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HomeMy WebLinkAboutCity Council Meeting - Council Workshop - Agenda - 10/03/2000 4^4�� KE1VT COUNCIL WORKSHOP ' WAS H I N G T O N AGENDA October 3, 2000 The Council Workshop will meet in Chambers East in Kent City Hall at 5:00 PM on Tuesday, October 3, 2000. Council Members: President Leona Orr, Sandy Amodt,Tom Brotherton, Tim Clark, Connie Epperly, Judy Woods, Rico Yingling Speaker Time 1. Downtown Renewal Feasibility Study Geoff Graham 60 min. The Council Workshop meets each month on the first Tuesday at 5:OOPM and the third Tuesday at 5:30 PM in Chambers East unless otherwise noted. For agenda information please call Jackie Bicknell at (253) 856-5712. ANY PERSON REQUIRING A DISABILITY ACCOMMODATION SHOULD CONTACT THE CITY CLERK'S OFFICE AT (253) 856-5725 IN ADVANCE. FOR TDD RELAY SERVICE, CALL THE WASHINGTON TELECOMMUNICATIONS RELAY SERVICE AT 1-800-833-6388. Memorandum September 27, 2000 To: Kent City Council Members From: Jacki Skaught Economic Development Manager Attached is a Draft of Hunter Interests Downtown Development Strategy and Impact Analysis. This report is stamped draft because it was written prior to last weeks bond vote. Thus the language addressing the Civic and Performing Arts Center will be rewritten and available in a final report on Tuesday. Geoff Graham of Hunter Interests will be making the presentation at Workshop. If you have any questions please call me. Thank you. HUNTER INTERESTS I N C O R P O R A T E D I. Introduction and Background Town Centers and downtowns are coraing back in many American cities in response to aggressive revitalization efforts in support of realistic downtown plans. In most instances this is being accomplished through innovative public/private ventures and the pursuit of new markets, rather than trying to replicate the central business district of the past. Currently there is a void of a true pedestrian friendly urban center in South King County. A true urban center is the focus of community life and should include a concentration of cultural, social, and business activities. It is a common elernent in the lives of all residents—a place defining the character and image of the community. Downtown Kent has the potential to evolve into the livable urban center that offers an environment that is "genuine," with a diverse array of activities and reasons to be downtown including to live, be entertained, shop, dine, be educated, work, and, most importantly, to interact socially with a diverse array of people and cultures. Kent's existing historic downtown provides an excellent building block upon which a thriving urban center can be created. Other keys assets which can be capitalized on by implementing a comprehensive downtown development strategy include: • Transit and parking facilities,which are being developed in the new urban core. • Continued interest from private sector developers for a variety of high quality proj ects. Substantial amounts of strategically located vacant or underutilized land in close proximity to historic core. This key development area which has the potential to evolve into Kent's "new urban core"is defined as the area bordered by 4'h Avenue, Railroad Avenue,Harrison Street, and James Street. (Insert photo of urban core) Development within the urban core should meet as many of the following goals as possible: 1 HUNTER INTERESTS I N C O R P O R A T E D • Reinforce the vision of Kent as a progressive affordable urban community with an eclectic mix of uses. • Build new development projects around, and incorporate them into, the existing civic and architectural histori of the City. • Support the expansion of uses related to arts and entertainment. Arts and entertainment are a key ingredient to the civic vitality of Kent. • Build upon the sense of community downtown; new and improved urban housing needs to be continually encouraged to do so. • Promote visitation for an array of reasons at different times of the day, which includes the attraction of residents not only from Kent but from within all of South King County. Downtown Kent should be positioned as a focal point for all of South King County. • Activate first floors of buildings along key streets to reinforce the pedestrian nature of downtown. • Create a fabric that includes pedestrian corridors, open spaces, buildings, and streets to knit the historic core and new urban core together. • Position Kent as a "brand" for young adult consumers. Young adult consumers should be considered the future of the downtown because of their demographic strength, purchasing power, entertainment orientation, nostalgia for things past, and the fact that older consumers follow their fashion and behavioral patterns. k HUNTER INTERESTS I N C O R P O R A T E D II. Existing Downtown and Market Area Conditions and Land Values A. Market Overview The City of Kent is centrally located in the Puget Sound Region of Washington State approximately 7 miles from SeaTac airport and 18 miles from both Seattle and Tacoma. Kent's strategic location near major transportation infrastructure including Interstate 5, SeaTac Airport, and the Ports of Seattle and Tacoma have contributed to the development of a strong local economy that includes significant presences in the manufacturing, wholesale, and transportation sectors. According to Sales and Marketing Magazine, the Seattle-Bellevue-Everett (Island, King, and Snohomish Counties) metro market has an estimated population of 2.34 million people of which 1.68 million reside in King County. The Tacoma (Pierce County) metro market 1999 population is estimated to be 699,800. which is expected to grow to over 741,100 by the, year 2004. During the same period the Seattle-Bellevue-Everett Metro market population is expected to grow to over 2.5 million according to Sales and Marketing, Magazine. L.. The significant and growing population base of the Puget Sound region combined with Kent's strategic location equidistant between the two metro markets creates an opportunity for Kent to position itself as a hub/focal point of South King County and become a key urban node in the Seattle-Tacoma consolidated area. The opportunity to create a pedestrian-:Friendly mixed use urban atmosphere is further strengthened by the relatively high average household incomes in both the Seattle ($59,461) and Tacoma ($48,255) metro areas and the substantial amount of growth in effective buying income (EBI) that is projected over the next three years. King County is projected to realize a 40.2% change in EBI between 1998 and 2003. During the same period the Tacoma metro market is projected to experience a 37.5% increase in EBI according to Sales and Marketing Magazine. Kent is currently the second largest city in South King County with a 2002 projected population over 70,700 according to the Kent Chamber of Commerce. The Kent market area, defined as the are�I that extends from I- 5 on the west to the Cascade foothills to the east, to the north. to Kent City limits at 180' and south to 277`', has an estimated population of 179,300. This figure is expected to grow to over 196,000 or 9.6% by 2010 according to the Commuter Rail station development study. (Jacki- or should we reference PSRC figures?) 3 HUNTER INTERESTS I N C O R P O R A T E D Table 1 City of Kent]Demographics 1980 1990 % Change 1997 % Change 2002 Census Census 80-90 Est. 90-97 Pro'. Population 25,267 37,972 50.3% 62,367 64.2% 77,000 Housing Units 10,879 17,157 57.7% 27,232 58.7% 33,400 Per Capita Income $9,175 $16,1 l0 75.6% $21,203 31.6% $25,300 Avg. Household Income $23,558 $38,028 61.4% $51,116 34.4% $61,100 Source: Kent Chamber of Commerce;City of Kent;Hunter Interests Inc. The significant growth in population and income in recent years and projections for future years are positive indicators for retail, entertainment, and urban housing, food and beverage, and transit demand. Kent currently is fifth overall in the State of Washington in total retail sales behind Seattle, Bellevue, Tacoma, and Spokane. According to a report issued by the State of Washington, Kent reported an 11% increase in retail sales for the fourth quarter of 1999 compared to the fourth quarter of 1998. Kent's diverse commercial base represents a growing target market for office space and hotel and conference demand. As the Kent market area commercial base continues to expand and diversify which should generate additional hotel and conference demand. ,l HUNTER INTERESTS I N C O R P O R A T E D Table 2 Major Kent Employers Name Type of Business Employees The Boeing Co. Aerospace/Computer Res. &Prod. 8,428 Kent School District 2,800 Hexcel Corporation Aircraft Parts Mfg. &Assembly 1,500 Flow International Corp. Waterjet Cutting Systems 800 Food Services of America Refrig. Fds. &Fds. Warehousing 710 City of Kent 692 Mikron Industries Mfg. Plastic Moldings 419 REI Recreational Equipment 400 Continental Mills Food Preparation 398 Fred Meyer Retail Sales 402 Linstead Inc. Mfg. Office Furniture 349 Sysco Fd. Svs. of Seattle Food Warehousing 340 Oberto Sausage Specialty meat Sales 320 Tally printer Corp. Computer Components Mfg. 303 Brazos Sportswear Inc. Mfg. Wholesale Sportswear 300 Spider Staging Corp. Scaffolding Equipment 306 Boise Cascade Office Products 296 ~" USF Reddaway Freight System 282 Hunter Douglas Fabrication Mfg. Window Coverings 268 Exotic Metals Forging Co. 256 South Seattle Auto Auction 253 Plush Pippin Corp. Grocery Warehouse/Distribution 237 Laboratory Corp. of America Clinical Lab--Medical 232 Kent Multicare Clinic 225 Summit Windows &Patio Doors Mfg. Aluminum Windows&Doors 206 Source: City of Kent,A"Community Profile";Kent Chamber of Commerce B. Downtown Kent Overview Downtown Kent today provides the foundation for a strong urban core with over 2.1 million square feet of buildings in 408 acres. The historic core area of downtown has approximately $23.1 million of building improvements. It is expected that the north core will realize the most significant shift in development pattern/density over the next 2 to 10 years, followed by the Central Avenue Corridor. HUNTER INTERESTS I N C O R P O R A T E D Table 3 Downtown. Kent 1999 Land and Improvement Values Sub Area Land Improvements South Core $10,833,700 $20,061,150 Historic Core $6,170,700 $23,196,000 Central Avenue Core $8,267,700 $8,114,100 North Core $16,216,900 $103,411,000 East Frame $7,151,200 $17,194,100 West Frame $8,279,000 $2,423,800 North Frame $7,284,600 $5,393,000 Total $64 203 800 $179 793 150 Source: City of Kent A truly vibrant town center/urban center offers an array of primary uses that draw people at different times of the day. Examples of primary uses include performing arts center, theaters, entertainment, civic functions, hotels, conference centers, and destination retail such as bookstores and music stores, Generally, as more and more appropriately positioned primary uses are introduced to an urban environment, downtown market conditions are strengthened and land values will increase. Downtown Kent today offers a strong foundation of primary uses that can be built upon including: churches, library, City Hall, Justice Center, schools, farmers market, post office, medical center, an.6 Kent Commons. However, the current mix of primary uses draws people to downtown predominately during the daytime hours. Therefore, it is critical to add uses that draw people to downtown Kent in the evening hours. The introduction of evening uses will also make downtown Kent a more attractive place to live as will the addition of the commuter rail station which will provide commuters a relatively short 22-minute commute to downtown Seattle from the new urban core. The injection of additional demand generators such as urban housing, the mixed use Borden entertainment development, conference and hotel complex and transit center will have a significant impact on lease rates in downtown, and in turn the viability of new development in the"new urban core." 6 HUNTER INTERESTS I N C O R P O R A T E D Current downtown retail lease rates reportedly cover a wide range from $3.00 triple net up to $ 18.00 triple net for newer space adjacent to the new urban core area. Reportedly downtown office rents range from $11 to $18 triple net with the majority of the downtown supply consisting of the 73,000 square foot Centennial Building, the 25,000 square foot Kent Professional Center, and the 13,660 feet of office space in the Anderson Building. C. Parking Facilities and Services Parking provisions within the defined study area are seen as an essential, and perhaps critical, element to the successful revitalization of the Kent downtown area. As noted earlier, on-street parking is permitted along most roadways within the downtown area, all of which fall within the defined urban core area. The principal factors that have a bearing on the usage levels for on-street parking are as follows: • Location, particularly in relation to key land uses and associated activities • Time restrictions (all day, 2-hour, etc.) • Parking usage costs (i.e., free, metered, etc.) Parking within the defined core area can be broadly categorized based on location (on-street vs. off-street), and by ownership and jurisdiction (public vs. private). Based on inventories conducted by the City, there are currently approximately 539 public spaces and 821 private spaces in the downtown area. 7 HUNTER INTERESTS I N C O R P O R A T E D III. Kent Urban Core Development Strategy A. Strategic Approach to Revitalization and Development The City of Kent is poised to take advantage of growth opportunities in the region through the continued development of its urban core. Hunter Interests recommends an action-oriented, tightly geographically focused development strategy that combines the following key components: • Implementation of key anchor projects that create additional/and or strengthen existing primary uses in the urban core (entertainment, employment, housing, civic functions, etc.). • Tightly clustering new and expanded uses that generate people on the streets during daytime and evening hours. • Placemaking and physical/urban design improvements. • Preservation of the existing urban fabric and historic resources. • Growth in the number of unique small businesses that contribute to a livable urban center. • Skilled and experienced management of the downtown environment on a daily basis. In order for the revitalization effort for downtown to be successful, it is imperative that these components be undertaken simultaneously, not in isolation. The urban core, which is defined as the area between 4`h Avenue, Railroad Avenue, Harrison Street, and James Street will play a key role in all of the preceding key components. The growth of small businesses in downtown Kent is one of the most important goals for the downtown revitalization strategy. However, any strategy to attract small businesses that would contribute to the appeal of downtown Kent must involve the introduction of primary uses that are economic generators for the surrounding mix of establishments. Business attraction programs that rely solely 13 HUNTER INTERESTS I N C O R P O R A T E D on the use of marketing or incentive and loan programs do not address the need to create the necessary pedestrian traffic to support urban retail, food and beverage establishments, and increase the appeal of urban living. The introduction of new daytime and evening primary uses in the urban core will create additional pedestrian traffic at various times of the day. When combined with the other key elements listed above, there will be significant impact on downtown market conditions and development potential. Kent is blessed with an underutilized land mass in close proximity to both existing activity generators such as Justice Center, Kent Commons, Transit Center, historic core, City Hall, and existing office space. This underutilized land mass creates the opportunity to cluster additional generative primary uses such as the planned performing arts center, conference center, Borden mixed use development, and structured parking. When all of the existing and planned generative developments are combined with enhanced streetscape and greenspace in the area, the appeal of urban housing will be strengthened considerably. The new core area will also benefit from the existing historic core and vice versa. These new developments should be linked with view corridors and streetscape to encourage strolling from one district to the other. The reality of historic preservation and the creation of a livable urban center can only be realized with an increase in the number of reasons to visL downtown, which result in a significant increase in the number of people who are downtown. It is critical that key generative attractions, such as a performing arts center, conference center, hotel, and multiplex theater, need to be surrounded by a pleasant,well managed environment with appropriate support infrastructure, such as restaurants, parking, streetscape and �Teenspace. The following sections detail planned generative developments and other infrastructure recommendations as the initiatives which should be considered for the urban core. B. Redevelopment of Borden Site: 1. Development Strategy During the 1980s and 1990s, planners returned to the use of grid systems. They are easy to use in organizing land bays arid blocks, establishing a discernible town pattern and hierarchy of streets, and controlling block size with density to more efficiently organize land use. The downside of grid systems is that they are often too rigid and completely ignore topography, dominant natural features, view corridors and features, and natural land management techniques. A HUNTER INTERESTS INCOR PO RATED In the new millennium, a modified grid system will likely predominate in town planning theory, taking the best features from the old system and avoiding the worst, which created past town-planning extremes. A grid system that is sensitive to block size and density yet which cun,es streets in relation to natural contours and fits the hierarchy of streets into the natural land pattern will likely predominate. The development of the Borden Site represents an exciting opportunity to energize the Kent urban core with a mixed use development that incorporates a modified grid system that ties into the existing downtown grid pattern. We anticipate that the Borden site will include an entertainment-orientated development that includes an extensive :Food and beverage offering, high quality cinemas, entertainment/interactive retail (music store, bookstores, REI-type store), and office space with high density urban residential on upper floors. We recommend that a village green and outdoor function area be incorporated into the urban core with the ability to host diverse activities such as high school band performances, festivals, outdoor concerts, etc. Depending on the eventual design and development components, the Borden site may be an ideal location for the Kent Village Green. The village green should incorporate the ability to move street furniture to meet consumers' needs and maximize usage in inclement weather. The street furnishings and design of Bryant Park in Manhattan is an excellent example of the type of greenspace that is recommended for Kent. Incorporation of greenspace within the urban core will enhance the value of the surrounding developments. In addition to the acquisition of the Barden Site, we strongly recommend that acquisition of the Bank of America site be explored. The Bank of America site is a critical location in the heart of the core. The current development pattern in the new urban core area will have a negative impact on the creation of a pedestrian- oriented urban environment. The addition of the Bank of America site to the Borden site will enhance the overall development potential. Depending on the eventual timing of the development, the City may also want to consider shifting the site of the hotel or conference center to the top of a structured parking garage. This placement would not only create; a visible, attractive icon for Kent's downtown, it would also provide developers with a larger contiguous canvas from which to create the"soul" of the new urban core. A pedestrian system that links with integrated and adjacent residential development should encompass this area. Within the development on-street parking should be provided, with the :majority of parking hidden behind the buildings similar to Redmond Town Center. 10 HUNTER INTERESTS I N C O R P O R A T E D 2. Public and private sector costs The purchase price of the Borden Site is anticipated to be approximately $11.3. It is likely that it will be necessary for the City to write down the land cost as its contribution to the public/private development partnership. Based on current market conditions, land cost subsidies will be necessary to induce the type, quality, and density of development necessary to create a true urban center. The total anticipated value of the completed Borden site development is in the $45 to $60 million range with the City of Kent's Cost in land and infrastructure in the $4 to $12 million range. 3. Impediments The primary impediment to the redevelopment of the Borden site is gaining control of the key site in the new urban core in order to control the manner in which this project is developed. The overall new urban core and downtown Kent development strategy hinges on the development of the Borden site. Therefore, the acquisition of the Borden site and formation of the strategic development partnership are critical first steps in the new urban core's development process. D. Conference Center and Hotel Complex 1. Development strategy The development of a conference center that attracts both out-of-town visitors for conferences, meetings, small tradeshows as well as local residents for small consumers shows, weddings, civic functions, etc. can be a strong primary use for an urban environment provided that the center is surrounded by the appropriate support infrastructure. Many of the elements required for a vibrant town center are the same needed for a successful conference center. These include excellent transportation linkages and a variety of entertainment and food and beverage options for visitors to enjoy in the evening hours, in a safe and pedestrian-friendly environment. Therefore, it is critical that the Borden entertainment development be underway or complete before development of the conference center occurs. In addition, it is preferred that a private sector hotel development occurs in tandem with the conference center development. Although the current Kent-area hotel market conditions would not support additional hotel development, it is believed that the market conditions should improve over the next two to three years. A strengthening of local lodging market coupled with the introduction of lodging demand generators such as a conference center should create interest among private sector developers, especially if well integrated with the mixed use Borden entertainment development. ].1 HUNTER INTERESTS INCOR PO RATED It is recommended that the conference center be planned to be able to host performing arts and other community events. 2. Public sector/private sector costs The cost the conference center is estimated to range from $17.1 to $21.1 million depending on the final design of the facility The total gross square feet is approximately 30,000 square feet to 45, 000 square feet. The likely cost of the headquarters hotel is $22 to $26 million. 3. Impediments An opportunity exists in the South King County market area for a high quality conference facility that combines a price structure slightly below the full service SeaTac-area hotels while offering a much more pleasant atmosphere. The primary impediment to Kent's capitalization on this market opportunity is that the downtown Kent's surrounding environment must be vastly superior in comparison to the SeaTac airport area. As previously discussed, the development of the Borden site and new urban site should be well underway before the conference center can be considered viable. Since a void in the South King County conference market exists is possible that the competitive environment may change in response to this opportunity prior to the Kent conference center development being underway. If significant competitive conference and lodging facilities are added to the South King County marketplace, a shift in the design and orientation of the Center may be warranted. 4. Risks The primary risk is ensuring that the project is developed in a first class manner with the appropriate infrastructure to match the target market's needs. For instance, for the primary demand segments such as state association conferences, it is essential that a downtown hotel be developed in tandem with the conference center. E. Public Spaces and Infrastructure Improvements 1. Parking Parking should be located and integrated with mixed use development in order to serve multiple users at different times of the day. Parking structures should have active ground floor uses such as convenience retail(dry cleaners, food and beverage, news stand,bank, etc.) and should be sun•ounded by thought provoking streetscape 12 HUNTER INTERESTS I N C O R P O R A T E D improvements and public art. Parking structures should also be designed to allow for development on top of the structure, including projects that may require a clear span design such as a performing arts center. The Sound Transit parking garage is planned to have 685 parking spaces as well as 125 surface spaces on the west side of V Avenue just to the north of Smith Street. The garage will be accessed via 2nd Avenue, which will be extended across Smith into the Sound Transit garage site. While this garage is primarily intended to serve commuters, it is ideally positioned to also serve as part of the parking for a mixed use development at the Borden site, which will generate a significant amount of parking demand in the evening and weekends when transit parking demand will be at it is lowest. In addition to the Sound Transit garage, Metro Transit is considering the development of a 400-to 600-space parkin;garage on the east end of the municipal parking lot adjacent to 2nd Avenue and Smith Street. Because of its location in a critical transition area between the site of likely new major development in the new urban core and the historic core, it is critical that buildings and parking structures on this site create a street edge and that there be active ground floor uses in all new buildings, especially parking structures. The inclusion of greenspace and the creation of view corridors from the Borden site to Harrison will help induce pedestrian traffic between the new urban core and the historic core. It is important that pedestrians not perceive that the downtown experience ends at the Metro Parking garage. Like the Sound Transit garage, it is anticipated that the Metro garage would serve multiple uses/developments. This would include existing development, which currently generates parking demand at the municipal parking lot, and the new mixed use development that is anticipated to occur on the southwest quadrant of the parking lot bordering Harrison Street and 4"Avenue. A third major expansion of parking will likely occur within the development of the Borden site as discussed in prior sections. As the Borden site is redeveloped and additional density is added, a fourth potential structured parking site is the current surface parking lot at Kent Commons. Parking at this site would serve Kent 13 HUNTER INTERESTS I N C O R P O R A T E D Commons, development within the southwest quadrant of the Borden site, and infill residential development in the northeast quadrant of the south core. It is likely that as the new urban core is developed, the appeal of high density urban residences will increase over time, which will, in turn, enhance the urban atmosphere. In addition to residential development within the new urban core, it is also anticipated that infill residential development will occur in the historic and south core, and in later stages the West Frame area. 2. Road Improvements Based on the location of the two planned parking garages in the heart of the urban core, Hunter Interests strongly recommiends that traffic calming measures be implemented on Smith Street between 4"' Avenue and ls` Avenue, and on 4"' Avenue between Harrison Street and James Street. This would create a more pedestrian-friendly atmosphere, help define downtown Kent, and enhance public safety. If only one of these roads can be calmed, calming measures should be used on Smith Street. The existing traffic pattern, even with an inclusion of a light at 2'and Smith, will have the effect: of dividing the new urban core from the historic core. It will cause additional vehicular traffic since many consumers will choose to re-park their cars as they would in typical suburban strip development patterns. Traffic calming on Smith will also enhance the potential for creating a definable street edge with development on both sides. 3. Other Redevelopment Recommendations All new and existing streets within the core should be class A as defined by design. Currently 4' Avenue is class A south of Smith but not north, and Smith Street is not class A between 4r' and Railroad. The Pawn Shop site adjacent to the municipal parking lot should be included in the municipal lot development. If possible, a transferable option should be secured by the City. The acquisition of this key site will, in turn, enhance the development potential, and the potential to be the site of key infrastructure development that will enhance the appeal of the entire new urban core as well as the historic core, particularly the adjacent building between Harrison and Meeker Streets. 14 HUNTER INTERESTS I N C O R P O R A T E D IV. Project Imipacts Analysis The City of Kent has a tremendous opportunity to create a vibrant downtown that serves as the heart of the City and South King County. This opportunity has been created by the availability of large underutilized/undeveloped landmasses adjacent to the existing historic core area which provide an existing strong foundation of primary uses. The two key challenges to the realization of a diverse vibrant urban core are: • the development of primary uses that attract people for a variety of reasons and various times throughout the day with a particular emphasis on generating evening traffic and generating demand for existing land uses and other complimentary developments • the developments must occur in a manner that complements the existing development pattern in the historic core and the creation of a pedestrian- friendly urban environment. As a result, the primary measure of impact for primary uses under consideration for development in the new urban core is the amount of direct spending that will be generated in downtown by the primary users, and the impact on the appeal of other developments such as hotel development, urban housing, retail, food and beverage etc. A. Anticipated Impact of Mixed Uie Borden Entertainment Center As cited previously, the redevelopment of the Borden site is the first critical step in the development of the new urban core. Borden's development is critical because first it provides the opportunity to realize the type of development that will be extremely complementary to the proposed hotel, and conference center complex, as well as the transit center. A high quality mixed use Borden development will make each of these projects more appealing to the end-user and will help maximize the capture of spin-off spending from patrons at each of the development components. Without the redevelopment of the Borden site it is likely the hotel and conference center complex will be infeasible. In addition, the transit center will have far less an impact on the appeal of downtown as a residential location without the synergy and critical mass created by the development of Borden. L.. 15 HUNTER INTERESTS I N C O R P O R A T E D It is anticipated that one of the primary roles that the Borden development will play is a place to be entertained. Based on the analysis of the local and regional market area, HII strongly believes that the development of an array of entertainment facilities/experiences is the critical element in the creation of the type of urban environment envisioned for downtown Kent. There are very few entertainment anchors that can match the direct and indirect economic impact of a cinema complex that is carefully integrated into the urban fabric. A high quality cinema in the new urban core will strengthen the environment around it, which will, in turn, give it a competitive advantage due to its location in a unique urban entertainment district that distinguishes itself from the mall experience. It should also be noted that the majority of the research on cineplex impacts deals with shopping mall environments whet-e most early, multiplex and megaplex facilities were constructed. Downtown multiplex developments are more recent and have been studied less, yet they appear to have greater impacts on surrounding area investment and development. Table 4 Borden Entertainment Center Impact of 14-Sclreen Cineplex Annual number of patrons per screen 70,000 Total number of patrons 980,000 Estimated% that will make food and beverage purchase 36% Estimated% that will make retail purchase 14% Avg. food&beverage exp.all theater patrons $4.00 Avg. retail exp. all theater patrons $3.25 Total direct food&beverage spending $3,920,000.00 Total direct retail $3 185 000.00 Sources : Hunter Interests Inc.;ICSC These estimates of retail and food/beverage expenditures are based on exit surveys and research conducted at multipurpose shopping centers which serve multiple market segments. All of these shopping; centers have positioned themselves to 16 HUNTER INTERESTS INCOR PO RATED L attract visitors from greater distances than is the norm for suburban centers. Multipurpose centers have strong food and beverage components, and each to some degree has endeavored to add an element of entertainment to the shopping experience to attract tourists, daytime workers, business visitors, and regional consumers. Average theater patron expenditures at a multipurpose center were $11.10 on retail and $3.00 on food and beverage. Since it is anticipated that the downtown retail offering will not be as dense and diverse as a multipurpose center, the amount of expected retail spending per cinema patron in downtown was estimated to be considerably lower. Conversely, it is anticipated that downtown food and beverage offerings will be more upscale than the typical food and beverage offering in multipurpose centers. Therefore, it is anticipated that the per-person expenditure on food and beverage will be slightly higher in downtown. It is also expected that downtown movie patrons will have a greater propensity to seek a. full night of entertainment, which will increase the amount of food/beverage expenditures. The economics of movie theater development dictates that revenue derived by the mall owners is typically significantly less than other mall tenants, often providing only a 10% return on costs. However, research on the impact of cineplex on retail sales indicates that a 13-screen complex is expected to increase sales by an estimated $22 million to $27 million due to spin-off patronage resulting in a sales boost of over 20%. Consequently, the use; of subsidies to fund cineplex projects as economic anchors is often more favorable than subsidies for department stores, which require free land, virtually no rent, and onsite subsidies as well. Mall research has indicated that restaurants enjoy the largest relative benefit from adjacencies to cineplex complexes. Thus the cineplex is viewed as the key catalyst in the attraction of food and beverage establishments. Conservative estimates indicate that a 14-screen cineplex would generate a minimum of $3.9 million annually in direct spin-off spending iin downtown restaurants, provided an appropriate offering existed. Complementary entertainment-oriented retail such as books, music, and art are the retail categories that will experience the most spin-off benefit. Therefore, the development of the cineplex is extremely complementary to the creation of an arts and entertainment district. It will also help expose PAC's offering to a wider audience, which will, in turn, translate to increased visitation levels. Other types of business that would create a synergistic demand situation would be a high quality day spa, urban entertainment center such as Jillian's or Dave & Buster's, as well as urban housing. Increasing the number of recreational and entertainment opportunities within walking distance of urban housing will t 17 HUNTER INTERESTS I N C O R P O R A T E D enhance the appeal. After all, if new urban core residents are forced to get into their vehicles for a night of entertainment, a significant portion of the urban living experience is lost, as is the marketability of the housing. Research indicates that people in the 18-35 age bracket are increasingly avoiding the malls in search of a more genuine and unique entertainment and shopping experience. The cinema development will act as the cornerstone of the creation of an environment that will appeal to this age bracket, which has readily embraced urban life. More importantly, the attraction of this age segment to the downtown area will create a snowball effect, which will in turn make downtown Kent a hip place to be, live, and work similar to University Village in Seattle. Although entertainment establishments, including restaurants and entertainment retail (i.e. music, book, REI interactive venue) are the critical elements of the Borden development, it can not be the only element in order to be successful and create a true urban environment. It is anticipated that approximately 80,000 to 120,000 square feet of office space will be developed, which in tandem with the development of entertainment and retail facilities/establishment and transportation, will in turn enhance the appeal of residential in the new urban core as well as generating demand. In any true urban environment it is critical to have a residential base which puts people on the streets at a variety of times of day for a variety of reasons. It is anticipated that 175 to 275 residential units (170,000 to 260,000 square feet of residential development) will occur within the Borden development. The following table provides a preliminary estimate of property values and property taxes generated by the Borden development. It should be noted that the amount of square footage of each development component will be modified based on input from the private sector development partner. However, it is important to ensure that each of the components is developed. 113 HUNTER INTERESTS I N C O R P O R A T E D Table 5 Borden Mixed Use Development Estimated Property Values and Annual Property Tax Generated Property`value Annual Property Tax Residential $16,400,000 $47,560 Retail,Food/Beverage,Entertaii $26,800,000 $77,720 Office $10,100,1)00 $29,290 Total $53,300,000 $154,570 Source: Hunter Interests Inc.;City of Kent C. Conference Center Visitor Direct Spending Direct spending impacts from conference center operations result primarily from spending by overnight visitors of conferences, meetings, conventions, and '�- tradeshows. In addition, visitors who drive or fly in for the day and do not require hotel rooms (day-trippers) also generate direct spending, although to a lesser degree. Consumer and public shows generate an even lower direct economic impact because a portion of the attendees are local visitors. Total delegate expenditures are estimated to be $7.0 million in the stabilized year of operation as detailed in Table 7. This estimate is based on: • The estimated overnight and day-tripper attendance • The estimated complete meeting package rate for both day and overnight guests • Data from comparable facilities regarding spending generated • HII's research of the local and regional competitive market and interviews with potential demand generators • International Association of Convention and Visitors Bureaus and Convention Liaison Council data regarding total expenditure levels and type of expenditure. 19 HUNTER INTERESTS I N C O R P O R A T E D N.- Table 7 Kent Conference Center Direct Economic Impact No. of Avg.per capita Total Direct Guest Days Spending Spending Generated Association Conferences and Mtgs. 21,000 $202.00 $4,242,000 Corporate Mtg and Training Programs 8,000 $135.50 $1,084,000 SMERF 5,000 $76.00 $380,000 Civic Functions, Banquets 4,500 $17.00 $76,500 Tradeshows 6,000 $112.50 $675,000 Consumer Shows 23,000 $25.80 $593,400 Total 67,500 $7,050,900 Source: Hunter Interests Inc. Kent will also benefit from induced private development and increased lodging tax revenues. The headquarters hotel developed adjacent to the Conference Center and subsequent hotel development will generate additional hotel occupancy taxes as detailed in Table 8. Hotel occupancy tax revenues have been estimated based on the estimated room night generation from the conference center and additional leisure and commercial demand that wi11 be accommodated at the headquarters hotel. Table 8 Kent Conference Center and Headquarters Hotel Occupancy Tax Generation Average Total Local Room Rate Room Revenue Lodging Tax Room nights generated by Conference Center 39,800 $105 $4,179,000 $41,790 Net new leisure and commercial room nights 17,400 $88 $1,531,200 $15,312 Total 57,200 $57,102 Source: Hunter Interests Inc.;City of Kent 20 HUNTER INTERESTS I N C O R P O R A T E D D. Impact summary A cost benefit analysis indicates that the City's investment in the Borden site will likely provide the most favorable relationship of public sector investment to private, or approximately $5 in private sector to every $1 in public sector investment. The Borden development is also anticipated to generate the most significant amount of tax revenue and direct spin-off spending from its entertainment anchor. Most importantly, the Borden development is the catalyst and essential ingredient in the development of the new urban core. The hotel and conference center complex will not be feasible without the support infrastructure that the Borden development would provide and would not provide the economic return necessary to justify the public sector investment. However, with the appropriate infrastructure in place, the conference center and hotel complex would be an ideal second-phase economic anchor and primary use for the new urban core. The development of the conference center/hotel complex in turn will create a further strengthening of the downtown market conditions and property values. It should be noted that a substantial portion of the direct spending generated by the conference center is represented by hotel room revenues that are largely contingent on the development of a headquarters hotel. `�-- Table 9 Kent New Uurban Core Cost/Benefit Summary Public Sector Direct Land and Private Sector Spending Improvement Cost Investment Generation Image Impact Borden Complex $9 million $54 million $7,105,000 High Hotel&Conference $19.5 million $22 million $7,050,900 Moderate local, Center Complex high out of town Performing Arts Center $16.1 million $11 million $413,573 High Source: Hunter Interests Inc. The impact of parking structures is difficult to quantify. However, based on a review of the current development plan for the new urban core the design of planned parking structures is the second most critical component after the Borden development. The additional investment of $400,000 to $700,000 in parking structures to allow for active first floor uses, such as convenience retail (dry cleaners, prepared foods, coffee shop, etc.) which will make them not look or feel 21 HUNTER INTERESTS I N C O R P O R A T E D like parking structures, will likely provide the public sector one their best return on investments. If the parking structures are not carefully woven into the urban fabric and developed with blank walls, a far greater investment will likely be required in the future in streetscape, signage, and road improvements to overcome the deading effect that the garages will have on the surrounding environment. 22