Feasibility Study - College Hill Redevelopment Project

Prepared by: Richard Caplan & Associates (December, 2005)

Executive Summary

The College Hill project involves the redevelopment of approximately seven acres of land that is currently developed, but obsolete and needing redeveloping to enhance and preserve the neighborhood to fit the City of Topeka's Neighborhood Plan for the area. The site is suitable for redevelopment and qualifies for tax increment financing.

The area will be redeveloped to include:

  • 26 town homes
  • 169 garden apartments targeted to house students attending Washburn University
  • 24,000 square feet of retail
  • 644 spaces of parking
  • Improvements to streets, sidewalks, curb and gutters, water, storm drainage, wastewater, and landscaping

The proposed project will be more attractive for residential activity as a result of the removal of vacant commercial buildings in the redevelopment area. The proposed residential rental rates are in line with the Topeka rental market, especially for student housing. The project is consistent with the City of Topeka adopted Neighborhood Plan for the area.

The proposed 24,000 square feet of commercial development represents less than one-fourth of the city's annual retail absorption. Added to the fact that the new retail is replacing approximately 18,300 square fet of older, existing commercial, the new retail is projected to be absorbed by the retail market within the first year of completion.

The total project will cost $24.2 million including approximately $18.4 million from the development team and $4.335 in tax increment financing. Revenues for the overall project financing will come from the apartment rents, sales of the town homes, and retail space rent.

The tax increment for the bonds will come from the increase in property taxes from the improved properties and the increase in sales taxes from the increased sales anticipated in improved commercial properties. Upon completion and occupancy, a total of $387,556 is projected in tax increment revenues during the first full year of the redevelopment. According to a preliminary debt service schedule, it is anticipated that such an increment would support approximately $4.9 million of debt. The amount available for the eligible costs is approximately $4.335 million after capitalized interest, bond issuance costs, and bond insurance is deducted from the total debt issued.

This is not enough to pay all of the eligible costs of the project. Therefore, additional infusion of capital is needed. This is planned to be provided from the City of Topeka capital improvements plan in an amount totaling $1,500,000 to be used for infrastructure in the project area. This amount is projected to cover the gap, and will make the project feasible.

In summary the development brings a significant investment of private money to a neighborhood that is in need of private investment. The project upgrades public infrastructure in the amount of $1,750,000. Based on the analysis of the project's Sources and Uses, the competitive real estate market conditions and trends, projected tax increment, and the Bond Amortization Schedule, the project's additional $1.5 million proposed in public support makes the project feasible.

Project Description

The College Hill project involves the redevelopment of approximately seven acres of land that is currently developed, but obsolete and needing work to conserve it and preserve the neighborhood to fit the City of Topeka's Neighborhood Plan for the area.

The project runs from near 13th Street to 17th Street and from the south side of Washburn to the north side of Lane. The area will be redeveloped to include:

  • 26 town homes
  • 169 garden apartments
  • 24,000 square feet of retail, 644 spaces of parking
  • Improvements to streets, sidewalks, curb and gutters, water, storm drainage, wastewater, and landscaping

There are approximately seven operating businesses and approximately 25 housing units in the area. Washburn University has it maintenance shops in the neighborhood and owns a vacant lot at the corner of 17th and Washburn Avenue that is included in the area redevelopment plan.

The redevelopment is consistent with the City of Topeka adopted Neighborhood Plan for the area.

Project Budget

The project contemplates using Full Faith and Credit Tax Increment Financing (TIF) bonds of the City of Topeka. The Bonds may be used to pay the costs of land acquisition and assemblage, relocation, demolition, site clearance, public improvements and infrastructure, parking, miscellaneous development costs, and bond issuance costs.

The total cost of the project is estimated as follows:

Infrastructure Improvements  $ 1,750,000
Operations      3,750,000
Demolition, Remediation, Site Preparation         300,000
Relocation Costs         200,000
Retail Construction: 24,000 square feet @ $100 per sq. foot      1,920,000
Apartment Construction: 169 units @ $73,077 per unit   12,350,000
Townhouse Construction: 26 units @ $126,923 per unit      3,300,000
Capitalized Interest 3 Years         490,410
Bond Issuance and Bond Insurance Costs         144,585
Total Project Costs: $24,205,000