Town Center Initiative 1 MCKINNEY TOWN CENTER STUDY INITIATIVE PHASE 2 City Council Work Session...

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MCKINNEY TOWN CENTER STUDY INITIATIVE PHASE 2

City Council Work SessionJanuary 24, 2011

Bringing It all Together

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Town Center:McKinney’s Identity

(Brand)

Actively Attracting

Investment(Business Plan)

• Incentives Program

• Governance Structure & Coordination

• Small Business Incubation

TIRZ(Project & Finance Plan)

Catalyst Projects(Development and

Tax Base)

• Parking Program• PID • Form-Based Code

• Multi-modal Infrastructure

• Destinations

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Town Center “Business Plan”

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Driving Catalyst Projects

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• Leveraging

• Coordination of Public Entities

• De facto Master Developer context

• Attracting investment

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Public Improvement District (PID) Fiscal Tool

Feasibility Analysis

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Additional Tools - PID

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What is a Public Improvement District (PID)?Chapter 372 of the Texas Local Government Code allows any city to levy and collect special assessments on property within a defined benefit area of the city limits or ETJ. Revenue from the special assessments are then used to fund improvements (capital and/or O&M) within the benefit area.

• Property Value

• Any other manner that equally assesses property similarly benefited, such as a flat fee, provided that the collection entity is in agreement.

Method of assessment may be determined by:

• Library improvements• Art installation• Creation of pedestrian malls • Supplemental safety services• Other similar improvements (i.e. graffiti

abatement)• Supplemental business-related services • Costs associated with the creation,

administration, and operation of the PID

• Mass transit improvements• Off-street parking improvements• Park, recreation, and cultural improvements• Landscaping and other aesthetic improvements• Land acquisition in connection with an improvement• Affordable housing• Water, wastewater, health & sanitation, drainage,

street, or sidewalk improvements

Funds generated by the PID may be used to perform any of the following:

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PID Feasibility Analysis

Key Assumptions

• 20 year horizon for PID duration

• Property assessed by value

• Evaluated rates from $.05 - $.15/$100 assessed value

• 4 Development Scenarios Baseline: current values ($71,481,928)

Scenario #1: inflation only (3% annually)

Scenario #2: medium redevelopment: current values (assumes $80/ft²), 3% annual inflation

Scenario #3: medium redevelopment: higher values (assumes $115/ft²), 3% annual inflation

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Projected Appraised Values (of all properties within the PID)

Baseline Scenario #1 Scenario #2 Scenario #3

2010 $71,481,928 $71,481,928 $71,481,928 $71,481,928

2011 $71,481,928 $73,626,386 $73,626,386 $73,626,386

2012 $71,481,928 $75,835,177 $75,835,177 $75,835,177

2013 $71,481,928 $78,110,233 $80,077,141 $80,937,664

2014 $71,481,928 $80,453,540 $87,305,637 $90,303,430

2015 $71,481,928 $82,867,146 $96,982,467 $103,157,920

2016 $71,481,928 $85,353,160 $105,012,037 $113,612,796

2017 $71,481,928 $87,913,755 $117,125,719 $129,905,953

2018 $71,481,928 $90,551,168 $126,071,401 $141,611,503

2019 $71,481,928 $93,267,703 $137,327,284 $156,603,350

2020 $71,481,928 $96,065,734 $147,209,816 $169,585,351

2021 $71,481,928 $98,947,706 $157,561,705 $183,205,329

2022 $71,481,928 $101,916,137 $168,402,219 $197,489,879

2023 $71,481,928 $104,973,621 $179,751,358 $212,466,618

2024 $71,481,928 $108,122,830 $185,143,899 $218,840,616

2025 $71,481,928 $111,366,515 $190,698,216 $225,405,835

2026 $71,481,928 $114,707,510 $196,419,162 $232,168,010

2027 $71,481,928 $118,148,735 $202,311,737 $239,133,050

2028 $71,481,928 $121,693,198 $208,381,089 $246,307,042

2029 $71,481,928 $125,343,993 $214,632,522 $253,696,253

2030 $71,481,928 $129,104,313 $221,071,497 $261,307,140 8

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PID Feasibility Analysis: Overall Findings

Summary Totals by Rate per $100 Assessed Value (2010-2030)

Baseline Scenario #1 Scenario #2 Scenario #3

$0.05 $750,560 $1,024,925 $1,521,214 $1,738,341

$0.06 $900,672 $1,229,910 $1,825,457 $2,086,009

$0.07 $1,050,784 $1,434,895 $2,129,700 $2,433,677

$0.08 $1,200,896 $1,639,880 $2,433,943 $2,781,345

$0.09 $1,351,008 $1,844,865 $2,738,186 $3,129,013

$0.10 $1,501,120 $2,049,850 $3,042,428 $3,476,681

$0.11 $1,651,233 $2,254,836 $3,346,671 $3,824,349

$0.12 $1,801,345 $2,459,821 $3,650,914 $4,172,017

$0.13 $1,951,457 $2,664,806 $3,955,157 $4,519,686

$0.14 $2,101,569 $2,869,791 $4,259,400 $4,867,354

$0.15 $2,251,681 $3,074,776 $4,563,643 $5,215,022

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• 5,000 square foot building in McKinney with appraised value of $411,266 currently pays $2,408 each year in city taxes. That same building would pay:

○ $2,604 each year under a PID assessment of $.05/$100 assessed valuation○ $2,819 each year under a PID assessment of $.10/$100 assessed valuation○ $3,025 each year under a PID assessment of $.15/$100 assessed valuation

• 10,000 square foot building in McKinney with appraised value of $1,050,448 currently pays $6,174 each year in city taxes. That same building would pay:

○ $6,699 each year under a PID assessment of $.05/$100 assessed valuation○ $7,224 each year under a PID assessment of $.10/$100 assessed valuation○ $7,750 each year under a PID assessment of $.15/$100 assessed valuation

• 16,000 square foot building in McKinney with appraised value of $1,667,414 currently pays $9,763

each year in city taxes. That same building would pay:○ $10,597 each year under a PID assessment of $.05/$100 assessed valuation○ $11,430 each year under a PID assessment of $.10/$100 assessed valuation○ $12,264 each year under a PID assessment of $.15/$100 assessed valuation

PID Feasibility Analysis: Sample Assessment Scenarios

Creation of a Town Center Business Plan

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PID Feasibility Analysis: Considerations for Moving Forward

Creation of a Town Center Business Plan

– Revising existing development codes/policies to respond to market and ensure consistency with vision

– Redesigning SH 5 as a walkable mixed use corridor

– Activating the new Municipal Complex and Entertainment District

– Creating a network of appealing pedestrian connections

– Phasing in the Town Center parking plan to facilitate market-responsive private investment

– Maintaining balance of reinvestment and neighborhood stabilization to retain affordability and historic community character

– Synchronizing development regulations, public capital investment, and economic development policies/strategies

Assuring that McKinney realizes the market forecasts outlined in the PID Analysis will require:

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• Is development of a PID the right fiscal tool?

• What improvements/enhancements would the PID afford?

• What are the policy implications of establishing a PID?

• What are the public implications of establishing a PID?

• How would the PID interact with other fiscal tools (i.e., TIF)?

Considerations

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Parking Rate Study

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Parking Rate Study Review

• Is paid parking feasible (i.e. positive cash flow) under a certain set of assumptions?

• If a positive cash flow is feasible, can it fund a formal parking program (parking benefit district) and/or debt service a parking structure?

• What happens to cash flow if the rate of parking demand grows at 3% per year? 10%?

• Analysis conducted for 3 scenarios:

1. Assumes Year 1 establishment of a comprehensive paid parking program for all on-street and surface parking lots in downtown; no parking structure ever built

2. Assumes Year 4 establishment of comprehensive paid parking program to be implemented upon completion of a parking structure

3. Assumes Year 1 implementation of limited on-street meters (on Square Proper); with a Year 4 implementation of a comprehensive paid parking program and opening of a parking structure

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Parking Rate Study – Summary of Results

If level of parking demand continues to grow at 3 or 10% per year; all scenarios will show a positive cash flow within 2-3 years (excluding the capital costs for the parking structure itself)

Assumptions include:• Significant enforcement activities• Investment in state-of-the art revenue collection system(s)• Reasonable hourly parking rates (~$1+)

Challenges:• Maintaining existing demand when transitioning to paid parking• Up-front capital funding for the parking structure

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Parking Rate Study – Summary of Results

Scenario 1 – 3% Growth

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Parking Rate Study – Summary of Results

Scenario 2 – 3% Growth

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Parking Rate Study – Summary of Results

Scenario 3 – 3% Growth

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Parking Rate Study – Summary of Results

Can the positive cash flow from the parking system assist in serving the debt on a $7 million dollar parking structure (in today’s dollars, and under these assumptions)?Servicing the debt would take approximately:

- 12 years @ 3% annual growth in demand- 8 years @ 10% annual growth in demand

Under Scenarios 2 and 3. Assumes positive cash flows are used solely for debt service

Can the positive cash flow fund and sustain a formal parking benefit district?The positive cash flow could be used to fund parking improvements such as enhanced signage, striping, lighting, landscaping; valet/shuttle service; marketing; enforcement; etc.

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• Is a formal paid parking program the right fiscal tool?

• What improvements/enhancements would a parking program afford?

• What are the policy implications of establishing a a formal paid parking program?

• What are the public implications of establishing a formal paid parking program?

• How would a formal paid parking program interact with other fiscal tools (i.e., TIF)?

Considerations

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Business Plan: Fiscal Tools

• Consensus?

• If yes, what is the Council’s direction for moving forward with PID and/or a formal paid parking program, or both?

Sustained revitalization of the Town Center will require a combination of appropriate fiscal implementation tools that are consistent with and complementary to the Town Center vision.

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Progress of Town Center Form-Based Code

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Development Regulations Process - work to date

• 2009: analyzed regulations (zoning, subdivision) that are barriers to realizing the preferred concepts of the vision

• Jan 2010: Council work session emphasizing importance of synchronizing public capital investments and development regulations

• March 2010: stakeholders public meeting

• May 2010: Council work session outlining approach and process by which a new form-based development code would be created to specifically implement the Town Center illustrative master plan

• Sept 2010: stakeholders public meeting

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Results of Conventional Zoning

• Single use pods of development

• Buffers instead of transitions

• Lack of a transportation network

• Not pedestrian-friendly, not transit-friendly

• Narrowly stratified market

• Planned obsolescence, so constructed accordingly

• Scrape, rezone and sometimes re-subdivide to redevelop

• Value drops when intended use no longer viable

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Results of Form-Based Zoning

• Codes encourage mixed use

• Transitions instead of buffers

• A network of transportation

• Easy to walk

• Broad market (age, socio-economic, lifestyle)

• Designed and constructed to endure

• Change of use within buildings instead of redeveloping

• Value holds when current use no longer viable

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Economic Foundation of Form Based Approach

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Becoming More Common

• Leander, TX• Farmers Branch, TX• Mesquite, TX• North Richland Hills, TX• Duncanville, TX• Roanoke, TX• Benicia, CA• Ventura, CA• Peoria, IL• Owensboro, KY• Auburn, CA• Sarasota County, FL

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Oak Street, Roanoke, Texas – Before FBC

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Oak Street, Roanoke, Texas – After FBC

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Existing Development Pattern

• McKinney’s Town Center is “traditional”--was developed prior to conventional zoning and subdivision

• Designed with pedestrians and walking in mind

• Vibrant mix of uses and compact urban form (grid street network)

• Small blocks/small lots/narrow streets • Buildings closer to the street

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Issues with current standards

• Existing zoning districts do not relate to Town Center Vision/Master Plan• Zoning is fractured and does support clear center, edge, and transitions as

identified in the Master Plan

• No adjacency predictability = more risk for developers/investors

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McKinney’s Town Center generally consists of a traditional, compact, urban, pedestrian-oriented development pattern that existed and evolved for almost 100 years before the advent of contemporary zoning and subdivision regulations.

For the last 50+ years: conventional, suburban, auto-oriented zoning and subdivision development regulations have been unsuccessfully applied to the Town Center.

The Phase 1 process and community vision call for sustained long-term revitalization of the Town Center through emphasis on authentic urban, pedestrian-oriented built environment.

Form-based coding is the only regulatory tool available to successfully achieve the community vision for the Town Center.

The performance and long-term success of the TIRZ (and overall Town Center) depends on the implementation of the form-based code.

Bottom Line

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Historic Downtown

Future Transit Village

Corridors (SH 5, Kentucky/ Tennessee, & US 380)

Residential Neighborhoods

Phase 1 Focus Areas

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• Areas to be coded

• Degrees of change

• Method of implementation and integration with existing code

• Calibration and customization

FBC Considerations

• Preservation

• Targeted enhancement

• Evolution

• Transformation

• Freestanding

• Overlay

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Illustrative Plan—Adopted 2008

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Proposed Character Districts

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47Proposed Regulating Plan

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FBC Components

For each character district:

• Building form standards• Open space standards• Street standards• Block standards• Frontage type standards• Building type standards• Signage, lighting, landscape standards• Administration

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Building Form Standards

• Primary role in defining physical form

• Simple diagrams, easy-to-read tables

• 2 pages per character district

• building placement

• building form

• parking/service access

• frontage

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Public Space (Street) Standards

• movement type

• design speed

• curb radius

• pedestrian crossing time

• width (ROW, curb face to curb face)

• traffic, parking lanes

• landscape, lighting, sidewalk

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Next Steps/Timeline

• Refinement/testing/internal review and coordination with Engineering, Fire, and Building Departments (Feb 2011)

• Stakeholder outreach, including public workshop and public review/comment period (March 2011)

• Formal approval process (April 2011)

Freestanding Code

• Complete draft (Summer 2011)• Internal review/stakeholder outreach and review (Sept/Oct 2011)• Formal approval process (Nov/Dec 2011)

Overlay Code

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Town Center:McKinney’s Identity

(Brand)

Actively Attracting

Investment(Business Plan)

• Incentives Program

• Governance Structure & Coordination

• Small Business Incubation

TIRZ(Project & Finance Plan)

Catalyst Projects(Development and

Tax Base)

• Parking Program • PID • Form-Based Code

• Multi-modal Infrastructure

• Destinations