a pathway to responsible community ownership of the renaissance center - august 7, 2013 revision

7/27/2019 A Pathway to Responsible Community Ownership of the Renaissance Center - August 7, 2013 Revision

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APathwaytoResponsibleCommunity

OwnershipoftheRenaissanceCenter

FundforDemocraticCommunities

OriginallypublishedMay24,2013

RevisedAugust7,2013


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APathwaytoResponsibleCommunityOwnershipofthe

RenaissanceCenter

AnoteontheAugust7versionF4DCfirstpublishedAPathwaytoResponsibleCommunityOwnershipoftheRenaissanceCenterinMay2013.Sincethattime,manyofourelectedleadershaveindicatedbyvoteandpubliccommentthattheyareanxioustogetoutoftheshoppingcenterbusinessasquicklyaspossible.UrgencytoselltheRenaissanceCenterhasledCounciltoconsideracompetingproposalthataskstheCityfor$2millionina0%fullyforgiveableloan.

InrespectoftheCitysurgencytoselltheshoppingcenter,wehaveupdatedthisversionofthePathwaytoincludeafourthscenarioinwhichtheCommunityLandTrustcouldpurchasetheShoppingCenterasearlyas2015,withtheCityplayingastrongerfinancingrole.Wenote,however,thattheCitysfinancingroleinthisnewscenariodoesnotasktheCitytomakeanyforgivableloans.Everydollarwillbepaidbackinthisandallscenarioswediscussinthisdocument.Why?BecausewewanttheCitytobeabletoreplicatethisapproachtoeconomicdevelopmentinotherpartsofthecommunity!

Inaddition,wehaveheardsomeCouncilmembersdiscussthesupportiverentarrangementthattheRenaissanceCommunityCooperative(RCC)hassoughtfromtheCityas a financiall ns pportable b rden that nderc ts the iabilit of the shopping center


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ExecutiveSummary

ThebestoptionforongoingcommunitywealthbuildinginNortheastGreensboroisfortheCitytoallowthecommunitytopurchasetheRenaissanceCenter.Thisdocumentmapsoutseveralpathwaystothatend.CommunityownershipismadepossiblebythedevelopmentofaCommunityLandTrust.Thiscommunity-ownedandcontrolledentitywouldbuytheshoppingcenterfromtheCityusingacombinationoffinancingincludingaccumulatedprofitfromtheoperationoftheRenaissanceCommunityCoop,financingfromSelf-HelpCreditUnionand,insomescenarios,loanassistancefromtheCityofGreensboro.DebtservicewouldberepaidusingthenetoperatingincomeoftheCenter,leavingabalanceoffundsavailabletofinanceothercommunityprojects.ThisanalysisincludesprovisionforvacancyratesandfulfillingtheexistingleaseagreementtoFamilyDollarStore.

Fourscenariosofpurchaseandownershipareincluded,eachhavingdifferentdatesforpurchaseofthepropertyandretirementofalldebt.Alsoanalyzedistherateandamountofaccumulationofcommunitywealthundereachscenario.Spreadsheetsareattachedthatsummarizethesescenarios.Thisdocumentalsolooksattheprocessofpreparationofthe

communitytoexercisetheresponsibilitiesofownershipthroughaCommunityLandTrust.

OurhopeisthatthisdocumentwillillustratepossiblepathwaystocommunityownershipoftheRenaissanceCenterandhelptheCityCounciltobeabletoevaluatecommunityownershipoftheRenaissanceCenterasaseriousoptionastheydecidethefateoftheRenaissanceCenter.

Background

Formorethanadecade,residentsofNortheastGreensborohavebeenfacedwiththerun-down,nearlyemptyRenaissanceCenter(formerlytheBessemerCenter).Initscurrentd i h h R i C i d b l f i d l i


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towardsturningtheirdreamintoareality.TheCommitteeisontracktoopentheRenaissanceCommunityCooperative(RCC)GroceryStorebyJuneof2014.Theycompleted

amarketstudyandproformabusinessprojectionsthatestablishtheviabilityoftheproject.Themarketstudyandproformahavebeenexaminedbyexperiencedgroceryprofessionals(UpliftSolutions)andlenders(SelfHelp)whobelievethattheRCCgrocerystorehasrealfinancialviability.1

TheCityisnowcontemplatingwhethertomaintainownershipoftheRenaissanceCenterorsellittoaprivatedevelopmentgroup(withtheRCCgroceryinthemixeitherway).CityCouncilisweighingwhichofthesetwopathswillcost-effectivelyleadtoaturn-aroundoftheCenterandthecommunityseconomicfortunes.Therearemanyfactorstobeweighed,includingthequestionofwhetheritisfeasibleandappropriatefortheCitytoownandoperatearetailshoppingcenter.

TherearealsoquestionsaboutwhetherprivateownershipoftheCenterwillleadtothekindofdevelopmentthecommunitywantsstoresthatmeetrealcommunityneedsandjobsthatpayadecentwageorwhetherprivateownershipwillresultinextractiveslum

typestoresthatdolittleinthewayofprovidingjobsandbuildingcommunitywealthandhealth.Thelogicofprofitasthesolebusinessmotivationcreatesthesetypesofstores.Thislogicrequiresthatbusinessesstrivetomakethemaximumprofit,takingadvantageofeveryfad,prejudice,weaknessanddependencyexistingintheneighborhoodinordertosellatthehighestallowablepricewhilemakingthelowestpossibleexpendituresonwagesandbenefitsandprovidingaslittleupkeepandmaintenanceaspossibletotheirfacilities.Inlow-incomeneighborhoods,wherethereislittlecompetitionandacaptiveaudiencewithlimitedtransportation,slum-typebusinessesoperatingwithprofitastheirsolemotive

neednotworryaboutprovidinghighqualitygoodsandservices.

ThereisaThirdOption:CommunityOwnership


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TheImportanceofCommunityOwnership

TherearesomewhoquestionwhytheCityorthecommunityshouldowntherealestateinwhichcommunity-ownedbusinesses,liketheRCCGroceryStore,operate.WhiletheRCCCommunityandF4DCstronglypreferthattheRenaissanceCenterbeownedbytheCityuntilthecommunitycanbuytheCenter,theRCCGroceryStorecouldconceivablyexistinsideashoppingareaandbuildingownedbyanotherdeveloper,asisthecasewithDeepRoots.Thereasonthatwethinkweshouldmovedownthepathtowardcommunityownershipisbecauseitisclearlybetterforthecommunity.Whilecommunityownershipcomeswithgreaterresponsibility,itwillcreateopportunitiestostabilizethecommunity,alongwithopportunitiestocreate,accumulateandretainwealththatwillimprovethequalityoflifeinthecommunityforyearstocome.Theownershipofthecenterisbothabusinessopportunityandanopportunitytoenhancethecommunityinthefollowingways:

Communityownershipwillbringinrevenuesfromtherentalofbusinessspacetootherbusinesses

Communityownershipwillallowthecommunitytoselectwhichbusinessesarebroughtintothecommunityandtodecidewhichbusinessesarenotwelcomedthere

Byregulatingrentstructures(withinthebusinesslimitsofwhatisneededtohandlethedebtservice),thecommunitycanofferincentivestoparticularlydesirabletenantswhowillhaveasignificantimpactonthecommunity,e.g.,healthfacilities,jobtrainingfacilities,communityarts,recreation,culture,history,etc.

Asimportantasitistoselectgoodtenants,itisalsoimportanttoexcludetenantsthatdonotcontributetothecommunityandinsteadextractthecommunityslimitedwealth.Unhealthyfastfood,predatorylendingestablishments,highpricedrent-to-owncenters,

d l ti b i h t k l th t it


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incentivesforjobcreationalongwithitsinvolvementwithcommunityredevelopmenteffortsareexpressionsofthatcommitment.Helpingtocreatethedemocraticstructureand

theopportunityforownershipoftheRenaissanceCenterasahuboftheeconomiclifeofthisNortheastGreensborocommunitywillbeimportantstepsontheroadtoparity.

Citiesacrossthecountryareinsimilarpositions.Thecurrenteconomiccrisisincreasestheurgencyoftheseeffortsatequitablecommunitydevelopment,butitdidnotcreateit.Greensborowillhavetheopportunitytobeamodelforothercitiesinansweringaquestiononthemindsofmany:Howcanwebestdeveloptheeconomicandphysicalinfrastructurethatwillallowallofourneighborhoodsthechanceandthemeanstohelpthemselves?

ThebalanceofthisdocumentattemptstoresponsiblytacklethisbigquestioninthespecificcontextofNortheastGreensboro,byaddressingthreequestionsthatcollectivelyassesswhethercommunityownershipoftheRenaissanceCenterisaviableoption:

1. CanthecommunityraisethemoneytopurchasetheRenaissanceCenter?2.

Arethereviableformsoflegalownershipandgovernancethatwouldallowacommunitytoresponsiblyanddemocraticallyownandoperateashoppingcenter?

3. Howwillthecommunitygaintherequisitecapabilitiestopullthisoff?Byansweringthesequestions,wewillmapoutmultiplepathwaystocommunityownershipoftheRenaissanceCentersoitcanbeevaluatedasaseriousoptionwhiletheCityCouncilmakesupitsmindaboutthefateoftheshoppingcenter.2

Question1:CanthecommunityraisethemoneytopurchasetheRenaissanceCenter?

Purchase Price of the Shopping Center


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bustling,vibrantshoppingdestinationfilledwithtenantspayinghighrents,theFMVwillgoup.Thatsnotthescenariowehavedataorexperiencewith,sointhispaper,wellnot

considerthisaspartofouranalysis.EveniftheFMVofthecentergoeshigher,therentsthatcouldbechargedwouldgoupaccordingly,whichwouldcoverthedebtserviceonextrafinancingneededtocovertheincreasedpurchaseprice.

WenotethattheCitywillconsideritsownpublicpolicy,fiscal,andstatutoryconcernsinsettingapurchasepricefortheRenaissanceCenter.SomeoftherelevantstatutesrequiresaleatFMVasdeterminedbythreeindependentappraisals,whereasothersallowsaleatalowerprice,ifcertainpublicnoticeandpublichearingrequirementsaremet.Forpurposesofthisanalysis,wellworkwiththe$1.9millionfigure,whichseemsafairestimateofFMV.

FinancingthePurchaseoftheShoppingCenter:NetOperatingIncomefromRentalofthe

ShoppingCenterGoestoDebtService

Inallscenariosinwhichthecommunitypurchasestheshoppingcenter,thepresumptionisthatthenetoperatingincomefromtheleasingofstoreswouldbeusedtocoveranydebt

servicerelatedtofinancing.Intheattachedspreadsheet,wedoaquick-and-dirty,non-discounted,non-depreciated,non-inflatedcashflowanalysiswherewecalculateanannualnetoperatingincome,beforedebtservice,of$91,414peryear.WebasedourrevenueandexpensefiguresonexplicitlynamedassumptionsdrawnfromtheMichaelWattsreportandtheMay20proposalofNewBessemerAssociates.Withahealthyreserveof.35persquarefootincluded,wethinkourassumptionsareconservativeandresponsible.

FinancingthePurchaseoftheShoppingCenter:Equity

Toobtainthe$1.9millionpurchaseprice,thecommunitywouldbringsomeamountofequitytothetable,withthebalancefinancedbySelfHelpCreditUnionand,perhaps,theCity In scenarios 1 3 the community would bring a minimum of $400 000 in equity with


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contributingtothecommunitysongoingeconomicdevelopment,health,andwell-being.ThereisexplicitunderstandingthatthesupportiverentfigurethattheRCCisseeking

($2,000permonth,or$24,000annually$2.40persquarefoot)istobetiedtocommunitybenefit,includingusingaportionofsurplustobuycommunity-ownedassetssuchastheRenaissanceCenter.

SomepeoplehavecriticizedthesupportiverentfigurefortheRCCasafinanciallyunsupportableburdenthatundercutstheviabilityoftheshoppingcenterasabusinessenterprise.Thatmaybetrueiftheshoppingcenteristobeownedbyaprivatedeveloperseekingmaximumreturnoninvestment,butneitherthecommunitynortheCityasowners

oftheRenaissanceCenterhavesuchanarrowinterest.Infact,itisinboththeCitysandthecommunitysinteresttosettherentfigurefortheRCCatalevelthatensuresthattheCentersbasicexpensesarecovered(lostpropertytax,maintenance,insurance)whileallowingforthecommunitytoaccumulatesurplusatafasterrate.Inthiscontext,thesupportiverentfigureisntaproblemitspartofthesolution,helpingthecommunityachieveitsbigpicturedreamsofcommunityownership,health,andwealth

whileprovidingtheCitywitharesponsiblewayoutoftheshoppingcenterbusiness.SupportfromFoundationsandGrassrootsFundraising

RoundingouttheRCCscontributiontoequity,weareconfidentthatwecanraiseadditionalfundsindonationsandgrantsfromindividualsaswellaslocal,regional,andnationalfoundations.InScenarios1-3,weestimateaminimumof$150,000fromfoundations,individualdonations,andgovernmentsources,suchasthefederal

governmentsHealthyFoodFinancingInitiative.InScenario4,thefast-purchasescenario,wedonothaveasmuchtimetodothegrant-seekingandfundraising,sothisfigureissmaller,at$80,000.


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loweringthecostofborrowing,or(2)thecommunitycanwaitlongertopurchasetheshoppingcenter,whichwouldallowmoretimeforalargerequitystaketoberaised(from

RCCsurpluses).

LotsofWaystoAccomplishThePurchase:FourPossibleFinancingScenarios

Pleaseseetheattachedspreadsheetinwhichwecomparefourdifferentfinancingscenarios,withdifferenttimelinesandimplicationsforcashflow.

Scenario1:Thecommunityisabletopurchasetheshoppingcenterin5yearsandpayoffthedebtwithin40yearsofpurchase(45yearsfromnow).

Down-Payment:$400,000(21%equity)

$250,000fromaccumulatedsurplusfromgrocerystore $150,000indonationsandgrantsfromlocal,regional,andnationalfoundations

Lending:$1,500,000(79%financing)

$800,000@4%over20yearsfromSelf-Help(annualdebtserviceinyears1-20is$58,174)

$700,000@0%over40yearsfromtheCityofGreensboro(annualdebtserviceinyears21-40followingpayoffofSelfHelpnoteis$35,000)

InScenario1,thedebttoSelf-HelpisretiredbeforetheCitysdebtbeginstobepaidoff.

Scenario2:Thecommunityisabletopurchasetheshoppingcenterin10yearsandpayoffthedebtwithin15yearsofpurchase(25yearsfromnow).



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$150,000indonationsandgrantsfromlocal,regional,andnationalfoundationsLending:$950,000(50%financing)

$950,000@4%over20yearsfromSelf-Help(annualdebtserviceinyears1-20is$69,082)

TheCitydoesnotparticipateasalenderinScenario3.SelfHelpispaidbackwithin20yearsofpurchase.

Scenario4:(FastPurchaseScenario):Thecommunityisabletopurchasetheshoppingcenterin2yearsandpayoffthedebtwithin30yearsofpurchase(32yearsfromnow)


$20,000fromaccumulatedsurplusfromgrocerystore $80,000indonationsandgrantsfromlocal,regional,andnationalfoundations

Lending:$1,800,000(94%financing)

$300,000@4%over5yearsfromSelf-Help(annualdebtserviceinyears1-15is$66,299.52)

$1,500,000@0%over15yearsfromtheCityofGreensboro(annualdebtserviceinyears6-30is$60,000)

InScenario4,thedebttoSelfHelpisretiredfirst,inyears15.ThedebttotheCityisretiredoverthenext25years(Years6-30).

CommunityWealthBuilding

The four scenarios have different implications for the goal of building community wealth


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gentrification,andgainingcommunitycontrolovertheenvironment.

Manycommunitiesareusingthe501(c)3non-profitCommunityLandTrust(CLT)asthelegalformationtomanagecommunityownershipofsharedrealestateassets.TheclosestCLTsweknowofareinOrangeCounty(CommunityHomeTrust)andDurham(DurhamCommunityLandTrustees).ForinformationaboutCLTs,checkoutthesewebsites:

DurhamCommunityLandTrustees,www.dclt.org CommunityHomeTrust,www.communityhometrust.org BurlingtonAssociates,www.burlingtonassociates.com NationalCommunityLandTrustNetwork,www.cltnetwork.org InstituteforCommunityEconomics,www.iceclt.org

WhilemostCLTshavefocusedonhousingstock,somearepurchasingandmanagingcommercialpropertyaswell.

Governance

Inthispreliminarydiscussion,wedontwanttogotoofarinspecifyingthedetailsofhowthelandtrustshouldbesetuporgovernedthesearemattersthathavetobeworkedoutinthecommunityamongthepeoplewhotaketheresponsibilityofformingthelandtrust,workingwithknowledgeablelegalandfinancialexperts.However,wethinkitsappropriatetotalkabouttheneedforauthenticdemocraticgovernancestructuresandpracticestobeinplace,embeddedwithinastrongPolicyGovernanceframework.

Wearesometimesaskedhowitispossibleforawholecommunitytooperateagrocerystore,ashoppingcenter,oranykindofbusiness.Somepeoplebelievethatiftherearenot

l h h ll d i i ill b l b d d f h i i f


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followsthepoliciesestablishedbytheBoardandthemembership,itisfreetocarryoutoperationsinanywaythatworks.Thisenablesthedailyoperationstobecarriedout

efficientlyandeffectively.(FormoreonPolicyGovernanceseewww.governancecoach.com.)IfyouremainskepticaloftheeffectivenessofPolicyGovernanceinabusinesssetting,considerthesuccessofWeaverStreetMarket(annualrevenue$14million)andCompanyShopsMarket(annualrevenue$5million),bothofwhichutilizePolicyGovernancestructuresandpractices.

AuthenticDemocracyandCommunityControl

Broadmembership,anchoredintheimmediateneighborhoodandjoinedbyalliesfromacrossthecity,isthestartingpointfordemocraticfunctioningoftheCLT.ThemembershipintheCLTcanbeginrathersmall(say50to100people)andeasilygrowto500to1,000ormorepeople.Itwillbeimportantformemberstohavefinancialortimecommitmentrequirementsasanexpressionoftheirseriousnessabouttheorganization.TherearevariouswaysotherCLTshavedecidedmembership,butultimatelytheserequirementswillbedecidedbythecommunity.AnyresidentofNorthCarolinacouldbecomeamember,

butmembershiprecruitmentwouldbefocusedontheareaimmediatelysurroundingtheshoppingcenter,withsecondaryattentiontothewidercommunityofGreensboro.

WeproposethattheCLTsboardbeelectedentirelyfromitsmembers.Themajorityofboardseatswouldbereservedformemberswholivewithina1-2mileradiusoftheshoppingcenter.Thiswouldensurethattheshoppingcenterwouldbeoperatedwiththeconcernsoftheimmediatecommunitymostinmind.Twotothreeseatscouldbereservedformemberswholiveoutsidetheimmediatecommunity,tobringinoutsideperspectives,

expertise,andconnectionstocomplementthoseoftheimmediatecommunity.

Takingitscuesfromthemembershipmeeting,theBoardwillneedtosetpolicyonanumber of issues starting with the question of what needs of the community are to be met


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forcommunityimprovementeffortssponsoredbythenonprofitlandtrust.

Non-memberswholiveintheimmediatecommunityshouldbeinvitedtoatleastoneeventeachquarter,designedtostrengthentheCLTsconnectiontotheimmediatecommunityandtohearaboutanyissuesoropportunitiesfacingthecommunity.TheCLTshouldalsoconscientiouslyinteractwithothercommunityorganizationsandinstitutionsinthearea,includingCEEJ,ConcernedCitizens,WoodmereParkNeighborhoodAssociation,PeelerRecreationCenter,andMcGirt-HortonLibrary.

Asstatedearlier,itisntappropriateinthispapertospecifyallaspectsofthegovernanceof

theCLT:itscriticalthatmembersofthecommunitybeengagedindecidinghowtheywantthelandtrusttobestructured.Whatskey,though,isaninitialandsustainedcommitmenttoauthenticdemocracy.Thatmeansgovernancestructuresandpracticesthatareinclusive,transparent,andaccountable,backedupbywell-understoodandagreed-upondecisionmakingprocesses.Itsnotenoughtogetarticlesofincorporationandbylawsinplaceitsaboutbuildingaliving,dynamiccapacityforpracticingauthenticdemocracy.

Question3:Howwillthecommunitygaintherequisitecapabilitiestopullthisoff?

Whatcapabilitiesareneeded?

Weseethreebroadcapabilitiesthatthecommunitywillneedtosucceed:

1. CollectiveandindividualskillsandaptitudesrelatedtodemocraticPolicyGovernanceofaCLTthatownsasubstantialasset

2. Amoderatelevelofcommunitycohesivenessandtrust,enhancedbysoftskillsincommunityengagementandcommunitybuilding

3. Specificknowledgeandskillsrelatedtoowningandoperatingashoppingcenter


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creditedwith.TheRCCexperienceisnotafluke:afterall,thesamecommunitycametogetherinahighlyeffectivewaytostopthere-openingoftheWhiteStreetLandfill.CEEJ

andConcernedCitizenshaveproventhemselvestobewell-organized,purposeful,hard-working,andinitforthelong-haul.Sothereisclearlyasolidsetofcapabilitiestoworkfrom.

Wearealsoconfidentthattheexperienceoflaunchingandoperatingacooperativelyownedgrocerystorewillprovetobeavaluabletraininggroundforbothindividualleadersandthelargercommunityintheareasofdemocraticfunctioning,communityengagement,finance,retailoperations,etc.Infact,weseethenextfewyearsofRCCstart-upand

operationsasessentialtogettingthecommunityreadyforthelargerprojectofowningacommunityassetliketheshoppingcenter.

Frankly,weresuspiciousofotherproposalsthathavesuggestedgivingpartoralloftheshoppingcentertothecommunity,withoutanyseriousconsiderationofthecommunityspreparationtotakeonthatresponsibility,orwho,exactly,representsthecommunity.Withoutanextended,concreteopportunityforlearningandpracticeatdemocratic

governanceofabusinessandintheabsenceofanorganizationwithamechanisminplacetocarrythisout,wedontseehowthecommunitywillbeabletoidentifyitsmostimportantgoalsinowningtheCenter,electanaccountableBoard,andsecureandsuperviseappropriatequalifiedmanagement.

Wehavesketchedoutfourscenariosforcommunityownership,threeofwhichprovidefivetotenyearsforthedevelopmentofcapacity,leadership,anddemocraticorganizationalstructurestoassumeresponsibleownershipoftheRenaissancecenter.Theselonger-term

scenariosareneededtoraiselargerequitystakes,buttheyalsohavethebenefitofprovidingampletimeforcommunitydevelopment.Thefourthscenario,inwhichthecommunitylandtrustisabletopurchasetheshoppingcenterintwoyears,isachievable,but requires an acceleration of community development activities and a more serious


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ComparisonoffourscenariosinwhichaComunityLandTrustpurchasesRenaissanceCenter

Scenario1 Scenario2 Scenario3 Scenario4

PurchasePriceofShoppingcenter $1,900,000 $1,900,000 $1,900,000 $1,900,000

Yearstosavedownpayment 5 10 10 2

Yearofpurchase 2018 2023 2023 2015

Yearstopayoff(Term) 40 15 20 30

Yearpaidoff 2058 2038 2043 2045

LastyearCityisowedmoney 2058 2038 N/A 2045

InitialEquityStake $400,000 $950,000 $950,000 $100,000

AmountofdownpaymentfromRCC $250,000 $800,000 $800,000 $20,000

Amountofdownpayment-othersources $150,000 $150,000 $150,000 $80,000

AmountofFinancingNeeded $1,500,000 $950,000 $950,000 $1,800,000

FinancingfromSelfHelp@4% $800,000 $500,000 $950,000 $300,000

FinancingfromCity@0% $700,000 $450,000 $0 $1,500,000

AnnualNOIbeforedebtservice $91,414 $91,414 $91,414 $91,414

AnnualDebtService

Years1-5 $58,174 $74,381 $69,082 $66,300

Years6-15 $58,174 $74,381 $69,082 $60,000

Years16-20 $58,174 $0 $69,082 $60,000

Years21-30 $35,000 $0 $0 $60,000

Years31-40 $35,000 $0 $0 $0

AnnualNOIafterdebtservice

Years1-5 $33,240 $17,033 $22,332 $25,114

Years1-15 $33,240 $17,033 $22,332 $31,414

Years16-20 $33,240 $91,414 $22,332 $31,414

Years21-30 $56,414 $91,414 $91,414 $31,414

Years31-40 $56,414 $91,414 $91,414 $91,414

AccumulatedCashrelativetopurchasedate

Year3 $0 $0 $0 $75,343

Year5 $166,200 $85,164 $111,661 $125,572

Year10 $332,399 $170,327 $223,323 $282,642

Year15 $498,599 $255,491 $334,984 $439,712

Year 20 $664 798 $712 561 $446 646 $596 782


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RoughCutAnnualNetOperatingIncomeStatementforShoppingCenter

AnnualIncomefromRents

FamilyDollar $39,680.00

RCC $24,000.00

19,000 remainingsquarefeet $140,600.00

Annualmaxincome $204,280.00

Revenuelosttovacancy -$32,560.00

Grossincomefromrents $171,720.00

AnnualExpenses

Management $8,586.00

Insurance $7,920.00

Maintenance $39,600.00

Utilities $8,800.00

Taxes $0.00 Ifcommunityownsasanon-profitlandtrust,thennotaxesdue.Otherwise$26,184

Reserves $15,400.00

Totalexpenses $80,306.00

NetOperatingIncomebeforeDebtService $91,414.00

Assumptions

Sqfootageofgrocerystore/comm'yspace 15,000

Grocerystorerentperyr $24,000.00

FamilyDollarsqfootage 10,000

FamilyDollarrentperyr $40,000.00

Totalsqfootageofcenter 44,000

Remainingsqfootage 19,000

Annualsqftrentalprice $7.40 seeassumptionsusedbyNewbessemerAssociatesin5/20submission

Vacancyrate 10% likelygivenlong-termleasessignedbyFamilyDollarandRCCmanagementcosts 5% seeassumptions usedinMichaelWatts4/23report to City

Insurancepersqft $0.18 seeassumptions usedinMichaelWatts4/23report to City

Maintenancepersqft $0.90 seeassumptionsusedinMichael Watts4/23reporttoCity

Utilitiespersqft $0.20 seeassumptions usedinMichaelWatts4/23report to City

Reserve per sq ft $0.35 seeassumptions usedinMichaelWatts4/23report to City

a pathway to responsible community ownership of the renaissance center - august 7, 2013 revision

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