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Study Session 1.TitlePageTemplate-Drever_V4_PDFV ALAr- 07 Residential Development Proposal= Drever Partners Cityof ina January 2022 The Problem and The Plan: Since 2016 Salina has been successful in becoming the chosen expansion location of several economic develop- r { ment prospects. One Vision, a commercial airplane restora- tion company, has relocated to Salina from Sioux City, Iowa bringing 200+ new jobs and recently indicating their desire e for additional employment expansion. Schwan's and Great - Plains Manufacturing have both announced substantial ex- . pansions that will result in 635 new jobs by 2025 with Great Plains estimating another 200 new jobs between 2025 and ' 2030. Saline County and the City of Salina have supported these expansions through IRBs totaling over 300 million dollars. Additional growth in the commu- nity, supported by these new jobs and the completion of the Downtown Revitalization Project, should result in 263 new jobs in downtown. Stryten Manufacturing has indicated that they would add 110 new employees if the housing was available for their new labor force. Associated indus- tries like medical, education, retail, and entertainment will be affected by the influx of new jobs and are expected to see an increase in their own employment needs in order to meet new demands. "Salina is projecting 1,300 - 1,500 new jobs in the next 5 years; with well over half of those new jobs anticipated within the next 1-2 years..1Y - Salina Chamber of Commerce, Jan. 2022 Due to the expansion of businesses, in January of 2021 the City began working again with RDG Planning and Design Group to update the 2015 Live Salina Housing Assessment and Strategic Plan (Housing Plan). The purpose of updating the plan has been to ensure that the community's demographics and new employment numbers are as current as possible, allowing the City to understand the projected housing need. Additionally, the City wanted the updated plan to objectively assess the housing development challenges and costs with the an- ticipation that developers would be seeking financial as- sistance or incentives in the future from the City. Results of the study show a need for over 1,500 units by 2030 with a recognition that this number is not static and will increase as additional economic development occurs. Meanwhile, our three largest industries are seeing major growth, with no signs of slowing. Staff has been in contact with multiple developers discussing the economics of various housing projects. Developers have consistently identified projects in Salina as not viable. They have indi- cated a considerable level of interest in Salina but point out but there is less risk and higher rental rates in metro markets. In response to this, the City Commission adopted a Housing Incentive Policy in July of 2021. The community has made a concerted effort of finding available funding for these issues yet, the need remains and that is the basis of our request. Details related to the com- munity's needs per Housing Plan's 10 -year Program are detailed in the following table: O1 Year Program—Minimum Required Housing *Data based on 2021 Live Salina Plan and known business expansions, any additional employer expansion will require more units Source: RDG Planning & Design 2021-2025 2026-2030 TOTAL Total Needed 1,039 1,664 Total Owner Occupied - 519 375 894 <$225,000 206 149 355 $225,000-300,000 129 93 222 $300,000-400,000 128 92 220 .$400,000 57 41 98 Total Renter Occupied 520 250 770 <$625 213 102 315 $625-1,000 181 87 269 $1,000-1,500 77 37 115 >$1,500 49 23 72 1 Measured Need and Identified Solutions: The Housing Plan not only lays out the specific unit numbers and housing types needed to meet the communities demand, it also identifies the approach needed to meet those specifications: • Offset the increased cost of new construction with government assistance and incentive pro- grams. • Meet the immediate demand, primarily focusing on Salina's average 5 year rate rental housing, by both encouraging development of residential construction through incentives and ensuring that projects meet 01 has been 41 units a year. the city's overall housing goals. • Demonstrate the market for more diverse and affordable housing types in a well-designed, planned development. Between 2022 and 2025 • Make infrastructure investments where necessary to we need 346 units a year direct new development in areas that take advantaqe of community assets and provide highly attractive and competitive living environments. That is over 8x ��nL iUj0o(D F j� more housing a year! Fr7��' m m Developer: Drever Capita/ Management YEARS Operating history COMPLETED TRANSACTIONS PROPERTIES Acquired and improved Unmatched Experience in Delivering Affordable High -Quality Workforce Housing That Transforms Communities and Enhances Lives Institutional Quality Workforce Housingi I Vertically Integrated a 1990s= 33,!89 units • 1980es: 5,654 units Hutton? • 1970s: 6,003 units 42,039 units Notes: Each 'dot represents an actual Drever community (locations not to scale) Arrows represent Drever's each decade's evoluian of acquisitions and sales APARTMENTS developed 1 transformed CITIES transformed properties — unproved communities STATES Increased and improved housing inventory Drever Capital Management is a family -run, vertically integrated real estate development firm specializing in workforce housing. With a 50+ year track record of acquiring and developing multifamily and senior housing properties across the United States for both institutional and individual investors, working with our own con- struction and property management teams to ensure the safety of our investors' capital and to maximize timely returns in a socially and environmentally responsible manner. Drever Family Pioneering Workforce Housing Innovations Have Been Recognized With Numerous Awards WN Investor Uk rcapit31 M3na^pernmll[yAm MEUIMN social nespnnsWky e Aparnnen Hehlbhillly A[fi MrAmeM Award PJ et?en Aert1sl Hou, iTp .4word 1'ha nen Aparemenis rnsihe pn 1�oes ProMrtY d the Yev Award:21n13 Aei1NJ ANw!menJ At sa W i,on 1M 0rch rase mU wln:M. ManapemanY nesnpklon A.rd-MIZ ,u, Ian Apm'shaenJ Acadel,oe `'�yiyS�I rnrfJ ¢M1�� ilk e A k,w �'yrtL r s o a - *i0R aIR WOX r,rrl.* SO" •• TopNmd mml Hoops Foo• Cuss c Satisf&c - 20ID-2014 S.TIJIIIerFe Eardo- ViLps mt lain Lasa. AfihhoR Lefts. Jud Elm AL3h—Ap�winr 7 CllS@ Aweds: HIS – 29I3 ecreeg.rfa,.e AyeaaeewrA,�ueeJ:eK ft Rear =fl�TA(M2 uu l oaaeelie:�ee.daen�al 2td711rt Re>r!.suesD-W11As .RdwbiRee Irp F Z.16— for N ... Eeeeeer I.mroena:±o-u—xa:s aer<„sa aya�,ana:ruaea I I1j5hen kanLJ Imps kadsidc:2053Hed-:d Top KA4 d fT�p MdaJJrveyed apanoeuale,ud on sale gos:rned . 23% ULU Moa I.Anw: 2(111-20l1N.& dTep S5 ITup S%nd—yed apuv l god na ,ale peueoeed u Ls Ikkl The Site: Penleigh Gardens .maw &rte 1 1141 Diverse family-oriented development in Suburban environment • Three product types, 1300 new units • 950 multi family units • 150 cottage homes • 200 active adult 55+ apartments • Anchored by new satellite YMCA facility ' offering much-needed 7 AM to 10 PM Al daycare • All residents shall benefit from Drever hallmark hest in -class amenities Lowe'sHvfne Em rovement The Site: Penleigh Commons Crawford urban revitalization initiative • Replaces three blighted properties with 500 new residences -100 Junior one- bedrooms and 338 micro -unit studios—plus 62 old hotel rooms converted to Micro Unit Studios: ideal for college student & service worker housing • Vibrant urban community shall appeal to younger entry-level workers and new arrivals for expanding manufacturing job base • All residents shall benefit from Drever hallmark best in -class amenities package and disciplined, property management oversight ~ N �}'Am 1P A 11708N 16 T. Isis +' -'� 7. _J =W Cr .Vl .51 'rF Western Value Inn Salina Ambassador Hotel Sizzlin' and Conference Center y THE PENLEIGH GARDENS 1Q Community renter &Leasing Office Garden Style Multifamily Living with Shared Amenities {Including Pool, Barbeque Pavilions and Pet Parkl (D YShMCA Gitness Cenl er with 60 Child Daycare Center 8 ared R®aeatiun F=teIds Neighborhood Commerc'al Garden Style M ult ifam i ly Living with Shared Amenities OIncluding Pi ckleball Court, & Barbeque Pavilions Single Family Cottages with Common Play Areas, Bike Paths, Walking Trails, & Barbeque Pavilions e� Li e-� O9 Proposed 51, Acture AdLit Community with Walking Paths, Outdoor Recreation Areas, It Ouest Parking $ Retail Development Pad 1.5 Anes Menards(Existing) OFa i rfield Inn Suit -(Existing) lA Ameri can Ag Credi I(Existing) NUTI roN Thi s drawl ng is prel i minsry in nature and is su bject to change 1 lug THE WIMNwkV1 .� COMMONS O Gerden Style Multifamily A partment.Bui Id Ing 1 I(D Retail Pad Site OExAsting hot el Building Clubhouse / Leasing Office 11 OOutd—Arrenities t (Pani He ns, Walking Trails, Community Gathering, Rlcreetion ) O �Tl--rrl,r..1T.TT.:.-_--rl-i:Trr.r.T---FMr IYJII__._U Ili CRAWFOROST. NurroN _ prdimhsery in naturcand issu bject to ehertge. ar.� A This is more then just housing... Removing Blight: The West Crawford Corridor is a gateway to Salina from 1-135, cutting through the middle of the City and acting as the Southern most border to North Salina. It was once a major commercial corridor with hotels and restaurants, most notably home to the Ambassador hotel (a former Holidome). Many locals and visitors from across the state are familiar with this proper- ty having attended conferences, weddings, or weekend getaways there. Today the hotel's expansive real-estate is run down and the building boarded up. After closing in 2021 due to the pandemic the vacant building has be- come a place of vandalism and nefarious activity. Most recently, vandals ripped through the building cutting out copper pipes and whatever else could be sold for scrap. Penleigh Commons 600 new units of modern safe rental housing along with generous amenities will replace 3 blighted buildings and welcome new residents and visitors alike. The Penleigh Commons project is not just about housing but building a better community for all of Salina. I , Childcare for 60 kids! +T , .6 .w a The complete funding request includes providing an on -property � '-- childcare, wellness and community support center. The child- - care center would include all day care for up to 60 children ages ., Y ' `infant through preschool, summer camp for elementary age chil- i e" I dren, plus additional enrichment activities for youth of all ag- .— __ es. Supported childcare programs and affordable living for child- care professionals support Salina's workforce by encouraging the use of well -staffed, affordable, safe and professional options for employees with children. rr Additional amenities would include space for wellness, communi- ty gathering areas, classes and more. The Drever Development group is excited to be in conversations with the YMCA Board of Directors and leadership staff about a potential partnership to provide these services. The Y is a well-established local, non-profit or- ganization that brings people together of all ages which aligns with the purpose and direction of the proposed housing projects. This is Community Building! Ensure We Have Childcareq Workers: Through an innovative social initiative coupled with NON financial engineering, preferred equity investment -� made in the Penleigh Project will allow Salina's larg- er employers, socially -minded citizens, and founda- tions to not only fund housing but directly impact housing affordability for childcare and early educa- tion workers. 0 Debentures pay 3% interest plus earn pro rata 10% of value gain over costs after 10 years For every million of preferred equity invested the r-1 • 2% of the 3% interest can be paid currently and 1% is allocated to enable day care and paraprofessional teaching aides to afford housing equivalent to that of those earning 30% to 40% higher wages • The 1 %—of the 3% debenture interest—allocated to housing affordabil- ity supplement translates to $10,000 annually, which provide $400 per month supplement to two daycare/teaching aides Housing Mix Meets Salina's Housing Need 4 K Micro Unit Studio* $750 $910 Junior One - $950 $1,155 Bedroom One -Bedroom $1,200 $1,474 Two -Bedroom $1,600 $1,965 Three -Bedroom $2,000 $2,456 Cottage $2,500 $3,047 Average Rent/SF $2.06 SF $2.52 SF Crawford Magnolia Square Garden Val- Craw- Garden Seniors/ Magno- Apartment Cot- Total Percent Foot- Rents Apart- ue ford To- Apart- Active Iia To - Type tages Units of Total age ments In tals ments Adult tals Micro unit 350 &750 338 62 400 140 20 160 560 31.1% Studio Jr 1 BR 450 $950 100 100 180 40 220 320 17.8% 1 BR 600 $1,200 270 100 370 370 20.6% 2 BR 800 $1,600 270 40 310 310 17.2% 3 BR 1,000 $2,000 90 90 90 5.0% Cottages 1,200 $2,500 150 150 8.3% Totals 438 62 500 950 150 200 1,300 1,800 Percent of 3.4 24.3% 27.8% 52.8% 8.3% 11.1% 72.2% Total % 4 K Micro Unit Studio* $750 $910 Junior One - $950 $1,155 Bedroom One -Bedroom $1,200 $1,474 Two -Bedroom $1,600 $1,965 Three -Bedroom $2,000 $2,456 Cottage $2,500 $3,047 Average Rent/SF $2.06 SF $2.52 SF # of Units Square Foot Acquisition Cost Hard Cost 500 1,300 894,500 1,800 1,073,300 178,800 $3 $3 $6 $35 $145 $180 Soft Cost Development Fee Amenities Financing Cost $9 $37 $46 $4 $10 $14 $2 $6 $8 $7 $28 $35 Contingency $3 $13 $16 YMCA $0 $10 $10 Total Cost $252 $315 Per Unit Cost $175,000 Capital Structure Numbers For the Public/Private Partnership Collaboration Development Cost Budget Government Support/Cost Mitigation Sales Tax Relief $10M Integrated Construction & $15M Permanent Mortgage Net State/County/City Sup- $50M port >65M if no integrated construc- tion & permanent mortgage Private Capital Structure First Mortgage 65% $156M $315M $175,000/unit $75M $41,667/unit $27,778/unit $240M $133,337/unit Preferred Equity 25% $60M *3% rate of return over 10 years and 10 prioritized units per million. Ability to do- * Saliva's companies, leading citi- nate 1% to childcare/para workers for do- zens, and foundations housing subsidy. Private Investors 8% $20M Development Team 2% $4M Construction/ Development Costs Mit- igation/Support Replace expensive in- vestor private equity with Stakeholder Pre- ferred Equity (SPE) Single 4% interest rate mortgage—no con- struction loan Sales Tax Exemption Property Tax Exemption $75M financial support needed to bridge dif- ference between $315M development cost and $240M affordable development budget consistent with rents specified in Salina hous- ing plan and what people can afford to pay based on household income. Salina's companies, leading citizens & foun- dations invest funds in Stakeholder Preferred Equity, obtaining preferred status for 10 apart- ments for each $1 M of Preferred Equity, which pay current 3% interest, 2% of which paid to company and 1 % funds daycare paraprofessional housing costs supplement State of Kansas guarantees mortgage or stakeholders' banks provide construction and permanent financing into a single mortgage: facilitated by Hutton guaranteed maximum price (GMP) construction contract Converts infeasible projects to pro- spectively feasible Each 1 % interest increment on $1,000,000 of Preferred Equity sup- ports reducing housing cost by $400/month for two daycare work- ers/paraprofessional teaching aides Benefit to Preferred Equity investors & government is prioritized access to housing for their employees & constituents Savings on construction loan at 4% interest rate enhances project feasi- bility For purchases of construction products within Enhances affordability by reducing Kansas Property tax relief for 10 years -20 years pre- ferred YMCA Building Funding $10M to construct 30,000 SF new satellite facility at Magnolia Property hard cost Enhance affordability by reducing operating expenses Supports much needed daycare, plus provides after school activities and community recreation/social events programs Why: • 1800 units of need market -rate multi -family housing Brings the product types and rents identified in the Salina Housing Plan • Support childcare and childcare workers The bulk of units we need completed within the time we need )rever Partners committed to +10 -year Public/Private Partnership