New Moran Nov. 15 report
Burlington required New Moran, Inc., to submit this progress report about their development efforts on Nov. 15, 2014.
Content
NEW MORAN DILIGENCE REPORT
NOVEMBER 15, 2014
New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
NEW MORAN DILIGENCE REPORT
EXECUTIVE SUMMARY
11.15.2014
The last eight months have provided a great deal of clarity and progress in the redevelopment of the
Moran Plant. Following the successful public vote in March, the incorporation of Vermont nonprofit New
Moran, Inc. in May, and a unanimously approved MOU with the City of Burlington in August, this report
details due diligence addressing the design, development cost, tenant mix and financing plan for the
Moran Plant.
Beyond the details included in the following pages, there is a wealth to report regarding the
development of New Moran, Inc. as an organization, and the greater identity of the Moran Plant. As
Waterfront Access North construction commenced surrounding Moran, a simultaneous initiative began
to invite greater public participation in the reimagining and redevelopment of Moran itself.
At the heart of this work is the challenge of sharing the value and appeal of a space which has, for most
of the past three decades, been closed to the public. With the help of CEDO staff, the Moran team lead
17 separate tours prior to receiving an independent access agreement in July. Since July, we have
shared the building in person with over 260 individuals, representing businesses, organizations,
foundations and the community at large.
While the organizing Board of New Moran, Inc. remains small, lean and action oriented, we have begun
assembling a collection of community leaders in support of the project. These individuals, starting with
Public Investment Team chairman Bill Truex, represent a broad, diverse network of informed
ambassadors and advisors throughout the greater community. The full Champions Council description
and membership are attached (Addendum A).
More broadly, we have been lucky to work with a skilled team from the surrounding area to articulate a
professional and compelling identity for the project. This team includes artists, designers, web
development, PR strategy and media production. Collectively, we have created a web platform and
graphic identity for the building which will effectively share progress and invite the public to join in the
Moran Plant effort. The brand and website will launch November 17th.
The following summary and attached addenda address each of the items identified in the MOU
between New Moran, Inc and the City of Burlington on August 18th:
1. Conceptual Building Design
a. Following preliminary design completed in October, 2013, New Moran, Inc. (NMI)
continues to work with local architecture firm, Smith Buckley Architects PLLC (SBA).
Conceptual floor plans and renderings created October, 2013 are attached (see
Addendum B).
b. NMI contracted Engineer Ventures (EV) to complete multiple engineering design studies,
including flood-proofing solutions in relation to use of the first floor, the ability to alter
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New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
steel columns for tenant use optimization, and providing current, safe access to the roof
areas for public viewing. NMI expects to contract with EV for both Civil and Structural
Engineering services.
c. NMI contracted historic preservation consultant Emily Wadhams to review conceptual
designs with regards to the Secretary of the Interior's Standards for Rehabilitation,
confirm the suitability of the project for Rehabilitation Investment Tax Credits (RITC), and
produce a preliminary report for review and approval by the Vermont Division for Historic
Preservation and the National Park Service. While this scope was not required in NMI’s
MOU with the City until March, it proved to be a critical path component of thorough
diligence with regards to both design and financing.
d. John Sandor, the National Park Service (NPS) reviewer for the State of Vermont, visited
the site on October 30th with Caitlin Corkins, the tax credit reviewer for the Vermont
Division for Historic Preservation. Following this visit, NPS assessed NMI’s preliminary
plans with regard to the feasibility of receiving the Federal Rehabilitation Investment Tax
Credit (see Addendum C). The results of this preliminary review letter are encouraging
with respect to tax credit feasibility. Despite the positive preliminary review, significant
evaluation and design work are still ahead. In particular, the ability to achieve net-zero
energy use will be particularly challenging to complete within traditional NPS guidelines.
NMI has arranged for a comprehensive engineering and design study to address these
variables.
e. Pending the completion of the predevelopment diligence phase of the project, NMI will
resume schematic design with SBA in December, 2014, in line with anticipated
submission of permit applications in March, 2015.
2. Conceptual Site Plan
a. NMI has retained local landscape architecture firm, Wagner Hodgson, and
commissioned the attached conceptual site plan (see Addendum D).
b. The attached plan outlines a 1.532 acre site directly surrounding the Moran Plant (1.922
acres including the building). This site includes pedestrian, bike and vehicular access to
Moran and the surrounding campus. It creates dramatic public space, directly on the
shoreline, and abuts the combined educational and recreational resources of the
Community Sailing Center, the new Burlington Skate Park, the expanded bike path, and
the proposed Burlington Harbor Marina to the south. As designed, the site increases
public access to the lakeshore, creates new play space for children and families,
manages stormwater, offers opportunities for environmental education and realizes the
potential for a programmed, year round, publically accessible outdoor space on the
northern waterfront.
c. The site design also illustrates a number of design suggestions in adjacent areas,
acknowledging other site stakeholders, including the City of Burlington, Burlington
Harbor Marina, and Lake Champlain Community Sailing Center. These suggestions are
intended as a starting point to guide discussion around parking, circulation and public
access.
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New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
3. Development Budget
a. Sources (Addendum E):
i.
Specific requests for City infrastructure investment
1. $6.3M of TIF Allocation as approved by public vote in March, 2014.
2. As part of the diligence completed in the last eight months, NMI is
confident the landscape surrounding Moran on the northern waterfront
represents an essential piece of creating a viable and vibrant campus for
the Moran Plant, surrounding stakeholders and the public at large. In
accordance, we have reflected an additional $2,854,187 within the NMI
project budget to complete a combination of $230,000 in environmental
remediation and $2,624,187 in site work and landscape architecture for
the proposed site and public green space immediately surrounding the
Moran building. The current sources for this work are charitable
contributions and the resulting tax credit equity; our existing budget
includes no additional City sources above $6.3M in TIF. If additional TIF
or City funds were available for infrastructure investment, a cost share of
the $2,854,187 necessary complete the undeveloped waterfront acreage
surrounding Moran would leverage tax credit investment, reduce strain on
the Moran Plant operations, and increase the creditworthiness of NMI.
Please refer to Addendum D for proposed site boundaries, and proposed
terms in Section 4, and Section 6 for discussion of operating reserves.
b. Uses (Addendum E)
4. Financing Plan
a. Credit Enhancement Assumptions:
i.
In consultation with potential lenders and investors, we have identified a plan for
credit enhancement that is realistic and practical for a newly formed non-profit
entity. The plan comprises two components: a) pre-leasing to credit worthy
tenants, and; b) capitalization of sufficient operating reserves.
ii.
With regard to pre-leasing, we are in negotiations with three local tenants
comprising nearly 40% of annual projected operating revenue. We have active
conversations with additional tenants comprising up to 90% of annual projected
operating revenue. There is a great deal of work yet ahead, and securing preleases with creditworthy tenants – in addition to creating mechanisms which
increase the creditworthiness of less established potential tenants – is a
significant area of focus.
iii.
With respect to operating reserves, please see section 6 for further discussion.
The financial security and underwriting feasibility of the project would be
significantly enhanced by increasing the amount of this reserve.
b. Detailed Outline and proposed term sheet for City-provided funding sources
i.
Pursuant to typical NMTC structuring, the $6.3M of TIF allocation is requested to
be delivered in the form of a loan at 0%, with payment deferred for 10 years.
Payments thereafter would be made in accordance with agreed-upon cash flow
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New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
and reserve funding formulas. The funds would be advanced at construction
closing, and administered by an agreed-upon agent acting as a fiduciary on
behalf of all the sources of financing.
ii.
Regarding any shared additional infrastructure investment discussed in Section
3, the funds would offset existing sources for site work and environmental
remediation. Pending an agreement with the City, those offset sources would
create additional operating reserves and reduce required debt service carried by
NMI. City funding would be requested in a similar fashion to the already
approved TIF funds, as described above.
c. Capital Fundraising Campaign Plan and updated milestones are detailed in Addendum
F.
5. Operating Budget & Pro Forma (see Addendum G)
6. Determination of sufficient operating reserves
a. The Development Budget (Addendum E) indicates an Operating and Lease-Up Reserve
of $1.7M. As detailed in Addendum G, this reserve is adequate to capitalize
approximately $1M in anticipated expenditures during years 1-5 of operation, plus a
reserve equaling approximately one year of additional building operating expenses and
the required distributions to the historic tax credit investor.
b. The existing reserve detailed in Addendum E is, by our determination, the minimum
viable amount without which we would reduce the scope of the project.
c. The challenge of securing sufficient operating reserves and additional capital investment
is an area of focus for the team. While elements of the project could be downsized to
reduce total expenditure, NMTC and RITC funding provides direct leverage of
approximately $1.35 for every $1.00 of investment, and operating reserve does not
provide the same leverage. Given the complexity and baseline expense of completing
tax credit deals, there is strong incentive to complete eligible infrastructure investment as
part of this project.
d. Additional capital investment in the project beyond the currently identified sources would
provide three distinct functions: it would allow for an increase of the true operating
reserve; it would increase the creditworthiness of NMI and likelihood of achieving
favorable terms in NMTC and RITC allocation; and most directly, it could lessen
pressure on the operating budget by reducing the need for debt service, thereby
effectively increasing operating stability across the board.
7. Fundraising Feasibility Study (see Addendum H).
a. Beginning in March, NMI interviewed three separate fundraising advisors and feasibility
study firms with experience in Burlington. Resilient Philanthropy (RP) was contracted on
March 24th, and has delivered a comprehensive scope of work, beginning immediately
with two founding partners Richard Russell and Megan Wenrich. In early June, Scott
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New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
McArdle joined RP after thirteen years at the Vermont Community Foundation. McArdle
assumed the lead role on the Moran project in August, while Richard Russell worked
directly with prospective leadership donors.
b. After more than seven months of research, prospect identification and fundraising visits,
RP is confident in the ability to attract a total of $11M in charitable support for the Moran
Plant redevelopment. The summary, conclusions and a gift structure for the campaign
are attached (see Addendum I).
8. Ground Lease and Property Tax Liability Assumptions (see Addendum J).
9. Updated Project Schedule (see Addendum K).
a. To date, NMI has tracked on schedule across the board. Following the delivery of this
report, NMI will work with CEDO and the Mayor's Office to review a term sheet for City
Council approval in January, followed by Development Agreement approval in March,
2015. Simultaneously, we anticipate resuming schematic design with our design team in
December, 2014, in line with anticipated submission of permit applications in March,
2015. This puts NMI on track for a construction start in Spring 2016 and a grand opening
in Spring, 2017.
10. Letters of interest for project funding from a CDE for NMTC (see Addendum L).
a. After preliminary discussion with multiple CDE’s beginning in October, 2013, NMI
retained the Washington, DC based The Binnick Group (TBG) in August to evaluate the
availability of NMTC allocation from national CDEs. TBG reviewed the Moran Plant
project to date, and developed a comprehensive ‘Sell Sheet’, which was distributed to
seven CDE’s across the country including Housing Vermont’s Vermont Rural Ventures.
b. NMI has received letters of interest from six CDE’s totalling $36M, plus an engagement
letter from Vermont Rural Ventures (estimated at $5-7M). This figure is in excess of the
approximately $34M in total allocation required to complete the deal, affording some
flexibility with regards to CDE selection.
11. Preliminary Market Analysis Report (see Addendum M).
a. NMI discussed a market study in depth with a reputable local firm. It was apparent that
traditional market studies would not be able to determine market feasibility on the
northern waterfront.
b. Following discussion with CEDO, NMI completed a three-prong preliminary analysis of
the market:
i.
We completed a review of rent schedule and projected expenses with three
Burlington real estate developers and brokers with significant property under
management in the Burlington area, and specifically the waterfront.
ii.
Two members of the NMI Board of Directors with significant experience in
creative office and incubator spaces provided insight and financial modeling to
project potential use, tenant structure and alternative financing structures within
the Burlington community.
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New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
iii.
A separate review was completed with the Flynn Center with regards to operating
expenses. The Flynn campus is within 10% of the projected square footage of
Moran, and represents similar use classes across their properties. Projected
Moran expenses are proportionally appropriate to those of the Flynn Center, with
some revisions made and an additional contingency included.
c. While not a traditional market study, this review provided a representative evaluation of
rent and occupancy assumptions given projected tenant mix on the Moran site. The
conclusions from these three reviews, with discussion and subsequent revisions to the
operating model, are attached as Addendum M.
12. Proposed Tenant Mix
a. NMI continues to engage significant interest from prospective tenants and in multiple
cases is advancing in-depth dialogue with regard to lease, terms, and intent. Multiple
Letters of Intent are currently under negotiation, representing approximately 40% of
annual operating revenue. The attached occupancy schedule (see Addendum N),
reflects these dialogues and terms.
13. Preliminary Review with Planning & Zoning Staff
a. NMI initiated a review with Sandrine Thibault on June 4th, 2014, and completed a
preliminary review with the Burlington Department of Planning & Zoning on October
14th, 2014. Those present included Director David E. White, Zoning Administrator Ken
Lerner, and Senior Planners Mary O’Neil and Scott Gustin.
b. Based on the October 14th review, NMI began a comprehensive Public Trust Doctrine
investigation with legal counsel at Dinse Knapp McAndrew. Research began with a
focus on the Public Trust Doctrine under Vermont State statute and case law and, more
specifically, under the Burlington Comprehensive Development Ordinance. Initial
conclusions are discussed in Addendum J.
6
ADDENDUM A
Champions Council
New Moran, Inc.
PO Box 8502
Burlington, VT 05402
MoranPlant.org
Champions Council for the Moran Plant
From the initial conception of the New Moran concept, we have received extraordinary support for the
project from a number of business-owners and community leaders, which prompted the assembly of a
team of ambassadors and advisers that we call our Champions Council.
The Champions Council is a collection of community leaders willing to lend their name in support of the
non-profit New Moran, Inc. and the redevelopment of the Moran Plant.
We are have asked for support, both on a letterhead and in everyday conversation, from individuals
who offer perspective, bring gravitas, and demonstrate a range of support for the project. There is no
fiduciary or governance responsibility associated with this role.
We have asked all Champions to make a charitable contribution towards the project of an amount that
is meaningful for them at this point in the project, and that amount has varied for each champion. The
intended term of this support is through the opening of the building, Spring 2017, though the role is at
the discretion of each individual.
The Champions Council includes:
● Benjy Adler, Skinny Pancake
● Jill Badalato, Dealer.com;
● Brian Boardman, Hickok and Boardman Real Estate;
● Paul Bruhn, Preservation Trust of Vermont;
● Alex Crothers, Crothers Management Group;
● Marguerite Dibble, gametheory;
● Kevin Ellis, Ellis Mills Public Affairs;
● Stu Comstock-Gay, Vermont Community Foundation;
● John Killacky, Flynn Center for the Performing Arts;
● Chico Lager, former CEO, Ben & Jerry’s;
● Laura Latka, Eideard Group;
● Gil Livingston, Vermont Land Trust;
● Neale Lunderville, Burlington Electric Department;
● Mark Naud, Lake Champlain Community Sailing Center;
● Charlie Smith, Vermont PBS;
● Meg Smith, Vermont Women's Fund;
● Molly Stevens, author and culinary educator;
● Dave Stiller, Heritage Aviation;
● Gaye Symington, former Speaker of the Vermont House;
● Joe Thompson, MASSMoCA;
● Bill Truex, TruexCullins;
● Alec Webb, Shelburne Farms;
● Larry Williams, Redstone
1
ADDENDUM B
Conceptual Building Design
RES
T
AURANTMARKETHAL
L
& EDUCAT
I
ONALBREWERY
5,
246S
Q.F
T
.
ADDENDUM C
National Park Service Review
Emily Wadhams
Historic Preservation Consulting
597 So. Prospect St.
Burlington, Vermont 05401
Tel: 802.658.9535 cell: 802.881.7721
[email protected]
TRANSMITTAL
DATE:
November
7,
2014
TO:
Charlie
Tipper
Tad
Cooke
Erick
Crockenberg
FROM:
Emily
Wadhams
RE:
New
Moran
-‐
NPA
Preliminary
Review
–
Historic
Tax
Credit
As
you
know,
we
asked
the
National
Park
Service
(NPS)
to
give
us
a
Preliminary
Review
of
the
conceptual
plans
for
the
New
Moran
Project
to
assess
the
feasibility
of
applying
for
and
receiving
the
Federal
Rehabilitation
Investment
Tax
Credit.
John
Sandor,
the
NPS
reviewer
for
the
State
of
Vermont,
visited
the
th
site
on
October
30
with
Caitlin
Corkins,
the
tax
credit
reviewer
for
the
Vermont
Division
for
Historic
Preservation.
Cleary
Buckley
and
Israel
Smith
of
SBA,
the
Tad,
Erick
and
I
were
also
present
at
that
site
visit.
Attached
are
Mr.
Sandor’s
preliminary
comments
about
the
materials
we
submitted
to
the
Vermont
Division
for
Historic
Preservation
on
September
12,
2014
-‐
materials
that
were
subsequently
forwarded
to
Mr.
Sandor.
Our
plan
was
to
get
early
feedback
from
the
NPS
before
spending
additional
time
and
resources
on
the
next
design
phase
in
order
to
be
able
to
incorporate
the
NPS
comments
into
the
design.
Mr.
Sandor’s
response
highlighted
some
areas
of
the
proposed
design
that
he
suggested
should
be
reconsidered.
His
suggestions
do
not
appear
to
be
problematic
for
the
program,
developers
or
the
design
team
and
did
not
seem,
as
we
discussed
them
at
the
site
meeting,
to
be
difficult
accomplish.
The
final
determination
of
whether
or
not
the
project
meets
the
Secretary
of
the
Interior’s
Standards
will
be
made
by
the
National
Park
Service
when
the
project
submits
the
Phase
2
Certification
Application
for
the
Rehabilitation
Investment
Tax
Credit
when
the
design
is
further
developed.
However,
at
this
conceptual
phase,
based
on
the
site
visit,
the
attached
preliminary
comments
from
the
National
Park
Service
and
the
response
of
the
development/design
team,
the
project,
if
it
chooses
to
seek
the
Federal
Rehabilitation
Investment
Tax
Credit,
has
every
expectation
of
achieving
that
goal.
Thank
you.
Sincerely,
Emily
Wadhams
Historic
Preservation
Consultant
cc:
Peter
Owens
Jeffrey
Glassberg
Cleary
Buckley
Israel
Smith
Caitlin
Corkins
Laura
Trieschmann
United States Department of the Interior
NATIONAL PARK SERVICE
1849 C Street, N.W.
Washington, D.C.20240
TO:
Caitlin Corkens, Vermont State H¡storic Preseruation Office
FROM:
John Sandor, Technical Preservation Services, National Park Service
DATE:
November 6,20L4
SUBJECT:
preliminary Review of Rehabilitation of Moran Municipal Generating Station, Burlington
This memo is to summarize conversations we had on site with you, the developers, architects and
consultant, on October 30,2OL4. Having reviewed the preliminary submission of proposed work dated
September LZ, ZO!4, and toured the building and site, I can offer the following comments on key
aspects of the proposal:
While the interior has a general industrial / utilitarian character, there is little specific in terms of
existing features or materials that are critical to sustaining that character. New interior finishes
and features, however, must be compat¡ble with that character.
A substantial part of the volume of the largest interior space where the turbines were housed
should be kept open as is proposed. The size of the space can easily accommodate the number
of insertions and subdivisions proposed without compromising the character, and there is
considerable flexibility in configuring this space. The retention of some of the equipment and
supporting interior framework can add to the historic character of the property, but the
equipment is not considered a part of the building and its retention is not required.
The enclosure of the steel framework that supported the boilers on the north side can
successfully be accomplished within the Standards as long as the approach to the walls can be
seen as compatible. There is considerable flexibility to change elements of the framework itself'
Existing window openings must for the most part be filled with windows that are consistent with
the general appearance of those that were there historically. Treatment of other openings must
respect their historic function.
The overall stepped profile of the building is character defining and must not be interrupted by
additions. The proposed addition at the third floor level to accommodate fly space is a change
that is not consistent w¡th the Standards. There is a potential for adding to the building
elsewhere, however, such as the proposed stair and elevator tower on the east elevation. This
addition should be able to meet the Standards if its massing and envelope are treated
compatibly. The proposed new entrance addition at the northeast corner of the second floor
has the potent¡al
to be too strong
a feature, competing
with the historic building, thus how it
is
detailed will be critical.
This assessment is based on the information available and is not comprehensive given that only a
preliminary proposal was presented. Certification of a rehabilitation requires the formal submission of
a
Certification Application and determinations of whether or not a project meets the Standards are based
on the overall impact of the project on the historic property.
ADDENDUM D
Conceptual Site Plan
ADDENDUM E
Development Budget
Addendum E - New Moran - Development Budget
11/14/2014
% of Total Cost/sf
Sources Of Funds
60,031
Equity
Debt
Federal Historic Tax Credit (RITC)
State Historic Tax Credit
New Markets Tax Credit (NMTC)
Senior Loan
Charitable
TIF Allocation
Total Sources:
4,106,019
250,000
9,586,007
12%
1%
29%
1,875,000
11,000,000
6,300,000
6%
33%
19%
33,117,025
100% $
552
230,000
65,000
295,000
1%
0%
1% $
5
8,791,344
3,397,808
545,058
2,624,187
3,071,679
300,155
230,000
1,320,372
100,000
2,491,920
22,872,524
27%
10%
2%
8%
9%
1%
1%
4%
0%
8%
69% $
381
1,179,792
117,920
60,031
10,000
57,750
186,894
30,000
25,000
50,000
20,000
30,000
100,000
1,867,387
4%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0%
0%
6% $
31
Uses of Funds
Acquisition
Environmental Remediation
Closing Costs
Total Acquisition Cost
Hard Costs
Building Reconstruction
Building Additions
Demolition
Site Work & Landscaping
Contingency & Escalation
FFE - Public Spaces & Tenant Space Allow
Living Machine
Energy Production/Upgrades
IT Infrastructure
Tenant Fit-Up - Allowance
Total Hard Costs
Design
Architectural & Engineering
Civil Engineering
Commissioning
Energy Modeling
Environmental
Fit - Up A&E
Historic Preservation
IT/Data/Tel
Environmental Certification
Marine/Structural
Permit Applications & Hearings
Contingency
Total Design
1 of 2
Other Soft Costs
Accounting & Audit
Capital Campaign
Clerk of the Works
Community Engagement
Legal
Marketing & Market Studies
Permit Fees
Program Development & Administration
Project Management & Financial Admin.
Property Management
Testing
Contingency
Total Other Soft Costs
80,000
145,000
75,000
75,000
900,000
85,000
424,737
260,000
350,000
40,000
25,000
125,000
2,584,737
0%
0%
0%
0%
3%
0%
1%
1%
1%
0%
0%
0%
8% $
1,338,924
1,730,000
4%
5%
878,954
125,000
17,500
3%
0%
0%
43
Financing, Reserves & Carrying Charges
Reserves
NMTC Reserves
Operating/ Lease-Up Reserves
Financing
Construction Period & Bridge Loan Interest
Loan Fees & Expenses
NMTC Audit & Fees during Const
Carrying
Builders Risk & Liability Insur
Maintenance & Security
Utilities
Taxes
Total Financing, Reserves & Carrying
Project Contingency
Total Uses of Funds:
112,000
27,000
18,000
4,247,378
0%
0%
0%
0%
13% $
71
1,250,000
4% $
21
33,117,026
100% $
552
2 of 2
ADDENDUM F
Financing Plan
Addendum F - New Moran - Capital Fundraising Plans
11/14/14
Source of Funds
Federal Historic Tax Credit (RITC)
State Historic Tax Credit
New Markets Tax Credit (NMTC)
Completed
Q1 - 2015
Q2 - 2015
NPS review confirms
RITC eligibility.
Preliminary
discussions with
potential investors.
Coordinate with design
team.
Update regulators and
potential investors on
progress.
Amount
$
$
$
4,106,019
250,000
Meet with program
Eligibility Confirmed. leaders. Identify and court
potential investors.
Submit application.
Meet with CDEs. Review
multi-CDE project
structure options.
Confirm application
timelines.
Update on progress.
9,586,007
Prepare project
brochure. Obtain
letters of interest from
CDEs.
Debt service capacity
confirmed.
Confirm slow money loan
Preliminary discussion
structure options.
with loan
administrator.
Senior Loan
$
1,875,000
Charitable
$
11,000,000
Campaign Feasibility
confirmed. Initial
pledges secured.
Donor cultivation and
campaign.
Donor cultivation and
campaign.
TIF Allocation
$
6,300,000
Voter Approval.
Negotiate terms.
Execute Agreement.
Q3 - 2015
Q4 - 2015
Q1 - 2016
Underwriting completed by
Submit Part 2
Investors. Commitments, Approved Part 2 issued by
Application to NPS.
subject to standard
NPS.
contingencies, issued.
Award.
Investor commitment.
Q2 - 2016
Closing.
Closing.
Underwriting completed by
Submit applications to
CDEs and Investors.
CDEs. Identify and
Commitments, subject to
court potential
standard contingencies,
investors.
issued.
Closing.
Distribute Offering.
Secure commitments.
Closing.
Donor cultivation and
campaign.
Donor cultivation and
campaign.
Donor cultivation and
campaign. Arrange bridge
financing.
Closing.
Update
Update
Confirmation
Closing.
ADDENDUM G
Operating Budget and Pro Forma
Addendum G: New Moran - Operating Budget and Pro Forma Cash Flow
11/14/2014
Pro Forma
2017
1
2018
2
2019
3
2020
4
2021
5
2022
6
2023
7
Projection
2024
8
2025
9
2026
10
2027
11
2028
12
2029
13
2030
14
2031
15
General Assumptions
Gross Square Footage
60,031
Leased Square Footage
41,532
Efficiency
69%
Income - Rate of Increase
2%
Lease Up Occupancy % Assumptions
First Floor - Market Hall
75%
80%
82%
85%
90%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
Second Floor - Event Space
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
Third Floor & Fourth Floor - Program
80%
85%
90%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
95%
Third & Fourth Floor - Seasonal & Per Event
80%
82%
85%
87%
90%
90%
90%
90%
90%
90%
90%
90%
90%
90%
90%
Income
See 2.1 Rent Schedule
First Floor - Market Hall
111,620
83,715
91,082
95,226
100,684
108,739
117,076
119,417
121,805
124,242
126,726
129,261
131,846
134,483
137,173
139,916
Second Floor - Event Space
111,560
105,982
108,102
110,264
112,469
114,718
117,013
119,353
121,740
124,175
126,658
129,191
131,775
134,411
137,099
139,841
Third Floor & Fourth Floor - Program
68,766
55,013
63,265
72,754
83,668
96,218
98,623
101,089
103,616
106,206
108,862
111,583
114,373
117,232
120,163
123,167
Third & Fourth Floor - Seasonal & Per Event
41,048
32,839
34,333
36,301
37,898
39,989
40,789
41,604
42,437
43,285
44,151
45,034
45,935
46,853
47,790
48,746
366,136
329,522
336,113
342,835
349,692
356,686
363,819
371,096
378,518
386,088
393,810
401,686
409,720
417,914
426,272
434,798
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
100,000
________
$699,130
$707,071
$732,894
$757,380
$784,411
$816,350
$837,320
$852,559
$868,116
$883,996
$900,207
$916,755
$933,649
$950,893
$968,497
$986,468
2019
3
2020
4
2023
7
Projection
2024
8
CAM Recovery
Net Underwriting Income
Total Revenue
Pro Forma
2017
1
Expenses
Recoverable
2018
2
2021
5
2022
6
2025
9
2026
10
2027
11
2028
12
2029
13
2030
14
2031
15
Per S.F.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Elevator Maint & Inspections
8,000
0.13
8,000
8,160
8,323
8,490
8,659
8,833
9,009
9,189
9,373
9,561
9,752
9,947
10,146
10,349
10,556
HVAC Maintenance & Repairs
18,009
0.30
18,009
18,369
18,737
19,112
19,494
19,884
20,281
20,687
21,101
21,523
21,953
22,392
22,840
23,297
23,763
Insurance - Prop & Liability
30,000
0.50
30,000
30,600
31,212
31,836
32,473
33,122
33,785
34,461
35,150
35,853
36,570
37,301
38,047
38,808
39,584
Janitorial & Cleaning Supplies
48,000
0.80
48,000
48,960
49,939
50,938
51,957
52,996
54,056
55,137
56,240
57,364
58,512
59,682
60,876
62,093
63,335
Landscaping & Grounds (1)
15,000
0.25
15,000
15,300
15,606
15,918
16,236
16,561
16,892
17,230
17,575
17,926
18,285
18,651
19,024
19,404
19,792
Maintenance & Repairs - General
39,000
0.65
39,000
39,780
40,576
41,387
42,215
43,059
43,920
44,799
45,695
46,609
47,541
48,492
49,461
50,451
51,460
Program Director
48,000
0.80
48,000
48,960
49,939
50,938
51,957
52,996
54,056
55,137
56,240
57,364
58,512
59,682
60,876
62,093
63,335
Property Management
48,000
0.80
48,000
48,960
49,939
50,938
51,957
52,996
54,056
55,137
56,240
57,364
58,512
59,682
60,876
62,093
63,335
Recycling & Waste
5,000
0.08
5,000
5,100
5,202
5,306
5,412
5,520
5,631
5,743
5,858
5,975
6,095
6,217
6,341
6,468
6,597
Snow Removal (1)
15,000
0.25
15,000
15,300
15,606
15,918
16,236
16,561
16,892
17,230
17,575
17,926
18,285
18,651
19,024
19,404
19,792
Sprinkler/Security/Fire Alarm
13,500
0.22
13,500
13,770
14,045
14,326
14,613
14,905
15,203
15,507
15,817
16,134
16,456
16,786
17,121
17,464
17,813
Storm Water Fees
1,000
0.02
1,000
1,020
1,040
1,061
1,082
1,104
1,126
1,149
1,172
1,195
1,219
1,243
1,268
1,294
1,319
Telephone/Data
2,400
0.04
2,400
2,448
2,497
2,547
2,598
2,650
2,703
2,757
2,812
2,868
2,926
2,984
3,044
3,105
3,167
Utilities - Electric
69,036
1.15
69,036
70,416
71,825
73,261
74,726
76,221
77,745
79,300
80,886
82,504
84,154
85,837
87,554
89,305
91,091
Utilities - Heat
18,009
0.30
18,009
18,369
18,737
19,112
19,494
19,884
20,281
20,687
21,101
21,523
21,953
22,392
22,840
23,297
23,763
Utilities - Water & Sewer
9,485
0.16
9,485
9,675
9,868
10,065
10,267
10,472
10,682
10,895
11,113
11,335
11,562
11,793
12,029
12,270
12,515
Window Washing
3,500
0.06
3,500
3,570
3,641
3,714
3,789
3,864
3,942
4,020
4,101
4,183
4,266
4,352
4,439
4,528
4,618
414,868
423,165
431,628
440,261
449,066
458,048
467,208
476,553
486,084
495,805
505,721
515,836
Taxes (2)
Paid By Tenants as Determined by Use
Sub-Total Recoverable Expenses
390,939
6.51
Per Leasable SF
9.41
390,939
398,758
406,733
(1) Assumes coordination with municipal services.
(2) See discussion of property tax liability assumptions in Addendum K
Page 1 of 2
Addendum G: New Moran - Operating Budget and Pro Forma Cash Flow
11/14/2014
Pro Forma
Projection
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Non- Recoverable
Adminstrative Costs & Supplies
10,000
0.17
10,000
10,200
10,404
10,612
10,824
11,041
11,262
11,487
11,717
11,951
12,190
12,434
12,682
12,936
13,195
Advertising & Communications
10,000
0.17
10,000
10,200
10,404
10,612
10,824
11,041
11,262
11,487
11,717
11,951
12,190
12,434
12,682
12,936
13,195
Community Engagement Coordinator
42,000
0.70
42,000
42,840
43,697
44,571
45,462
46,371
47,299
48,245
49,210
50,194
51,198
52,222
53,266
54,331
55,418
Executive Director
48,000
0.80
48,000
48,960
49,939
50,938
51,957
52,996
54,056
55,137
56,240
57,364
58,512
59,682
60,876
62,093
63,335
Employee Benefits & Taxes
40,920
0.68
40,920
41,738
42,573
43,425
44,293
45,179
46,083
47,004
47,944
48,903
49,881
50,879
51,896
52,934
53,993
Professional Services
30,000
0.50
30,000
30,600
31,212
31,836
32,473
33,122
33,785
34,461
35,150
35,853
36,570
37,301
38,047
38,808
39,584
500
0.01
500
510
520
531
541
552
563
574
586
598
609
622
634
647
660
0.42
25,000
________
206,420
25,500
________
210,548
26,010
________
214,759
26,530
________
219,055
27,061
________
223,436
27,602
________
227,904
28,154
________
232,462
28,717
________
237,112
29,291
________
241,854
29,877
________
246,691
30,475
________
251,625
31,084
________
256,657
31,706
________
261,790
32,340
________
267,026
32,987
________
272,367
Taxes - Entities
Contingency
Sub-Total Non- Recoverable Expenses
25,000
________
206,420 $
Per Leasable SF
Total Operating Expenses
3.44
4.97
597,359
Net Operating Income
597,359
609,306
109,712
123,588
659,533
672,723
686,178
757,596
772,748
788,203
135,888
621,492
150,488
633,922
169,749
646,601
177,787
179,836
181,938
184,095
699,901
186,308
713,899
188,578
728,177
190,907
742,741
193,298
195,750
198,265
12,023
-
26,023
-
45,023
-
67,535
67,535
67,535
67,535
67,535
67,535
67,535
67,535
67,535
Other Expenses/Reserves
Reserve for Replacement
CDE Audits
See Sources & Uses
CDE Fees
QALICB Audit
New Market Fees
Total Expenses
EBITDA
Debt Service
Net Cash Flow from Operations
Preferred Return to RITC Investor
Net Cash Flow, After Distributions
Cumulative Cash Flow
45,023
-
0.75
-
-
8,000
9,500
________
8,000
9,500
________
8,000
9,500
________
8,000
9,500
________
8,000
9,500
________
8,000
9,500
________
45,023
168,624
8,000
9,500
________
________
________
________
________
________
________
________
________
________
659,882
________
614,859
________
626,806
________
651,016
________
677,446
________
709,124
________
890,680
________
740,258
________
753,713
________
767,436
________
781,434
________
795,712
________
810,276
________
825,131
________
840,283
________
855,738
________
39,248
92,212
106,088
106,364
106,965
107,226
(53,361)
112,301
114,403
116,560
118,773
121,043
123,373
125,763
128,215
130,731
46,875
________
45,337
123,181
________
100,939
________
5,149
123,181
________
100,939
________
5,426
123,181
________
100,939
________
6,026
123,181
________
100,939
________
6,287
123,181
________
100,939
100,939
________ ________
(154,299)
11,362
615,903
________ ________
100,939
________
13,464
100,939
________
15,621
100,939
________
17,834
100,939
________
20,104
100,939
________
22,434
100,939
________
24,824
100,939
________
27,276
100,939
________
29,792
(77,844)
(118,032)
(117,755)
(117,154)
(116,894)
(770,202)
(77,844)
(195,875)
(313,630)
(430,785)
(547,678)
(1,317,881)
1,652,156
1,534,125
1,428,393
1,337,262
12,023
26,023
45,023
________
________
________
________
________
________
________
________
11,362
13,464
15,621
17,834
20,104
22,434
24,824
27,276
29,792
1,265,391
540,212
619,109
700,108
783,264
868,633
956,272
1,046,241
1,138,600
1,233,411
45,023
67,535
67,535
67,535
67,535
67,535
67,535
67,535
67,535
67,535
(770,202)
11,362
________ ________
13,464
________
15,621
________
17,834
________
20,104
________
22,434
________
24,824
________
27,276
________
29,792
________
700,108
783,264
868,633
956,272
1,046,241
1,138,600
1,233,411
1,330,737
Cash Reserves
Opening Reserve Balance
Capital Reserve
(Use)/Addition
Aggregate Reserve Balances - Exclusive Of Earnings
1,730,000
-
-
(77,844)
________
(118,032)
________
(117,755)
________
(117,154)
(116,894)
________ ________
1,652,156
1,534,125
1,428,393
1,337,262
1,265,391
540,212
619,109
Page 2 of 2
ADDENDUM H
Fundraising Feasibility Study
The
Hon.
Miro
Weinberger
November
14,
2014
Mayor
of
Burlington
Burlington
City
Hall
149
Church
Street
Burlington,
VT
05401
Dear
Mayor
Weinberger:
Resilient
Philanthropy
was
retained
to
determine
the
capacity
and
inclination
of
the
Burlington
community
and
beyond
to
support
the
Moran
project
philanthropically,
as
well
as
to
help
seek
early
financial
commitments.
We
met
with
numerous
community
leaders
and
opinion
makers
over
the
past
six
months
to
test
a
fundraising
campaign
goal
of
$11
million
through
42
face-‐to-‐face
meetings
prospective
donors
capable
of
6-‐
and
7-‐figure
support.
Based
on
our
analysis,
the
Moran
project
has
all
the
elements
necessary
to
succeed
at
capturing
the
giving
public’s
imagination
and
philanthropy:
a
compelling
story
–
the
promise
to
transform
Burlington’s
waterfront
and
enliven
the
city
–
and
deep
and
widespread
potential
for
philanthropic
support.
Inspiring
leaders
are
in
place.
The
timing
is
right.
The
surrounding
projects
are
catalytic
and
complementary.
The
complex
financial
model
works;
the
leveraging
of
public
dollars
and
tax
credits
is
convincing.
Raising
$11
million
in
charitable
capital
for
the
Moran
project
is
achievable.
It
will
take
time,
but
prospective
donors
understand
the
transformative
potential
of
the
project
and
want
it
to
happen.
To
date,
$1.4
million
in
philanthropy
has
been
committed.
To
succeed
in
raising
the
balance
of
the
capital,
the
team
must
take
into
account
the
following,
excerpted
from
our
final
report:
•
•
•
•
•
Establish
and
publicize
the
lead
gift
as
soon
as
possible
–
others
will
follow.
Improve
resource
development
through
broad
community
engagement
and
demonstrating
public
support.
This
is
a
significant
campaign
for
the
region,
and
an
essential
base
of
support
must
be
built
from
scratch.
Advance
the
awareness,
understanding,
and
trust
of
potential
investors.
The
project’s
public-‐private
financing
plan
is
complex;
some
don’t
initially
understand
why
philanthropy
is
needed.
New
York’s
High
Line
and
MASS
MoCA
are
comparable
models
that
succeeded.
Broaden
New
Moran’s
network
to
make
connections,
introductions,
and
conversions
to
support.
To
some,
this
is
merely
the
latest
in
a
series
of
proposals
for
Moran;
doubters
were
often
moved
to
support
after
discussions
and
tours.
Recruit
local,
high-‐performing
partners,
contractors,
and
vendors.
People
are
drawn
to
Tad
Cooke,
Erick
Crockenberg,
and
Charlie
Tipper’s
vision;
the
team
must
continue
to
add
depth
and
breadth
of
expertise.
Respectfully,
Richard
Russell,
Founding
Partner
Scott
McArdle,
Partner
New
Moran
report
–
Fall
2014
–
page
1
of
1
pages
ADDENDUM I
Campaign Gift Structure
Gift
range
#
of
gifts
#
of
prospects
Subtotal
$3,000,000
$1,000,000
$500,000
$250,000
$100,000
$50,000
1
2
5
8
9
12
3
6
15
24
27
36
$3,000,000
$2,000,000
$2,500,000
$2,000,000
$900,000
$600,000
Totals
37
111
$11,000,000
Cumulative
total
$3,000,000
$5,000,000
$7,500,000
$9,500,000
$10,400,000
$11,000,000
ADDENDUM J
Ground Lease and Property Tax
Liability Assumptions
New Moran, Inc.
PO Box 8502
Burlington, VT 05401
MoranPlant.org
Ground Lease and Property Tax Liability Assumptions
New Moran, Inc.
November 14, 2014
The northern waterfront is a complex site, and the Moran Plant is a uniquely challenging historic
building. Ground lease and property tax assumptions for the project are based on three areas of
focus: Site Boundary, Allowable Uses and Property Tax Liability.
New Moran project principals retained Dinse Knapp McAndrew in April of 2014 as legal counsel. In
evaluating Ground Lease and Property Tax Liability Assumptions, DKM reviewed two relevant areas
of interest: allowable uses under Public Trust Doctrine, and property tax liability.
With regards to ground lease, New Moran has assumed a long-term lease of the Moran Plant
building at $1/year. We assume the term of this lease will be negotiated, and propose a thirty year
lease, with an option to renew for an additional thirty years. We also propose a shared management
or licensing agreement for the currently undeveloped landscape surrounding the Moran Plant, as
indicated in Addendum D and discussed below.
Site Boundary:
The site plan attached to this report as Addendum D outlines a 1.532 acre site directly surrounding
the Moran Plant (1.922 acres including the building). This site includes pedestrian, bike and
vehicular access to Moran and the surrounding campus. It creates dramatic public space, directly on
the shoreline, and abuts the combined educational and recreational resources of the Community
Sailing Center, the new Burlington SkatePark, the expanded bike path, and the proposed Burlington
Harbor Marina to the south. As designed, the site increases public access to the lakeshore, creates
new play space for children and families, manages stormwater, offers opportunities for
environmental education and realizes the potential for a programmed, year round, publically
accessible outdoor space on the waterfront.
The site design also illustrates a number of design suggestions in adjacent areas, acknowledging
other site stakeholders, including the City of Burlington, Burlington Harbor Marina, and Lake
Champlain Community Sailing Center. These suggestions are intended as a starting point to guide
discussion around parking, circulation and public access.
NMI proposes a shared management of licensing agreement with the City of Burlington to steward
and program the 1.532 acre area as proposed in Addendum D. Funding for portions of landscaping,
grounds maintenance and snow removal is included in the Operating Budget and Pro Forma,
Addendum G.
1
New Moran, Inc.
PO Box 8502
Burlington, VT 05401
MoranPlant.org
Allowable Uses
The Moran plant is located in the Downtown Waterfront – Public Trust District (“DW-PTD”).
According to the Burlington Comprehensive Development Ordinance (“CDO”), Section
4.4.1(d)(2)(A), land in this zone may only be used for:
- Governmental facilities
- Indoor or outdoor parks and recreation uses and facilities
- Arts, educational and cultural activities
- Fresh water and other environmental activities
- Services accessory to a permissible use;
- Railroad, wharfing and storage uses; or
- Publicly accessible restrooms.
The Moran Plant and site as proposed includes two major uses: the preservation of a historic
building for arts, education and cultural activities, and an outdoor public space suited to recreational
uses, arts and cultural activities, environmental activities, including public education. It will also
include public bathrooms.
Based on our preliminary research, it is our assumption that the Moran Plant building represents a
cohesive whole, serving as an allowable primary use under the Public Trust Doctrine.
Property Tax Liability
Property tax liability is not a black and white determination given the proposed use and management
structure for the Moran Plant. After preliminary research, we are confident NMI will receive 501c3
designation and the Vermont public, pious or charitable Vermont property tax exemption.
Assuming the master lease for the building is held by NMI, and NMI qualifies for the Vermont
property tax exemption, the most significant variable is the degree of liability and scrutiny with
respect to individual sub-tenants of NMI. On one hand, preserving the Moran Plant as an historical,
educational, and cultural resource for the City can constitute the primary use of the property so that
the entire property qualifies for the property tax exemption. Unlike the property tax exemption
applicable to colleges and universities, there is no carve-out for property leased for general
commercial purposes. All income from leases to
sub-tenants will be used to support the public and charitable purposes of New Moran.
On the other hand, property taxes could be evaluated looking subtenant-by-subtenant at how each
portion of the Moran Plant is being used. The exemption for public, pious or charitable purposes
may not provide protection from taxation for portions of the property sub-leased to tenants that may
be operating on a for-profit basis.
To date, NMI assumes property tax liability will be evaluated pursuant to individual uses within the
building. It is our opinion that the most essential component of this analysis is determining a process
for evaluating property tax liability, rather than a specific designation for the tenant mix as proposed.
While this is area requires additional research, we are confident in reaching an arrangement that is
both viable, and mutually beneficial for NMI, our sub-tenants, and the City of Burlington.
2
ADDENDUM K
Updated Project Schedule
MORAN PLANT — PROJECTED SCHEDULE — 11.14.14 DRAFT
Scope
Proposal
Milestone
Public TIF Vote
Managament Incorporate New Entity
MOU (NMI and City of BTV)
Findings Report
Preliminary Market Analysis
Parking Study
Project Term Sheet
Development Agreement
Major Tenant Commitments
Begin Formal NM/BTV Lease
Commence Full Operation
Finance
Capital Campaign Feasibility
Major Donor Cultivation
Capital Campaign
Financing Commitments
Closing
Design
Assemble A&E Proposals
Historic Preservation Analysis
Schematic Design
Design Development
Construction Drawings
Permits
DRB - Design Permits
DPW - Construction Permits
Construction
Contractor Selected
Construction
Grand Opening
2014
2015
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
2016
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
2017
Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul
Aug Sep Oct Nov Dec
ADDENDUM L
New Market Tax Credits
Letters of Interest
Moran Plant Redevelopment - Summary of New Market Tax Credit Letters of Interest
Name of CDE
Service Area
Status
Amount
Statewide
Received
N/A – Letter of Engagement*
Urban Action Community Development LLC (“UACD”)
National
Received
$7MM*
Urban Research Park CDE, LLC (“URP”)
National
Received
$7MM
USBCDE, LLC
National
Received
$5MM*
CCG Community Partners, LLC (“CCG”)
National
Received
$7MM
Multi-State
Received
$10MM*
National
Received
$7MM*
Vermont Rural Ventures (“VRV”)
MHIC NE New Markets CDE II LLC (MHIC)
HEDC New Markets, Inc. (National Development Council)
Total
*Denotes probable long-term interest in project
**Indicates 36M in levels of interest plus an estimated 5-7M from VRV
$41-43MM**
ADDENDUM M
Preliminary Market Analysis Report
New Moran, Inc.
PO Box 8502
Burlington, VT 05401
MoranPlant.org
Preliminary Market Analysis
The Burlington waterfront is a challenging site for real-estate development. The value of existing
developments including 216 Lake Street, Union Station, Echo Lake Aquarium and 60 Lake Street are
undeniable. Yet – despite those developments and vibrant seasonal use of Waterfront Park and the Bike
Path, many challenges remain for business activity on the waterfront.
Chief among these challenges is stimulating more year round activity on the waterfront. While vibrant
during the warmer months, the seasonality of waterfront property makes it difficult for businesses to
depend on customer traffic, and in all too many cases, to survive at all. The same can be said for new
businesses interested in operating on the waterfront, and particularly its northern end. Existing property
owners are often challenged to rent current spaces at market rents, making new development that much
more of a risk.
In the interest of determining the feasibility of proposed rents, NMI discussed a market study in depth
with a reputable local firm. It was apparent, for all the reasons addressed above, that traditional market
studies would not be able to determine market feasibility on the northern waterfront.
In response, NMI conferred with CEDO and formulated a three prong approach to analyze the market,
determine the feasibility of proposed rents and review projected operating expenses against existing
comparable real estate.
1. We completed a review of rent schedule and projected expenses with three Burlington real estate
developers and brokers with significant property under management in the Burlington area and
specifically the waterfront. The conclusions were as follows:
a. The rental rates originally proposed ($14 PSF NNN, projected $24.08 PSF ‘all in’ expense
for tenants), are on par with Class A office rates in the downtown and waterfront areas.
While viable for some tenants, they will preclude a variety of less established, profitable or
well capitalized tenants, especially in the food service, arts and education sectors.
i.
In response, net rents were reduced 15-25% depending on the location and
intended use-class of each area in the building. CAM charges were also reduced,
further discussion below.
b. Fit-up above vanilla shell would be a challenge for tenants with significant infrastructure
requirements.
i.
In response, an average of $60 PSF fit-up allowance was added to the
development budget. This allowance will be weighted in favor of tenants with
higher infrastructure needs.
ii.
Additionally, an allowance has been made for interior design and coordination with
tenants.
c. Operating expenses, and CAM charges by extension, were quite high for similar caliber
buildings in the Burlington market. Of note, projected recoverable expenses were 25-60%
higher than other buildings under local management in Burlington and on the waterfront.
1
New Moran, Inc.
PO Box 8502
Burlington, VT 05401
MoranPlant.org
i.
Projected recoverable expenses for the Moran building include in-house
management, programming and marketing. While in one building, the services are
loosely comparable to those of Church Street Marketplace, and the included
recoverable expenses echo the Marketplace fee structure. While introducing an
additional expense, the presence of programming and marketing have been
deemed essential to commercial viability of many prospective tenants at Moran,
and particularly in the winter.
ii.
With that, recoverable expenses were adjusted based on operating expenses for
comparable spaces on the waterfront, resulting in a ~15% decrease in recoverable
expenses.
iii.
Non-recoverable expenses, which represent the administrative, staff and
professional costs of operating New Moran, Inc. were increased to reflect
additional marketing, community engagement and professional services, along
with a greater annual contingency.
d. Finally, the process by which tenants are reviewed under the Public Trust Doctrine will
have an effect on the ease of securing new tenants over time. This can be addressed
through a clear articulation of an agreed upon framework for tenant evaluation and
acquisition which is both adaptable and enduring. There is more discussion in Addendum
J of the report to which this is attached.
2. Two members of the NMI Board of Directors with significant experience in creative office and
incubator spaces provided insight and financial modeling to project potential use, tenant structure
and alternative financing structures within the Burlington community. The conclusions were:
a. The Moran Plant represents an iconic, dynamic and potentially highly desirable space for
creative collaboration, cultural and educational programming, and further development of
Burlington as a hub for technology, environmentalism and social innovation. The unique
history and singular location can be leveraged to create a vibrant, highly sought after
space which meets a variety of needs.
b. There is an opportunity to explore corporate partnerships for ongoing underwriting of
specific uses in the building, and particularly those uses which provide direct community
benefit. Such uses include community meeting space equipped for audio/visual recording
and broadcast, artisan and prototyping space such as that of the existing Generator
Maker Space, and food systems uses including community garden education, food
preparation and workforce development, and incubator space for food service
entrepreneurs.
c. It will be essential to solidify dynamic anchor tenants in order to attract a full cadre of
tenants who support the mission of the building and meet allowable uses under the Public
Trust Doctrine.
d. While the program and appropriate anchor tenants are still under discussion, the initial
conclusions indicate strong potential to advance the mission of NMI through creative,
dynamic partnerships with local, regional and national companies and organizations
interested in supporting a program which serves all manner of Burlington residents.
2
New Moran, Inc.
PO Box 8502
Burlington, VT 05401
MoranPlant.org
3. A separate review was completed with the Flynn Center with regards to operating expenses. The
Flynn campus is within 10% of the projected square footage of Moran, and represents similar use
classes across their properties. As a non-profit managed historic structure, with significant
programming on an annual, and even daily basis, the Flynn provided a unique comparison.
Projected Moran expenses are proportionally appropriate to those of the Flynn Center, with some
revisions made and an additional contingency included.
While not a traditional market study, this preliminary review provided a representative evaluation of rent
and occupancy assumptions given projected tenant mix on the Moran site. As the building design
advances, and relationships with potential tenants mature, the operating model and projected rents will
be refined. As detailed in the MOU signed between NMI and the City in August, 2014, a more thorough
market study confirming updated projections will be conducted during the Development phase of the
project.
3
ADDENDUM N
Proposed Tenant Mix
Addendum - New Moran - Occupancy Schedule
11/14/14
Tenant
Use
First Floor
Market Hall
Service, Education, Program Related Retail
Event Space
Ticketed Shows
Public, Private, Community & Corporate
Performance
Work Space
Work Space
Western Roof
Program Related Occupant
Balcony/Classrooms
Food & Events - Seasonal
Work Space
Hopper Gallery
Great Roof
VT Community Garden Network
Program Related Occupant
Art, Education, Events, Public Space
Events, Public Space - Seasonal
Roof Garden - Seasonal
Second Floor
Gross Sq. Ft.
17,130
Leased S.F.
% of Leasable
S.F.
11,162
11,162
26.9%
16,160
38.9%
3,972
1,598
1,980
7,550
9.6%
3.8%
4.8%
1,359
2,635
2,666
3.3%
6.3%
6.4%
17,450
Third Floor
13,800
Fourth Floor
8,351
6,660
Fifth Floor
New Moran Event Mgt
Limited Access - Gallery
3,300
60,031
41,532
100%
