Inner Annapolis Development Plan

8/9/2019 Inner Annapolis Development Plan

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Inner AnnapolisCommercial Development

Recommendation

Using History, Arts and Entertainment

to

Create Economic Value

V1.1

April, 2010

Park Place Condominium Association


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Development of the Park Place Recommendation

This recommendation was developed for the City of Annapolis city government.

The origin of t

he study was based upon certain negative events in April, 2010 w

herein t

he Speaker of t

heMaryland Delegates refused to place any funds in the State capital program, and funded an existing

program at a level in excess of the amount requested by that entity.

Over eighty percent of the Resident is sold and virtually every owner invested in this high end developmentwith recognition that the world class Maryland Theatre for the Performing Arts (MTPA) would enhancetheir property values

Further, the observed changes in local shopping patterns, coupled with the worst economic decline since the

Great Depression has lowered property values all along the several mile corridor from the waterfront outto the Westgate Circle including the entire Park Place Development.

The Association Board determined that it was imperative that an initiative be undertaken to assist the Citysolve the economic development challenge of the inner commercial corridor as the principal means ofrestoring property value. The Maryland Theatre is the se qua non of that initiative.

The study was performed by Mr. G. William Vining, Principle of the New Millennium Consultants, LLC, a

management consulting firm. Mr. Vining served for two years as the first president of the AssociationBoard and has a significant understanding of the Park Place Development.

Mr. Vining is a retired consulting partner of Deloitte where he had extensive responsibility for marketing of the firms nationalmanufacturing practice, and significant client service responsibilities. Since retirement Mr. Vining has extensive experience insmall business and technology start ups in the Central Maryland area serving for two years as Advisory Board Chairman ofthe Howard County Center for Business and Technology.

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Contents

Item Page

Local Area Trends

Limited Space, The DC Effect

Urban Decay Has Started, Needs Revising

Property Values, Tax Losses

Economic Development Objective Reverse the Trend

The Win-Win Cycle

Creating Demand Pull

Integrated Program, City Leadership

Economic Value of Arts, Entertainment Indisputable

Recommended Framework

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5

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Local Area TrendsFor about a decade several trends have been unfolding in the Annapolis area that have affected the

traditional downtown commercial area (defined as the waterfront, Main Street to Church Circleand proceeding out West Street to Westgate Circle)

Growth and investment

A bond issue of some $20 million was accomplished to improve West Street from Church Circle to Westgate Circle The Park Place mixed use community was built out and the Residence, Hotel, and Office Buildings 1 and 2

occupied (the Maryland Theatre for the Performing Arts, a key feature of the development is yet to be built)

Anne Arundel population increased promoting expansion of Westfield Mall by 50 stores

The Parole Town Center was created with a large shopping infrastructure as well as residences

National and local economic constriction Housing bubble

Financial crises

City, County and State budget shortages due to property value declines, foreclosures, and vacancies, constrictionof business in general

Inner city decline There has been a downtown commercial area decline due to less business (customer base shifted even more to

the Westfield Mall and Parole Town Center)

The current 11% vacancy rate has a lost rental value of about $48 million/yearand will increase as the areacontinues to loose business

Commercial and residential property value declines - driven by a combination of the the national economicsituation and the absence of a draw to the inner commercial area are well over $100 million with Park Placedevelopment having over $100 million lost value

As will be shown on the pages following, the Annapolis downtown commercial area is being subjectedto the District of Columbia effect lots of land-use that produces no income.

Park Place Condominium Association4


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Limited Space - The DC Effect

Inner Annapolis is very limitedas to land use:

Naval Academy State Government St Johns College City Government Historic sites Churches Historic zoning Surrounded on three sides

by water, fourth side public land

In an era dominated by bigbox stores, shopping traffic for theboutique shops, restaurants, and hotelsin the traditional commercial area will notoccur in sufficient volume.

The imperative is to find an exploit ademand pull that will sustain the areabased on the commercial configurationthat exists there.

The Annapolis Tourist Bureau has noted the reduced spend of visitors has had more affect thanthe effects of fewer tourists

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Urban Decay Has Started, Needs Reversing

The commercial area in question is not easily defined in terms of statistics one must use acombination of sources. A reasonable estimate, based upon information from two commercialsources1 is

a range of 112 to 182 commercial properties along the corridor

the area has approximately 1,100 establishments employing around 12,000 people

the square footage is around 1.23 to 1.70 million square feet

the average rental is around $30/square foot

the current vacancy rate is estimated at around 11% - 81 properties identified as vacant.

Using these statistics

the rental value of the commercial land is about $36.9 million per year the vacancy rate costs property owners around $48 million/ year

the lost tax revenue can be estimated, but requires knowledge and tools not readily available in preparationof this analysis.

One need only to stand along the commercial corridor (something Park Place residents frequently do) and see the lackof traffic

Some businesses are surviving on a marginal basis as it is. These marginal performers are going to fade away one byone without a magnet to pull business back to the corridor.

At some point the condition of the commercial corridor is going to affect the adjacent residential area. Homes on eachside of the corridor will decline as demand is reduced.

Note 1: Sources AA Economic Development Corp, CB Richard Ellis Retail Services, Mackenzie Market Report, 4th Quarter, 2009



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Property Value, Tax Losses

Property Group

Value Pre

Recession(Millions)

Value Reduction Drivers Value

of Decline(Millions)

National

RecessionEffects

Legacycommercialbusinesses

TBD 25%+ TBD

New commercial Park Place1 $160 30%+2 $64+

Legacyresidential TBD 20-25% TBD

New residential Park Place $125 30%+ $50

The greatest effect from commercial area decline is property values and tax revenue reduction from acombination of lower assessment levels, reductions in sales taxes business and licensing revenue.

An increase in property values driven by a robust commercial district - is the only meansto solve the tax revenue and property value problem

Note 1: Hotel, Building 1, 2 Note 2: Bridgewater Reports April, 2010 Value has declined 50% since peak

While difficult to estimate, it is likely that the inner corridor has lost $100+ million in value

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Market

Contributions of the commercial corridorstakeholders

Anticipation of the MTPA Construction of the MTPA Growing awareness of the economic

benefits to the Community, City, County,State

Increased occupancy of commercial sites Increased foot traffic to businesses Increased total activity due to the

opening of the Maryland Theatre

Drivers ofValue

Premium Value

New EntertainmentDistrict

Cache Demand above limited

Supply

Parity

Drivers ofValue

Economic Development Objective Reverse the Value Trend

Park Place Condominium Association 8

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The Win-Win Cycle

EnhancedProperty

Value

IncreasedTax Base,

More Tax Income

IncreasedCommercial

Business

The Commercial Corridor is the key to Annapolis and must be vibrant

The secret sauce for revival is using something unique and authentic to the City


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Creating Demand Pull

An integrated program ofhistory, art and entertainment is the most effective means to draw the level ofvisitor traffic to the inner commercial corridor that is needed for economic vitality.

History Annapolis is one of several historic places Plymouth Rock/Salem, Philadelphia,Williamsburg/Jamestown and St. Augustine are others that reach back to the very beginning ofAmerican history.

There is some use of the historical background, to draw visitors; however the historical

past can be used to draw many interested adults, young people of school age as well as adults

Arts there are several theater groups in Annapolis and one major facility Maryland Hall that havevenues for drama, symphony, ballet. Maryland Hall in particularhas a capability for teaching andthespian development. There are also several commercial art galleries

This arts focus is drawing people to the downtown area - and can be significantly

intensified to draw people to the inner city commercial corridor

Entertainment in a broad context the existing restaurants, boutique shops, theater groups, andcommercial enterprises (especially Rams Head), and Maryland Hall presently draw visitors.However, parking and other constraints such as seating capacity limit the volumes of visitorsneeded for commercial success of the commercial corridor

The Park Place site, and especially the Maryland Theatre for the Performing Arts (MTPA) are needed

in order to draw and to accommodate parking for the volumes of visitors needed for a vibrant downtown

commercial area


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Integrated Program, City Leadership

Currently the many entities commercial and not-for-profit that comprise the commercial corridorand adjacent residential areas lack a common focus and sense of purpose in other words an

integrated program.There is a need to

create a common understanding of the nature of the problem - commercial property value declinesthat will draw down the inner city area, resulting in a loss for property owners and thegovernments

develop a common vision as to how this problem can be overcome by a unified program theenhanced history, arts and entertainment program that will draw the volumes of visitors and

levels of spending needed to sustain the inner city commercial corridor identify the contribution of the organizations involved in achieving the mutually advantageous

result a win-win for property owners, not-for-profits and government

As with many mature communities Annapolis has entrenched interests. It is quite easy for these tosee matters within the context of their own interests, not realizing too narrow a view ultimatelyprevents realization of each groups interests.

The body politic of Annapolis needs leadership of the City Government to bring all these interestedparties together and guide them to a common purpose. The Citys sole role is leadership.


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Economic Value of Arts, Entertainment Indisputable

NationalArts & EconomicProsperity Report1

MarylandStatewide Arts

Survey2

MTPAEconomic

Impact Study3

Win/Winfor

Business,

Residents,City and County,State=

Note 1: Arts and Economic Prosperity III,by Americans for the Arts

Twenty-five cities in each region of the US have participated three studies which demonstrate that artsinvestments pay better than commercial ones providing a 7:1 return on investment.

39% of attendees from

outside local area The spend is 2X local 19% spend $1,000 or more 32% of travelers stay longer

due to events

Public unusuallyengaged in arts

95% want morefunding for the arts

$124 million from construction $24.6 million recurringeconomic impact- including $5 million in the

inner corridor $1.3 million in taxes to the city,

county and state

Note 2: Maryland State Arts CouncilNote 3: Basile Baumann Prost Cole

Associates, Inc.

Park Place Condominium Association 12

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Recommended Framework

Using this document as a starting point the Residence recommends the City, under the leadership ofthe Mayor, develop an Integrated Program definition composed of at least the following elements

Integrated

History, Artsand

EntertainmentProgram

Economic Assessment and Vision for Remediation

The civic participants stakeholders

Role of stakeholders

Stakeholder plans

City leadership role in implementation

Progress reporting and barrier management

Publicity


Inner Annapolis Development Plan

Documents

Transcript of Inner Annapolis Development Plan