bae economic impacts discussion – fort monroe federal area development authority september 19,...
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Economic Impacts Discussion –
Fort Monroe Federal Area Development Authority
September 19, 2008
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Today’s AgendaToday’s Agenda
• BAE’s role in FMFADA/City of Hampton discussions.
• Fort Monroe Capital Requirements
• Need for Strategic Plan for Fort Monroe’s Real Estate Assets
• Lessons Learned from Presidio of San Francisco and NASA Research Park
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FMFADA/City of Hampton Work
Incorporate revised infrastructure cost estimates into the Fort Monroe financial model
Refine and update fiscal impacts (revenues and expenses)
Identify business decisions related to municipal services:
• Who owns system/provides service?
• Who operates?
• What standards?
• Whose cost?
The answers to these questions will guide how FMFADA and City of Hampton structure their relationship
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Fort Monroe Capital RequirementFort Monroe Capital Requirement
• Planning-level estimate of required capital to implement Fort Monroe Reuse Plan:
• These are preliminary “order of magnitude” estimates and will be refined and updated as the FMFADA continues its implementation planning.
$500 Million
• This includes:
• Historic rehabilitation/reuse ($126M)
• New construction ($223M)
• Infrastructure ($33M; ex. electrical system)
• Cultural facilities ($66M)
• Seed capital for FMFADA ($11M)
• 10% contingency
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Public and Private FundingPublic and Private Funding
• But to attract private investment and charitable contributions, the Commonwealth must make an initial investment.
• The bulk of required capital costs of Fort Monroe will be funded by the private sector:
Public
• FMFADA seed capital
• Infrastructure (partial)
Private
• Infrastructure (partial)
• Historic rehabilitation & adaptive reuse
• New Construction
• Cultural facilities
• Infrastructure (partial)
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Potential Public InvestmentsPotential Public Investments
Contribution to FMFADA’s operating expenses in early years, including pre-transfer period FY2009-2012
Acceptance of Fort Monroe roads for VDOT funding
Contribution to cover potential shortfalls in revenue to the City of Hampton. (FY2012 and next few fiscal years)
One-time investment in revolving capital improvement fund to invest in start-up of Interim Leasing and Residential Leasehold Programs. (FY2012)
Specific dollar estimates will be prepared this fall
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Need for Strategic Real Estate Plan
To implement the Fort Monroe Reuse Plan, the FMFADA needs to prepare a strategic real estate plan that:
• Formulates a strategy for management and development of Fort Monroe’s real estate assets
• Evaluates alternative business/legal relationships with master developer/manager
• Develops scope and process for selection of master developer/manager
• Identifies early capital requirements and sources
• Proposes a specific five-year series of goals and actions
• Happens parallel to and coordinated with Interpretive Master Plan
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Time is of the EssenceTime is of the Essence
• The scheduled date of transfer is in three years, September 2011
• During this time the FMFADA needs to:
• Work with the City of Hampton to establish a mutually agreeable partnership to support implementation and ongoing provision of public services
• Undertake a competitive process to engage one or more master developers/managers
• Identify marketing opportunities/prospective anchor tenants
• Formulate planning and permitting procedures
• Establish historic preservation guidelines
• Complete its Interpretive Master Plan
• Ideally, a master developer/manager will have at least one year prior to transfer to complete due diligence and its own projecting planning –critical to “hit the ground running.”
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What did the Presidio and NASA Do?What did the Presidio and NASA Do?
• There are “lessons learned” from experience with the Presidio of San Francisco and NASA Research Park (Silicon Valley)
• Both projects completed extensive strategic planning for the management of real estate assets at the Presidio of San Francisco and NASA Research Park, respectively.
• The following are BAE’s own observations about what the Presidio Trust and NASA have done and why.
Presidio of San Francisco
NASA Ames Research Center
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Presidio of San FranciscoPresidio of San FranciscoQuick Profile:
• Trust established by Congress in 1996 with seven member board
• Flexible authority to conduct business
• $25M annual appropriations; $50M Treasury loan authority
• Financial self-sufficiency by 2013
• 1,168 acres of Presidio total of 1,450 managed by Trust
• 5.6 million sq.ft. of existing and limited new development
• 470 historic structures, including 303 historic residences
• $585 million in capital required in 1994 dollars
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Presidio Implementation TimelinePresidio Implementation Timeline
• BRAC action announced in 1989
• Pre-transfer planning by National Park Service 1990-1994
• NPS General Management Plan Amendment for the Presidio of San Francisco adopted in 1994 with transfer from Army:
• NPS management 1994-1998
• Congress established Presidio Trust late 1996
• Trust Board appointed and convened in mid-1997
• Early 1998 Trust staff hired; housing management company engaged; Trust leasing under NPS GMPA
• 2000-2002 new Presidio Trust Management Plan adopted
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Presidio Approach to Public-Private Presidio Approach to Public-Private PartnershipsPartnerships
• Both the NPS and Presidio Trust adopted a mix of self-funded direct rehabilitation, property management contracts, and long-term leases with multiple developers:
• NPS and Trust have invested federal funds for historic building rehabilitation directly leased by corporation
• NPS and Trust managed RFQ/P processes to engage developers for specific building or clusters of structures
• Trust hired housing manager to lease existing housing in “as is” condition - rehabilitation later
• Trust ultimately hired CBRE to handle commercial leasing
• The NPS and Trust could do this because:
• Had access to federal appropriations
• Established large organizations
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Presidio Leasing and Financial ResultsPresidio Leasing and Financial Results
• Under NPS management by the end of 1997:
• 1.3 million sq. ft. leased
• $7 million in total revenues
U.S. ArmyThoreau CenterPresidio Golf CourseGorbachev Foundation USA
• Under Trust management, in 2008:
• 4+M sq.ft. leased
• $60 million in total revenue (ex. Appropriations)
Presidio Residences ($36M) Non-residential ($17M)SDC/Other ($7M)
Letterman Digital Arts CenterSF Film SocietyBay School (HS)Disney Family Museum
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NASA Research ParkNASA Research ParkQuick Profile:
• NASA Ames Research Center established by Congress in 1939
• Federal-to-federal transfer of Naval Air Station Moffett Field
• NRP concept: “World class shared-use R&D and education campus targeted to government, industry, academia and non-profit organizations.”
• NRP Business Plan mandates financial self-sufficiency
• 2,000 acres, including airfield and core NASA Ames campus
• 5.2 million sq.ft. of existing and new development in NRP
• Shenandoah Plaza National Historic District w/22 contributory structures, including Historic Airship Hangars 1, 2 and 3
• Over $2 billion in capital required in 2008 dollars
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NRP Implementation TimelineNRP Implementation Timeline
• BRAC action for NAS Moffett announced in 1989
• Pre-transfer planning as joint federal use facility managed by NASA
• Navy property transferred in 1994 with Moffett Field; Comprehensive Use Plan adopted
• Managed as joint federal property 1994-1997
• Air cargo controversy –Citizens Advisory Committee formed and identifies preferred uses of former Navy Property in 1997
• NASA Ames conducts feasibility study of proposed NASA Research Park concept 1998-1999.
• NASA Ames Development Plan and EIS formulated and adopted 2000-2002
• Enhanced Use Leasing legislation adopted for NASA in 2003
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NASA Approach to Public-Private NASA Approach to Public-Private PartnershipsPartnerships
• NASA adopted a mix of self-funded direct rehabilitation, and long-term leases with end users:
• “Pay as you go” historic building repairs and improvements
• Leasing focus on small technology start-ups
• Long-term leases with Carnegie Mellon and Google Inc.
• Now negotiating with University of California to select master developer for a 70-acre portion of NRP
• Leasing and property managed by civil-servants and on-site contractors (approx. 12 staff)
• NASA took this approach because:
• Had existing buildings in good condition and requiring minimal renovation
• Preference to transact with end users to achieve collaborative research goals
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NRP Leasing and Financial ResultsNRP Leasing and Financial Results
• FY 2004-2008 results:
• 625,000 sq. ft. leased - 50+ tenants
• 42.2 acres of land/1.2M office/R&D
• $7 million in total revenue (ex. appropriations)
Carnegie Mellon University UC Santa CruzBloom EnergyApprion Inc.U.S. Army (Wind tunnel)Airship Ventures Inc .N211 Hangar LLCMars institute
Total NRP Revenue
$0.0$1.0$2.0$3.0$4.0$5.0$6.0$7.0$8.0
FY04 FY05 FY06 FY07 FY08 FY09(est.)
Re
ve
nu
e i
n $
Mil
lio
ns
Total Revenue
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ObservationsObservationsInfrastructure
• Presidio: $90M Army - $100M environmental remediation
• NASA: $160M to be funded by end users/developers
• Land value issues
Asset Management
• Leasing existing buildings versus new development/full rehab
• Different economics
• Trade-off between # direct deals and size of organization
• Mixed-use projects need specialized real estate managers/developers
Marketing Experience
• Historic preservation and building “stories:” marketing plus
• The Presidio and NASA brands: powerful
• Keep your Post Office
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ObservationsObservations
Organizational Structure
• NPS: McKinsey recommendation to create “project office”
• NPS/NASA: Entrepreneurial spirit but “flat” federal organization results in too many decision-makers
• NPS/NASA: Hesitant to make decisions - fear of “getting in trouble”
• Trust: Opportunity to establish “mission and commercial” staff culture
• Trust: Board involvement in leasing double-edged sword
Planning
• NPS Presidio plan unrealistic and relied upon permanent federal support
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Lessons for Fort MonroeLessons for Fort Monroe
Adoption of a realistic, practical reuse plan
Strong support from stakeholders
Clear lines of decision-making authority
Adequate capitalization
Immunization against traditional ways of doing government business
• FMFADA must be independent, but accountable
• Must be able to make decisions quickly
• Capacity to respond opportunistically to market conditions
Ensure FMFADA staffing is adequate to implement plan
Utilize professional leasing and development services
Many pieces are in place to shorten start-up time