Homework
Overview
Economic development projects often hinge on the availability of financing and funding. Myriad resources, programs and tools exist to address this access to capital challenge. The goal of financing is to remove barriers to project completion. This individual homework will help students develop the skills to effectively assess potential financing sources for economic development goals and projects.
The Project
The City of Lexington, KY is working diligently to diversify its economy and usher in a new era of revitalization, job creation, investment and affordable housing development. The city has identified a 600-acre, 75 parcel area in the central city for driving this development. The targeted redevelopment area has the following demographics:
a) 75 parcels owned by 60 different property owners
b) Two property owners own larger portions - Diversified Developers Inc. owns a 300-acre tract zoned light industrial. Lex Hospital owns a 150-acre tract zoned commercial/retail.
c) Little employment - just 100 jobs within the district
d) Lack of housing but very adjacent to the University of Kentucky main campus
e) Low property values due to 25 years of disinvestment, generally blighted, potential land contamination
f) Mixed income demographics but very little upper income individuals
g) Crumbling infrastructure - old sidewalks, overhead utilities, poor water drainage
h) Three main areas - 300 acres zoned as light industrial, 300 acres zoned commercial/retail and the remaining 100 acres zoned residential
i) This area of Lexington is a designated food desert
Lexington is a unified city/county government with Fayette County. The unified government has the full complement of financing resources available including:
a) City/county bond programs
b) Tax increment (TIF) and special assessment (business improvement district)
c) City revolving loan fund focused on minority business
d) County revolving loan fund focused on energy efficiency
e) Access to $60M in federal new markets tax credits
f) Access to the Kentucky Bond Corporation (state bond issuer)
g) Access to the Kentucky Cabinet for Economic Development programming
Lexington has identified the following development goals:
a) Mixed rate housing - 50% affordable, 50% market rate. The city would like 1,500 units of housing including single family, condo, apartment, etc.
b) Density is important and this is in an urban area of the city.
c) Retail - large shopping and retail emphasis including an anchor grocery store and/or commercial center (i.e. Target, Home Depot, etc.)
d) Healthcare & Community - large community center with an urgent care facility attached
e) Office - 10 class-A office buildings to attract 10,000 high earning workers.
The project is estimated to cost $150 million including:
a) Housing - $40M
b) Retail - $20M
c) Healthcare & Community - $16M
d) Office - $22M
e) Parking Garage - $25M
f) Infrastructure (roads, sewer, water, utilities, land clearing, etc.) - $27M
Task
Produce 5 pages, comprehensive approach recommending three potential financing tools and comprehensive solution that Lexington could use to achieve their goals. The report should cover a wide range of topics and include the following:
• Project & Program Overview - Provide an overview of how you see this project materializing with a discussion on the best use of the land and how to meet the needs and objective of Lexington through your approach. Provide an in-depth overview on how the three recommended financing tools work. Provide a review of the mechanics of the tools selected, partners involved and the timing of each tool. Provide references to examples of how the tools works in other communities and it can be applied to the current opportunity in Lexington, KY.
• Pros & Cons - Discuss the effectiveness of these programs including the pros and cons of using each tool. Be detailed. Discuss the structures of these tools and how they impact the community. What roadblocks and/or obstacles stand in the way of the programming working? Do these tools drive a sustainable approach to achieving project success and community mission?
• Pro Forma - Prepare a basic project pro forma which includes both the sources and uses of funds. What does the project cost and what sources of financings will address these needs? What is the gap that the programs are trying to address?
Format your homework according to the give formatting requirements:
• The answer must be using Times New Roman font (size 12), double spaced, typed, with one-inch margins on all sides.
• The response also includes a cover page containing the student's name, the title of the homework, the course title, and the date. The cover page is not included in the required page length.
• Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.