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MidTown Office Tower former Red Carpet Inn Site

MidTown Office Tower former Red Carpet Inn Site. Presentation February 12, 2011. Introduction and Purpose. The City of Norfolk acquired the former Red Carpet Inn site to Eradicate a structure and operation that was a blighting influence Land bank the site for future economic development

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MidTown Office Tower former Red Carpet Inn Site

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  1. MidTown Office Towerformer Red Carpet Inn Site Presentation February 12, 2011

  2. Introduction and Purpose • The City of Norfolk acquired the former Red Carpet Inn site to • Eradicate a structure and operation that was a blighting influence • Land bank the site for future economic development • The City of Norfolk issued a Request for Proposals (RFP) to solicit proposals for the development of the site • Received a proposal for a strip shopping center that would not adequately bring value to the neighborhood • Received unsolicited proposals that also were not of value to the neighborhood and City • Our intention today is to provide the public with an overview of the most recent proposal by TIVEST, a local developer

  3. Project Site ~4.5 acre site at the corner of Virginia Beach Boulevard and Tidewater Drive (former Red Carpet Inn site)

  4. Project Description $32 Million Class ‘A’ office building with 165,800 SF of net leasable space 71 space integrated parking garage and 267 surface parking spaces.

  5. How We Got Here • In 2008 the City Council authorized an Agreement between the City and TIVEST for the development of an office building and parking on the former Red Carpet Inn site • Tivest secured an anchor tenant lease with Southeastern Tidewater Opportunity Project, Inc. (STOP). • Since that time the recession has created difficulty for the project to secure financing

  6. Who is STOP, and what services do they provide? • Established in 1965, the STOP Organization is the oldest and largest community action agency in Virginia • STOP has an annual budget in excess of $20MM • STOP provides 28 different community services, a sampling of these services include:

  7. Why is this Right for Norfolk Now? • Tivest is paying the full price of $1,200,000 for the land. • Approximately $300,000 annually in new tax revenues to the city. The City will only pay the grant to Tivest from tax revenues generated by the project. • This project represents the largest investment made in this highly distressed part of our community. • After the 7th, 8th and 12th year of the lease City has an option purchase portions or the entire project. • The MidTown office project will create approximately 400 jobs during construction and 275 permanent jobs (150 new to Norfolk).

  8. The Administration believes this project offers the following benefits: • Quality and scope of development • We are paying higher rent because the costs to build a new building demands higher rents. • A Class ‘A’ project will signal the City’s commitment to raise this distressed community and act as a catalyst to private investors. • A smaller building would not work. The developer has two signed leases for 160,000 SF, and will occupy 5,000 SF itself. • Why would this community deserve a lesser building than other areas of the City?

  9. The Administration believes this project offers the following benefits: • Community Building • Consolidation of services (both City’s and STOP’s) for both our youngest and most needy citizens. • City needs to invest in building our human capital. • Location conveniently serves not only adjacent communities, but broad pool of our citizens.

  10. The Administration believes this project offers the following benefits: • Opportunity for City to own space and consolidate services • Attractive purchase option • Allows the City an advantageous opportunity to purchase a portion or the entire building • Why doesn’t the City build the building? • The financing being used is not available to the City • Therefore the lease has to be at a rate that supports the building, but at the end of the lease we have the opportunity to purchase it at an attractive price.

  11. Conclusion • City goal in acquiring land was to create new project that would spur additional development, add to our tax base, grow jobs and strengthen our community. • This project meets all these criteria • City receives $1.2 MM for land and $2.6 M in revenues in first 10-years versus costs of $500,000 and $490,000 for a performance based grant, which is estimated to be paid during the first 5 years of project’s operation. • City is able to accomplish consolidation of both City Human Services and STOP Organizations services • Investing not only in real estate, but our citizens

  12. Next Step • Norfolk City Council Meeting, Tuesday, February 15, 2011, 2:30pm • You may sign up to speak before the meeting by calling the Clerk’s office at 664-4253

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