as of 21 Oct 14

7 May Dredge Plan Analysis7 May Dredge Plan Analysis

• The costs are too high. o The Special Service District (SSD) = 51.5 centso Is a self-imposed property tax increase of 55% for 16 years o Increases our taxes from 93 to 144.5 cents—highest in the city o Over twice the SSD rates proposed in the 2012 dredge proposalso SSD rate is considerably higher than other dredge proposals

• Inequitable dredge plan. o Channels inequitably distributed—properties circled pay dis-proportionally higher costs and are 100 – 300 feet from the channel

Do you know what your costs are, and what you are paying for?o Properties not near neighborhood channels may pay tens of thousands more for individual driveways to access channels

“driveways” costs range from $0 - $20K for each 7 year dredge cycle* ; up to $60K for some owners

o Annual SSD costs range from $1,905 to $6,965 o16 year cumulative SSD costs range from $30,480 to $101,168 PLUS the cost of Individual driveways ($60K)**o 40% of the properties pay approximately 70% of the costso Neighborhood channels dredged to the shallow cove reaches doubles the costs due to dredging cuts 3.5 to 4 feet deep

*City of Virginia Beach, Old Donation Policy Report, Sept 10, 2010. **Does not include increase in assessments or tax rates

• Undue risk borne by property owners. o The plan is fraught with long term economic risk to the owners o Total costs to property owners not finalized until after voting

Chesopeian planning SSD increased 22% from estimate of 23.95 cents in 2011 to actual 29.13 cents in 2013. Owners need cost estimate for driveways before vote

o16 years is an extraordinary length of time to make a significant financial commitment

Buyers will want concessions for buying into an excessively high taxed areaWill reduce the volume of buyers for our properties

Exhibit A

Witchduck Bay SSD Channel Quantities

SPUR/Channel

TOTAL Cubic Yard (CY)

multiplied by cost to dredge at $34.13 CY

Cost

Add 20% Eng. costs(1st

dredge cost Dollars

Three Dredge

Cost (2.88

factor) Dollars

CS - City Funded Channel2,255 76963 92356 265985TOTAL 0 76963 92356 265985

0 0No. 1 - Channel 1,389 47403 56883 163824No. 2 - Channel 5,785 197433 236919 682327No. 3 - Channel 1,797 61320 73584 211923No. 4 - Channel 1,380 47099 56519 162776No. 5 - Channel 818 27911 33493 96460No. 6 - Channel 2,569 87676 105211 303009No. 7 - Channel 2,380 81229 97475 280729No. 8 - Channel 3,208 109500 131401 378433No. 9 - Channel 2,153 73465 88158 253894No. 10 - Channel 1,225 41809 50171 144493No. 11 - Channel 1,943 66298 79557 229124No. 12 - Channel 1,603 54722 65666 189118No. 13 - Channel 1,454 49640 59568 171556No. 14 - Channel 2,258 77048 92458 266280No. 15 - DELETED*** 0 0 0 0No. 16 - DELETED*** 0 0 0 0No. 17 - Channel 2,557 87259 104711 301567No. 18 - Channel 1,260 43004 51605 148621No. 19 - Channel 1,431 48844 58613 168804No. 20 - Channel 971 33144 39773 114546No. 21 - Channel 997 34016 40819 117560No. 22 - Channel 1,040 35495 42594 122671No. 23 - Channel 898 30660 36792 105961No. 24 - Channel 767 26166 31400 90431No. 25 - Channel 1,112 37960 45552 131190

TOTAL 44,093 1399102 1678923 4835298

Note: $5,068,356 - $4835298=$233K variance (actual cost could be 4% higher)

7 May, Witchduck Individual Channel Costs*7 May, Witchduck Individual Channel Costs*

as of 21 Oct 14

Calculations based on data provided from the City’s April ’14 Dredge analysis. While some of the values in the data fields are outdated (i.e., new construction),generally we believe the data is statistically sufficient to conduct a representative analysis. All information is available upon request.

Exhibit B

as of 21 Oct 14

OPTION A, Affordable and Equitable (pay for your portions of the dredging) OPTION A, Affordable and Equitable (pay for your portions of the dredging)

Neighborhood channels include:2, 7, 8, 11,12,17,21,22 = $2,301,611/16 years= $143,851 per year143,851 / 6,147.09 = SSD 23.40 (this cost is very close to the 2014 Thoroughgood cove estimate (which was defeated) and nearthe 2102 Witchduck and Thoroughgood SSD estimates (defeated as well).

Further cost savings will be gained by reducing Channel 2 lengthby up to 500 feet. As drawn on the 7 May plan it approaches several properties offering them a greater benefit than others.

Additional cost reductions could be saved by narrowing the width of Some of these channels to 12 – 8 feet, vice 20 – 15 feet.

Rationale for channels selected: above channels traverse most of the wider bodies of the coves and for the most part do not cross property lines or approach docks/yards within a few hundred feet.

Channel 6 should be funded by the city. For other dredge projectsthe city has funded up to over 20% of the cost. For the 7 May plan, the city only funds 5.5%. Extending the city’s spur to include channel 6 will bring the city’s share to about 10%.

This option significantly reduces the shared costs of the SSD, shiftsthe burden to the property owners to pay for their portions of whatthey want dredged, and does not unfairly dredge close to some properties at the expense of others. Neighbor property owners could band together to fund and design neighbor driveways to theirown specifications and needs, i.e., widths, depths, lengths. Thiswould not burden other owners and makes more equitable.

= Omit channel from dredge plan funded by SSD

Exhibit C

Extend city spur to include channel 6

as of 21 Oct 14

OPTION B, The Equitable, costly plan (everyone gets near access to channels) OPTION B, The Equitable, costly plan (everyone gets near access to channels)

1

23

4

5

6

7

8

9

Everyone gets a channel so that no property owners are exploited and everyone minimizes their costs of a driveway.This entails adding up to 9 additional channels ranging from distances of 100 – 300 feet. See green dotted lines 1 – 9. This option corrects the unfairness of the 7 May plan on determining which properties get channels or not. The additional costs would be similar to channels 5,20, 23, 24 -- all costing approximately $30K for each dredging. Note: these values are higher than the $20K stated by the city in theOld Donation Policy letter, which calls into the question that estimate’s accuracy. This is why owners need to be provided an estimate of any driveways prior to voting to make an informed decision.

This would increase the cost to: $30K x 9 channels x 3 dredgings = $810,000$810,000 + $5,068,357 = $5,878,357 / 16 years = $367,397367,397 / 6,147.09 = 59.76 cents SSD

Compared to individual SSD for coves 2 (73.34) and 3 (56.29) this cost does not seem that unreasonable. For property owners that would have to pay for their own driveways, this cost is probably more affordable than having to pay the SSD and the additional driveway costs of $60K. Many cost saving measures could be incorporated into this option and the others as well to lower the SSD: • City spur includes channel 6• widths of smaller channels reduced to 8 – 10 ft • depths of some channels reduced by 1 foot• some owners say they don’t want a channel and are willing to forego deep water access to their property, but are still part of the SSD

Extend city spur to include channel 6

# = additional channels added

Exhibit D

as of 21 Oct 14

Extend city spur to include channel 6

OPTION C, Each Cove separately (The right to determine your own neighborhood plan)OPTION C, Each Cove separately (The right to determine your own neighborhood plan)

Each cove’s neighbors determines their needs and requirements for designing thespecifications for their cove and they fundwith a combination of SSD and driveways

The city spur includes channel 6

Each cove decides widths, depths and lengthsof channels

No cove imposes or exploits another cove

The costs accurately reflect the costs incurred byeach community and the burden is on the coveneighbors’

Ultimately, the costs are borne by each neighbor to pay their costs. This options takes into accounteach property owners decision to buy and livewhere they chose to live. The cost of altering thegeography and ecology is borne by that cove’s neighbors

Exhibit E

Cove 1 AnalysisCove 1 AnalysisChannel costs 2 $682,358

3 211,959 4 162,771 5 96,482 Total $1,153,570

$1,153,570/16 years = $72,098 annual costAverage property value: $640,028 Property range: $261,900 – $1,140,800 Total assessment 25 properties = $16,000,700 $16,000,700/100 = 160,007 x .01 = $1600.07$72,098 / 1,600.07 = 45.06 cents SSD

For channel 2 only, SSD = 26.6 cents

*three dredgings; City of Virginia Beach, Old Donation Policy Report, Sept 10, 2010as of 21 Oct 14

• Cove 1 channel SSD costs less than the total project. Observations:• Channels 3,4,5 are very close to all the properties they service at the back of the cove –significantly reducing any need for “driveways” and out of pocket expenses separate from the SSD. Why do the properties at the back of the coves (which require most of the dredging) get neighborhood channels to within tens of feet to their properties? • Stanfield properties account for much of the dredge volume (3.5 -4.0 feet deep) and pay proportionally less of the costs• Properties located parallel (dashed red ovals) to channel 2 pay disproportionally higher costs due to higher property values

• In addition to the SSD, most will have to pay for their driveways of 100 - 300 feet to access the channel, which could cost up to $20K each dredge cycle ($60K). These properties do not get the same benefit as the others.

• Two properties are undeveloped;16/25 (64%) of the properties are significantly less than the project average. • The city’s only designated engineer for the dredging plans owns property here; engineering costs account for 20% of costs.• North side homes on Hermitage Pt pay no SSD; most buyers will want concessions for paying the highest taxes in the city.

Conclusion: The property owners in yellow endure significantly higher burden of the dredging SSD costs without the benefit of near access to the main channel (2). Additionally, they must pay tens of thousands more (dollars) for their own driveways to legitimately state they have deep water access, as their neighbors do –ironically at their expense. To make fair and equitable, dredging only channel 2 would reduce the SSD to 26.6 cents and shift the burden to properties to pay for their share of the project.

Exhibit F

Cove 2 AnalysisCove 2 Analysis

as of 21 Oct 14

Channel costs 1/3 of 6[1] $100,71017 301,61618 148,61619 168,79120 114,531

Total $843,264 $843,264/16 = $52,704 annual costAverage property value: $598,816 (excludes 2 tax relief properties)Property assessment Range $422,600 –$714,600Total assessment 12 properties (2 tax relief properties excluded) = $7,185,800 $7,185,800 / 100 = 71,858 x .01 = 718.58 $52,704 / 718.58 = 73.34 cents SSD

[1] Coves 2, 3, 4 all need channel 6, so divided equally.

• Cove 2 SSD costs the most of all the coves and drives up the total costs for the whole project. Observations:• requires dredging up to 3.5 - 4 feet deep for channels.• channels are within tens of feet to properties/piers, significantly reducing need for driveways.• 2 properties are tax relief – they do not pay the SSD and costs are absorbed by all other property owners.• The property assessments are significantly below the project average of $749,648.

Conclusion: The only affordable way cove 2 can dredge is by getting all the coves involved and shift the burden of its costs to the other property owners. Cove 2 properties pay the least and receive the most benefit as they get neighborhood channels funded by the SSD, instead of driveways funded by owners.

Exhibit G

Cove 3 AnalysisCove 3 Analysis

as of 21 Oct 14

Channel costs 1/3 of 6$100,710

21 117,596

22 122,670

23 105,917

24 90,466

25 131,123

Total $668,482

$668,482 / 16 = $41,780 annual costAverage property value: $686,93Assessment range $279,600 –

1,114,800Total assessment 11 properties

$7,556,300$7,556,300 / 100 = 75,563 x .01=

755.633$41,780 / 755.63 = 55.29 cents SSD

• Cove 3 costs approximates the project in total: Observations:• The assessment of the properties are below the project average of $749,648 • Two undeveloped properties owned by the project leader get channels close to those properties at a cost of $255K paid for by the SSD.• Undeveloped properties pay the least of all property owners, shifting burden to the other property owners • Requires dredging 3.0 - 4 feet deep for channels• Channels are within tens of feet to properties, significantly reducing need for individually funded driveways

Conclusion: The biggest incentive for cove 3 properties is that the neighborhood channels are funded by everyone in the SSD, which reduces their costs for any driveways. The owners of undeveloped properties have the highest potential to recoup SSD costs and stand to profit at others expense.

Exhibit H

Cove 4 AnalysisCove 4 Analysis

as of 21 Oct 14

Channel costs 1/3 of 6 $100,7101 163,8347 280,7258 378,3919 253,94910 144,48911 229,17812 189,07713 171,50414 266,336Total $2,178,193$2,178,193 / 16 = $ 136,137 annual costAverage property value $882,662; Assessment range $265,200 – $1,361,100Total assessments 34 properties = $30,010,500 (excludes 1 tax relief property)$30,010,500 / 100 = 300,105 x .01 = 3,001.05136,137 / 3,001.05 = 45.36 SSD cents

• Cove 4 SSD costs are less than the other coves, but could be much lower if not for the channels and excluded properties• Average property values significantly higher than the project average; hence bear the burden of the costs.• The number of channels and their total costs are the most expensive. • Many properties on N. Witchduck Rd will have to pay for their own driveways to access the main channel – 7. • Properties serviced by SSD funded channels 1, 9,10,13, 14 minimize their driveway costs.• Four (4) properties valued at $2.3M removed from the dredge plan because they were “no” votes and could prevent attaining 80%. City public works and cove captain states reason was because these properties were too far from the channel and would not get service. If so, then many properties on coves 1 and 4 meet this exclusion. This is a double standard and is gerrymandering. Deleting those 4 homes increases cove SSD by 3.44 cents.

Conclusion: Property owners facing channels 6 and 7 (red oblong circle) do not receive the same level of service as those near channels 1, 9, 10, 13, 14. What is the rationale and how is this fair? These properties will have to pay the SSD rate and for driveways to truly have deep water access. Omitting the 4 properties to gerrymander the numbers raises the SSD costs for all.

Exhibit I

2014* Property asmt. NOTE: 2015 assessments Increased 3.6%**

2014 Tax

93 cents Tax + SDD51.5 =$144.5 (55% tax increase)

Increase X 16 years Through 2031(not counting change in city tax rate or further assessments)

Additional Cost for

Driveways(thousands)

Total for yrs 2,9 & 16***

Potential SSD and Driveway costs

$516K 4803 7444 2641 42,256 0 – 60K 102,256

$859K 7994 12390 4396 70,336 0 - 60K 130,336

$1.013M 9422 14604 5182 82,912 0 - 60K 142,912

$1.236M 11497 17820 6323 101,168 0 – 60K 161,166

* City of Va Bch Properties: http://cvb.manatron.com/Tabs/PropertySearch.aspx ** The Virginian Pilot, Property Values rise in Virginia Beach, April 13, 2014 *** 7 May Preliminary Plan depicts numerous “Neighborhood channels” that did not appear in 2012 plans City of Virginia Beach, Old Donation Policy Report, Sept 10, 2010, driveways range from $5K – 20K

SSD effects on Witchduck / Thoroughgood Properties SSD effects on Witchduck / Thoroughgood Properties

as of 21 Oct 14

Exhibit J

Community Potential Residents

Total Est Cost

SSDCents/$100

Avg prop

SSD Annual

Cost

Status

Witchduck/ Thoroughgood

82 $5.35M 51.5 400K-1.2M+ 1905 - 6965

Thoroughgood 36 24.1 500K-1.7M defeated

Churchpoint 13 38 defeated

Chesopeian 142 $3.225M 29.13** $545K 1,429 approved

Robin Hood Forest 26 $1.424M 38.7 $741 2,871 defeated

Bayville 12 $1.35M 36.3 $1.2M 4,361 approved

Old Donation 66 $1.377M 15.9 $651K 1,017 approved

Dix Creek 145 $7.99M 39.1 250K-1M 978-3910

Little Neck 38 $1.796M 30.4 $850K 2584

Harbor Point 46 $296K 7.9 $757K 963

Hebdon Cove 91 $3.360M 34.4 100 – 500K 344-1720

•http://www.vbgov.com/government/departments/public-works/coastal/pages/neighborhood-channel-dredging.aspx •** Final SSD increased by 22% from original estimate

SSD Comparison* SSD Comparison*

as of 21 Oct 14

Exhibit K