City of Jacksonville
for private road maintenance and solid waste collection at the
apartment site
Expenditures.
37.1%
33.6%
Table 26: Annual Expenditures at Build-Out, City of Jacksonville
18.3%
3.9%
Sales Tax
2.9%
Business Licenses
Water User Fees
0.5%
1.9%
Wastwater User Fees
Stormwater Fees
The 56,000 square feet of retail and office in the by-right scenario
could generate annual revenue of $67,451 to the City of
Jacksonville. General Fund real property tax revenue would
make the largest share with $30,775 annually, followed by
wastewater user fees at $15,653.
The single-family development is assumed to be located outside
the municipal boundaries of the City of Jacksonville. As a result,
gross revenue is applied only to Onslow County.
June 2011
Category
Police
Fire/Rescue
Road Maintenance
Solid Waste
Total
HOS
By-Right SF Site
$36,570 $22,799
$0
$25,007 $15,590
$0
$0
$0
$0
$0
$0
$0
$1,277
$294
$0
$4,718
$0
$0
$6,114
$3,765
$0
$73,686 $42,449
$0
Sources: City of Jacksonville; Warren & Associates
The retail-only by-right scenario is expected to have an annual
expenditure of $42,449. Similar to HOS, police and fire services
make up the largest share of expenditures at 90.4%. No annual
expenditures are calculated for the single-family scenario as all
services are assumed to be provided by Onslow County.
48
expenditures. For the City of Jacksonville, the HOS scenario has
the largest annual net revenue of $48,917, versus $25,002 for the
by-right development (Graph 32). The difference is primarily
due to the higher taxable value of the HOS scenario. The City of
Jacksonville would not receive any net revenue from the singlefamily scenario.
Net Revenue.
Graph 32: Net Revenue at Build-Out, City of Jacksonville
$140,000
$120,000
Category
Real Property
Sales Tax - School Capital Needs
Total
HOS
By-Right SF Site
$52,809 $35,728 $73,950
$5,209
$0
$8,334
$3,720 $10,416
$0
$1,580
$4,424
$0
$500
$1,400
$0
$11,928
$0 $11,928
$798
$0
$798
$76,543 $51,968 $95,009
Annual Revenue
Annual Expenditures
Net Revenue =
$48,917
$100,000
$80,000
$60,000
Net Revenue =
$25,002
$40,000
$20,000
1.0%
0.7%
$0
HOS
By-Right
Single-Family
2.1%
15.6%
4.9%
5.5.3 Onslow County
Onslow County would receive annual revenue
under all three scenarios. Based on the current tax rate of $0.58
per $100 value, the HOS scenario could generate $76,543 in
annual gross revenue to Onslow County (Table 27). Real
$52,809, followed by $11,928 for Sales, Service, and Other.
Sales, Service, and Other include revenues from beer and wine,
franchise fees, and other user fees.
6.8%
69.0%
Gross Revenue.
June 2011
Real Property
Sales Tax - School Capital Needs
49
The by-right scenario, including office and retail uses, could
generate $51,968 annually at build-out. With more retail square
footage, the by-right scenario would generate more sales tax
revenue than HOS. Sales taxes are broken into the different
designations for use. It is important to note that Sales, Services,
and Other and Intergovernmental Transfers are applied only to
households, so no revenue is generated by the by-right scenario.
The single-family scenario would likely generate the highest
annual gross revenue of $95,009. With 75 detached residential
units, the single-family scenario has a higher taxable value than
either the HOS or by-right. There is no sales tax revenue
calculated for the single-family scenario.
Social, health, and education services are provided
by Onslow County to all residents. In each fiscal impact
scenario, these services are only provided to residential uses.
Additionally, all state and federal intergovernmental transfers for
these expenditures are excluded. For Focus Area #3, the by-right
scenario has no annual expenditures for these services.
Expenditures.
The higher cost for the single-family scenario is due to the fact
that Onslow County is assumed to provide all services to this
the City of Jacksonville.
June 2011
Category
HOS
By-Right SF Site
Social Services
$17,444
$0
$17,444
Health Services
$2,214
$0
$2,214
$6,823
$0
$51,406
Coastal Carolina Community College $3,872
$0
$3,872
Sheriff
$0
$0
$10,962
$0
$0
$2,748
EMS
$7,399
$7,191
$7,399
$827
$0
$827
$2,401
$1,478
$3,405
Total
$40,980
$8,670 $100,277
comprise the largest share of annual expenditures. Based on
assumed for single-family developments than apartment units.
Based on a higher share of efficiencies and one-bedrooms, only
0.1 students per unit are assumed for Focus Area #3, less than 0.3
for Focus Area #2. The $1,340 local cost per student, provided
by Public Schools of North Carolina, is consistent between both
scenarios.
Students/
Household
Cost/
Student
Single-Family:
0.55
$1,340
Apartments:
0.10
$1,340
50
For Onslow County, the HOS scenario has
expected annual net revenue of $35,563. The by-right
development has the largest net revenue for the County of
$43,298 annually (Graph 34). Non-residential developments are
a source of positive net revenue to counties due to low costs of
service. Again, counties do not provide social, health, or
education services to non-residential uses. The single-family
scenario is expected to have annual net revenue of negative
$5,268.
Net Revenue.
$160,000
City of Jacksonville
$140,000
Onslow County
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
$20,000
HOS
By-Right
Single-Family
The by-right scenario would provide a slightly higher net revenue
to Onslow County. Necessary services such as police and fire
would be provided by the City of Jacksonville. With no
residential uses, Onslow County would have very limited annual
expenditures.
Located outside of municipal boundaries, the single-family
scenario has no net impact on the City of Jacksonville, but has
negative net annual revenue for Onslow County. The negative
net annual revenue is primarily due to the provision of social,
health, and education services.
the highest net annual revenue for the City of Jacksonville (Graph
35). The retail included as part of the HOS scenario helps to offset high-cost County services, equating to net revenue.
June 2011
Graph 36 shows the combined City of Jacksonville/Onslow
County net revenue for the three scenarios. HOS is expected to
have a combined net revenue of $84,479, followed by the byright scenario with $68,301. The high cost of education to
Onslow County is the primary reason why the 75-unit singlefamily development would generate an annual net impact of
negative $5,268.
51
Graph 36: Annual Combined City/County Net Revenue Comparison, Focus Area #3
$160,000
$140,000
$120,000
$100,000
$84,479
$80,000
$68,301
$60,000
$40,000
$20,000
$0
-$5,268
$20,000
HOS
June 2011
By-Right
Single-Family
52
6. Focus Area #4: Sneads Ferry
6.1
Site Selection
Sneads Ferry is an unincorporated area in the southern portion of
Onslow County (Map 7). The community contains primarily
residential uses, with some limited retail services clustered at the
intersection of NC-210 and NC-172. The housing stock has
limited diversity, comprised primarily of single-family detached
units. Based on input from Onslow County planners, Sneads
Ferry is lacking a traditional “core” and could be positioned to
support higher density or multi-use development.
The Sneads Ferry gate into Camp Lejeune is currently located on
NC-172. Close proximity to the Sneads Ferry gate has
accelerated growth in this area of Onslow County. A new gate
accessing Camp Lejeune is currently under construction with
access off of NC-210. The new gate will help alleviate
congestion on NC-172.
The United States Marine Corps Special Operations Command
(MARSOC) has recently announced expansion plans. Based on
the selection process, personnel active in MARSOC are generally
in a higher military pay-grade. MARSOC operations would be
accessed from the new Sneads Ferry gate on NC-2010, making
this area of Onslow County attractive to higher-wage military
households.
Map 7: Focus Area #4, Onslow County
June 2011
53
6.2
Project Description
Master development of a 20 acre site in the vicinity of Sneads
Ferry (NC-210/NC-172)
Assumes sale of three, one-acre pads for retail development
152 for-sale townhouse units contained in 18 twostory buildings
Unit mix consists of two- and three-bedroom
units
Select units to include attached garages
Community amenities include club
house, walking trails, and
swimming pool
June 2011
54
June 2011
55
June 2011
56
6.3
The financial feasibility of the Sneads Ferry site (Focus Area #4)
was tested using cash flow models to show prospective sale
prices compared to construction costs, debt service, and required
developer returns. Pricing was adjusted to reach an optimal
initial equity return multiple and internal rate of return for the
development. Findings from the financial feasibility analysis
were incorporated into the site plan and project images
demonstrated in Section 6.2.
Numerous assumptions were utilized as part of the financial
feasibility analysis. Assumptions were based on comparable
community performance, as well as local market information
gathered through interviews.
Land Cost:
$10,000/ door
Hard Construction:
$48 / square foot
Closing Pace:
10.5 units / year
Retail Pad Sales:
1 / year
Loan to Cost Ratio:
75%
Construction Loan:
6%
Inflation:
2010 constant $
June 2011
Construction costs are
projected for 152 units
contained in 18, two-story
wood-frame buildings.
Facades would be a
combination of brick and
hardi-plank siding. Later
phase units are designed
with flexibility to include attached garages. The costs include an
allowance for a clubhouse with amenity areas, as well as a pool.
The photograph to the right illustrates a similar level of
construction.
site is 47% two-bedrooms and 53% three-bedrooms. This unit
mix is comparable to other competitive townhouse communities
in the Camp Lejeune market, and targets higher-wage MARSOC
personnel.
Avg.
Avg. Sale Price/
Unit Type
Units Mix % Sq.Ft. Price
Sq.Ft.
2 Bedroom
72 47% 1,100 $119,000 $108
3 Bedroom
80 53% 1,300 $139,000 $107
Total/Avg.
152 100% 1,205 $129,526 $107
In order to achieve desired returns, given the pro forma
assumptions, an average sale price of $129,526, or $107 per
square foot, must be reached. Average sales prices would range
from $119,000 for a two-bedroom unit to $139,000 for a threebedroom.
57
Net Income:
Equity Return Multiple:
IRR:
$
$
$
$
3,717,381 25.00%
11,152,142 75.00%
14,869,523
7,157,698
1.93
25.53%
Projected sales prices required to attract investment would be
competitive with existing townhouse product in the Camp
Lejeune market. The blue bars in Graph 37 represent the current
range of sales prices for townhouses and single-family detached
units in the Camp Lejeune market. Pricing at Focus Area #4 falls
within the range for existing townhouse product. Pro forma
pricing also includes superior finishes and amenities to all other
townhouse products currently available. Suggested pricing is less
than comparable single-family detached projects in the market
area.
June 2011
Market Attached
Project Townhouses
Financial Summary
Equity Investment
Loan Amount
Total Project Cost
Graph 37: Sales Price Comparison, 2010
Market Detached
The total project cost for Focus Area #4 is estimated at $14.8
million. Based on the density and sales prices, the net income
would be nearly $7.2 million. This equates to an equity return
multiple of 1.93 and an internal rate of return of 25.53%. An
investment with an internal rate of return of 25% or more is likely
to be sufficient to attract investor interest.
$0
$50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 $400,000
A multi-use townhouse project in Sneads Ferry is a viable
project. Including superior amenities and finishes to existing
product in the Camp Lejeune market, competitive pricing can still
be reached to make these units marketable. The Focus Area’s
location near the Sneads Ferry gate would provide comparatively
quick access into Camp Lejeune. On-site retail would also make
this location more attractive than existing competitive product.
Construction of new townhouses in Sneads Ferry could provide a
viable opportunity for a local developer. However, the tertiary
nature of the market would discourage national investors or
developers. They would perceive the small market size as having
an excessive level of risk.
58
6.4
Focus Area #4 is located in an unincorporated area. As a result,
fiscal impacts are only calculated for Onslow County. All results
are reported in 2010 constant dollars to eliminate the impact of
inflation and real property appreciation.
Focus Area #4
contains 22.6 acres that are
currently zoned Highway
Business. Based on feedback
from Onslow County,
regulations for this zoning
classification would allow for
retail services. Assuming a
0.25 FAR, the site could yield
approximately 246,000 square
feet of retail. Retail
configuration could include big
box, grocery, junior anchor,
free standing restaurant,
pharmacy, and small-shop strip centers.
By-Right.
Onslow County.
Single-Family.
6.4.2 Gross Revenue
Based on the current Onslow County tax rate of $0.58 per $100
value, the HOS scenario could generate $176,086 in annual gross
revenue (Table 30). Real property taxes would make up the
largest portion of revenue at $136,514, followed by $24,693 for
Sales, Service, and Other. The Sales, Service, and Other category
includes revenues from beer and wine, franchise fees, and other
user fees based on households.
Focus Area #4
Category
HOS
By-Right
Real Property
$136,514 $166,988
$17,550
$0
$14,124 $164,798
Sales Tax - School Capacity Needs
$5,999 $69,995
$1,898 $22,150
$24,693
$0
$1,651
$0
Total
$176,086 $423,931
Unincorp.
SF Site
$152,456
$17,550
$0
$0
$0
$24,693
$1,651
$170,006
It is important to note that Warren & Associates believes the
scale of the by-right scenario is unrealistic for Sneads Ferry at
this time. In order to support this amount of retail and attract key
tenants, substantially more households are needed.
June 2011
59
6.4.3 Expenditures
3.4%
Social, health, and education services are provided by Onslow
County to all residents. In each fiscal impact scenario, these
services are only provided to residential uses. Additionally, all
state and federal intergovernmental transfers for these
expenditures are excluded. For Focus Area #4, the retail-only byright scenario has no annual expenditures for these services.
0.9%
1.1%
14.0%
8.0%
10.0%
77.5%
Real Property
Sales Tax - School Capacity Needs
The by-right scenario, with only retail uses, could generate
$423,931 annually at build-out. Real property taxes make up the
largest portion at $166,988, followed by sales taxes with
$164,798. Sales tax revenues are broken into three different
designations by Onslow County. It is important to note that
Sales, Services, and Other, and Intergovernmental Transfers are
applied only to households, so no revenue is generated by the byright scenario.
The single-family scenario would likely generate $170,006 in
gross annual revenue. With 152 single-family detached
residential units, the scenario has a higher taxable value than
HOS. No sales tax revenue is calculated for the single-family
scenario.
Expenditure categories for the by-right development that include
no cost are all services that are provided exclusively to residents.
The largest expenditures for the by-right scenario are the
provision of sheriff and EMS services.
Focus Area #4
Category
HOS
By-Right
Social Services
$36,114
$0
Health Services
$4,584
$0
$47,356
$0
Coastal Carolina Community College
$8,015
$0
Sheriff
$25,802 $27,046
$6,081
$3,502
EMS
$13,085 $10,764
$1,711
$0
$1,113
$0
$6,375
$6,910
Total
$150,236 $48,222
Unincorp.
SF Site
$36,114
$4,584
$106,423
$8,015
$22,614
$5,669
$11,816
$1,711
$1,113
$7,035
$205,093
June 2011
60
made up the largest share of annual expenditures. Based on
assumed for the single-family development than for-sale
townhouse units in HOS. The local cost per student, provided by
Public Schools of North Carolina, is consistent between both
scenarios.
$450,000
Annual Revenue
$400,000
Annual Expenditures
$350,000
$300,000
Net Revenue =
$375,710
$250,000
$200,000
$150,000
Net Revenue =
$25,850
Net Revenue =
-$35,086
$100,000
Students/
Household
Cost/
Student
Single-Family:
0.55
$1,340
Townhouses:
0.25
$1,340
6.4.4 Net Revenue
For Onslow County, the HOS scenario has expected annual net
revenue of $25,850 (Graph 39). Property and sales tax revenue
from the retail helps off-set the cost to serve the multi-use
development.
$50,000
$0
HOS
By-Right
Single-Family
The by-right development has the largest net revenue for the
County of $375,710 annually. Commercial developments are a
source of positive net revenue to counties due to the low cost of
service; counties provide social, health, and education services to
residential households.
Although the by-right scenario has significant net revenue for
Onlsow County, it is unlikely that a development of this scale
would emerge in Sneads Ferry until substantial growth occurs.
Sneads Ferry does not currently have enough households to
attract many of the key tenants that would be needed to anchor a
development of this size.
The single-family scenario is expected to have annual net revenue
of negative $35,086. With a higher share of students per
household than HOS, the single-family scenario does not
generate enough revenue to off-set the cost of public education.
June 2011
61
7. Focus Area #5: Pender County
A complete analysis, including market and financial feasibility
and fiscal impacts, was performed on a site in eastern Pender
County (Map 8).
7.1
Site Selection
Eastern Pender County has become a popular location for
households commuting to Jacksonville and Wilmington. The
unincorporated Hampstead area has experienced significant
growth, largely due to accessibility to I-40 and US-17, via NC210. Public water is also available along US-17 and NC-210.
A number of major public investments are proposed for this area,
making it more attractive to development. These include:
•
•
•
Proposed
Hampstead Bypass
could offer faster
access to both
Jacksonville and
Wilmington; land
acquisition is
expected to begin in
2014
Plans to extend
sewer south along
US-17 through public-private partnership
Proposed Pender County Rail Trial/Pender County
Greenway
June 2011
Map 8: Focus Area #5, Pender County
62
7.2
Project Description
Development of 192-acre parcel in the
Hampstead area of Pender County,
west of US-17
Single-family detached product with
lots ranging from 1/5 to 1/3 acres
Yields 192 units with average lot size of
¼-acre
+/- 107 acres of open space preserved
Community amenities include sidewalks and
walking trails
Figure 11:
Focus Area #5 Site Plan
June 2011
63
7.3
Figure 12: 110-Unit, Large Lot Site Plan
Three models were tested for Focus Area #5. Ultimately, the
project described in Section 7.2 was selected as the most
successful, based on competitive market data and investment
return. This section includes the financial feasibility findings for
all three scenarios. The scenarios include:
•
•
•
110-unit, large lot
110-unit, conservation
192-unit, hybrid
Fiscal impact analyses were only completed for the 192-lot
hybrid single-family detached development.
7.3.1 110-Unit, Large Lot
The first model analyzed for Pender County is a 110-unit, large
lot single-family detached development. This type of
development would be demonstrative of by-right development
under the current zoning regulations in the Hampstead area. With
an average lot size of approximately one-acre, this development
maxes out available land, excluding only environmentally
sensitive areas. This results in +/-50 acres of preserved open
space. Overall density of this site is one residential unit per 1.75
acres.
The development pro forma assumes no reliance on public
utilities, with each lot having individual well and septic. The 2.3
miles of streets have no curb, gutter, or sidewalks. The only
community amenity is 1.5 miles of walking trails.
June 2011
In order to reach an internal rate of return of at least 25%, an
industry standard to interest a traditional land developer, the
average sales price for a single-family house would be $238,000,
ranging from $186,261 to $289,739. The 110 houses would
range in size from 1,800 square feet to 2,800 square feet, equating
to an average price per square foot of $103. Absorption of this
development is expected to take between four and five years.
Graph 40 demonstrates the affordability of this development to
the average civilian household in Pender County. Based on a
2010 average monthly income of $4,520 and a 30% housing cost
64
Graph 40: Estimated Cost Burden for Civilian Residents, 2010
Graph 41: Estimated Cost Burden for Military Residents, 2010
O-3
O-2
Large Lot Average
$3,000
E-8
$2,500
E-7
$2,000
$1,500
E-6
Avg. Housing Cost Burden
$500
$1,000
$500
$0
Low Price
Average Price
High Price
In order to reach a 25% internal rate of return, the average
housing price in the 110-unit, large lot development is estimated
at $238,000, ranging from $186,261 to $289,739. This equates to
monthly housing costs between $1,243 and $1,823, including
mortgage and taxes. The average housing cost in this model
would be slightly higher than the average housing cost burden in
Pender County.
Military resident affordability is based on the most common offbase pay grade ranges. Ranges include BAH pay with and
without dependents. As shown in Graph 41, the lower half of the
price range for the 110-unit large lot subdivision would be
affordable to three of the five common off-base pay grades, while
the average monthly housing costs would be above all grades.
June 2011
$750
Large Lot Price Range
burden, households in Pender County would have $1,350 to
spend on housing, including mortgage, property taxes, insurance,
and utilities.
$1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500
Based on the required 25% internal rate of return, a developer
could pursue this project. As by-right development, this project
would have limited planning approval risk. Residents
maintaining their own well and septic systems would also reduce
infrastructure investment.
7.3.2 110-Unit, Conservation
The second model is a 110-unit, conservation single-family
detached development. Conservation developments are known
for concentrating, or clustering, residential lots in order to
maximize the preservation of open space. It is important to note
that this development would require entitlement beyond the byright zoning, due primarily to the smaller 1/5-acre lot size. This
development maintains +/-154 acres of preserved open space.
This equates to over 200% more open space than the large lot
scenario, with the same residential yield. Overall density of this
site is one residential unit per 1.75 acres.
65
The development pro forma assumes access to public water and
sewer, including $350,000 for an on-site pump station. The 1.2
miles of streets include curb, gutter, and sidewalks. Similar to
the large-lot model, the only community amenity is 2.0 miles of
walking trails.
Figure 13: 110-Unit, Conservation
equating to an average price per square foot of $105. Absorption
of this development is expected to take between three and four
years.
Average housing costs for the 110-unit conservation subdivision
would average $1,704 per month, ranging from $1,289 to $2,406
(Graph 42). Based on the $1,350 average supportable civilian
housing cost in Pender County, the average price in the
development would be 26.2% higher. The lowest priced units
would be affordable, while the highest cost units would exceed
income-based qualification by over $1,000 monthly.
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Low Price
In order to reach an internal rate of return of at least 25%, an
industry standard that could interest a traditional land developer,
the average sales price for a single-family house would be
$268,500, ranging from $237,076 to $299,924. The 110 houses
would range in size from 1,900 square feet to 3,500 square feet,
June 2011
Average Price
High Price
This development falls outside the BAH pay for three of the five
pay grades, and is barely affordable to the highest paid military
personnel in O-3 and E-8 (Graph 43). The average monthly
housing cost in the 110-unit conservation development is above
all of the pay grades.
66
7.3.3 192-Unit, Hybrid
Conservation Average
O-2
E-8
E-7
E-6
$500
$750
Conservation Price Range
O-3
The third single-family model tested for Focus Area #5
maximizes both open space preservation and residential unit
yield. As described in Section 7.2, this 192-unit single-family
development includes approximately 107 acres of open space.
The 2.6 miles of streets include curb, gutter, and sidewalks. The
community would have 2.0 miles of walking trails.
$1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500
It is important to note that conservation subdivisions have been
known to generate premiums and demand that exceed average
market performance. Results vary by site and market area;
however, it has been demonstrated that reduced grading area and
infrastructure installation costs can generate cost reductions.
Additionally, established conservation subdivisions have
exhibited premiums over the surrounding market.
Regardless of the potential for premiums, a local land developer
in Pender County would be unlikely to pursue this project. In
order to achieve a 25% internal rate of return, the required pricing
is out-of-line with the market, as demonstrated by the housing
cost burden analyses. Additionally, a more risky approval
process would likely deter many developers.
June 2011
Figure 14:
192-Unit, Hybrid
67
Average monthly housing costs for the 192-unit conservation
subdivision would average $1,496, ranging from $1,208 to
$2,228 (Graph 44). Based on the $1,350 average supportable
monthly civilian housing cost in Pender County, the average unit
price in the development would be $146 higher. The lowest
priced units would cost $142 per month less than the average
civilian qualified income, while the highest cost units would
exceed average affordability by $878 monthly.
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
Low Price
High Price
The 192-unit development could be affordable for all of the
common off-base military pay grades (Graph 45). The average
price point is closer to all five pay grades than either the 110-unit
large lot or conservation scenarios.
O-3
O-2
E-8
E-7
E-6
$500
June 2011
Average Price
$750
192-Unit Price Range
In order to reach an internal rate of return of at least 25%, the
average sales price for a single-family house in the 192-lot model
would be $231,406, ranging from $200,532 to $262,281. The
192-units would range in size from 1,800 square feet to 3,400
square feet, equating to an average price per square foot of $103.
Absorption of this development is expected to take between five
and eight years.
192-Unit Average
The development pro forma assumes access to public water and
sewer, with $400,000 reserved for installation of an on-site pump
station. The higher pump station cost over the 110-unit
conservation model is due to more residential units. Lot sizes
would range from 1/5-acre to 1/3-acre. Overall density of this
site is one residential unit per acre.
$1,000 $1,250 $1,500 $1,750 $2,000 $2,250 $2,500
68
This model was selected for further fiscal impact analysis
because a local land developer could pursue this project. The
variety of lot sizes increases affordability to civilian and military
residents in Pender County. It is important to note that this
development would require special approval because the average
lot size is smaller than current land use regulations allow.
7.4
Focus Area #5 is located in an unincorporated area. As a result,
fiscal impacts are only calculated for Pender County. All results
are reported in 2010 constant dollars to eliminate the impacts of
7.4.1 By-Right Comparison Description
As described in Section
7.3.1, the 110-unit, large lot
single-family detached
development would be
exemplary of by-right
development in
unincorporated Pender
County. Lot sizes would
average one-acre, with
approximately 50 acres of
preserved open space.
Overall density of this site is one
residential unit per 1.75 acres.
June 2011
7.4.2 Gross Revenue
Based on the current Pender County tax rate of $0.65 per $100
valuation, the HOS scenario could generate $551,339 in annual
gross revenue (Table 32). Pender County also charges an
additional $0.05 property tax for fire and $0.07 for EMS services.
These revenue streams are calculated separately from the general
fund. Real property taxes make up the largest portion of revenue
at $314,340, followed by $94,118 for water user fees. Although
the HOS scenario assumes access to public wastewater systems,
there is not enough information available to calculate the annual
user fees. This analysis assumes the wastewater user fees would
cover expenditures, with no annual net revenue.
Table 32: Annual Gross Revenue at Build-Out, Pender County
Category
Real Property - Fire and EMS
Personal Property - Boats
Water Usage Fees
Total
Focus Area #5
HOS
By-Right
$314,340 $170,170
$61,753 $33,548
$20,155 $11,547
$1,031
$591
$30,438 $17,438
$27,178 $15,571
$94,118 $53,922
$0
$0
$2,325
$1,332
$551,339 $304,119
Sources: Pender County; Warren & Associates
57.0%, followed by 17.1% for water user fees and 11.2% for real
property revenue dedicated to fire and EMS funds.
69
Graph 46: Gross Revenue at Build-Out, Pender County
HOS - Pender Revenue
Real Property - Fire and EMS
0.4%
17.1%
4.9%
Water Usage Fees
5.5%
57.0%
3.7%
11.2%
0.2%
Including only 110-units the by-right scenario could generate
$304,119 annually at build-out. Gross revenue for the by-right
scenario is 44.8% less than HOS. The higher revenue for HOS is
primarily due to increased density. Real property taxes make up
the largest portion at $170,170, followed by water user fees at
$53,922.
7.4.3 Expenditures
All state and federal intergovernmental transfers for social,
health, and education services are excluded from this analysis.
The HOS scenario would have an annual Pender County
expenditure of $389,807, 74.8% higher than $222,907 for the byright scenario (Table 33). The largest expenditures for both
scenarios are Pender County Schools, water provision, and
sheriff. Lacking information on the proposed wastewater system,
no gross revenue or expenditures are calculated.
June 2011
Table 33: Annual Expenditures at Build-Out, Pender County
Focus Area #5
Category
HOS
By-Right
Social Services
$112
$64
Public Health
$32,877
$18,836
Pender County Schools
$136,607
$78,265
Cape Fear Community College
$2,388
$1,368
Sheriff
$30,361
$17,394
$17,146
$9,823
EMS
$27,725
$15,884
Water System
$94,118
$53,922
Wastewater System
$0
$0
$31,373
$17,974
Pender County Library System
$1,848
$1,059
$1,046
$599
$14,206
$7,719
Total
$389,807
$222,907
Sources: Pender County; Warren & Associates
It should be noted that the expected annual expenditures for
social services is far lower than any other county analyzed in this
Housing Options Study. Intergovernmental transfers for this
expenditure category nearly cover the annual cost. Public health
also receives more intergovernmental transfers than any other
county included in this assignment.
In both scenarios, Pender County Schools comprise the largest
County, approximately 0.55 students per household are assumed
for single-family detached units. The local cost per student of
$1,391 was provided by Public Schools of North Carolina.
70
•
PENDER COUNTY SCHOOL ASSUMPTIONS
Students/
Household
Single-Family:
0.55
Cost/
Student
$1,391
•
7.4.4 Net Revenue
For Pender County, the HOS scenario has expected annual net
revenue of $161,531, or 98.9% more than $81,212 for the byright single-family development (Graph 47).
Graph 47: Annual Net Revenue at Build-Out, Pender County
$600,000
Annual Revenue
Annual Expenditures
$500,000
Net Revenue =
$161,531
•
Pender County receives a higher share of
intergovernmental transfers for health and social services
than the other counties analyzed; in the case of social
services, the transfers nearly cover the cost to serve. The
share of intergovernmental transfers provided to a county
is based on need as defined by state and federal
governments.
Gross revenue is based on the tax rate and the value of the
house. Based on market findings, residential units
proposed as part of Focus Area #5 are able to achieve a
higher value than single-family development analyzed in
Onslow and Craven counties.
Without knowing the exact impact of the new wastewater
system on future development, this analysis assumes it
would be revenue neutral. There could be costs
associated with the new system that are not captured in
this analysis.
$400,000
$300,000
Net Revenue =
$81,212
$200,000
$100,000
$0
HOS
By-Right
It is important to note that Pender County is the only county
included in this analysis to have positive net revenue for singlefamily development outside the urban fringe. This is likely due
to three key factors:
June 2011
71
8. Focus Area #6: Carteret County
In order to demonstrate the variation on impacts throughout the
region, a second fiscal impact analysis was completed for the
192-unit single-family development for Pender County. No
specific site was selected but the development is assumed to be in
unincorporated Carteret County. Financial feasibility
assumptions were not modified between the Pender and Carteret
fiscal impact analyses.
Similar to the other five focus areas, all fiscal impact results are
reported in 2010 constant dollars to eliminate the impact of
8.1
By-Right Comparison Description
Again, the 110-unit, large lot single-family detached development
was used to represent by-right development in unincorporated
Carteret County. Lot sizes would average one-acre, with
approximately 50 acres of preserved open space. Overall density
of this site is one residential unit per 1.75 acres.
8.2
Gross Revenue
Based on the current Carteret County tax rate of $0.23 per $100
value, the HOS scenario could generate $315,472 in annual gross
revenue (Table 34). Additional tax rates are applied for the
provision of fire and rescue services. This analysis assumes rates
of $0.055 for both fire and rescue, consistent with rates
throughout the County. Revenue streams for fire and rescue are
calculated separately from the general fund. General fund real
$111,905, followed by $88,646 for water user fees.
Figure 15:
192-Unit, Hybrid
June 2011
72
Table 34: Annual Gross Revenue at Build-Out, Carteret County
Category
Real Property - Fire Fund
Real Property - Rescue Fund
Water Usage Fees
Solid Waste Fees
Total
Focus Area #6
HOS
By-Right
$111,905
$60,530
$26,598
$14,399
$26,598
$14,399
$8,390
$4,807
$378
$216
$17,626
$10,098
$88,646
$50,787
$29,549
$16,929
$5,782
$3,313
$315,472 $175,478
Sources: Carteret County; Warren & Associates
As shown in Graph 48, General Fund real property taxes are
likely to generate the largest source of annual revenues for the
HOS scenario, at 35.5%, followed by 28.1% for water user fees
and 9.4% for annual solid waste collection fees.
Graph 48: Gross Revenue at Build-Out, Carteret County
HOS - Carteret Revenue
Real Property - Fire Fund
1.8%
Real Property - Rescue Fund
9.4%
35.5%
Water Usage Fees
28.1%
Solid Waste Fees
5.6%
8.4%
8.4%
Including only 110 units the by-right scenario could generate
$175,478 annually at build-out. Gross revenue for the by-right
scenario is 44.4% less than HOS. The higher revenue for HOS is
primarily due to increased density. Real property taxes make up
the largest portion at $60,530, followed by annual water user fees
at $50,787.
8.3
Expenditures
All state and federal intergovernmental transfers for social,
health, and education services are excluded from this analysis.
The HOS scenario would have an annual Carteret County
expenditure of $439,277, 74.6% higher than $251,532 for the byright scenario (Table 35). The largest expenditures for both
scenarios are Carteret County Schools, sheriff, and fire/rescue.
Table 35: Annual Expenditures at Build-Out, Carteret Cty.
Focus Area #6
Category
HOS
By-Right
Social Services
$27,046
$15,495
Public Health
$18,397
$10,540
Carteret County Schools
$246,774 $141,381
Carteret Community College
$14,785
$8,471
Sheriff
$41,519
$23,787
$48,414
$27,737
EMS
$13,104
$7,508
Public Works/Water
$4,923
$2,821
Solid Waste
$15,265
$8,745
Pender County Library System
$2,020
$1,157
$2,408
$1,380
$4,620
$2,510
Total
$439,277 $251,532
0.1%
June 2011
2.7%
Sources: Carteret County; Warren & Associates
73
In both scenarios, Carteret County Schools comprise the largest
County, approximately 0.55 students per household are assumed
for single-family detached units. The local cost per student of
$2,764 is higher the other three counties included in this
assignment.
Graph 49: Annual Net Revenue at Build-Out, Carteret County
$600,000
Annual Revenue
Annual Expenditures
$500,000
$400,000
Net Revenue =
-$123,805
$300,000
CARTERET COUNTY SCHOOL ASSUMPTIONS
Students/
Household
Cost/
Student
Net Revenue =
-$76,053
$200,000
$100,000
$0
Single-Family:
8.4
0.55
$2,764
HOS
By-Right
Net Revenue
Both scenarios result in negative annual net revenue, with the
costs to serve the development higher than gross revenue (Graph
49). The HOS scenario results in net revenue of negative
$123,805, versus negative $76,053 for the by-right development.
The larger deficit is due to the increased density in the HOS
scenario.
June 2011
74
9. Fiscal Impact Comparison
This section provides a comparison of the combined city/county
net revenue forecasted for each Focus Area. This analysis
proposed housing options that are generally higher density than
surrounding developments. Additionally, many of the scenarios
are infill or redevelopment opportunities. As shown in Graph 50
on the following page, the HOS scenarios generally generate
more revenue than the by-right or single-family. There are,
however, two exceptions:
•
•
The by-right scenario in Focus Area #4 equates to over
200,000 square feet of commercial space, generating
significant revenue to Onslow County. However, this
amount of commercial is not viable in Sneads Ferry.
Net revenue for Focus Area #6 in Carteret County is
more negative for HOS than by-right; primarily due to
increase density, combined with the high local cost of
schooling.
Cities in the MGTF region receive positive fiscal benefits from
most housing types. This is primarily because they are not
responsible for the provision of health, social, and education
services, which come at high cost to counties. For this reason,
counties receive more positive net revenue from commercial
development.
June 2011
Single-family development located outside the urban fringe
resulted in negative net revenue in all scenarios except Pender
County. Due to the elevated amount of intergovernmental
transfer revenue and revenue-neutral wastewater service, Pender
County is an outlier in this analysis.
KEY FISCAL IMPACT FINDINGS:
 Housing is typically lucrative to cities, which do not
provide social, health, or education services attributable
to counties
 For this same reason, commercial is a more lucrative
development pattern for counties
 For combined city/county net revenues, dense, in-fill
development generally brings more net revenue
than single-use single-family outside incorporated
areas
 The cost of serving single-family residential in
unincorporated areas generally results in net negative
or lower combined city/county revenue
75
Graph 50: Combined Net Revenue Comparison, HOS, By-Right, and Single-Family
$500,000
HOS
$400,000
$300,000
By-Right
Single-Family
$200,000
$100,000
$0
$100,000
$200,000
#1
(Havelock)
#2
#3
(Jacksonville) (Jacksonville)
#4
(Onslow)
#5
(Pender)
#6
(Carteret)
Focus Area
June 2011
76
10.
Implementation Strategies
This section identifies public sector actions that could increase
the potential for the focus area developments. Incentives can be
used to bridge financing gaps for priority projects or leverage
public investments to attract private development. The strategies
include a mix of policy and financial incentives.
10.1 Policy Incentives
10.1.1 Accelerated Entitlement
Accelerated entitlement is useful with rezoning, site plan
approval, and permitting. Streamlining entitlement can help
reduce development carrying costs with a quicker approval
process. It can also lower attorney fees.
10.1.2 Flexible Entitlement
Flexible entitlement allows developers to accommodate unique
physical attributes of specific sites. This is particularly beneficial
for infill projects with significant environmental constraints.
There are numerous tools currently available to jurisdictions to
grant flexibility to developers. Common implementation tools
used throughout North Carolina include:
•
•
•
•
•
•
Conditional/Special Use Permits
Conditional Zoning
Planned Unit Developments
Traditional Neighborhood Developments
Zoning Overlay Districts
Form-Based Code
June 2011
10.1.3 Density Bonus
Permitting higher densities than what is allowed under by-right
zoning can be helpful in attracting development that is consistent
with desired planning principals of a jurisdiction. Density
bonuses have successfully been used to incentivize infill or
redevelopment opportunities, the provision of affordable housing,
sustainable or LEED certified construction, and environmental
protection.
10.2 Financial Incentives
10.2.1 Site Acquisition and Preparation
Local governments can incentivize priority development by
purchasing sites, commissioning environmental reports, and
funding site work. The following site acquisition and preparation
strategies could be used by local jurisdictions:
•
•
•
•
•
•
•
Purchase and demolish existing buildings
Commission environmental reports
Initiate preliminary design drawings and site planning
Pay for environmental remediation
Donate site (whole or in part) to developers
Issue RFP to developers to “test” the project potential
Fund initial site work, utilities, and grading
10.2.2 Infrastructure (Utilities, Streets, and Parking)
The use of Special Assessment
Bonds became effective in North Carolina in 2008. A Special
Assessment Improvement District (SAID) is a defined
Special Assessment Bonds.
77
geographical area where the market value is enhanced due to a
public improvement, typically infrastructure. The special
assessment is levied against all current and future development in
the SAID, representing the area directly benefiting from the
improvements. The tax payments cease when the bonds are
retired. In order to approve an SAID, property owners
representing at least 66% of the tax value must agree.
Local governments carry the SAID debt on their balance sheets,
but the owners of the property are responsible for payment of the
principal and interest. Obligation of the loan carries through
sales, including foreclosures.
The Town of Mooresville is currently the only jurisdiction in
North Carolina that has an approved Special Assessment Bond.
Once levied, the Bond will be used to complete water and sewer
infrastructure improvements for the Langtree at the Lake mixeduse development along I-77.
Tax Increment Finance, or TIF, is a
widely used tool for economic development across the United
States. It is generally used to stimulate economic development in
depressed or underdeveloped areas. North Carolina approved
TIF financing in 2003, one of the last two states to allow its use.
Tax Increment Finance.
Similar to Special Assessment Bonds, TIF designates a specific
area, or improvement district. Once the improvement district is
identified, the base property value is determined. Public and
private improvements will increase the value of the property over
the base. Taxes are then levied on the new increment, and used
to pay debt service for the bonded improvements.
June 2011
TIF has had minimal impact in North Carolina due to the arduous
and lengthy process to gain approval by the property owners, city,
county, and state. There is also a stipulation that TIF districts
would not otherwise attract private investment without the
underwritten improvements.
Synthetic TIFs can be used as a public/private
partnership tool. Certificates of participation are negotiated
directly with a developer and do not require the creation of a
defined district. With no requirement for official votes by the
granting jurisdiction, the time period for financing and
constructing infrastructure is shortened. This can reduce carrying
costs for developers. Synthetic TIFs are used by the City of
Charlotte to incentivize the construction of parking decks.
Synthetic TIF.
Project specific tax increment grants can be provided for a
defined period. Up to 90% of the incremental increase in
property taxes from new construction can be used to pay off the
grant. Additionally, no payment is made to the private developer
until the infrastructure is delivered.
Infrastructure grants are project-specific,
and can be underwritten by either local or state governments.
This implementation strategy is commonly used for:
Infrastructure Grant.
•
•
•
•
Curb and gutter
Sidewalks
Underground utilities
Signalization
78
The amount of the grant is directly related to the capital
investment. The cost recovery schedule is based on ad valorem
taxes, and can occur over a seven-year period.
General Obligation Bonds are
municipal bonds with fixed interest rates and terms. These bonds
can be used for a variety of improvements, and typically offer a
lower interest rate than would be available privately.
General Obligation Bonds.
Revenue Bonds use fees from services to repay
debt service. Common forms of Revenue Bonds are for
water/sewer improvements, airports, and toll roads.
Revenue Bonds.
Community
Development Block Grants (CDBGs) are available to local
municipalities and counties through the U.S. Department of
Housing and Urban Development. These funds are primarily
used to improve housing and economic opportunities in low- and
moderate-income neighborhoods.
Community Development Block Grants.
The New Markets Tax Credit program
was established in 2000 as part of the Community Renewal Tax
Relief Act. This national program aims to incentivize
revitalization of low-income communities by providing private
developers with a credit against Federal income taxes. The credit
equals 39% of the investment amount, paid out over seven years.
New Markets Tax Credits.
In order to qualify for a New Markets Tax Credit, at least 20% of
the project’s revenue must be from non-residential uses (job
creation). Additionally, the Census tract containing the project
must have either a 20% poverty rate or at least 20% of
households earning less than 80% the area median income.
June 2011
Known by a variety of names,
Business Improvement Districts (BIDs) are defined geographies
where an additional tax rate is applied equally to all parcels.
BIDs are commonly used in downtowns. For example, the City
of Morganton has an additional $0.14 tax rate for all downtown
parcels. Revenue is used for improvement projects in the defined
geography only.
Business Improvement District.
Low interest loans are underwritten by a
public entity to provide debt for specific projects. These loans
typically offer lower interest rates than would be available in the
private market.
Low-Interest Loans.
10.2.3 Annual Operating Subsidies
Property tax credits, otherwise known as
economic development grants, are provided by public entities to
incentivize private development. Property tax credits are based
on a predefined minimum level of capital investment. Private
development can be “credited” property tax payments over a set
period of time. The level of credit is jurisdiction-specific, and
can vary from 1% to 100%. Additionally, many jurisdictions
offer a diminishing credit over the period, with the largest credits
occurring in the early years.
Property Tax Credit.
Government can
master lease commercial space to create cash flow for a private
development. The master leased space can either be used by the
public entity for its own operations or subleased to other
organizations.
Government Master Lease of Commercial Space.
79
Typically used for the
construction of parking garages, local jurisdictions can lease
parking spaces in order to create guaranteed cash flow that can be
used to secure debt, supporting private development.
Government Lease of Parking Spaces.
Local jurisdictions can subsidize monthly
rents for tenants in a selected area, often in downtowns. For
example, the City of Wilson awards grants of up to $6,000 for
one year or $8,400 for two years to retail tenants in the Central
Business District. The subsidy enables downtown building
owners to compete with newer shopping centers and helps pay for
tenant upfits.
Tenant Rent Subsidy.
10.3 Case Study: Focus Area #3
The downtown Jacksonville site (Focus Area #3) would likely
require incentives to offset the risk of an unproven mixed-use
residential/retail project. The goal is to improve the likelihood of
generating an income stream that meets or exceeds a developer’s
required rate of return. The site would cover approximately three
acres, including 75 apartments and 10,000 square feet of streetlevel retail. Parking would be accommodated through the
combination of a private surface lot and on-street public spaces.
Figure 16:
Focus Area #3 Site Plan
site is 13% efficiencies; 47% one-bedrooms; 33% two-bedrooms;
and 7% three-bedrooms. The urban nature of Focus Area #3
would likely attract a target market of young professionals and
single military personnel, with very few small families.
Unit Type
Efficiency
1 Bedroom
2 Bedroom
3 Bedroom
Total/Avg.
Avg.
Avg.
500
10
13%
$745
725
35
47%
$950
25
33% 1,050 $1,155
5
7% 1,300 $1,290
842 $1,014
75 100%
Rent/
Sq.Ft.
$1.49
$1.31
$1.10
$0.99
$1.20
June 2011
80
Given the pro forma assumptions, and a required 8% yield, an
average rent of $1,014, or $1.20 per square foot, must be reached.
Average monthly rents would range from $745 for an efficiency
unit to $1,290 for a three-bedroom. Higher rents are needed to
support the construction costs of a mixed-use building, as well as
subsidize the rents for street-level retail. Securing successful
retail tenants could help stabilize the rents for the entire project.
$1.45
$1.35
$1.25
$1.15
$1.05
$8.4 million. Based on the proposed unit mix and rents, the
stabilized net operating income after the first year of construction
is estimated at $673,414. The net operating income includes
rental income from the street-level retail. This equates to an
initial yield of 8.0% and an internal rate of return after a five year
hold of 19.37%.
Financial Summary
Equity Investment
Loan Amount
Total Project Cost
NOI - Year 1
IRR (5 yr hold):
$ 2,104,610 25.00%
$ 6,313,830 75.00%
$ 8,418,440
$
673,414
8.00%
19.37%
$0.95
$0.91
$0.85
$0.86
$0.75
Avg. Rent/SF
Avg. "A" Rent/SF
Graph 52 demonstrates how financial incentives could assist in
lowering development costs for Focus Area #3. If the land is
donated to the deal, the required pro forma rent per square foot to
reach an 8% yield would be reduced to $1.14. If both land and
site preparation (grading and parking lot construction) costs are
omitted from the cash-flow model, the required average rent per
square foot falls to $1.03. This is a more feasible 13% rent
premium over the current Class “A” average.
than the Class “A” average (Graph 51). This level of premium in
downtown Jacksonville is likely unjustified. However,
public/private partnerships or financial incentives from the City
of Jacksonville could bridge the gap between pro forma and
currently supportable market rents.
June 2011
81
Graph 52: Rent/Sq.Ft. Comparison with Incentives, 2010
•
$1.45
$1.35
$1.25
ProForma Rent/SF
$1.15
No Land Cost
$1.05
No Land or Site Work Cost
•
$0.95
$0.91
$0.85
•
$0.86
$0.75
Avg. Rent/SF
Avg. "A" Rent/SF
Implementation strategies need to be specific to a project’s
design, scale, and timing. As a result, not all of the strategies
described in this section would be appropriate to bridge the gap
between pro forma and current market rents for Focus Area #3.
This section identifies strategies with “low probability” to be
successfully utilized, as well as those with “potential”.
10.3.1 “Low Probability” Strategies
The following implementation strategies have would have a “low
probability” of success for the downtown Jacksonville project:
•
Special Assessment Bonds
 Intended for a larger district, not a single parcel
 Developer would have to assume debt service of
$89,100 per year, reducing yield or increasing rent
beyond market
June 2011
Tax Increment Finance
 TIF is only for projects that could not move
forward “but for” the investment, and requires
approval at the city, county, and state levels
 Annual debt service estimate of $89,100 would be
greater than the revenue increment for the project
Business Improvement District
 There is currently no district in the City of
Jacksonville to fund infrastructure
 Funds have to benefit multiple properties
New Markets Tax Credits
 At least 20% of the revenue must be from nonresidential uses, and the site would only be 12%
 Census tract must have >20% poverty or median
income <80% of AMI
10.3.2 “Potential” Strategies
Based on the size and scale of the HOS scenario for Focus Area
#3, the following implementation strategies should be considered
by Onslow County and the City of Jacksonville:
•
•
•
•
•
•
•
Unrestricted Cash Reserves
Low-Interest Loan
General Obligation Bond
Synthetic TIF
Community Development Block Grant
Master Lease of Commercial Space
Property Tax Credits
82
Appendix I: Pro Forma Background
Focus Area #1: Havelock City Center
Development Cost Analysis
Cost
Pre-Dev & Admin
$
Land
Site Work/Parking
Construction
Design
Municipality Fees
Developer Fee
Legal, Fin, Ins, RE Tax
Contingency
FF&E & Lease-Up
Operating Reserve
Construction Interest
Total Investment
$
Per SF
75,000 $
2,635,200
1,920,000
12,420,000
430,200
150,000
517,608
240,000
821,600
240,000
550,000
646,800
0.32
11.23
8.18
52.94
1.83
0.64
2.21
1.02
3.50
1.02
2.34
2.76
20,646,408
88.01
Stabilized Operating Analysis
REVENUE
Schedule Rent
$
Vacancy & Concessions
Other Income
Total Revenue
EXPENSES
Payroll
G&A
Marketing
Management Fee
Utilities
R&M
Landscaping
Insurance
Taxes
Replacement Reserves
Total Expenses
Net Operating Income
June 2011
$
$
Note(s):
- $127k/acre (plus 10%) + grading/infra
- assumes surface parking
- $45/gsf
- 3% of construction cost
- 3% of development cost
Budget
Per SF
2,550,960 $
(178,567)
10.87
(0.76)
2,372,393
144,000
10.11
0.61
2,516,393
10.73
210,000 $
37,200
34,800
94,896
90,720
84,000
48,000
54,000
162,471
48,000
0.90
0.16
0.15
0.40
0.39
0.36
0.20
0.23
0.69
0.20
$
864,087 $
3.68
$
1,652,306 $
7.04
83
Focus Area #2: NC-24 Corridor
Pre-Dev & Admin
Land
Site Work/Parking
Construction
Design
Municipality Fees
Developer Fee
Contingency
FF&E & Lease-Up
Operating Reserve
Total Investment
$
$
Cost
Per SF
Note(s):
50,000 $
0.26
2,376,000
12.13 - $11k/unit
1,728,000
8.82 - assumes surface parking
11,453,415
58.47 - $47/gsf, $5k per garage
395,442
2.02 - 3% of construction cost
175,000
0.89
466,662
2.38 - 3% of development cost
216,000
1.10
740,733
3.78 - 5% of development cost
240,000
1.23
150,000
0.77
646,800
3.30
$
18,638,052
REVENUE
Schedule Rent
$
Vacancy & Concessions
Other Income
Total Revenue
EXPENSES
Payroll
G&A
Marketing
Management Fee
Utilities
R&M
Landscaping
Insurance
Taxes
Total Expenses
June 2011
95.14
Budget
Per SF
2,273,760 $
(159,163)
11.61
(0.81)
2,114,597
175,770
10.79
0.90
2,290,367
11.69
$
199,800 $
32,184
30,240
84,584
82,080
75,600
43,200
43,200
165,305
43,200
1.02
0.16
0.15
0.43
0.42
0.39
0.22
0.22
0.84
0.22
$
799,393 $
4.08
$
1,490,974 $
7.61
84
Focus Area #3: Downtown Jacksonville (Rental)
Cost
Pre-Dev & Admin
$
Land
Site Work/Demo/Parking
Construction
Design
Municipality Fees
Developer Fee
Contingency
FF&E & Lease-Up
Operating Reserve
Total Investment
$
Per SF
50,000 $
567,600
712,500
5,339,844
242,094
60,000
221,097
112,500
350,947
240,000
250,000
252,000
8,398,581
$
REVENUE
Schedule Rent
$
Vacancy
Other Income
Total Revenue
EXPENSES
Payroll
G&A
Marketing
Management Fee
Utilities
R&M
Landscaping
Insurance
Taxes
Total Expenses
June 2011
0.68
7.76
9.74
73.02
3.31
0.82
3.02
1.54
4.80
3.28
3.42
3.45
Note(s):
- $172k/acre (plus 10%)
- $55gsf residential, $100/retail
114.85
Budget
1,010,200 $
(83,714)
Per SF
13.81
(1.14)
926,486
45,000
12.67
0.62
971,486
13.29
$
66,750 $
13,500
11,250
42,324
28,275
28,125
11,250
14,850
66,728
16,875
0.91
0.18
0.15
0.58
0.39
0.38
0.15
0.20
0.91
0.23
$
299,927 $
4.10
$
671,559 $
9.18
85
Focus Area #4: Sneads Ferry
Cost
Pre-Dev & Admin
Land
Site Work/Parking
Construction
Design
Municipality Fees
Developer Fee
Contingency
FF&E & Lease-Up
Total Investment
$
$
Revenue Analysis
REVENUE
Sales
Sales Expenses
Other Income
Total Revenue
June 2011
Per SF
50,000 $
1,520,000
1,520,000
9,770,667
451,627
152,000
387,365
228,000
614,865
50,000
125,000
14,869,523 $
0.27
8.30
8.30
53.33
2.47
0.83
2.11
1.24
3.36
0.27
0.68
81.17
Note(s):
- $10k/unit
- $48gsf residential
Budget
$
19,688,000 $
(1,378,160)
Per SF
107.47
(7.52)
18,309,840
-
99.94
-
18,309,840
99.94
86
Focus Area #5: Pender County
110-Unit Large Lot
LTH
18%
0%
0%
Product
Product A
n/a
n/a
Project
Location
Proforma Date
Proforma Start Year
Land price
Acres
Per acre
Land Cost Per Lot
Initial closing date
Interest carry land
Sales Absorption
Single Family Units
Multi Family Units
Commercial Acres
Home Closing
First
Last
June 2011
W
160
0
0
D
260
0
0
SF Min
SF Max
1800
2800
0
0
0
0
Total Weighted Average
Focus Area #5: 110-Unit Large Lot
Pender County, NC
10/12/10
$
$
$
2011
384,000
192
2,000
3,491
3Q12
6%
110
0
0
1Q13
3Q17
SF Avg
2300
0
0
2300
$SF
103
0
0
103
$
$
$
$
Lot Price
House Min
House Max
House Avg
42,840 $
186,261 $
289,739 $
238,000
$
$
$
$
$
$
42,840 $
186,261 $
289,739 $
238,000
Cash Flow
Total Sales Revenue
Less: Total Closing Costs
Marketing Fee Reimbursements
Total Cash Receipts
Land & Acquisition
Interest (land)
Direct Costs
Common Costs
Amenity Costs
Master Plan Costs
Contingency
10%
Total Other Costs
Total Project Costs
Net Operating Cash Flow
Project IRR:
Residential & Lot
Road Length
Road Efficiency
Marketing Fee
Average LHV Residual
Closing Costs
Single Family
Multi-Family
Commercial
Cost Contingency
Management Fee
start date
End Date
Number of Periods
Total Fee Amount
$
$
$
$
$
$
$
$
$
$
$
$
$
$
%
100%
0%
0%
100%
5,437,927
54,379
5,383,547
384,000
19,080
3,835,318
109,273
83,430
73,645
345,132
385,465
4,565,914
817,633
25.80%
Lot Totals
110
0
0
110
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Per Lot
49,436
494
48,941
3,491
173
34,867
993
758
670
3,138
3,504
41,508
7,433
11,933
0.678
0%
18%
$
1.0%
1.0%
0.5%
10.0%
3%
3Q11
3Q17
25.00
163,138
87
110-Unit Conservation
LTH
18%
18%
18%
Product
Product A
Product B
Product C
W
60
80
90
D
125
150
175
SF Min
SF Max
1600
2200
2100
2700
2600
3200
FAMILY TOTALS (weighted average)
SF Avg
1900
2400
2900
2250
$SF
103
104
102
101
$
$
$
$
Lot Price
House Min
House Max
House Avg
35,100 $
164,211 $
225,789 $
195,000
45,000 $
218,750 $
281,250 $
250,000
53,100 $
264,483 $
325,517 $
295,000
40,860 $
196,793 $
257,207 $
227,000
%
50%
30%
20%
100%
Cash Flow
Project
Location
Proforma Date
Proforma Start Year
Land price
Acres
Per acre
Land Cost Per Lot
Interest carry land
Sales Absorption
Single Family Units
Multi Family Units
Commercial Acres
Home Closing
First
Last
June 2011
Focus Area #5: 110-Unit Conservation
Pender County, NC
10/12/10
$
$
$
2011
384,000
192.00
2,000
3,491
4Q12
6%
110
0
0
2Q13
4Q16
Total Sales Revenue
Total Cash Receipts
Land & Acquisition
Interest (land)
Direct Costs
Common Costs
Amenity Costs
Master Plan Costs
Contingency
10%
Total Other Costs
Total Project Costs
Project IRR:
Residential & Lot
Road Length
Road Efficiency
Marketing Fee
Closing Costs
Single Family
Multi-Family
Commercial
Cost Contingency
Management Fee
start date
End Date
Number of Periods
Total Fee Amount
$
$
$
$
$
$
$
$
$
$
$
$
$
$
5,201,408
52,014
5,149,394
384,000
19,080
3,066,304
384,165
111,905
157,590
373,904
379,694
4,876,642
272,752
8.12%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Lot Totals
55
33
22
110
Per Lot
47,286
473
46,813
3,491
173
27,875
3,492
1,017
1,433
3,399
3,452
44,333
2,480
6,043
0.763
0%
18%
$
1.0%
1.0%
0.5%
10.0%
3%
3Q11
4Q16
22
156,042
88
192-Unit Hybrid
LTH
18%
18%
18%
Product
Product A
Product B
Product C
W
60
80
90
D
125
150
175
SF Min
SF Max
2200
1600
2100
2700
2600
3200
FAMILY TOTALS (weighted average)
SF Avg
1900
1900
1900
2249
$SF
103
104
102
103
$
$
$
$
Lot Price
35,100
45,000
53,100
41,653
House Min
$
164,211
$
218,750
$
264,483
$
200,532
$
$
$
$
House Max
225,789
281,250
325,517
262,281
House Avg
$
195,000
$
250,000
$
295,000
$
231,406
%
50%
30%
20%
100%
Cash Flow
Project
Location
Proforma Date
Proforma Start Year
Land price
Acres
Per acre
Land Cost Per Lot
Interest carry land
Sales Absorption
Single Family Units
Multi Family Units
Commercial Acres
Home Closing
First
Last
June 2011
Focus Area #5: 192-Unit Hybrid
Pender County, NC
10/12/10
2011
$
384,000
192.00
$
2,000
$
2,000
4Q12
6%
192
0
0
2Q13
4Q18
Total Sales Revenue
Total Cash Receipts
Land & Acquisition
Interest (land)
Direct Costs
Common Costs
Amenity Costs
Master Plan Costs
Contingency
10%
Total Other Costs
Total Project Costs
Project IRR:
Residential & Lot
Road Length
Road Efficiency
Marketing Fee
Closing Costs
Single Family
Multi-Family
Commercial
Cost Contingency
Management Fee
start date
End Date
Number of Periods
Total Fee Amount
$
$
$
$
$
$
$
$
$
$
$
$
$
$
9,373,967
93,740
9,280,227
384,000
19,080
5,521,492
646,088
226,532
157,590
657,078
(655,864)
8,169,136
1,111,091
14.61%
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Lot Totals
96
58
38
192
Per Lot
48,823
488
48,335
2,000
99
28,758
3,365
1,180
821
3,422
(3,416)
42,548
5,787
10,545
0.763
0%
18%
$
1.0%
1.0%
0.5%
10.0%
3%
3Q11
4Q18
30
281,219 $
1,465
89

Housing Options Study - Military Growth Task Force

Transcription

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