Coriolis Attachment 3 - Redevelopment Scenarios
Detailed financial modeling for redevelopment scenarios, including revenue, cost, and residual land value calculations.
Attachment 3 - Redevelopment Scenarios
Assumptions
1. Revenue and Value: a) Townhouse prices of $330 per square foot based on MLS sales of townhouses in View Royal over the past year. b) Apartment rental rates based on a review of rents currently being achieved in Victoria West, Downtown Victoria and Langford/Colwood by unit type in newer buildings (see Attachment 1). Parking revenue included in the rental rate based on survey of units currently renting in the area. c) Average net unit size of 1,150 square feet provided by the client. d) A vacancy allowance of 1.0% based on a CMHC vacancy rate of 0.8% for purpose-built apartment units in View Royal. e) Operating costs excluding property taxes of $4,000 per unit or $3.50 per square foot per year based on operating costs for newer purpose-built rental projects and strata fees in the region for newer apartment units. f) Cap rate of 4.0% based on Q4 2016 Canada Cap Rate Report from Colliers International which indicates cap rates for multi-family properties in Victoria range from 4.0% to 5.0%.
2. Policy: a) For assessment of smaller unit scenario, a parking allowance of 1.0 stalls per unit for one bedrooms, 1.5 stalls per unit for two bedrooms, 2.0 stalls per unit for three bedroom units. b) A rezoning fee of $60,206, public hearing fee of $2,500, a development permit fee $58,556 and building permit fee of $76,315 provided by the Town.
3. Building Cost Assumptions: a) Demolition cost of $1,500,000 for the site. b) Hard construction costs of $190 per sq. ft. for above grade woodframe townhouse residential floorspace based on the 2017 Altus Cost Guide (high quality). c) Hard construction costs of $260 per sq. ft. for concrete apartment residential floorspace based on the 2017 Altus Cost Guide (high quality). d) Allowance for site exclusions of $5.0 million including landscaping, on-site servicing and surface parking construction. e) Underground parking of $50,000 per stall or $75.00 per sq. ft. A total of 134 surface parking stalls included in ‘Site Exclusions’. f) Landscaping included in ‘Site Exclusions’. g) A project management fee of 3.5% included on hard and soft costs. h) Soft costs of 9% on hard costs are included for building permits and professional fees. i) A contingency allowance of 5% included on hard costs, soft costs and the project management fee. j) Fixtures and equipment fee of $2,000 per unit. k) Separate allowances included for property taxes and DCCs. l) A financing fee of 1.0% is included. m) No developer's profit margin.
Townhouse Value Under Redevelopment 0.8 FSR
Major Assumptions (shading indicates figures that are inputs; unshaded cells are formulas)
| Site and Building Size | Value | Notes |
|---|---|---|
| Site Size | 678,665 sq.ft. | 6.30 hectares |
| Density | 0.80 FSR | |
| Residential Density Before Exclusions | 0.80 FSR | |
| Enclosed Balconies | 0.00 | 0% of residential |
| In-suite storage | 0.00 | 0.0 sf per unit |
| Effective Residential Density After Bonuses and Exclusions | 0.00 FSR | |
| Total Effective Gross Density After Bonuses and Exclusions | 0.80 FSR |
| Market Strata Residential floorspace | Value | Notes |
|---|---|---|
| Net saleable space | 542,932 sq.ft. or | 100% of gross area |
| Average Gross unit size | 1,595 sq.ft. gross | |
| Average Net unit size | 1,595 sq.ft. net | |
| Number of units | 340 units or | |
| Two Bedroom Units | 68 | |
| Three Bedroom Units | 272 | |
| Total Market Strata Unit Parking Stalls | 511 stalls or | 1.50 per unit |
| Structured Garage Parking Stalls | 421 stalls | |
| Surface parking stalls | 90 stalls |
| Strata Revenue and Value | Value | Notes |
|---|---|---|
| Average Sales Price Per Sq. Ft. | $330 | per sq.ft. of net saleable residential space |
| Parking Stall(s) | $0 | per stall |
| Storage Lockers | $0 | per locker with 0 available |
| Overall Average Sales Price Per Sq. Ft. | $330 | per sq.ft. of net saleable residential space |
| Pre-Construction Costs | Value | Calculation Base |
|---|---|---|
| Rezoning | $60,206 | $2,200 plus $0.1068 /sq. ft. |
| Public Hearing | $2,500 | |
| Development Permit Fee | $58,556 | $550 plus $0.11 |
| Building Permit | $76,315 | $5,237 plus 0.075% construction costs |
| Construction Costs | Value | Notes |
|---|---|---|
| Allowance for Demolition of Existing Buildings | $1,500,000 | $9 per gross sq.ft. of existing floorspace |
| Other Costs | $0 | |
| Connection fees | $50,000 | |
| Green Roof | $2,035,995 | $4 per gross sq.ft. of existing floorspace |
| Hard Construction Costs | ||
| Market Strata Residential Area | $130 | per gross sq.ft. of residential area |
| Cost Per Underground Stall | $50,000 | per underground stall |
| Cost Per Garage Stall | $12,500 | per garage stall |
| Overall Costs Per Square Foot | $175 | per gross sq.ft. |
| Hard Cost Used in Analysis | $175 | |
| Landscaping | $1,696,663 | or $5 per sq.ft. on 50% of site |
| Soft costs/professional fees (excluding management) | 9.0% | of above |
| Project Management | 3.5% | of above |
| Post Construction Holding Costs | $400 | per unit per month on 50% of units for 12 months |
| Contingency on hard and soft costs | 5.0% | of hard and soft costs |
| Local Government Levies | Value | Notes |
|---|---|---|
| View Royal Development Cost Charge | $6,077 | per market unit |
| Financing Assumptions | Value | Notes |
|---|---|---|
| Financing rate on construction costs | 5.0% | on 50% of costs, assuming a 1.25 year construction period |
| and a total loan of 75% on costs | ||
| Financing fees | 1.00% | of financed construction costs |
| Financing on Land Acquisition | 5.0% | during construction on 50% of land cost |
| Marketing and Commissions | Value | Notes |
|---|---|---|
| Commissions/sales costs on residential | 1.0% | of gross strata market residential revenue |
| Marketing on residential | 1.0% | of gross strata market residential revenue |
| Property Taxes | Value | Notes |
|---|---|---|
| Tax Rate (New Multi-Residential) | 0.58% | of assessed value |
| Current assessment (Year 1 of analysis) | $36,530,000 | for 2016 |
| Assumed assessment after 1 year of construction (Year 2 of analysis) | $89,583,780 | (50% of completed project value) |
| Allowance for Developer's Profit | Value | Notes |
|---|---|---|
| 15.0% | of total costs or 13.0% of gross revenue |
Financial Summary
| Revenue | Amount |
|---|---|
| Gross Market Residential Sales Revenue | $179,167,560 |
| Less commissions and sales costs | $1,791,676 |
| Net residential sales revenue | $177,375,884 |
| Allowance for Demolition of Existing Buildings | $1,500,000 |
| Other Costs | $0 |
| Connection fees | $50,000 |
| Hard construction costs | $94,770,730 |
| Landscaping | $1,696,663 |
| Soft costs | $8,821,565 |
| Project Management | $3,739,364 |
| Residential Marketing | $1,791,676 |
| Post Construction Holding Costs | $408,457 |
| Contingency on hard and soft costs | $5,549,339 |
| Municipal DCC | $2,068,397 |
| Rezoning | $60,206 |
| Public Hearing | $2,500 |
| Development Permit Fee | $58,556 |
| Building Permit | $76,315 |
| Less property tax allowance during development | $183,840 |
| Construction financing | $2,830,725 |
| Financing fees/costs | $927,062 |
| Total Project Costs Before Land Related | $124,535,395 |
| Profit and Residual Values | Amount |
|---|---|
| Allowance for Developer's Profit | $23,363,450 |
| Residual to Land and Land Carry | $29,477,040 |
| Less financing on land during construction and approvals | $1,575,179 |
| Less property purchase tax | $809,056 |
| Residual Land Value | $27,092,805 |
| Residual Value per sq.ft. of gross buildable floorspace | $50 |
| Residual Value per sq.ft. of FSR under existing zoning | $50 |
| Residual Value per sq.ft. of site | $40 |