Simsbury, CT - Economic Development Commission Minutes

The special meeting of the Economic Development Commission was called to order at 7:40 AM in the Main Meeting Room of the Simsbury Town Offices. Chairman Louis George and Commission members David Balboni, Mark Deming, Thomas Rechen, Derek Peterson and Charles Minor were present as well as other interested parties.

Commissioner Rechen stated that he would be excusing himself from this project because his law firm represents Konover Construction Company, although it is a different company from the one that has made this application. He also stated that one of his partners represents Konover Construction and Commissioner Rechen stated that he has been involved with litigation with Michael Konover. Although he does not feel that there is a conflict presented by this project because this is a separate independent entity, he will be excusing himself from the consideration of this application.

T.J. Donahue and Ray Kehrhahn made the presentation before the EDC on behalf of the applicant. Mr. Donahue stated that, regarding their timeline, they have been scheduled to go before the Planning Commission on August 14, 2007. The official opening of the public hearing with the Zoning Commission will be September 24, 2007. They are expecting decisions on this application in the late Fall 2007 and the commencement of the building drawing approval phase in late 2007.

Ray Kehrhahn stated that this presentation, which is being brought before the EDC, is not the final version and during his presentation he will let the Commission know what is subject to change. Mr. Kehrhahn proceeded to outline the master plan for the Commission and the feasibility analysis. The feasibility analysis was broken down into three components: the office component; the retail component; and the multi-family component. He stated that although they are independent, they have become somewhat inter-related. He then shared the economic impact analysis and the fiscal analysis with the Commission.

Master plan – Mr. Kehrhahn stated that this is an adaptive reuse of an existing location. He showed the Commission some aerial views of the property. He stated that the trade area is defined, within this project, as a 12-minute drive time from the center of the project. The residential component would be approximately 20 minutes away, a 12-minute drive time for the retail, and approximately a 1-20 minute drive for the commercial office.

Mr. Kehrhahn spoke regarding the demand for residential housing units and some of the statistics regarding this issue. Many of the figures that he is using throughout this presentation have come from the Census Bureau. The projections he is making are based on population and income trends. He also talked about the incomes associated with this demand.

Regarding office space demand, Mr. Kehrhahn showed the Commission a chart. He stated that 59% of the professional employment in the trade area is associated with college graduates or individuals with an advanced degree. Within the 12-minute drive time, he stated that they project approximately 1, 987 new jobs to be created between now and the year 2011. These professional jobs will create demand for office space.

Economic Impact – Mr. Kehrhahn stated that regarding the retail component, for every one full-time employee, there would be 500 s.f. of direct retail space. Regarding the restaurants, this would be 1.5 employees for every 500 s.f. of space. He stated that there would be 822 jobs that will be created; in this marketplace, the average annual salary, including benefits is $42,000. This will make the total payroll associated with the direct retail approximately $34,500,000.

Regarding the professional office space, Mr. Kehrhahn stated that there would be jobs for 507 professionals in this space. The average salary associated with these jobs is approximately $72,000. The total office payroll is projected to be $36,465,000. Mr. Kehrhahn discussed the additional economic benefits associated with the creation of these jobs.

Fiscal Impact – Mr. Kehrhahn stated that he looked at the one-time impact to the Town of Simsbury. The value of the new construction would be approximately $187,000,000 based on construction estimates as of June 2007. He stated that he is still waiting for information regarding the water and sewer impact fees.

Mr. Kehrhahn continued his presentation to the Commission regarding the ongoing fiscal impact. Because of the demographics of the trade area and the income growth, this project will have a lot of attention from institutional investors. He stated that the approximate assessed value of this project would be $171,000,000.

Regarding the cost to the Town, Mr. Kehrhahn stated that based on a conservative analysis, there will be approximately 52.3 students in kindergarten through high school that could potentially be added to the school system. Simsbury’s net cost per student, after taking away the State’s reimbursement, is almost $10,000. He stated that the direct cost to the Board of Education is projected to be approximately $522,000. He also commented on the indirect costs associated with the Town providing services, including public safety, administration, public works, etc. He stated that this would be a total of approximately $750,000 in net additional expenditures by the Town of Simsbury.

Chairman George questioned if he was correct in saying that within 12 minutes of this project are where most of the retail businesses will come. Mr. Kehrhahn stated that this was correct. They have not taken into account daytime employment, which inside the trade area, is actually very substantial. He stated that he will need to figure out what the additional daytime demand would be; he has not incorporated this into his report.

Commissioner Minor asked for a breakdown of the average income of the proposed created jobs. Mr. Kehrhahn stated that these jobs include the managers down to the material handlers. The created jobs would be 822 equivalent full time jobs; a significant portion of the jobs will be part time.

Chairman George stated that prior to this meeting, Mr. Donahue had defined “big box” retail as the weakest form of economic development. He asked Mr. Donahue to comment on this project and the feasibility and dependency on the “big box”. Mr. Donahue stated that “big box” is only in regards to what a project looks like. Home Depot and Lowes would be an example of this. With respect to what is proposed at River Oaks, Mr. Donahue stated that there is not a single structure that looks like a “big box”. The physical appearance and aesthetics of this project have been very carefully designed.

Commissioner Deming questioned what the highest and lowest forms of development in terms of generating property taxes would be. Mr. Kehrhahn stated that this is determined by the value of the property and how they utilize the location. He stated that a large store like Target and a specialty grocery store would be the anchor stores for River Oaks. Anchors create sufficient traffic and economic energy and will support the rest of the 180,000 of retail space.

There was some discussion on Target and what that company is doing for the communities in which they are located. Commissioner Minor questioned if the large retail space for Target gets built but nothing else is built, how this would impact the Town regarding tax dollars. Mr. Donahue stated that there are ways for the Town to protect itself from this, although, their new PDD Regulations state that there will be an approved concept and master plan. There will also be approved phasing plans. Commissioner Minor stated that he feels the Town is at a large risk. Mr. Donahue stated that if this Commission feels that this project is feasible economically and will support River Oaks, then the EDC needs to relate their feelings to the Land Use Agencies. Commissioner Minor stated that this project cannot be approved or denied based on economics. Commissioner Balboni disagreed with Commissioner Minor regarding the importance of the EDC’s support of this project. Mr. Donahue commented that although the EDC is without technical power in the technical process, this Commission has tremendous influence. The support of this Commission is very important and he would like each member to consider this project carefully.

Commissioner Deming asked if the capacity of design was constrained in any way because of the water/sewer. Mr. Donahue stated that no, the sewer capacity would support another 30%. He stated that currently, they are at 68% coverage. He stated that there is also more than enough water available.

Commissioner Minor question what impact this project would have on local businesses. Mr. Kehrhahn stated that the dollars that are available in the market are already being serviced by retailers in Town. There is still in excess of $160,000,000 in sales. He stated that this project would have an economic benefit in the immediate surrounding areas, as well as the 12-minute radius. Also, the jobs that will be created will ultimately help support the downtown businesses.

Jeff Vose of the MHA commented that the numbers in Mr. Kehrhahn’s presentation are amazingly accurate and may even be conservative. He feels that the impact on local retailers and businesses will be generally affected in a positive way. Mr. Vose did state his concerns regarding the lower income jobs, which he feels will have to be imported; they will not be coming from Simsbury. This also creates concerns regarding transportation.

Commissioner Deming questioned if the State of Connecticut has any say regarding Route 10 and the additional traffic in terms of the capacity of the road. Mr. Donahue stated that the SDC owns exclusive jurisdiction over the traffic; they are very interested in what the Town does, although it is a State Highway. He stated that they would need SDC permits regarding the roads and traffic to get traffic through safely and efficiently. Regarding public transportation, Mr. Donahue stated that they have an application in to the Connecticut Transit. There will also be a bus stop in front of River Oaks.

Chairman George questioned how a mixed-use development such as River Oaks would impact the surrounding values to neighbors. Mr. Kehrhahn stated that research strongly shows that this type of development increases property values. Chairman George asked them to put information together regarding this issue prior to the next meeting to be given to the Commission members.

Chairman George stated that the EDC would not be meeting in August. The next regular meeting would be held on September 20, 2007. He requested copies of Mr. Kehrhahn’s full study and any academic reports on market values of surrounding properties as soon as possible so the Commission would have time to review them prior to the September meeting.

Mr. Donahue concluded the presentation by stating that River Oaks is very important to the Town of Simsbury. He stated that this piece of property is one of the most important pieces of land for economic development. River Oaks has been very carefully designed. This project is about whether Simsbury wants to grow or not.