10 Reasons The City Should Approve the Train Depot Project
After much deliberation on how to respond regarding recent comments and opposition towards the Depot Project, I have come to the conclusion that I must voice my thoughts and suggestions on how to proceed. While I acknowledge that the concerns put forth have merit, it is my belief that moving forward with the developer is the right decision and here are 10 reasons why I support this decision.
- Time and Lost Opportunity. If the project is abandoned the city still owns the land and has go back to the drawing board. While everyone agrees downtown will continue to grow, the future of the site and future projects would virtually mean starting from the beginning again. This means that if a new developer showed up tomorrow wanting to move forward, it would be at least 1 year before dirt was being moved, and 2 years before the project was completed. Personally, having been involved in development for years, and I believe the number is realistically more like 3-4 years before another developer would be moving dirt on the site. In the meantime, the residents that would have moved to the site and would have been paying taxes downtown would move elsewhere. We will have lost out on a substantial opportunity, and on top of that lose residents to another part of Augusta or North Augusta.
- Taxes. One of the chief complaints surrounds “phase II” of the project and whether or not that phase will happen, even though the city’s contribution is given upfront in phase I. My honest response to that is “so what!” Let’s assume that only Phase I happens. The economic impact from Phase I is still substantial enough to justify the project. I have heard the arguments about the amount of taxes to be generated and the payback of the bonds to be received, but they are failing to factor in the income from increases in property tax from surrounding parcels. Those values must go up. I’ve never seen tax revenue generated by the people living and working on the site factored in. Once you consider that you will have approximately 200 more permanent residents in living downtown, all paying over $1,500 in rent, you will see the economic return from increased spending in the area. Even with just phase 1, the city stands to gain substantial tax revenue and economic growth that will have a lasting impact for decades to come.
- Grocery Store. Everyone wants to talk about the “food desert” downtown. My firm has been active in trying to recruit a grocery chain to downtown for years. The reality is that grocery store chains do NOT see a food desert. They don’t see enough of an opportunity to justify opening a location. The responses have been that people can easily go to stores in North Augusta, and that the demographics just don’t support a store downtown. The demographics improve with every single new development. The Depot Project could be the one that puts us over the threshold of being able to attract a grocery chain downtown. Abandon the project and you pretty much guarantee no grocery store of any real size opening downtown for several more years. It’s unpopular, it’s controversial, but it’s the truth. Unfortunately, what we “demand” doesn’t matter. The retailer has to see an opportunity, or they are not going to come. Those who scream “we want a grocery store downtown” but then turn and say they don’t want this project just don’t understand how closely the two are related. If you truly want a grocery store downtown, you have to do what you can to increase residential density in the area.
- Office Space. One of the primary things I do on a daily basis is lease office space to users. There are still a large number of vacant office spaces available downtown, so it’s unrealistic to ask the developer to commit to building 100,000 SF of “Class A” office space where there’s no demand. The nature of a development project such as this warrants changes and adjustments to market conditions. Class “A” office space would not be financially feasible if it were sitting on the site today, but 2 years from now it may be. We should afford the developer flexibility to adjust to changing market conditions.
- Phase II. Phase II will happen. If we afford the flexibility, I mentioned previously then the market will dictate what it will look like. I am ok if there’s zero commitment to Phase II because I know as a developer that they are going to fully utilize the site. It may take longer than anticipated, and it may change in shape, size, and use, but there is zero chance that the developer is not going to utilize every inch of the site. It would be financially irresponsible for them to do so.
- Transparency. This topic is what initially prompted me to share my concerns for this project. Anyone familiar with how this type of development project works knows that a developer is going to keep their cards close to the chest. For many reasons, they are not willing to let all of their information out freely to be given to the public. There are a lot of reasons why. These out-of-state developers that have acknowledged opportunity in our city and want to invest their time and money are acting exactly how any other developer would. We seem to be wanting to penalize them for this. It’s just part of the development business, which is very cutthroat.
- Proforma. A proforma adds no real value to the conversation and decision process. It seems like a lot of people are hung up on this. The reality is that a proforma can be made to show anything, and its trivial at best for the city to even get hung up on this point. The reality is the bank would not loan one dollar on this project if it were not financially feasible. I would trust a bank’s assessment over any governmental body in analyzing the financial viability of a project of this size.
- Parking. For many years we have had a parking problem downtown. Whatever your opinion on parking meters, the fact that there’s a shortage must be acknowledged. This project will help alleviate the problem.
- Other Development. If successful, this project will attract new interest in the area. If it fails, it will damage the potential of future projects. Phase I is a slam dunk. It will work. Phase II may shift and morph, but I am confident that what the developers decide to do with it will work. They are a strong, reputable group with a great resume of previous projects. Lower Broad Street is ripe for development. With strip clubs closing January 1st 2020 and this project taking off, the interest in that part of downtown is going to increase substantially, attracting new development and new tax revenue for the city. Again, that is tax revenue that I have not seen factored in.
- Public Relations. This city would suffer greatly if this project were to fail. It is already becoming viewed as a difficult place to do development, with drastically increased challenges getting property rezoned and approved. Abandoning this project would send a message to other developers that will cause them to pause before investing in our city. When investing in development projects outside of the city, the first thing I do is investigate what kinds of hurdles I will need to address with whatever the municipality is. The timing could not be worse for the city to be seen as unfriendly towards development. From that standpoint, the city needs a win
.and this project helps solve that problem.