Fort Monroe Financial Model O&M Costs and Fiscal Impacts

1. Fort Monroe Financial Model O&M Costs and Fiscal Impacts Fort Monroe Federal Area Development Authority May 28, 2008

2. Today’s Discussion • Bottom-up O&M budget for Fort Monroe • Indicate how these costs get allocated • Net fiscal impact • Input on key assumptions for FMFADA cash flow model

3. Building a “Bottom-Up” Budget • BAE researched average O&M unit costs experienced by Hampton Roads cities • Hampton, Norfolk, Virginia Beach, Newport News • FMFADA hosted an O&M workshop • Consultant team; City of Hampton Public Works, Traffic Operations, Parks & Recreation, and Planning Department • Agreed on detailed unit costs for operations and maintenance of roads, grounds, and infrastructure • Budget based upon three levels of development

4. Three Levels of Development • BAE estimated costs at three stages of development: • “EXIST” – existing buildings prior to in-fill or new development • “Base” – proposed reuse plan • Adaptive reuse of office buildings for residential • Infill in Historic Village; North Gate; Entry Gate • No change to Wherry Housing • “MAX Build” – maximum development permitted per Dover Kohl 2006 reuse plan • Includes long-term redevelopment of Wherry Quarter • Represents maximum potential costs (and revenues)

5. Preliminary Results • Annual O&M costs between $4M and $4.7M to maintain Fort Monroe: • Compare to $15M Army figure from June 2007

6. Implications for Stakeholders • Here’s how Fort Monroe’s O&M costs might be allocated:

7. Net Fiscal Impact to City of Hampton • City of Hampton costs include a share of Fort Monroe’s O&M costs as well as cost to provide City Services (schools, police, fire, etc.) • O&M costs are relatively fixed • Physical upkeep required regardless of occupancy • “Signs need to be fixed & lawns need to be mowed“ • City services are relatively variable • Demand grows with new residential and commercial tenants • Four primary sources of revenues: • Local taxes (real estate, personal property, etc.) • Service & user fees (sewer hook-up, trash collection, etc.) • Contributions from FMFADA • Inter-governmental transfers

8. Hampton Infrastructure O&M – Incremental Costs • Some costs are offset by State funding and fees (e.g., road maintenance, wastewater) • Some costs may be reimbursed by FMFADA

9. Hampton City Services – Incremental Cost • Some costs are offset by State funding and fees (e.g., schools, building inspections) • Reuse of Fort Monroe is not anticipated to require a net increase in police force above current planned growth • Key driver of costs is impact on public schools

10. Present Value: • Million Net Fiscal Impact to City of Hampton • Negative net financial position first four years • FMFADA may be able to pay some of the shortfall in the short term • Turns positive in 2015

11. Next Steps – FMFADA Cash Flow The following are key assumptions: • 20-year period: 2011 to 2031 • Interim leasing program • Wherry Housing leased until development of Wherry Quarter or demolition • Single-family homes, duplexes, quads leased until long-term leasehold • Warehouse and selected other commercial buildings leased “as is” until point of renovation or demolition • Existing homes leased within two-year period

12. Next Steps – FMFADA Cash Flow • Development and long-term ground lease phasing: • Long-term leases of residential units commence in 2011-2013 • Redevelopment in North Gate first • Gradual infill development in Historic Village • Redevelopment of Wherry Quarter assumed as last phase (if any) • Property taxes to City of Hampton triggered by execution of long-term leases of residential units • Building maintenance and utility costs covered by residential and commercial tenants • FMFADA will have to cover maintenance costs for vacant buildings during lease-up period • Does not include any FMFADA contribution to public facility O&M costs

13. Direction and Input Comments? Questions?