HomeMy WebLinkAboutORD 2006-104 - Williams Dr Gateway TIRZAN ORDINANCE DESIGNATING A CONTIGUOUS GEOGRAPHIC AREA
WITHIN THE CITY OF GEORGETOWN CONSISTINGOF
APPROXIMATELY APPROXIMATELY
QUARTERS OF iNG THE SOUTHBOUND FRONTAGE ROAD
OF BETWEEN NORTHWESTBOULEVARD ON THE
NORTH!' AND THE NORTHi OF aN GABRIEL RIVER ON
THE SOUTH, •PURPOSES
TO CHAPTER 311 OF i! BOARD OF
DIRECTORS i •CONTAINING
PROVISIONS ! TO THE FOREGOINGAND
PROVIDING
CouncilWHEREAS, the City of of a •
determined that the creationof • by c -r by the Tax
Increment Financing Act, Chapter of the Texas Tax Code,Vernon's•r- •' -
(the "Act") within the area of described in Exhibit•• hereto s
in the best of • Article VIII, Sectionof the Texas
platting,Constitution as the area is predominantly open, underdeveloped and, because of obsolete
r impairs • •, growth of and
plan,WHEREAS, the City has prepared a preliminary reinvestment zone project and
financing • correct copyof -•' hereto as Exhibit: and on
with the City Secretary, which plan provides that a portion of of -• g- a a valorem
constitutingtaxes • be deposited a the hereinafter created tax increment
fund, and that taxes of other taxing units may be utilized of proposed Zone;
i t
intentionWHEREAS, the City, on July 26, 2006 the City provided written notice of the City's
• create the proposed •ne, complying with the requirementsa Section 311.100
Texas Tax •rl_ to the governing body of on property
proposed • -
noticeWHEREAS, a of r- . 2006 public hearing on • of
Isroposed Zonepublished • -t t- # 2006 in the Williamson County
newspaper of •°.•.neral circulatii and
WHEREAS, formal presentations were made to other taxing entities on August 7, 2006
and August 8, 2006; and
Ordinance No. Q amp - 10 1
Williams Drive Gateway Tax Increment Reinvestment Zone
Page 1 of 7
WHEREAS, at the public hearing on September 26, 2006 interested persons were
allowed to speak for or against the creation of the proposed Zone, its boundaries, or the concept
• tax increment financing and • • property in the proposed • were given a
reasonable •rr• to protest the inclusion • their property in the proposed • and
WHEREAS, evidence was received and presented at the public hearing in favor of the
creation of the proposed Zone and its boundaries under the provisions of Chapter 311, Texas
Tax Code; and
WHEREAS, no owner of real property in the proposed zone protested the inclusion of
his property in the proposed Zone; and
WHEREAS, not more than 10 percent of the property within the proposed Zone is
currently used for residential purposes, as that term is defined in Section 311.006(d) of the Texas
Tax Code; and
WHEREAS, the City has provided all information, and made all presentations, given all
notices and done all other things required by Chapter 311, Texas Tax Code, or other law as a
condition to the creation of the proposed • and
WHEREAS, the City has not previously created any tax increment reinvestment zones
or any industrial districts; and
WHEREAS, the total appraised value of taxable real property in the proposed Zone does
not exceed 15 percent of the total appraised value of taxable real property in the City.
Section 1. Findings. a) That the facts and • contained in the preamble of
this Ordinance are hereby found and declared to be true and correct and are adopted as part of
this
•• for all purposes.
b) That the City Council further finds and declares that the proposed improvements in
the Zone will significantly enhance the value of all the taxable real property in the proposed
zone and will be of general benefit to the City.
c) That the City Council further finds and declares that the proposed reinvestment Zone
meets the criteria and requirements of Section 311.005 of the Texas Tax Code because -
(1) The proposed Zone substantially impairs and arrests the sound growth of the
City, retards the provision of housing accommodations, constitutes an economic
Ordinance No. a7 ()OU - I OH
Williams Drive Tax Increment Reinvestment Zone
Page 2 of 7
and social liability and is a menace to the public health, safety, morals, or welfare
in its present condition and use because of:
a. the predominance of defective or inadequate sidewalk or street layout;
and/or
b. faulty lot layout in relation to size, adequacy, accessibility or usefulness;
and/or
(2) The proposed Zone is predominantly open and, because of obsolete platting,
deterioration of structures or site improvements, or other factors, substantially
impairs or arrests the sound growth of the City.
d) That the City Council, pursuant to the requirements of Chapter 311, Texas Tax Code,
further finds and declares:
(1) That the proposed Zone is a contiguous geographic area located wholly with
the corporate limits of the City of Georgetown; I
(2) That the total appraised value of taxable real property in the proposed Zonl
does not exceed fifteen •' • the total r•'. value • taxable re,
property in the City and in the industrial districts created by tlie City. -
(3) That the proposed Zone does not contain more than fifteen percent of the total
appraised value of real property taxable by Williamson County;
(4) That the development or redevelopment of the property in the proposed Zone
will not occur solely through private investment in the reasonably foreseeable
future;
(5) That less than ten percent of the property in the proposed Zone is used for
residential purposes within the meaning of Section 311.006(d), Texas Tax Code;
and
• That the improvements proposed to be implemented in the proposed
reinvestment
• will significantly enhance the value of all taxable real
property *in the proposed reinvestment Zone.
e) The City Council finds and declares that the creation of the Zone is in conformance
with the following Policy Statements in the City's Century Plan:
Ordinance No. r.2 cro Cp .-10
H
Williams Drive Tax Increment Reinvestment Zone
Page 3 of 7
1.0 The community enjoys the benefits of well-planned land use in which conflicting
needs are balanced.
9.0 Citizens and commercial goods move safely and efficiently throughout all parts of
the City.
10.0 Georgetown's citizens and businesses enjoy an attractive community with a
unique sense of place and a positive, identifiable image, at a cost which is consistent
with other city social and economic priorities.
13.0 All municipal operations are conducted in an efficient business -like manner and
sufficient financial resources for both current and future needs are provided.
15.0 The City manages its resources in a sound and fiscally conservative manner.
Section 2. Designation of the Zone. That the City, acting under the provisions of
Chapter 311, Texas Tax Code, including Section 311.005(a), does hereby designate as a
reinvestment zone, and create and designate a reinvestment zone over, the area described in
Exhibit "A" to promote the redevelopment of the area. The reinvestment zone shall hereafter be
named for identification as "Reinvestment Zone No. 3, City of Georgetown" (the "Zone"), which
also may be referred to as the Williams Drive Tax Increment Reinvestment Zone.
Section 3. Board of Directors. That there is hereby created a Board of Directors for the
Zone, which shall consist of five (5) members.
The directors appointed to Positions One, Three and Five shall be appointed for tw•
year terms, beginning on effective date of the zone while the directors appointed to Positio
Two and Four shall be appointed to one year terms beginning on the effective date of the Zon
All subsequent appointments shall be appointed for two-year terms. The member of the Boar
of Directors appointed to Position One is hereby designated to serve as chair of the Board
Directors for the term beginning on the effective date of the Zone, and ending upon
expiration of the initial term of Position One. Thereafter the City Council shall annua
n
nominate and appoint a member to serve as chair for a term of one year beginning January 1
1
the following year. The City Council authorizes the Board of Directors to elect from i
members a vice chairman and such other officers as the Board of Directors sees f*
Notwithstanding the foregoing, the term of any City Council member serving on the Board
Directors shall automatically expire when their term on the City Council ends.
The Board of Directors of the Zone shall comply with Chapter 551, Texas Government
Code (the Open Meetings Act) and Chapter 552, Texas Government Code (regarding public
records and information). The Board of Directors shall make recommendations to the City
Council concerning the administration of the Zone. The Board of Directors shall prepare or
Ordinance No. dOOke - 10!J
Williams Drive Tax Increment Reinvestment Zone
Page 4 of 7
cause to be prepared and adopt a project plan and a reinvestment zone financing plan for
Zone as described 'in Section 311.011, Texas Tax Code, and shall submit such plans to the Ci
Council for its approval. The City, pursuant to Section 311.010(a) of the Texas Tax Code hereb
authorizes the Board of Directors to exercise all of the City's powers necessary to admMiist
manage or operate the Zone and to prepare the project plan and reinvestment zone financi
plan, 'including the submission of an annual report on the status of the Zone. Notwithstandi
el
the foregoing, the Board of Directors shall not be authorized to issue tax increment bonds
notes, impose taxes or fees, exercise the power of eminent domain or give final approval to t
project plan and reinvestment zone financing plan. The Board of Directors of the Zone may n
exercise any power granted to the City by Section 311.008 of the Texas Tax Codo
additional and prior authorization from the City.
Section 4. Duration of the Zone. That the Zone shall take effect immediately upon the
passage and approval of this Ordinance, and termination of the operation of the Zone shall
occur on December 31, 2031, or at an earlier time designated by subsequent ordinance of the
City Council in the event the City determines in its sole discretion that the Zone should be
terminated due to insufficient private investment or other good cause, or at such time,
subsequent to the time that all project costs, tax increment bonds, notes and other obligations of
the Zone, and the interest thereon, have been paid in full.
Section 5. Tax Increment Base; Amount of Tax Increment. That the Tax Increrne
Base of the City or any other taxing unit participating in the Zone for the Zone is the tot
appraised value of all real property taxable by the City or other taxing unit participating in
Zone and located in the Zone, determmied as of January 1, 2006, e year in w ic one w
designated as a reinvestment zone (the "Tax Increment Base"). The amount of the t
increment for a year is 100% of propertv taxes levied and collected by the City Td allZor
th�
portion of property taxes of other taxing units participating in the Zone and located in e o
t.? 11 raise]
, -i-igt fortk 2i�i
Value of real property taxable by City or other taxing unit participating in the Zone and locate
in the Zone. The Captured Appraised Value of real property taxable by City or other taxi
tmidv!I
by the unit and located in the Zone for that year less the Tax Increment Base. I
Section 6. Tax Increment Fund. That there is hereby created and established a Tax
Increment Fund for the Zone which may be divided into subaccounts as authorized by
subsequent resolutions or ordinances. All Tax Increments, as defined herein and in the Texas
Tax Code, shall be deposited in the Tax Increment Fund. Any expenditure to be made from the
Tax Increment or any contract related thereto, must be approved by the City Council prior to
such expenditure being made or contract beffig executed. The Tax Increment Fund and any
subaccount shall be maintained at the depository bank of the City and shall be secured *in the
manner prescribed by law for funds of Texas cities. The annual Tax Increment less any
amounts that are to be allocated pursuant to the Act shall be deposited directly into the Tax
Ordinance No. 900&#. (OH
Williams Drive Tax Increment Reinvestment Zone
Page 5 of 7
Increment Fund. All revenues from the sale of any tax increment bonds, notes or other
*bligations hereafter issued for the benefit of the Zone by the City, if any; revenues from the
sale of property acquired as part of the project plan and reinvestment zone financing plan, if
any; and other revenues to be used in the Zone shall be deposited into the Tax Increment Fund.
Prior to the termination of the Zone, money shall be disbursed from the Tax Increment Fund
only to pay project costs, as defined by the Texas Tax Code, for the Zone, to satisfy the claims of
holders of tax increments bonds or notes issued for the Zone, or to pay obligations incurred
pursuant to agreements entered into to implement the project plan and reinvestment zone
financing plan and achieve their purpose pursuant to Section 311.010(b) of the Texas Tax Code.
Section 7. Purpose of Zone. That the City Council hereby finds that the creation of the Zone
and the expenditure of moneys on deposit in the Tax Increment Fund necessary or convenient
to the creation of the Zone or to the implementation of the pro'ect plan for the Zone constitutes
J
a program to promote local economic development and to stimulate business and commercial
activity in the City. The City Council further finds that the Zone will facilitate a program of
public improvements to allow and encourage the development and redevelopment of
downtown Georgetown into a mixed use, pedestrian oriented environment consistent with the
goals of the City's Downtown Master Plan. Construction of the public improvements is
anticipated to take place in phases over a number of years and timed in coordination with new
development and redevelopment pr jects in the Zone.
01
Section 8. Severability. If any provision, section, subsection, sentence, clause or p rase
of this Ordinance, or the application of same to any person to set circumstances, is for any
reason held to be unconstitutional, void or invalid, the validity of the remaining provisions of
nereilly, 1 Te in T Te nTelpfe 1 4
or regulations connected herein shall become inoperative or fail by reason of any
unconstitutionality, voidness or invalidity of any portion hereof, and all provisions of this
Ordinance are declared severable for that purpose.
Section 9. Open Meetings. It is hereby found, determined and declared that a
;wfficient written notice of the datei. hour -j -dace and sub."ect of the me—efing of the CitW Council at
which this Ordinance was adopted was posted at a place convenient and readily accessible at all
times to the general public at the City Hall of the City for the time required by law preceding its
C eeting, as required by the Open Meetings Law, Texas Government Code, Ch. 551, and that
this meeting has been open to the public as required by law at all times during which this
Ordinance and the subject matter hereof has been discussed, considered and formally acted
upon. The City Council further ratifies, approves and confirms such written notice and the
contents and posting thereof.
Ordinance No S)000-104
Williams Drive Tax Increment Reinvestment Zone
Page 6 of 7
Council of Georgetown at a regular meeting on October 26, 2004, at which a quorum was
present and for which due notice was given pursuant to Section 551.001, et. seq. of the Texas
Government Code.
READ, CONSIDERED, PASSED AND APPROVED ON SECOND AND FINAL
READING by the City Council of Georgetown at a regular meeting on the October 10, 2006, at
which a quorum was present and for which due notice was given pursuant to Section 551.001,
et. seqof the Texas Government Code.
9 . I
6ary Noon, Mayor
City of Georgetown, Texas
ATTEST
- Sandra Lee
City Secretary
APPR7: AS,O FORM:
By: * CC� L
Patricia Carls
City Attorney
Ordinance No. —�W
All
AEST 184B
GEORG�ETOWN
TEXAS
Williams Drive
Gateway T.I.R.Z.
NE,
Legend
Proposed T.I.R.Z.
-Y, Boundary
Property Line
!,Z4
Ri
ver
. . . . . . . . . . Water Body
Cartographic Data For
General Planning Purposes Only
f
slob
0 500
NOEL -JMML- Feet
I inch equals 500 feet
PROJECT PLAN
AND
REINVESTMENT ZONE FINANCING PLAN
WILLIAMS DRI VE GA TE WA Y REINVESTMENT
ZONE
June 2006
TABLE OF CONTENTS
I.
INTRODUCTION
I-1
Il.
PROJECT PLAN
II-1
A.
Existing Uses and Conditions (311.011(b)(1))
II-1
B.
Municipal Ordinances and Agreements (311.011(b)(2))
II-1
C.
Zone Non -Project Costs (311.011(b)(3))
II-1
D.
Relocation (311.011(b)(4))
II-1
III.
FINANCING PLAN
III-1
A.
Project Cost Description (311.01 l(c)(1))
III-1
B.
Location of Proposed Public Improvements (311.011(c)(2))
III-1
C.
Anticipated Budget for Project Costs
III-1
D.
Economic Feasibility Study (311.011(c)(3))
III-2
E.
Estimate of Bonded Indebtedness to be Incurred (311.011(c)(4))
III-2
F.
Time of Incurring Monetary Obligations (311.011(c)(5))
III-2
G.
Method of Financing (311.011(c)(6))
III-2
H.
Current Appraised Value/Captured Appraised Value (311.011(c)(7)(8))
III-3
I.
Duration of the Zone (311.011(c)(9))
III-3
IV.
BOARD OF DIRECTORS OF THE ZONE
IV-1
TABLE OF EXHIBITS AND APPENDICES
Exhibit A Map Indicating Existing Conditions
Exhibit B Zone Boundary Map
Exhibit C Preliminary Project List
Exhibit D Projected Captured Appraised Value and Tax Increment
Appendix 1 Economic and Market Feasibility Studies
L INTRODUCTION
Williams Drive Gateway Reinvestment Zone (the "Zone") is a tax increment reinvestment zone,
proposed to be designated by the City of Georgetown (the "City") pursuant to the Tax Increment
Financing Act, as codified in Chapter 311 of the Texas Tax Code (the "Act"). The Zone is
proposed to cover approximately 70(+/-) acres, is located entirely in Williamson County (the
"County") and within the corporate limits of the City, and is generally located approximately one
half mile along the southbound frontage road of Interstate 35, between Northwest Boulevard on
the north end and the north fork of the San Gabriel River on the south. The Zone is proposed to
be created for a 25-year duration.
The Zone will facilitate a program of public improvements to allow and encourage the
development and redevelopment of downtown Georgetown into a mixed use, pedestrian oriented
environment consistent with the goals of the City's Williams Drive Gateway Redevelopment
Plan. Construction of the public improvements is scheduled to take place in phases over a
number of years and timed in coordination with new development and redevelopment projects in
the Zone.
Public improvements scheduled for the Zone include, but are not limited to, the construction of-
(i) sidewalks, cross walks and pedestrian crossing systems (ii) storm sewers and drainage ponds,
(iii) sanitary sewers, (iv) landscaping, streetscape, fountains, works of art, and street furniture,
(v) plazas, squares, pedestrian malls, trails, and other public spaces, (vi) parking lots and
roadways, (vii) utility line relocation and installation, (viii) water system improvements (ix)
parks, and outdoor performance spaces, (x) bicycle routes and facilities, (xi) public
transportation projects, (xii) signage, and (xiii) other related necessary or convenient public
improvements (collectively, the "Project Costs").
I-1
H. PROJECT PLAN
A. Existing Uses and Conditions (311.011(b)(1))
The City will designate approximately 70 (+/-) acres as Williams Drive Gateway Reinvestment
Zone. Exhibit n is a map illustrating the existing conditions of property within the Zone, as
required by Section 311.011 (b)(1) of the Act. The area currently includes several different uses
including retail, restaurant, office, institutional and limited residential. The purpose of the Zone
is to facilitate a program of public improvements to allow the development and redevelopment of
Williams Drive Gateway area into a mixed use, pedestrian oriented environment consistent with
the goals of the City's Williams Drive Gateway Redevelopment Plan.
For illustrative purposes, Exhibit B depicts the vicinity and boundaries of the Zone.
B. Municipal Ordinances and Agreements (311.011(b)(2))
All of the property located within the Zone is within the corporate limits of the City.
The City has agreed to participate in the Zone by contributing 100% of its tax increment.
The proposed development does not anticipate any additional changes to the City's
comprehensive plan, City ordinances or building codes other than those relating to the creation
of the Zone or those ordinances or comprehensive plan amendments already approved by the
City for the development.
C. Zone Non -Project Costs (311.011(b)(3))
Non -Project Costs represent the expenditures estimated by public and private investors necessary
to complete the development and redevelopment efforts in the Williams Drive Gateway area. It
is difficult to quantify the maximum extent of non -project costs as these investments will happen
over time by multiple parties. Over the life of the reinvestment zone it is anticipated that
substantial new investment will occur within the zone.
D. Relocation (311.011(b)(4))
No residential relocation will be required as apart of the creation of the Zone. Less than 10% of
the property within the Zone is currently used for residential purposes.
III. FINANCING PLAN
A. Project Cost Description (311.011(c)(1))
Project Costs will include all costs associated with the projects listed in I'Aiiibit (' and will
include:
1. Capital Costs
a. water system improvements;
b. storm sewers and drainage ponds;
C. sanitary sewers;
d. utility line relocation and installation;
e. parking lots and roadways;
f. streetscape and landscape areas;
g. public areas and plazas;
h. sidewalks, cross walks and pedestrian crossing facilities;
i. parks, trails and outdoor performance areas;
j. public transportation projects; and
k. bicycle routes and facilities.
2. Design, Architectural, and Engineering Fees
The public improvements will require professional services for design and engineering,
including inspecting/testing of soils and construction materials and overseeing
construction operations. Additionally, certain studies, including market and economic
feasibility studies will be prepared.
3. Zone Administration - Over 25-Year Life of Zone
The ongoing administration of the Zone will require services including, but not limited
to, such services as accountants and bookkeepers, engineers, legal counsel, planners or
other administrative services deemed necessary by the Zone Board to implement this
Plan.
B. Location of Proposed Public Improvements (311.011(c)(2))
The approximate location of the proposed public improvements, as required to be demonstrated
by Section 311.011 (c)(2) of the Act, is shown on I'Aiiibit 11, which follows. The public
improvements will be constructed in phases consistent with the development and redevelopment
of properties within downtown Georgetown.
C. Estimate of Project Costs
Project Costs will vary depending on the nature, timing and number of development and
redevelopment projects within the Zone. It is anticipated that total Project Costs will not exceed
$25,000,000. Project Cost expenditures will vary from year to year and may range from
$500,000 to $1,000,000 annually. Such Project Costs may be paid from the tax increment on
deposit from time to time in the Fund, defined below, or through the issuance of bonds, notes or
other obligations (the "Obligations").
D. Economic Feasibility Study (311.011(c)(3))
A market analysis and recommended action plan as well as a master plan for the proposed Zone
have been conducted. See Appendix 1 for a copy of these studies.
E. Estimate of Obligations to be Incurred (311.011(c)(4))
The City will finance certain Project Costs described above necessary to develop the property in
the Zone. The City will finance such Project Costs through using funds on deposit in the Fund,
the issuance of Obligations or any combination thereof depending upon the growth of the tax
increment and the number of other taxing jurisdictions participating in the Zone. The City
estimates that it will issue Obligations in one or more series in an aggregate amount not to
exceed $25,000,000 at such time and amount as financially feasible based upon the tax increment
and the nature and scope of development and redevelopment projects within the zone.
F. Time of Incurring Monetary Obligations (311.011(c)(5))
The repayment term on any Obligations issued is estimated at 20 years. It is anticipated that
Obligations will be issued no sooner than City of Georgetown fiscal year 2007.
G. Method of Financing (311.011(c)(6))
Any Obligations issued by the City will be secured in whole or in part by ad valorem taxes
collected by the City on the incremental increase in the assessed value of real property located
within the Zone.
For purposes of this financing model, it is anticipated that the City will participate in the Zone at
a participation rate equal to 100% of its total tax rate. The City anticipates requesting the County
to participate in the Zone.
The City will establish a Tax Increment Fund (the "Fund") for the Zone in the ordinance
designating the Zone. In accordance with Section 311.013 of the Act, each participating taxing
jurisdiction will pay into the Fund the amount of increment generated by the taxing jurisdiction.
The tax increment deposited into the Fund will be used to pay Project Costs, Obligations issued
to finance Project Costs and costs related to maintaining, operating and administering the Zone.
H. Current Appraised Value/Captured Appraised Value (311.011(c)(7)(8))
The Plan will be implemented in part through the Zone's ability to capture and utilize
incremental ad valorem tax revenue generated from real property in the Zone, known as the
captured appraised value. The base value, from which captured appraised value is calculated, is
the total assessed taxable value of all property within the Zone on January 1, 2006, as shown on
the rolls of the Williamson County Appraisal District.
III - 2
The development and redevelopment in the Zone is anticipated to occur over a number of years,
the projected captured appraised value will increase as development continues. Exhibit D shows
the projected captured appraised value and tax increment over the 25-year duration of the Zone.
I. Duration of the Zone (311.011(c)(9))
The Zone will have a duration of 25 years.
III - 2
IV. BOARD OF DIRECTORS OF THE ZONE
The City will create a Zone Board of Directors composed of 5 members in the Ordinance
designating the Zone. It is anticipated that other taxing entities within the Zone will waive
appointment to the Board of Directors. However, if the County participates in the Zone, and
does no waive appointment, the County will be entitled to appoint one director to the Board of
Directors. The City will appoint the remaining four members of the Board of Directors.
The Board of Directors of the Zone will prepare (i) an Annual Zone Budget; (ii) an Annual
Report of Zone activities; and (iii) an Annual Financial Statement prepared in accordance with
Generally Accepted Accounting Principles for presentation to the City.
IV-1
EXHIBIT A -MAP INDICATING EXISTING CONDITIONS AND
ZONE BOUNDARYMAP
EXHIBIT B — PRELIMINARYPROJECT LIST
Project
1. Construct additional surface and structured parking
2. Re -configure on -street parking to maximize number of spaces
3. Install additional landscaping around existing surface parking lots
4. Develop a master landscape and streetscape plan
5. Expand pedestrian amenities throughout zone to include: bike racks, benches, trash
cans, lighting, public restrooms, public art, pedestrian crossing systems
6. Construct new City and County offices and facilities within the zone
7. Develop additional small parks within the zone
8. Construct and outdoor performance space
9. Add public art along sidewalks
10. Create a scenic overlook for the San Gabriel River
11. Bring all sidewalks into compliance with Downtown Master Plan sidewalk hierarchy
12. Install brick crosswalks
13. Install pedestrian controlled street crossings
14. Create bike routes
15. Create a public transit shuttle service to downtown
16. Create additional housing units
17. Create a hotel and convention site
18. Create a wayfinding si na a program and install si na e
19. Improve signage along trails
20. Bury overhead utility lines
21. Replace and upgrade water and sewer lines
22. Build a regional water quality system for the zone
23. Make Williams Drive more pedestrian friendly
APPENDIX I - MARKETANALYSISAND DOWNTOWN MASTER PLAN
Williams. Drive Gateway
Market Feasibility Analysis
Prepared for
Mr. James Hill
Civic Design Associates
2136 Kipling Street
Houston, Texas 77098
by
Capitol Market Research, Inc.
605 Brazos Street, Suite 300
Austin, Texas 78701
(512) 476-5000
on
November 23, 2005
■o+ij,:
II.:_,.�r,.�
�l•� L�wi
Real Estate Research, Land Development Economics & Market Analysis
November 23, 2005
Mr. James Hill
Civic Design Associates
2136 Kipling Street
Houston, Texas 77098
Re: Market Feasibility Analysis for the residential and retail components of a proposed
mixed -use redevelopment project to be constructed at the intersection of Williams Dr. and
IH-35 in Georgetown, Texas
Dear Mr. Hill:
The potential for mixed -use development at the Williams Drive Gateway is specified in the report
that follows. The market demand for retail and multifamily residential development is identified,
and a forecast for the Gateway area is prepared. The resulting demand analysis is combined
with data on future supply and an assessment of the characteristics of the redevelopment site,
which results in a potential absorption forecast for the subject property.
The analysis and forecast is shown in the report that follows. We invite you to review the report
and contact us with any questions or comments you may have.
Respectfully submitted,
CAPITOL MARKET RESEARCH, INC.
Charles H. Heimsath, AICP
President
CHHlmm
Capitol Market Research, Inc.
605 Brazos, Suite 300
Austin, Texas 78701, (512) 476-5000
cheimsath@cmraustin.com
TABLE OF CONTENTS
TABLE OF CONTENTS
List of Tables
iv
Site Analysis and Neighborhood Data
Static Attributes
1
Legal Attributes
Dynamic Attributes
2
Environmental Attributes
2
Demographic Trends and Forecasts
6
Historical Trends
6
Forecast
6
Austin Retail Market Conditions
11
Retail Market Overview
11
Current Market Conditions
11
Georgetown Retail Market Conditions
14
Overview
14
New Construction
14
Occupancy & Absorption
14
Average Rents
14
Market Outlook
14
Market Area Purchasing Power
17
Estimates of Purchasing Power
18
Planned Retail Development
19
Georgetown Gateway Retail Absorption
21
Multifamily Market Trends in the Austin MSA
22
Apartment Market Overview
22
Current Market Conditions
22
Georgetown Apartment Market Conditions
24
Overview
24
New Construction
24
Occupancy
24
Average Rents
24
Market Outlook
24
Planned Projects in the Georgetown Market Area
27
Market Area and Subject Absorption Forecast
29
Current Market Conditions
30
Townhome and Condominium Demand
32
Georgetown Townhome/Condominium Market Conditions
33
Overview
33
New Construction
33
Absorption
33
Pricing
33
Market Outlook
33
Gateway Area Townhome/Condominium Absorption Forecast
36
Conclusions
37
APPENDIX
38
CERTIFICATE
39
III
List of Tables
Page
Table (1)
Table (2)
24-hour Traffic Volumes
Population and Household Growth by Tract: Market Area, Williamson County
2
and Austin MSA: 1990 — 2000
7
9
Table (3)
Market Area Household Forecast: 2000 — 2015
10
Table (4)
Market Area Multi -Family Forecast: 2000 — 2015
13
Table (5)
Retail Market Summary: 1991 — 2005
15
Table (6)
Georgetown Market Area Retail Summary: October 2005
Table (7)
Current Purchasing Power
17
is
Table (8)
Estimated Purchasing Power
20
Table (9)
Table (10)
Supply and Demand Comparison
Supply and Demand Comparison: Georgetown Gateway Project Area
21
Table (11)
Citywide Apartment Summary: 1991 — 2005
23
Table (12)
Georgetown Market Area Apartment Summary: 1995 — 2005
25
Table (13)
Competitive Multifamily Sites
27
28
Table (14)
Proposed Project Timing
28
Table (15)
Subject Absorption Forecast
31
Table (16)
New Townhome/Condo Sales: Austin MLS Region
32
Table (17)
Market Area Townhome/Condo Demand: 2000 — 2015
Table (18)
Georgetown Market Area Condominiumrrownhome Sales
34
Table (19)
Georgetown Gateway Condominiumrrowhome Absorption: 2005 — 2015
36
iv
Site Analysis and Neighborhood Data
In order to fully explore the market and development feasibility of the subject property, it is necessary to
analyze the site and neighborhood attributes and characteristics. These attributes can then be assessed
in order to determine their relative importance to the potential for commercial development of the site.
Characteristics felt to be most relevant to the subject site are outlined below and are followed by a more
detailed discussion of each.
1. Static Attributes - the physical characteristics of the site and existing structures that comprise
the subject property.
2. Legal Attributes - consists of public controls and potential legislation restricting and defining use,
such as zoning (existing and proposed), and other restrictions that may enhance or adversely
affect the subject.
3. Dynamic Attributes - characteristics with potential to affect project viability both on and off the
subject site including access, exposure, and neighborhood characteristics.
4. Environmental Attributes - impact of physical, social and economic factors such as drainage,
floodplain and compatibility with the immediate neighborhood.
Static Attributes
Size and shape: Approximately 58.68 acres total, consisting of several contiguous parcels, with
an irregular shape
Location: The subject site is located on the southbound frontage of IH-35, where it
intersects with Williams Drive in Georgetown, Texas. It is bordered on the
north by Northwest Blvd., bisected by Williams Dr. and bordered on the south
by the San Gabriel River.
Flood Plain: According to the Flood Hazard Map produced by ESRI/FEMA Project Impact, a
small portion of the subject property (along the San Gabriel River) lies within
the 100-year flood plain. Further consultation with an engineer is
recommended.
Topography: The site is relatively flat with vacant tracts of land in the far northern and far
southern portions of the study area. At the southern end of the study area, the
land drops off sharply toward the north fork of the San Gabriel River.
Legal Attributes
The subject property is located within the City of Georgetown city limits, and is subject city zoning and site
plan regulations. There are five zoning districts that make up the study area: C-1 (Local Commercial), C-3
(General Commercial), OF (Office), RS (Residential Single -Family) and TF (Two Family).
Capitol Market Research (CMR) obtained from the Williamson Central Appraisal District the 2005 tax roll
that includes a property "structure code" that can be used to establish land use. The appraisal data
shows total land value within the study area of $7,082,991 and total improved property value of
$8,979,338 and a total assessed value of $16,062,329, The land use map shows a concentration of
commercial uses throughout the study area, residential uses on both sides of Williams Dr., north of Park
Lane/Cedar Drive and vacant land in the far northern and southern portions of the study area. Both land
uses and values represent the current conditions as of September 30, 2005.
Dynamic Attributes
The site is located on and may be accessed from IH-35, Williams Drive (FM 2338) and Northwest Blvd.
Traffic counts shown in Table (1) indicate that IH-35 and Williams Drive are the major arterials that may
be quickly accessed from the subject site.
Table (1)
24-hour Traffic Volumes
LOCATION
1968
19^.2
1976
1980
1984
1988
1992
1997
2002
IH-35
North of 195
n a.
n a.
n a.
n a
n.a.
n.a.
37780
50240
62300
Al Berry Creek
9980
11640
17150
17600
n.a.
31120
38470
59830
72230
South of Airport Road
8180
10720
15710
16800
n a.
31780
39460
61810
73030
South of San Gabriel River North
9830
11420
19250
20000
n a.
44270
55430
75290
99970
North of San Gabriel River South
9880
11690
19290
22000
40500
45770
56630
86400
104890
South of FM 2243
9720
11640
18400
23000
39010
44570
53700
87470
101930
I1-11-35 BUSINESS
At San Gabriel River
5880
7890
12250
13500
n.a
17740
15950
20220
22540
North of FM 2338
2610
3730
6340
9400
n.a
11050
12340
17950
18350
SH 29
West of IH 35
1100
1700
2180
2800
no
5690
7030
13640
19160
East of1H 35
1890
2710
3540
4700
na
8000
13720
17480
22470
FM 2338 (Wl1.1.1AMS DR)
West oflH 35 Business
3250
4100
8790
12300
na
17250
20410
22530
22360
West of IH 35
2650
3170
10390
13200
n a
21260
23520
31400
36580
South of Co Rd 264 (Booty's Cro!
530
960
3810
5500
n a
15290
15440
21260
29690
NORTHWEST BLVD
West oflH35
na.
n.a.
n.a.
n.a.
n.a.
n.a.
2610
3110
2720
.\'uur, e: 'rnC d.: : rulhe Vdwicr
Land uses in the area include several established neighborhoods, vacant parkland along the San Gabriel
River, and nearby shopping centers such as The Rivery, located in the southern portion of the subject
study area along IH-35, and Wolf Ranch, which is nearing completion and is located at SH 29 and IH-35,
approximately 1.4 miles southwest of the study area. The subject site has frontage on IH-35 and is
bisected by Williams Dr. (FM 2338) and has excellent access to both major arterials.
Environmental Attributes
According to Flood Hazard Map produced by the Federal Emergency Management Agency (FEMA) and
ESRI Project Impact, a portion of this approximately 58.68-acre site lies within the designated 100-year
floodplain. Further consultation with an engineer is recommended.
2
Exhibit A Study Area Boundary
Page 7
City of Georgelown, Texas
Williams Drive Gateway
�--- - _ 2005 Land Uses
�\ h
y WCAD Land Uses
Single Familiy
j Multi -Family
IDuplex
Vacant
� Commercial
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Prepurod by Caphol Motko(Rosoon:h, October 2005!_
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Williams Drive Gateway
2005 Zoning Districts
1
t'• ��! -,,, ._ City of Georgetown Zoning Districts
C-1: Local Commercial ,� •�
/ C-3: General Commercial ; 2
Offic
OF: Residential
/\V\ • ' � IRS:Residential Single -Family
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-----� — Tgr48491wat.shp
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i i .
Demographic Trends and Forecasts
Historical Trends
The defined Georgetown market area has experienced a significant amount of population and household
growth since 1990 when the area had 21,986 people living in 7,889 households. Total population in the
subject area census tracts grew from 23,283 in 1990 to 42,151 in 2000, an increase of 81.04%. The
18,868-population increase during the 1990s was approximately 17.09% of total household growth in
Williamson County and 4.03% of the growth experienced in the Austin MSA. However, recent trends in
new building permits issued in the market area suggest that the aggregate rate of growth has increased
since the late nineties, with the development of several new single-family subdivisions west of IH-35.
Viewed from the perspective of existing home sales, the Georgetown market area has accounted for
approximately 4.47% of MLS homes sales in the Austin region since 2000 and 15.28% of sales in
Williamson County. This level of activity indicates a strong market demand for housing in this part of the
region. New construction in the Georgetown market area added more than 4,000 new units to the market
area from 2000 through the end of 2004, and accounted for 6.3% of the growth in the Austin MSA and
17.7% in Williamson County.
Forecast
After reviewing the historical capture rate, new home sales and recent MLS activity in the market area,
and recognizing that the market area has a substantial amount of undeveloped land in inventory, a
market area population and household forecast has been prepared and is shown in Table (3) on page 9.
The household forecast shows a potential growth of approximately 1,403 new households added in the
market area on an annual basis. According to the 2000 census, approximately 23.1% of the existing
households were renters, and this is down by 10.6 percentage points from 33.7% in 1990. Because this
area has an abundance of vacant land and a number of large scale single-family developments planned,
it seems likely that the overall market will continue to be dominated by owner -occupied single-family
housing. However, the increasing demand for well located rental housing and movement away from
traditional single family development as the predominate housing type in the market area should result in
an increase in the demand for multifamily housing in the market area. Consequently, CMR has assumed
a modest increase in the historical tenure split (to 25% in 2015) that will result in demand of 318 new
renter units on an annual basis over the next 10 years (Table (4)).
51
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Table (3)
Market Area Household Forecast
2000 - 2015
Year
Williamson County
Population
Annual
Change
Market Area
Percent
Market Area
Forecast
Household
Size
Total
Households
2000
249,967
16.9%
42,151
2.66
15,006
2001
266,088
16,121
17.1%
44,908
2.66
16,883
2002
282,209
16,121
17.1%
47,664
2.66
17,919
2003
298,331
16,121
17.1%
50,421
2.66
18,955
2004
314,452
16,121
17.1%
53,178
2.66
19,992
2005
330,573
16,121
17.1%
55,935
2.66
21,028
2006
350,263
19,690
17.1%
59,302
2.66
22,294
2007
369,953
19,690
17.1%
62,669
2.66
23,560
2008
389,644
19,690
17.1%
66,036
2.66
24,825
2009
409,334
19,690
17.1%
69,403
2.66
26,091
2010
429,024
19,690
17.1%
72,770
2.66
27,357
2011
452,973
23,949
17.1%
76,865
2.66
28,897
2012
476,922
23,949
17.1%
80,960
2.66
30,436
2013
500,872
23,949
17.1%
85,056
2.66
31,976
2014
524,821
23,949
17.1%
89,151
2.66
33,515
2015
548,770
23,949
17.1%
93,246
2.66
35,055
Prepared by:
Capitol Market Research, October 2005
Notes:
Projections based on Texas State Data Center, June 2004 (scenario 1.0)
Market area capture rate based on 1990 - 2000 growth trend.
Household size based on 2000 US Census
poptrend.xls
9
Table (4)
Market Area Multi -Family Forecast
2000 - 2015
Year
Total
Households
Annual
Change
Percent Renter % Multi-
Renter Households Family
Multi -Family
Demand
2000
15,006
.....
2001
16,883
1,877
23.1%
433
93.6%
406
2002
17,919
1,036
23.1%
239
93.6%
224
2003
18,955
1,036
23.1%
239
93.6%
224
2004
19,992
1,036
23.1%
239
93.6%
224
2005
21,028
1,036
23.1%
239
93.6%
224
2006
22,294
1,266
23.3%
295
93.6%
276
2007
23,560
1,266
23.5%
297
93.6%
278
2008
24,825
1,266
23.7%
300
93.6%
280
2009
26,091
1,266
23.9%
302
93.6%
283
2010
27,357
1,266
24.1%
304
93.6%
285
2011
28,897
1,540
24.2%
373
93.6%
349
2012
30,436
1,540
24.4%
376
93.6%
352
2013
31,976
1,540
24.6%
379
93.6%
355
2014
33,515
1,540
24.8%
382
93.6%
358
2015
35,055
1,540
25.0%
385
93.6%
360
Prepared by: Capitol Market Research, November 2005
Notes:
Projections based on Texas State
Data Center, June 2004 (scenario 1.0)
Market area percent renter based
on 2000 census data.
Percent multi -family based on TAMU Real Estate Center building permit starts, 1990-2004
poptrend.xls
10
Austin Retail Market Conditions
Retail Market Overview
The Austin multi -tenant retail market has shifted away from the traditional location and concentration of
retail space in neighborhood shopping centers and large regional malls to a more diverse base that
includes "power centers," "super centers," and off -price shopping. Approximately 10.5 million square feet
of multi -tenant space have been added to the citywide inventory since 1995, an increase of 36.6%, and
much of that space has been located near Lakeline Mall, in the MoPac corridor at the Arboretum, at La
Frontera in Round Rock and in Sunset Valley.
Gross retail sales for the Austin MSA rose at an average of 16,54% per year from 1980-1985. Rising
incomes and a rapidly expanding population base provided the growth impetus. Then in 1986, the bottom
fell out of the market and retail sales dropped by almost 5%. This drop in sales persisted during 1987
and 1988, however, from 1991 to 2000 retail sales increased dramatically, growing an average of 10.9%
per year from 1991 to 2000. With the "dot.com" bust in 2001, gross retail sales dropped, and recently the
growth rate has been a more modest 3.3% per year (2001-2003). However, with employment and
population growth forecasted to be 3% per year, the future prospects for retail development in Austin are
encouraging.
The combination of rapid population growth and increases in disposable income has created a healthy
demand for retail space in the Austin area. In addition, the national trend toward replacement of
neighborhood retail stores and malls with "big box" outlet stores and "lifestyle centers" has generated a
demand for new construction, even during the late eighties, and in 2001 and 2002 when the Austin
economy was stagnant and there was little population growth.
Between 1986 and 1992 there was very little improvement in average occupancy and rental rates, but
during that same period, a total of 1.3 million square feet of shopping center space was built and
absorbed at very high rental rates. Consequently, absorption of new retail space averaged 200,000
square feet per year between 1988 and 1992 and, as a result of the new construction, the shopping
center landscape began to change in response to the new retailing formats.
Between 1992 and 1995, the evolution of the shopping center accelerated and the retail market improved
considerably. Occupancy rates which had been stuck in the low 80% range climbed to more than 93%
and, as the market improved, absorption increased to 1.0 million square feet in 1993. In 1995 the
opening and lease -up of Lakeline Mall at Highway and FM 620 pushed absorption to 1.9 million square
feet, however the occupancy rate for regional shopping malls dropped from 90.3% in 1994 to 88.9% in
1995 due, in part, to space availability at Lakeline Mall. Since that time occupancy rates have continued
to increase and have now stabilized at approximately 94%. In recent years, annual absorption has
routinely exceeded 1 million sq. ft. as major suburban "nodes" of retail activity have opened and
expanded.
Current Market Conditions
Citywide occupancy decreased slightly from December 2003, dropping from 94.1% in December 2003 to
93.5% in December 2004 and again in June 2005 to 93.4%. Average rents also decreased $0.37 per
square foot from $16.22 in December 2003 to $15.85 in December 2004 per square foot, but increased
11.0% to $17.59 per square foot, the highest average rate ever recorded in the Austin area. In spite of
the small declines in occupancy, the market remains strong with the expansion of power centers, large
community "super centers," new "lifestyle centers" and a growing trend of demolition and renovation.
11
The June 2005 inventory of multi -tenant retail space in the Austin area included 29.2 million square feet
evenly distributed among the four major types of retail centers. The regional malls, which include
Lakeline, Barton Creek Square, Highland and Northcross Malls, and Capital Plaza, account for more than
4.3 million square feet of retail space. Community and power centers (by definition) include at least one
junior department or discount store and are concentrated on Highway 183, MoPac and IH-35.
Neighborhood centers, usually anchored by a grocery store/drugstore combination, are distributed
throughout the city among the various residential subdivisions. Strip centers, which generally have no
"anchor" tenant, are found along every major thoroughfare in the city and surrounding suburban
residential markets.
12
Table (5)
Retail Market Summary
Austin: 1991 - 2005
Date
Total SF
Occupied SF
Percent
Occupied
SF Additions Absorption
Avera e
Rent
1991
18,615,066
14,312.101
76.9%
533,000
347,825
$9.19
1992
19,010,914
14.792,832
77.8%
395,848
568,007
$9.26
1993
19,286,206
16,105,328
83.5%
275,292
1.030,636
$9.47
1994
19,337,926
17,001,589
87.9%
51,720
840,493
$10.21
1995
21,400,556
18,973,430
88.7%
2,062,630
1,977,355
$12.94
1996
21,751,044
19,916,993
91.6%
350,488
1,081,861
$12.92
1997
21,716,879
20,336,836
93.6%
-34,165
557,335
$13.70
1998
23,319,543
21,655,479
92.9%
1,602,664
1,340,491
$15.02
1999
24,161,615
22,929,209
94.9%
842,072
1,311,473
$14.81
2000
25,615,824
24,757,048
96.6%
1,454,209
1,324,776
$16.85
2001
26,476,299
25,014,511
94.5%
860,475
557,628
$16.00
2002
26,584,952
25,212,128
94.8%
21,000
94,045
$15.96
2003
28,536,372
26,847,571
94.1%
1,844,992
1,522,224
$16.22
2004
28,583,179
26,712,487
93.5%
301,804
2,937
$15.85
2005
29,191,534
27,258,299
93.4%
446,318
562,982
$17.59
Source: Capitol Market Research, Austin Area Retail Survey, 1991-2005
retail sum.zls
Retail Historical Rent & Occupancy
1991-2005
$20.00
$18.00
$16.00
LL $14.00
$12.00
o. $10.00
$8.00
W $6.00
$4.00
$2.00
$0.00
100.0%
V
m
90.0% 3
70.0%
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F=Average Rent -+-Percent Occupied]
13
Georgetown Retail Market Conditions
Overview
In October 2005, Capitol Market Research surveyed 13 multi -tenant shopping centers in the Georgetown
market area with a total of 1,648,366 square feet of net rentable area. Currently. the market area
occupancy is 89.6%. Average rents are $26.00 per square foot. Community centers in this area have the
highest average rent at $32.31, and are 92.6% occupied. Neighborhood centers have the highest
occupancy rate at 97%, but the lowest average rent at $18.44, white strip centers have the lowest
occupancy at 70.7% and average rent is $19.84.
New Construction
A majority of the retail centers in the Georgetown market area were completed since 2000. Eleven of the
13 retail centers in this market area, comprising 87.1% of the net rentable area, were completed since
2000. Within the last two years, seven retail centers with 1,169,819 sq. ft. (71%) were completed,
including three small strip centers, one HEB-anchored shopping center, and two large community
shopping centers (Rivery Towne Crossing and Wolf Ranch). These centers are achieving rental rates
that are 17% higher than the market average while maintaining a higher occupancy rate.
Occupancy & Absorption
The market area occupancy in October 2005 was 89.6%. According to brokers active in the Georgetown
market, occupancy rates have remained above 90% over the last few years, but absorption has been
relatively low until recently (2004) due to the small size of the older centers in the market area and the
lack of attractive lease space.
Average Rents
Average rents in the Georgetown are increasing as new product is introduced in the market at higher than
average rates. The new construction product (built since 2004) has out -performed the market, achieving
higher average rents ($30.41) and maintaining higher than average occupancy (90,5%).
Market Outlook
The high occupancy rates and strong population growth in this market area have created a strong
opportunity for new retail development. For the last several years, the growth in retail space has not kept
pace with the residential growth in the market area; but with completion of Wolf Ranch and Rivery Towne
Crossing, the retail offerings in the area have expanded dramatically.
14
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ii
Market Area Purchasing Power
The proposed Gateway redevelopment area in Georgetown is located on the southbound frontage road of
IH-35 where it intersects with Williams Drive, in a market area that has several community shopping
centers (Rivery Towne Crossing, Georgetown Market Place, and several along Williams Drive) and a
large "power center" nearing completion (Wolf Ranch). As shown below, the market area (defined as zip
codes 78626 and 78628) has a substantial population base and a significant amount of disposable
income. Since 1990, the number of single-family households in the market area has increased by 33.9%,
based on the construction of 3,780 new single-family homes and two new apartment communities,
Water's Edge and Georgetown Place, which together added 506 units.
The new households that have moved into the area to occupy the new homes and apartments have
added an estimated $467.8 million in additional household income to the market since April 2000. Based
on these data, CMR estimates that at the end of 2004, there is approximately $1.26 billion in disposable
income among the estimated 16,913 households located in the subject market area.
Table (7)
Current Purchasing Power
Georgetown Market Area
Year
Market Area Average HH Total HH Total Disposable
Households Income Income Income
Estimated
Retail Purchases
Actual
Retail Purchases
2000
13,849 $71,063 $984,157,189 $910,246,984
$600,763,010
$554,903,368
2001
14,771 $78,061 $1,153.041,499 $1,066,448,082
$703,855,734
•$700,173,389
2002
15,458 $85,783 $1,326,030,957 $1,226,446,032
$809,454,381
$767,113,451
2003
16,026 $80,715 $1,293,546,411 $1,196.401,076
$789,624,710
$807,300,819
2004
16,913 $80,715 $1,365,141,049 $1,262,618,956
$833.328,511
$852.871,601
Sources: (1) Household estimate based on new construction of housing in the market area
(2) Average income based on HUD annual increases in Median HH Income for the Austin MSA
(3) Disposable income is assumed to be 92.49% of total, based on 1999 Consumer Expenditure Survey
(4) Retail purchases are estimated to be 66% of disposable income
(5) Census tracts used for retail projections differ from those used for household forecast (pages 9-11); does not include 206.01
Retail Demand As
17
Estimates of Purchasing Power
The previous sections have documented the current disposable income and have provided a growth trend
analysis for the retail market area based upon the documented construction of new homes and
apartments in the area since 2000. Using this historical information as a base, and recognizing the
growth potential of the area based on land and utility availability, CMR has provided a forecast of
anticipated new population and household growth expected in the market area in Table (7). This housing
forecast is then combined with a forecast of household income to create a future income estimate for the
retail market area through 2015. Since a significant portion of total income is used for housing and
transportation expenses, only that portion of "Disposable Income" that is available for retail purchases is
used to estimate the demand for retail from area households, as shown below in Table (8).
Table (8)
Estimated Purchasing Power
Georgetown Market Area
Market Area Average HH Total HH Total Disposable Estimated
Vanr Hnimphnlds Income Income Income Retail Purchases
2000
13,849
$71,063
$984,157,189
$910,246,984
$600,763,010
2001
14,771
$78,061
$1,153,041,499
$1,066,448,082
$703,855,734
2002
15,458
$85,783
$1,326,030,957
$1,226,446,032
$809,454,381
2003
16,026
$80,715
$1,293,546,411
$1,196,401,076
$789,624,710
2004
16,913
$80.715
$1.365,141,049
$1,262,618,956
$833,328,511
2005
17,949
$82,733
$1,485,011,372
$1,373,487,018
$906,501,432
2006
19,215
$84,802
$1,629,478,540
$1.507,104,701
$994,689,103
2007
20,481
$86,922
$1,780,240,933
$1,646,544,839
$1,086,719,594
2008
21,747
$89,095
$1.937,523.022
$1,792,015,043
$1.182,729,929
2009
23,013
$91,322
$2,101,556,565
$1,943,729,667
$1,282,861,580
2010
24,278
$93,605
$2,272,580,833
$2,101,910,013
$1,387,260,608
2011
25,818
$95,945
$2,477,111,994
$2,291,080,883
$1,512,113,383
2012
27,358
$98,344
$2,690,449,349
$2,488,396,603
$1,642,341,758
2013
28,897
$100,803
$2,912,905,377
$2,694,146.183
$1,778,136,481
2014
30,437
$103,323
$3,144,802,676
$2,908,627,995
$1.919,694,477
2015
31,976
$105,906
$3,386,474,274
$3,132,150,056
$2,067,219,037
Sources: (1) Household estimate based on new construction of housing in the market area
(2) Average income based on HUD annual increases in Median HH Income for the Austin MSA
(3) Disposable income is assumed to be 92.49% of total, based on 1999 Consumer Expenditure Survey
(4) Retail purchases are estimated to be 66% of disposable income
(5) Average HH income increase assumed to average 2.5% per year
retail demand.xls
18
Planned Retail Development
The 16,913 plus households that currently live in the Georgetown market area have an estimated $1.3
billion in disposable income and approximately 213 of that income is spent on retail purchases. According
to records obtained from the State Comptroller's office, actual retail sales in the market area exceed
estimated retail purchases based on disposable household income in the market area by 2.3%. This
retail sales "excess" is due in large measure to households from outside the designated market area
traveling into the market area to make purchases, which most likely occurs at those retail establishments
that have a broad market penetration (e.g. Rivery Towne Crossing, Wolf Ranch). In 2004, the total
demand for retail purchases was estimated to be $833 million, and an estimated $852 million was spent
within the trade area.
However, this is a unique market area where the existing retail centers draw consumer expenditures from
an area that is larger than the existing defined population base. The high rental rates achieved at the
newer centers in Georgetown (Booty's Crossing, Cedar Breaks Village and Rivery Towne Crossing)
attracted the interest of Simon Property Co., which recently completed a new "power center," Wolf Ranch,
at the southern edge of the study area. Wolf Ranch has a total of 664,713 sq. ft. and is anchored by
Target and includes a Linens N Things, PetsMart and Office Depot. The positive response Wolf Ranch
has received by the City of Georgetown and its residents has encouraged Simon Property Group to
continue with plans for Wolf Lakes, a similar retail project located across SH 29 from Wolf Ranch.
Preliminary plans for Wolf Lakes show that it will occupy 145 acres and include retail, entertainment and
restaurants and possibly office and residential. Currently, there is no timeline or completion date set for
Wolf Lakes.
In addition to Wolf Lakes, the Rivery mixed -use development includes Rivery Park Il, a mixed -use
development at Rivery Blvd. and Wolf Ranch Parkway that will be anchored by a 12-screen movie
theatre. The proposed "City Lights" movie theatre and cafe is scheduled to break ground in late 2006 and
open in the spring of 2006.
Even though the retail supply currently exceeds the demand for space in the market area, it is likely that
additional "neighborhood serving" retail space could be built at the Gateway location, in the short term.
Further addition to the Gateway retail component is most likely to be dependent upon growth in the "local"
population base as residential units are completed and occupied in the Gateway development, and the
Williams Drive submarket.
19
Table (9)
Supply and Demand Comparison
Georgetown Market Area
Year
Estimated Retail
Purchases
Actual Retail
Sales
"Leakage" in
Dollars
Estimated
Sales/SF
Add. Demand
for Retail SF
Total Retail
Space Added
Excess/Deficit
in Sq. Ft.
_
2000
$600,763,010
$554,903,368
$45,859,642
$260
176,383
0
0
176,383
14,163
2001
2002
$703,855,734
$809,454,381
$700,173,389
$767,113,451
$3,682,345
$42,340,930
$260
$260
14,163
162.850
0
162,850
2003
$789,624,710
$807,300,819
-$17,676,109
$260
(67,985)
0
0
(67,985)
(73,748)
2004
2005
$833,328,511
$906,501.432
$852,871,601
$874,193,391
-$19,543,090
$32,308,041
$265
$272
(73,748)
118,944
664,713
(545,769)
2006
$994,689,103
$896,048,226
$98,640,877
$278
354,294
150,000
204,294
589,644
2007
$1,086,719,594
$918,449,431
$168,270,162
$285
589,644
0
0
824,994
2008
2009
$1,182,729,929
$1,282,861,580
$941,410,667
$964,945,934
$241,319,261
$317,915,646
$293
$300
824,994
1,060,344
0
1,060,344
2010
$1,387,260,608
$989,069,582
$398,191,026
$307
1,295,694
0
0
1,295,694
1,581,950
2011
$1,512,113,383
$1,013,796,322
$498.317,061
$315
$323
1,581,950
1,868,207
0
1,868,207
2012
2013
$1,642,341,758
$1,778,136,481
$1,039.141,230
$1,065,119,760
$603,200,528
$713,016,721
$331
2,154,463
0
2,154,463
2014
$1,919,694,477
$1,091,747,754
$827,946,722
$339
2,440,719
0
0
2,440,719
2,726,976
2015
$2,067,219,037
$1,119,041,448
$948,177,589
$348
2,726,976
Sources: (1) Retail Sales per square foot based on ICSC "The Score" , 2004 and the existing inventory of 29 million sq.ft. of mull(Henant retail space
(2) Retail Sales assumed to increase at 2.5% per year
(3) Planned Shopping Center Additions In Georgetown Include Rlvery Park Ph.11 and Wolf Lakes
Planned New Centers
Center Name
Total NLA Date Developer
Wolf Lakes
700,000 not set Simon Property
Rivery Park II
150,000 2006 Bourn Dev.
Total
850.000
retail demand.xls
20
Georgetown Gateway Retail Absorption
The previous section shows the market area supply and demand picture, which shows the addition of
Wolf Ranch in 2005 and Rivery Park in 2006 capturing a large portion of the unmet demand for retail
services in the Georgetown market area. However, the continued strong growth of 1,400 to 1,700
households per year will result in more demand for retail services in the area. The subject site, with
frontage on Williams Drive and IH-35, will have significant retail development potential, provided,
however, that the area is redeveloped in a cohesive and well -planned manner. For the most part, the
existing buildings that comprise the redevelopment area are not suitable for conversion to uses that will
be needed to accommodate the existing and future demand. In most cases, the existing improvements
should be demolished to allow a more unified and architecturally appropriate redevelopment.
Table (10)
Supply and Demand Comparison
Georgetown Gateway Project Area
Year
Estimated Retail
Actual Retail
Sales
"Leakage" in
Dollars
Estimated
Sales per SF
Additional
Demand for
Retail SF
Annual
Change in
Sq.Ft.
Area
GatewaArea Area
Gatewa Y Gateway
Capture Rate Sq.Ft. Added
2000
$600,763,010
$554,903,368
$45,859,642
$260
176,383
...
0
0
2001
$703,855,734
$700,173,389
$3,682,345
$260
14.163
(162,220)
0
0
2002
$809,454,381
$767,113,451
$42,340,930
$260
162,850
148,687
0
0
2003
$789,624,710
$807,300,819
-$17,676,109
$260
(67,985)
(230,835)
0
0
2004
$833,328,511
$852.871,601
-$19,543,090
$265
(73,748)
(5,762)
0
0
2005
$906,501,432
$874,193,391
$32,308,041
$272
118,944
192,691
10.0%
19,269
2006
$994,689,103
$896,048,226
$98,640,877
$278
354,294
235,350
10.0%
23,535
2007
$1,086,719,594
$918,449,431
$168,270,162
$285
589,644
235,350
10.0%
23,535
2008
$1,182,729,929
$941,410,667
$241,319,261
$293
824,994
235,350
10.0%
23,535
2009
$1,282,861,580
$964,945,934
$317,915,646
$300
1,060,344
235,350
10.0%
23,535
2010
$1,387,260,608
$989.069,582
$398,191,026
$307
1,295,694
235,350
10.0%
23,535
2011
$1,512,113,383
$1.013,796.322
$498,317,061
$315
1,581,950
286,256
10.0%
28.626
2012
$1,642,341,758
$1,039.141,230
$603,200,528
$323
1,868,207
286,256
10.0%
28,626
2013
$1,778,136,481
$1,065.119.760
$713,016,721
$331
2,154,463
286,256
10.0%
28,626
2014
$1,919,694.477
$1.091,747,754
$827,946,722
$339
2,440,719
286,256
10.0%
28,626
2015
$2,067,219,037
$1,119.041,448
$948,177,589
$348
2,726,976
286.256
10.0%
28.626
251,447
Total
Sources: (1) Retail Sales persquare root based on ICSC 'The Score', 2004 and the existing inventory of 28 million sgJt. of mullti-tenant retail space
(2) Retail Sales assumed to increase at 2.5% peryear
retell demand xls
21
Multifamily Market Trends in the Austin MSA
Apartment Market Overview
Traditionally, apartment projects in Austin have been clustered near activity centers, major employers and
the university areas. Examples of this phenomenon include the cluster of apartments near IBM, Dell,
Abbott Labs and Solectron as well as the apartments surrounding the University of Texas, St. Edwards
University, and the various Austin Community College campus locations. The Central Business District
has, until recently, had relatively few residential rental units, but several apartment communities have
been developed within 1 to 2 miles of the CBD.
Market conditions in the Austin area multifamily market were volatile in the eighties, when an apartment
construction boom caused dramatic overbuilding in 1985 and 1986, which was followed by several years
of inactivity. After dropping to 80% occupancy in the mid -eighties, occupancy rates steadily increased,
and by 1990, rapid rent escalation was underway. However it was not until 1993 that overall market
rental rates were high enough to support widespread construction activity.
As Austin's economy experienced robust growth in the early nineties, the resurgence of multifamily
construction began in 1991 when 148 units were constructed and 220 units were absorbed. At that time
citywide occupancy was at 93.7% and apartments leased for an average $0.57 per square foot. From
that period through mid-1996, average rent per square foot and absorption accelerated dramatically.
Occupancy first peaked in December 1994 at 97.4%, and then again in June 2000 (at 98.2%), while new
unit completions peaked in 1996 at 6,405 units and then again at 8,472 in 2001. Since 1996, the pace of
new construction has fluctuated from year to year but both occupancy and average rental rates have, until
recently, steadily increased.
In 2001, for the first time in many years, new unit completions dramatically exceeded absorption and the
market plunged from 97.6% in January to 90.0% by the end of the year. The building continued into 2002, in
spite of the softness in the market, and by 2003 the construction boom was tapering off.
Current Market Conditions
Beginning in late 2003, new construction activity began to diminish and regional apartment demand
regained strength and has continued the positive absorption trend through 2004 and the first half of 2005.
Based on the CMR mid -year survey of 122,877 apartment units, the market occupancy rate increased 1.3
percentage points to a current occupancy rate of 92.7% (up from 91.4% in December 2004) with rental
rates also increasing $0.01 to $0.82 per square foot. Since the beginning of 1992, 58,589 apartment
units in 206 complexes were completed including 25 completed in 2003 (5,156 units), 9 in 2004 (2,262
units) and 6 in the first half of 2005 (714 units). As of June 2005, 12 additional projects are currently
under construction, with three partially completed and leasing.
In 2004, unit demand, as measured by absorption, exceeded new unit completions by 2,342 units, and in
2005 demand exceeded new unit completions by 1,604. The lack of new construction has allowed
existing units to be absorbed by the market. Rental rates increased slightly in June 2005 to $0.82, and
occupancy increased to 92.7%. New unit completions were 554 and absorption was 2,158 for the first six
months of 2005. The table on the following page provides apartment market conditions from 1991-2005.
Historical data on occupancy, average rent, unit completions and absorption for 1991 - 2005 is taken from
CMR's Austin Apartment Survey, a semi-annual survey of all projects of more than 50 units in the Austin
area.
22
Table (11)
Citywide Apartment Summary
1991-2005
Occupied
Percent
New Units
Calculated Rent per Sq.
Trends
Date
Total Units
Units
Occupied
Added
Absorption
Ft.
1991
61,113
57,266
93.7%
148
220
$0.57
Positive
1992
61,118
58,448
95.6%
348
1,160
$0.64
Positive
1993
63,074
61,174
97.0%
594
1,229
$0.71
Positive
1994
66,379
64,662
97.4%
2,178
2,212
$0.75
Positive
1995
69,324
67,101
96.8%
3,010
3,098
$0.79
Positive
1996
77,019
71,452
92.8%
7,695
3,882
$0.81
Caution
1997
81,382
77,270
94.9%
4,363
5,697
$0.82
Positive
1998
86,428
83,683
96.8%
5,046
5,929
$0.86
Positive
1999
89,699
87,531
97.6%
3,271
3,643
$0.91
Positive
2000
96,114
93,786
97.6%
6,415
5,773
$0.98
Positive
2001
105,162
94,651
90.0%
9,048
1,368
$0.94
Caution
2002
113,380
99,794
88.0%
8,218
4,925
$0.86
Caution
2003
120,169
107,290
89.3%
6,789
5,828
$0.81
Positive
2004
122,323
111,786
91.4%
2,154
4,133
$0.81
Positive
2005
122,877
113,944
92.7%
1,496
3,309
$0.82
Positive
Source:
Capitol Market Research, 1991-2005 Apartment Market Survey
apt sum.xls
CMR estimates of new completions based on a review of city documents and developer plans
Absorption based on forecasted population increase from employment
forecaset generaged using
the three econometric forecasts for the Ausitn MSA: an historical share analysis conducted by
CMR,
demographicsnow.com and CAMPO.
10000
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
Historical Absorption and New Units Added
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
®New Units Added Calculated Absorption -*-Percent Occupied
23
100%
95%
90%
85%
80%
75%
Georgetown Apartment Market Conditions
Overview
In October 2005, Capitol Market Research surveyed 11 apartment communities in Georgetown with a
total of 1,836 units. Currently, the market area occupancy is 92.4%, which is up (4.1% points) from
December 2004 when it was 88.3%. Average rents are $0.77 per square foot, also up since December
2004. Of the 1,836 total units, 984 (53.6%) have been built (completed) since the beginning of 1997.
New Construction
New construction has been sporadic in Georgetown, with unit completions occurring in only 4 of the last
10 years, in 1997, 2000, 2002 and 2003. Among the new completions were several class "A" market rate
products, including Parkview Place, Water's Edge and Westwood Village. These properties are leasing
relatively well at average rental rates that are 6.5% above the market average, while their occupancy is
lower at 89.5%.
In addition to the three new market rate apartment projects, there were two income -restricted, Low
Income Housing Tax Credit (LIHTC) projects built since 1996 with a combined total of 368 units. Since
there are only 1,836 units in the market area, the lower rates offered at the 368 income -restricted units
have had an effect on the market rate properties and contribute to the overall lower rental rate in
Georgetown.
Occupancy
The market area occupancy in October 2005 was at 92.4%, up from the 88.3% posted at the end of 2004
The current occupancy shows the market slowly recovering from the low of 87.9% in 2002- This market
area is likely to continue to experience a slow increase in occupancy due to relatively small job base in
the area and competition from projects in Round Rock and other areas that are closer to major
employment nodes.
Average Rents
Average rents in the Georgetown market area rose dramatically from $0.68 per sq. ft. in December 1995
to $0.84 in December 2001, a 23.5% increase over a six -year period. Since then, rents have dropped
25% back down to $0.74 per sq. ft. in December 2004 and are currently $0.77 per sq. ft. As noted above,
the new class "A" product has generally out -performed the market, achieving higher rents while
maintaining an occupancy rate slightly below the market average,
Market Outlook
The slow recovery in occupancy from a low of 67.9% in 2002 combined with very low average rental rates
will result in a slower than average rate of recovery in comparison with other market areas in the Austin
region. This slow pace of recovery will curtail new construction until the market occupancy moves up and
rental rates begin to climb again. In the short term, there are two Low Income Housing Tax Credit
(LIHTC) projects planned on River Bend at Northwest Blvd. The first project is a senior housing project
with 200 units. Site work is currently underway. The second project has 180 "family" units and has not
yet broken ground.
24
Table (12)
Georgetown Market Area Apartment Summary
1995 - 2005
Occupied
Percent
New Units
Calculated
Rent per Sq.
Trends
Date
Total Units
Units
Occupied
Added
Absorption
Ft.
1995
728
651
89.4%
...
...
$0.68
Positive
1996
728
720
98.9%
0
69
$0.72
Caution
1997
1,030
790
76.7%
302
70
$0.70
Positive
1998
1.030
1,015
98.5%
0
225
$0.73
Positive
1999
1.030
1,007
97.8%
0
-8
$0.74
Positive
2000
1,386
1,267
91.4%
356
260
$0.82
Positive
2001
1,386
1,275
92.0%
0
8
$0.84
Caution
2002
1,692
1,488
87.9%
306
213
$0.77
Positive
2003
1,836
1,636
89.1 %
144
148
$0.75
Positive
2004
1,836
1,621
88.3%
0
-15
$0.74
Positive
2005
1.836
1,696
92.4%
0
75
$0.77
Positive
Source: Capitol Market Research, 1995-2005 Apartment Market Survey
Historical Absorption and New Units Added
500
400
300
P
a
200
E
7
z
100
0
-100
i
1996 1997 1998 1999 2000 2001 2002 2003 2004
® New Units Added Ilia Calculated Absorption —6—Percent Occupied
25
histocc.xls
T 100%
95% 1
90%
d
ii
u
u
85% O !
c
m
u
0)
nu.
80%
75%
70%
Georgetown Market Area ,
Existing Apartments
1. Apple Creek
2. Georgetown Park
3. Georgetown Place
4. Georgetown Station
5. Georgian
6. Indian Creek
. Oaks at Georgetown
8 . Parkview Place
9. San Gabriel
N
10. Waters Edge
11. Westwood Village
0 0.25 0.5 Miles
I c:IProjects120051Williams Drive Gafewaylmap .apr1 isfing a
Prga d Capitol Ma of Research, October 2005
Planned Projects in the Georgetown Market Area
Currently, the occupancy rate in the Georgetown market area is 92.4%, which is approximately equal to
the occupancy for the Austin market area (92.7%). Therefore, the subject location will be competing
primarily with the undeveloped tracts in the market area that are zoned for multifamily use and that may
be developed with apartments within the forecast time period. Recent interviews with the City of
Georgetown Planning Department and local brokers and apartment developers, revealed plans for 4 new
multifamily projects in the area. Projects are defined as being "competitive" if the land is currently zoned
appropriately for multifamily development and utilities are available. In order to be considered as
immediate and direct competition, the proposed projects must either be held by or under contract to a
developer with known intention to move forward with a multifamily project.
The annual additions to the market area resulting from the development of this potential inventory of
multifamily units may vary based on the capacity of the apartment developer to obtain the necessary
construction financing and city approvals. It is also possible that other projects not currently in the
development stage could be quickly developed and brought to the market. Thus, the list of planned
additions is both actual, because it represents current plans, and representative, because it presents a
position that the subject project will be competing with other new apartment projects during the
anticipated development horizon.
Table (13)
Competitive Multi -Family Sites
Georgetown Market Area
No
PROJECT
ACRES
UNITS
Developer
STATUS
Zoning
1
River Bend Apt. (Seniors)
21.0
200
Bonner Carrington
Site work under way
MF
2
Northwest Apartments
10.0
180
Bonner Carrington
Closed
MF
3
Fairfield at Rivery
13.4
274
Fairfield Residential
planning underway
PUD
4
University Vista
4.0
32
Don Mordecai
Closed
MF
48.4
685
Source: Capitol Market Research Developer/Sroker lnlervlews, September 2005
CompSltes As
27
�
1
gleads
now
mom M,
a-
logo
CII4
Market Area and Subject Absorption Forecast
It is estimated that the Georgetown market area will accommodate an annual demand for new apartment
units for 2005 through 2009 of approximately 1,341 total units. The timing of the previously identified
planned projects is shown in Table (14). Combining the current market conditions with the plans for new
unit construction developed in the previous section, an absorption analysis for the market area and the
subject project can be developed and is shown in Table (15) below. The annual Deficit/Surplus shows
the relationship between forecast demand and the proposed units planned, on an annual basis.
It appears that the Georgetown market area will have a deficit of new unit completions, even if all the
planned projects start when the developer indicates that they should. However, it is often the case that
the development timetable is not met (thus reducing the number of units added) or the leasing activity far
exceeds that which has occurred historically because the area becomes "hot' and there is little
competition from other market areas. In the Georgetown market area, the demand will exceed the
potential supply through the forecast period.
Table (14)
Proposed Project Timing
Georgetown Market Area
Map No. Project Name
Units
2005
2006
2007
2008
2009
Future
1 River Bend Apt. (Seniors)
2 Northwest Apartments
3 Fairfield at Rivery
4 University Vista
200
180
274
32
0
0
0
0
200
0
0
0
0
0
274
0
0
0
0
0
0
0
0
0
0
180
0
32
Supply Totals:
686
0
200
274
0
0
212
Demand:
224
276
278
280
283
1,341
Annual Balance of Demand - Supply
224
76
4
280
283
Source: Capitol Market Research Developer/Broker Interviews, November 2005
Table (15)
Subject Absorption Forecast
Georgetown Market Area
Multifamily
Units
Subject
Proportionate
Competitive
Average
Subject
Year
Demand
Added
Units
Market Share
Market Share
Market Share
Absorption
2005
224
0
0
0
0
0
0
2006
276
200
75
37.5%
37.0%
37.3%
75
2007
278
274
0
0.0%
0.0%
0.0%
0
2008
280
0
100
35.7%
36.0%
35.8%
100
2009
283
0
100
35.4%
35.5%
35.4%
100
2010
285
0
0
0.0%
0.0%
0.0%
0
2011
349
0
0
0.0%
0.0%
0.0%
0
2012
352
0
0
0.0%
0.0%
0.0%
0
2013
355
0
0
0.0%
0.0%
0.0%
0
2014
358
0
0
0.0%
0.0%
0.0%
0
2015
360
0
0
0.0%
0.0%
0.0%
0
Total
3,400
474
276
276
Prepared by: Capitol Market Research, November 2005
compsiles.Yls
9
Town home/Condom inium Market Trends in the Austin MSA
Historically, townhome and condominium projects in the Austin MSA have been clustered in the central
city, mostly in neighborhoods close to downtown, the Arboretum area and the University of Texas. Over
the last few years, the area has expanded to include more neighborhoods such as Tarrytown, Bouldin
Creek, Travis Heights, Barton Creek, Lakeway, East Austin and the Central Business District (CBD). The
combination of strong consumer demand for housing and the rapid escalation of land prices in desirable
neighborhoods has provided opportunities for new, higher density housing options. The most viable, and
perhaps most successful, emerging market is the CBD. Beginning in 1997, almost 600 new
condominiums have been completed and absorbed, and many units have sold for prices that exceed
$300 per square foot.
The current market trend has a solid footing in basic land economic fundamentals, unlike the
condominium construction boom in the mid -eighties, which was fueled by favorable income tax treatment
of "passive" real estate investments. In addition to rising single-family home prices, the demand for
higher density housing has a strong demographic basis in ageing baby -boomer households and busy
young professionals.
In the late nineties there were almost no new condominium or townhome projects for sale in Austin. Then
in 2000, suburban construction began with the Courtyard Homes at Cobblestone (59 units) and Bouldin
Creek Condominiums (33 units). Both projects were enthusiastically received by the young professional
homebuyer and sold out quickly. Liberty Hill was also built in 2000, and sold rapidly to both young
professionals and the empty nesters who live in the Westlake area. The success of these three projects
enticed other developers to explore the market, and most of the new product ahs been well received. In
roughly the same time period, the downtown condominium market emerged, expanding from two small
"adaptive reuse" projects on East Fifth St., to several new condominium towers.
Current Market Conditions
As discussed above, the townhome/condominium market in the Austin area is rapidly gaining strength,
and is emerging as an important segment of the new home market. Since 2001, the number of new
townhome/condominium permits issued by the City of Austin has increased from 73 to 358 in 2004, an
increase of 390.4%. Also during that time period, the number of "new" units sold through MLS increased
from 186 in 2001 to 296 in 2004, an increase of 59.1%. While it is clear that one of the motivations to buy
a condominium unit is its relatively low price, the average price of a new unit sold through MLS has
generally increased and is now at $208,247for 1,526 sq. ft., or $136.47 per sq. ft.
One of the most interesting aspects of this higher density market is the degree to which homebuyers are
accepting new innovative product, whether it is stark urban lofts in East Austin (The Pedernales), or
elegant stone townhomes in South Austin (Kinney Muse) or expensive high-rise condominiums (5 fifty-
five East Fifth Street).
W
Table (16)
New Townhome/Condo Sales
Austin MLS Region
Units
Number of
Average Sales
Median Sales
Average
Average
Year
Permitted
Sales
Price
Price
SF
$ISF
2000
213
268
$195,477
$150,975
1,440
$135.75
2001
73
186
$202,343
$169,725
1,606
$125.99
2002
91
194
$221,665
$175,625
1,659
$133.61
2003
263
219
$189,733
$153,220
1,579
$120.16
2004
358
296
$208,247
$156,112
1,526
$136.47
2005
233
219
$215,039
$179,900
1,520
$141.47
Source: Austin Board of Realtors, MLS Database
Prepared by Capitol Market Research, July 2005
2000 2001 2002 2003 2004
condo sum.xls
$185,000
$180,000
$175,000
$170, 000
$165,000
$160,000 IL
$155,000 rn
$150,000
$145,000
$140,000
' -
$135,000
2005
® Units Permitted Cl Number of Sales —,A Median Sales Price
31
Townhome and Condominium Demand
Townhome and condominium demand in this area historically has not been strong due to the lack of
available product. The Georgetown market area accounted for 3.2% of the households and 3.4% of the
population in the Austin MSA in 1990, but only 0.10% of all the existing condominiums in the MSA.
Currently 5.3% of the total MLS listings in the Georgetown market area are for townhomes and condos.
As of October 28, 2005, there are 22 MLS listings for condos and townhomes in the market area in
addition to the new units available directly from the condominium developers. In order to develop a
forecast for this market area that recognizes both the potential of the area and the current lack of
available supply, we first developed a forecast for Williamson County based on the condominium
percentage of total residential sales and then applied the market area capture rate of 18.2%, based on
the average percentage of total sales between 2001 and 2004. This forecast assumes a reasonably high
level of demand for condominium units over the forecast time period.
Table (17)
Market Area Townhome/Condo Demand
2000-2015
Year
Williamson
County Total
HH
Annual
Change
Percent
TH/Condos
County TH/Condo
Demand
Mkt. Area
Percent
Mkt. Area
TH/Condo
Demand
2000
88,641
.....
.....
.....
.....
2001
94,358
5,717
1.5%
86
36.8%
32
2002
100,074
5,717
1.4%
78
14.3%
11
2003
105,791
5,717
2.0%
112
2.7%
3
2004
111,508
5,717
1.4%
80
18.9%
15
2005
117,224
5,717
5.0%
286
18.2%
52
2006
124,207
6,982
5.5%
384
18.2%
70
2007
131,189
6,982
6.0%
419
18.2%
76
2008
138,171
6,982
6.5%
454
18.2%
82
2009
145,154
6,982
7.0%
489
18.2%
89
2010
152,136
6,982
7.5%
524
18.2%
95
2011
160,629
8,493
8.0%
679
18.2%
123
2012
169,121
8,493
8.5%
722
18.2%
131
2013
177,614
8,493
9.0%
764
18.2%
139
2014
186,107
8,493
9.5%
807
18.2%
147
2015
194,599
8,493
10.0%
849
18.2%
154
Prepared by: Capitol Market Research, November 2005
Notes: Projections based on Texas State Data Center, June
2004 (scenario 1.0)
Percent TH/Condo
demand Is based on the 2001 - 2005 percentage of Total MLS Sales in Williamson Co.
This percentage is
expected to increase to at least 10% by 2015
Market area capture rate based on
1990 - 2000 growth trend.
poptrend.xls
32
Georgetown Town home/Condominium Market Conditions
Overview
In October 2005, Capitol Market Research surveyed the 7 new condominium communities in the
Georgetown market area that, when completed, will have a total of 239 units. Currently, the market area has
113 new condominium units available for sale. Average sales prices are $112 per sq. ft., but the range is
$40 to $167 per square foot. Of the 239 planned units, 147 (61.5%) have been built (completed) since the
beginning of 1998.
New Construction
Prior to 1998, there were no condominium or townhome communities in the Georgetown market area. The
first project, Villas of Katy's Crossing, presented a duplex style townhome product and was met with
relatively good market acceptance, selling out in less than three years. After a few years of inactivity, new
townhome/condominium construction in the Georgetown market area resumed in 2003. The most recent
projects, such as Village Park Condos and Old School City Homes, present a high quality, higher density
attached condominium product. Village Park Condos are two-story "stacked flat" condos, which has met with
reasonably good market acceptance. Despite the higher average sales price (due to the high quality of
finish -out), it has experienced rapid absorption. Old School City Homes has 40 three-story attached
townhome units. It has just recently begun construction (October 2005), and no units have been sold. In
contrast, Ryan's Cove and University Park, a duplex -style townhome product, has not experienced a rapid
absorption, due in part to the inferior location and lack of visibility. Old Town has four attached townhomes
and four single-family style condominiums on small lots. Construction on this product began in February and
marketing began in June 2005.
Absorption
Absorption rates among these three projects varies, from less than 1 unit per month to more than 1.9,
However, the absorption potential in this market area has not yet been fully established due to the lack of
new construction.
Pricing
The average unit price among these five projects varies from a low (estimated price) of $88,297 at Villas of
Katy 's Crossing to a high of $314,500 at Old School City Homes. As noted above, units with better access
and visibility have been selling more rapidly, and the market has responded favorably to the products at both
the high and lower end of the price spectrum.
Market Outlook
The increasing demand for smaller, well located units combined with the lack of new product in the area
should result in rapid absorption rates for those developers who offer an attractive attached product at a
reasonable price. Access and visibility, whether from drive -by traffic or from commuters at a passenger rail
station, will increase the viability and absorption potential of planned new projects. Currently there are many
types of product under construction, from affordable projects such as Townhomes at Katy's Crossing and
Ryan's Crossing to high -end projects such as Old School City Homes. There are currently no other projects
planned in the Georgetown market area, but it is likely that there will be several more projects developed
over the next few years.
33
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Conclusions
The preceding data and analysis have included an evaluation of the Gateway Redevelopment Area and
competitive projects and land in the Georgetown market area. Three land uses were considered for the
evaluation: retail, multi -family residential and townhome and condominiums.
The forecasted strong growth in Georgetown of 1,400 to 1,700 households per year will result in more
demand for retail services in spite of the recent completion of the Wolf Ranch power center. The subject
site, with frontage on Williams Drive and IH-35, will have significant retail development potential,
provided, however, that the area is redeveloped in a cohesive and well -planned manner. For the most
part, the existing buildings that comprise the redevelopment area are not suitable for conversion to uses
that are needed to accommodate the existing and future demand. In most cases, the existing
improvements should be demolished to allow a more unified and architecturally appropriate
redevelopment.
Among the findings in this analysis is the relative strength of the retail market in comparison with higher -
density residential land uses. After evaluating the subject tract and competitive sites throughout the
Georgetown market area, it became apparent that the subject tract could be attractive for retail and multi-
family uses if a comprehensive plan and redevelopment strategy is prepared and implemented. The
subject location on Williams Drive at IH-35 and its access to the IH-35 access road will provide excellent
exposure and accessibility to drive -by traffic. This exposure is critical to the success of both retail and
residential development.
The retail uses that will be attracted to this site are likely to be neighborhood oriented, due to the huge
number of stores recently completed at Wolf Ranch and Rivery Towne Crossing. It is possible that as
much as 250,000 sq. ft. of retail could be supported at the site over the next few years.
It is also likely that this site will be attractive for multi -family residential use as that market recovers. The
continued expansion of employment in the region and the Georgetown market area, indicate a growing
demand for multi -family development in Georgetown and at the subject site. At least 275 new apartment
units could be developed in the redevelopment area.
In addition to the retail and multi -family uses, this site should support at least 156
condom inium/townhome units. According to our analysis, the market for condominiums is strong enough
to support new construction immediately.
MA
APPENDIX
CERTIFICATE
The undersigned do hereby certify that, except as otherwise noted in this market/feasibility report:
We certify that we have personally inspected the aforementioned subject property, and that our fee is in
no way contingent upon the determination of feasibility reported herein.
We have no present or contemplated future interest in the real estate that is the subject of this report.
To the best of our knowledge and belief the statements of fact contained in this report, upon which the
analyses, opinions and conclusions expressed herein are based, are true and correct.
This report sets forth all of the limiting conditions (imposed by the terms of our assignment or by the
undersigned) affecting the analyses, opinions and conclusions contained in this report.
Recognition is hereby given to Sarah Gilbreath, Meghan McCarthy and Cindy Phung for their assistance in
the preparation of this report.
No one other than the undersigned prepared the analyses, conclusions and opinions concerning real
estate that are set forth in this report.
Respectfully submitted.
CAPITOL MARKET RESEARCH, INC.
Charles H. Heimsath, AICP
President