LET’S MOVE FORWARD!
-Achieving a Community Solution at UMCH-
Elections matter! This November, the majority status of our City Council hangs in the balance—three of seven seats will be decided. And the outcome at UMCH will likely be decided by the newly elected Council. This is a simple statement of fact. So, it’s super critical that we all VOTE!
A new Council could surrender to Lifestyle Communities (LC), allowing LC to achieve objectives that are clearly not favored by a majority of residents. This outcome would be extremely short-sighted and detrimental to our city as a unique and cherished place to live, work and raise our children. With the wrong Council, capitulation is actually a likely outcome, throwing our community into further conflict as the public would no doubt rally around a referendum.
Why go down that road? After a decade of inaction, endless discussion, and a frivolous lawsuit, there is a better way:
Let’s elect the right Council.
This new Council could make it clear to LC that they will not prevail through coercive means. This new Council could instead seek reasonable dialog with LC, convincing them that 500-plus apartments will never be built in the heart of our historic community – clogging our streets, crowding our schools, and paving over much-needed greenspace. On this basis, negotiations for a fair-market value acquisition could take place—and eventually will take place—to the benefit of all parties. Let’s move forward!
Please vote for three of the candidates who can and will make this happen:
Beck, Bucher, Duffey and Smith
These candidates support our basic vision
of a mixed-use Worthington Commons, including
a signature park accessible to all for all time.
Let’s make this vision a reality.
We continue to receive legitimate questions as to how the City would manage a project of the size and complexity of a Worthington Commons. Specifically, along the lines of: how do we ensure that a 37 acre, multi-use development is managed in a manner that CANNOT negatively impact city finances?
Let us try to answer this question.
The first point to be made is that “Do Nothing” is not an acceptable answer. For the past decade absolutely zero development has occurred on this property, and that equates to two outcomes, both bad, in our humble opinion:
- Do Nothing means that eventually LC will find a way to shoehorn a massive residential complex into this space, robbing our city of our ONLY opportunity to enjoy the many benefits of a signature park, and its amenities. All our neighboring communities currently enjoy such an asset … and, keep in mind, this is a big draw for employers as well.
- Do Nothing means that the city continues to lose out on the tax dollars that this property will generate once developed … totaling that over the last decade-plus easily equates to the city forfeiting multiple millions of dollars in revenue.
A second critical point to keep in mind, residential development – over time – is a net drain on a city’s revenue. The long-term cost of maintenance (street, sewer, sidewalk, lighting, etc.) plus the ongoing cost of fire, police, EMT, snow removal services, etc. typically exceeds the 2-4% of property tax that cities receive. The city of Dublin completed a study on this not too long ago if interested in pursuing this topic. The conclusion, however, is clear: LC’s multiple proposals are highly likely – long term – to be a net drain on city finances.
So, is there a prudent way forward, one that achieves 3 critical goals?
- Enables Worthington to avoid the downsides of LC’s multiple proposals, including:
- Traffic: 500-700 residential units will necessarily (by code) entail punching access roads onto Evening St., Larrimer, and/or Longfellow. What worries us most about this is the thought of significantly increased levels of rush hour traffic up and down Evening St, competing with school buses and elementary students in crosswalks around Evening St. Elementary.
- School over-crowding: we’ve already have temporary classrooms at Evening St Elementary. Adding the children from another 500-700 residential units will exacerbate the strain on our over-burdened educational system. Why consciously do this to our community?
- Water run-off: any of LC’s plans call for paving over 25+ of the 30 “developable” acres at UMCH, which is asking for flooding along the waterways between UMCH and the Olentangy River. In the Spring of 2022, multiple homes were flooded downstream of UMCH. It is inevitable that a significant increase in run-off water into these creeks will cause more frequent and more serious flooding. Again, why consciously do this?
- The monstrosity: LC only builds mega-complexes. It’s not that this sort of density is bad, the point here is that it is entirely inappropriate for the middle of residential Worthington. What is the sense in forever shattering the esthetic of these neighborhoods by dropping 3-5 story buildings next door?
- Gains the benefits of rational mixed-use development in the heart of our city:
- Significant tax benefits: resulting from Class-A commercial development along High St.
- Compatibly scaled residential development: (55-plus preferred) within the confines of the former-UMCH property, and within walking distance of downtown Worthington.
- A signature park (finally): let’s be clear, this is our only opportunity to enjoy amenities like a permanent home for our Arts Festival, expanded community gardens, a revenue earning event space, pickle-ball courts, walking trails, athletic fields (soccer parents are begging for these) … all chosen by residents.
- Protects the city and residents from financial risk! In answering this question, we realize there are a number of unknowns in a project of this sort, but any explanation of the financials must be:
- Clearly feasible: obvious to the reader that it is possible and practical.
- Highly understandable: stated in terms that we all can wrap our heads around.
How could the city deliver on a commitment to financially responsible development, at the former-UMCH property that results in best-in-class commercial, recreational and residential outcomes for our city? Let’s start with the facts and some reasonable assumptions:
- Of the 37.5 total acres, a bit more than 7 acres is the Tucker Creek watershed which is off-limits to any development, and 6.5 acres are zoned for commercial development … leaving a bit more than 23 acres for some combination of park land and residential development … to put a stake in the ground let’s say around 20 acres becomes a large signature park space and the remaining 3 acres are ear marked for residential development.
- The market value of the former UMCH property is somewhere between $5.2 m (LC’s 2022 purchase price from the United Methodist Church) and $7.5m (Franklin county’s current assessment). Our assumption is that LC, being a decent corporate citizen, will sell the property within the range of its market value.
- Class-A commercial space continues to be in demand. Post-COVID real estate economics has put a premium on upscale commercial, while moving away from lesser (class-B and -C) properties.
- Park development can occur over time in a phased manner which aligns with city revenue generation … it doesn’t all have to be built at once.
- There are significant sources of funding that will provide offsets to the costs associated with protecting and enhancing greenspaces and developing a signature park. State, federal and commercial sponsorship dollars are available, and have been used extensively by surrounding communities. Worthington will do the same.
- The city is in an excellent financial position, our city has a stellar credit rating! Worthington can borrow funds at the best rates available; it just secured bond financing at a 3.8% annual interest rate.
What does the property acquisition process involve, and how could it be managed within the limits of the city’s financial capabilities?
- One approach is that as part of the settlement with LC, the city of Worthington acquires the parcel in order to maintain control of the development process. The city then hires a master contractor to develop this parcel in the city’s best interest with a mandate to conduct the process in a resident-centered, financially savvy manner, with full resident transparency.
- It is important to understand that the acquisition and development of the commercial and residential parcels will ultimately be paid for by the purchasers of these properties. That is to say, the city will buy, then re-sell this acreage (approx. 15 acres in total) and the new owners will develop these parcels. This “pass-thru” approach typically is a net revenue generator and could fund the initial phase of park development.
- The key financial question then boils down to the acquisition of the remaining 27 acres (S-1 park land and the Tucker creek watershed).
- The city can effectively borrow on very favorable rates, we assume 4%, meaning a $1m loan (30 year term / 4% interest) would have an annual carrying cost of $57,500. As one for instance, if the city bought the former-UMCH parcel for $7m (near top end of market value), it would take on an annual carrying cost obligation of a bit over $400 thousand ($401,029).
- Post acquisition, the city could then create the residential plots that it would sell to realize a near-immediate return on investment. The preference here is to create 55-plus housing to address the needs of existing residents to stay within the community. These lots would be relatively small, say a quarter acre. In the 3 available acres, 10-12 could be offered.
- Similarly, an equivalent process would occur to create the commercial plots along High St. This process typically involves negotiations with commercial interests and therefore the sales cycle is a longer. Is it not unreasonable to assume however, that these plots could be put on the market and sold in a six to eighteen month time frame from the city’s acquisition of the former-UMCH property?
- If so, then within a relatively short time span from the city’s acquisition of the former-UMCH parcel, the sale of these residential and commercial parcels would be completed, and most of a loan retired. A total revenue figure is obviously an estimate, but a very conservative one would be: 12 residential lots @ $75K apiece, plus 6.5 commercial acres @ $750K per acre, which equates to a total revenue inflow of $5.8m. This figure represents a bit over 80% of the acquisition cost. Please note commercial acreage elsewhere in central-OH is selling for well over $1m per acre, so again, we are being conservative with these estimates.
- In terms of long term financing, the city could fund the $1.2m difference between the purchase price and what was realized from the sale of residential and commercial parcels over 30 years at 4%, which annualizes to $68,750. For perspective, this sum is equivalent to $4.65 per resident, per year.
But there is more than just land acquisition. How is a signature park to be developed and who pays for that?
- As stated in the assumptions, the signature park portion of Worthington Commons can be built out over time. Development costs tie directly to how quickly the city moves to deliver on the amenities the park will contain. Why? Because the commercial development at UMCH represent a new revenue stream to the city in the form of employee income tax. A conservative estimate of this tax revenue is approx. $560,000* annually in net new tax revenue. See the footnote below for details on this projection.
- The city could choose to develop the signature park gradually, investing the half million-plus dollars each year that this new revenue stream generated. In this way existing city financials would be non-impacted. Let us add that, in keeping with our conservative estimating approach, we have not taken into account the state, federal and private sources of funding available to offset park development costs.
- Or, the city could choose to move more quickly, tapping the general fund to invest in park development, the creation of amenities, landscaping, etc. As the city would be in control of the development process, these types of decisions would be fully transparent, and based on resident inputs.
- In either scenario, one thing is true. Businesses are highly attracted to the type of amenities that are envisioned for the park and these will be located, literally, in their backyard. Therefore, attracting top-tier clients will be facilitated if key park amenities are in place and functioning.
We hope this explanation helps with the complexities of financing a project such as Worthington Commons. And we reiterate, none of this can happen unless we vote in the right council and we therefore urge you to vote for three of the following candidates: Smith, Duffey, Bucher and Beck.
We thank-you for your Support!
* footnote: we projected potential income tax revenue as follows:
- 1 acre = 43,560 sq. ft., we assume 40% of this total space (17,424 sq. ft.) translates into usable office space, the rest goes to parking, landscaping, etc.
- commercial square feet per employee varies by the type of business occupying the space, the range runs from 700 (retail) to 350 (finance, insurance) to 200 (food service) … we use 300 as an average, for estimating purposes
- therefore, for each acre of commercial, 58 employees would be employed (1,742 usable sq. ft. divided by 300 sq. ft. needed for each employee) … note to keep this estimate conservative, we assume only a single floor of commercial, multi-floor commercial development would significantly increase employee counts
- for the 6.5 commercial acres, we would be looking at approx. 375 employees paying income tax in total.
- based on Class-A commercial development, salary ranges are likely to vary significantly from physician to dishwasher. Using an average salary of $75K, a 2% income tax would generate a bit more than $560K annually for the total commercial acreage. For perspective, looking at just three 4 physician medical practices, where the twelve doctors were earning an average of $350K each, would – by itself – generate $84,000 in income tax revenue, or 15% of this scenario’s total.