February 26 2015 MarketFront Financing City Funding 34 million PDA Equity 3 million WSDOT 6 million Housing Grants 92 million Philanthropy 21 Committed 39 million remaining ID: 634371
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Slide1
MarketFront Financing PDA Council Meeting February 26, 2015
MarketFront FinancingSlide2
City Funding - $34 millionPDA Equity - $3 millionWSDOT - $6 millionHousing Grants - $9.2 millionPhilanthropy - $2.1 Committed, $3.9 million remaining*State Grants - $2-2.5 million*NMTC - $4 million*PDA Debt - $8.5 - $18.9 million (short and long term)(See MarketFront Project Flow of Funds Chart)
*indicates funding not yet secured
MarketFront Financing
Funding Sources Slide3
PDA Debt History from 1999 – 2015 and projections through 2022 (see PDA Debt History and Financing Capacity Chart)
MarketFront Financing
PDA Debt History Slide4
1st & Pine Loan and Bond – To be refinanced – current interest rate of 5.4% and 5.12% – Projected interest rate for refinancing below 4%Garage Bond – $2.2 million callable now and note due to City of $680,692 to be paid from bond reserves of $441,166 and $2,299,526 from the CRRF. Remaining CRRF Balance after payment - $8,418,769Series 2009 Bond – Current annual debt service of $472k – paid off in 2021
MarketFront Financing
PDA Debt
– Refinancing
and Retirement
Slide5
Current interest rate levels Still historically low below 4%Options for debt Direct Placement - variable loan (fixed for 7), lower initial interest rate Public Offering - Bond (fixed for 20), higher interest rate
MarketFront Financing
Current Financing
Market AnalysisSlide6
Amortization:
20
Years
Expected Term:
7
Years
Projected Rate:
0.17%
1.83%
3.03%
Current
10-Year Avg
20-Year Avg.
Base (67% 30-Day LIBOR)
0.11%
1.23%
2.03%
Projected Credit Spread1.50%1.50%1.50%1.61%2.73%3.53%Annual Debt Service:$18,000,000$1,179,379 $1,269,721 $22,000,000$1,441,463 $1,551,881 Pros:1) Fastest transaction completion timeframe2) Least transaction costs3)Greatest extraordinary redemption flexibilityCons:1)Loan maturity expected to be less than full desired amortization term2)Interest rate expected to be variable
MarketFront Financing
Financing
Scenario – Direct Placement Slide7
Amortization:20Years
Expected Term:
20
Years
Projected Rate:
Rating
A-
Baa-1
3.55%
3.74%
Annual Debt Service:
$18,000,000
$1,265,750
$1,287,500
$22,000,000
$1,545,500
$1,575,250
Pros:1)Rate is fixed for full term2)Full desired termCons:1)Decreased extraordinary redemption flexibility2)Greater transaction completion timeframe3)Increased transaction costsMarketFront FinancingFinancing Scenario – Public Offering Slide8
AssumptionsCurrent Garage Bond Paid off in 20151st & Pine Loan and Bond refinancedMaximum capacity - $24 million – additional $500k approx. per year in debt serviceMedium – $22 million – does not include project alternates or TI FundsLow – $18 million – does not include above plus PDA carry on NMTC and portion of Philanthropy
MarketFront Financing
PDA Debt Capacity Slide9
Summary of Expense and Revenue – from 2005-2021Modeled with $18, $20, $22 and $24 million in debt/refinancing (See Financing Option – All PDA Charts)
MarketFront Financing
Market Pro-Forma
with MarketFront Slide10
Total Project Cost - $73,205,983Alternates - $1,192,923 million TI Funds - $1.3 millionContingencies Construction Contingency - $4.5 million (10%)Owner Contingency - $3.9 million (8.5%)Base Project without TI funds and Alternates - $71,763,250(See MarketFront Total Budget Summary Chart)
MarketFront Financing
Project CostSlide11
MarketFront Financing
Project Debt and Long Term Risk – Best Case
Best
Case
(Base project cost of $71,763,250)
City of Seattle
$34,000,000
WSDOT
$6,000,000
PDA Equity
$3,000,000
Housing Grant
$9,200,000
PDA
Philanthropy
$6,000,000
New Market Tax Credit
$4,000,000State and Other Grants$2,000,000Subtotal $64,200,000Long Term Debt $7,563,250Slide12
MarketFront Financing
Project Debt and Long Term Risk – Mid-Range
Mid-Range
-
assume
no future philanthropy or
grants (Base project cost of $71,763,250)
City of Seattle
$34,000,000
WSDOT
$6,000,000
PDA Equity
$3,000,000
Housing Grant
$9,200,000
PDA
Philanthropy
$2,000,000New Market Tax Credit$4,000,000State and Other Grants$0Subtotal $58,200,000Long Term Debt $13,563,250Slide13
MarketFront Financing
Project Debt and Long Term Risk – Worst Case
Worst
Case -
assume
no future philanthropy, tax credit
, or
grants
City of Seattle
$34,000,000
WSDOT
$6,000,000
PDA Equity
$3,000,000
Housing Grant
$9,200,000
PDA Philanthropy
$2,000,000New Market Tax Credit$0State and Other Grants$0Subtotal $54,200,000Long Term Debt $17,563,250Slide14
Cooling Tower Relocation - $840,000 (Upon notice from City of commencement of Overlook Walk)South Walkway - $540,000(Part of future Heritage House Remodel – and informed by Overlook Walk)Retail space fronting Overlook Walk - $200,000(Dependent on Overlook Walk)Vertical Green-scape infill on west face of garage - $350,000(dependent on Overlook Walk)
Shared responsibility for driveway connecting to new Alaskan Way - $400,000Signage Plan Integrated with existing Market Signage - $200,000
Total Future Related Costs - $2,530,000 ($1,930,000 dependent on Overlook Walk)
MarketFront Financing
Future Related CostsSlide15
Variable Loan vs. Long Term BondRecommendation - Pursue fixed rate long term Bond over variable rate loanWill take additional time to finalize. Potential short-term savings with variable loan not significant enough to outweigh value of long term predictability.Total Amount of Debt RequiredRecommendation - Total debt including refinancing of 1st & Pine Loan/Bond not to exceed $24 millionExercise all prudent project cost control efforts. Base project cost not including TI funds and Alternates in favor of robust contingency during early work.
Secure corresponding debt required to bridge funding gap with early call options for Philanthropy, Grants, and NMTC projected funding amounts and timing.
MarketFront Financing
Key Decisions and Recommendations