Presentation for the Borough of Middletown

Woodland Hills | Electric Substation Relocation & Smart Grid

United Realty & Infrastructure Group, LLC

August 2015 CONFIDENTIAL
The information contained in this document and any other enclosed documents is privileged and confidential and intended to be conveyed only to the designated recipient(s). If you are not the intended recipient, you are
hereby notified that any unauthorized disclosure, copying, distribution or taking of any action in reliance on the contents of the documentation is strictly prohibited and review by any individual other than the intended
recipient. If you have received this document in error, please immediately notify David Stubbs at 301-658-6540 ext. 105 (or via email: dstubbs@URIGRP.com), including enclosed documents without reading or copying them
in any manner. Thank you.

Project Overview
The Borough has a strong need to relocate the Mills Street Substation from its current site. The
current electric substation is in a flood plain which suffered quite a few outages as a result;
The Borough and Urigroup entered into a Letter of Intent on April 28, 2014 to begin exploring the
relocation of the Substation and Meter Replacement;
The Woodland Hills area was discussed as the desired location which is composed of
approximately 170 acres and has been zoned and approved for 440 dwelling units. The Borough
expressed a strong interest in having Woodland Hills developed, which is the largest remaining
developable parcel in Middletown. On May 13, 2014, Urigroup secured site control of Woodland
Hills for the purposes of relocating the Substation and developing the residential community;
On November 17, 2014, the Borough Council authorized the Boroughs Electrical Engineer to move
forward on a preliminary design and proposal for the relocation in combination of the substation to
the Woodland Hills area;
On February 17, 2015, the Borough and Urigroup executed a Development Agreement to develop
the Substation at Woodland Hills (see Proposed Borough Facility Plan enclosed). Under the
Development Agreement, the parties agreed that Urigroup would develop Substation and Electric
Meter replacement then lease them to the Borough under terms to be negotiated further;

Page 1

Project Overview (continued)

Urigroup has been working with the Boroughs Electrical Engineer on relocation and consolidation of
the Substation to Woodland Hills, and has obtained funding for the development of the Project. In
addition, the Borough and Urigroup have submitted applications for two Community Development
Block Grants and have begun the process of submitting an application for Redevelopment
Assistance Capital Program funding. These funds would go towards reducing the Boroughs out-ofpocket financial obligation for the Project;

By relocating the substation to Woodland Hills, it will kick start a project that has been in planning for
over 13 years, the site work improvements at Vine Street and Woodland Avenue will open the site
up for future development, and more importantly the Substation will be relocated to a site 30 feet
above the flood plain (Woodland Hills Site Plan is enclosed);

The Economic and Fiscal Impact of the development creates significant benefits for the Borough
(Fiscal & Economic Impact Analysis is enclosed);

Consolidating the Mills and Spruce Street Substations into a new substation and revamping the
existing metered system to a smart grid system will provide much greater efficiencies for the
Borough and its customers. In addition once the construction has been completed, if the Borough
were to later lease or sell their elect distribution system then the newly installed system would have
much greater value when looking for possible investors/operators.

Page 2

P3 Financing Options for Electric Substation

Relocation & Smart Grid System Revamp

Urigroup has provided two options to finance and develop the Project at Woodland
Hills on the following pages;

The following options have their advantages and disadvantages when compared to
one another;

The priority has been to safe guard and upgrade electric distribution system as
quickly as possible given its current dire condition, while at this time spurring
economic development through the Woodland Hills Development.

Page 3

Substation Financing Options

Pros:

Keeps control of electric distribution system;

Tax exempt financing, which allows for lowest cost of financing;

Borough will apply grants/subsidies to reduce construction costs of the Project;

Property and infrastructure reverts to Borough upon expiration of Ground Lease.

Cons:

Borough must handle upfront legal and predevelopment costs;

Delays construction completion and occupancy by up to 6 months or more;

Borough assumes construction risk;

There may be uncertainty for municipal bond financing in light of current events and market volatility;

Tax exempt financing would trigger prevailing wage;

Tax-exempt debt must be retired/defeased before Electric Distribution System can be sold or leased to a Private Entity.

*-The projections above are approximate and subject to the current market conditions. Not a final quote.

Page 4

Substation Financing Options (continued)

Pros:

Keeps control of electric distribution system;

Private equity and debt utilized to fund improvements;

Funding is in place. Urigroup provides Borough the ability to Rate Lock now and protect the financing from market volatility;

Urigroup guarantees project to be on time and on budget; assumes construction risk;

Project completion and occupancy by September 2016, if we begin by August 15th, 2015;

All approved Expenses to be reimbursed at closing and no additional capital provided from Borough until first lease payment on
October 1st, 2016;

The Master Lease will provide greater flexibility for the Borough. One benefit is that it is assignable, there is no need to
terminate lease in order to sell or lease distribution system;

Urigroup will work with the Borough to maximize the use of subsidies/grants for Project;

Similar call provisions and/or yield protection as tax-exempt financing and/or prepayment options;

Property and infrastructure reverts to Borough upon expiration of Master Lease.

Cons:

Financing costs may be higher than Tax-Exempt Financing;

Lease payments will be higher than Tax-exempt financing throughout its term due to annual escalator of lease;

If Urigroup utilizes public subsidies the project would then be subject to prevailing wage.
*-The projections above are approximate and subject to the current market conditions. Not a final quote.

Page 5

MiddletownBoroughElectricSubstationRelocation&SmartGridSystem
DEVELOPMENTBUDGET
CLOSINGCOSTS
LandAcquisition
LandRecordationTax
LandTransferTax
TOTALLANDCOSTS

$Amount

%Cost

545,000
0
10,900
555,900

4.4%
0.0%
0.1%
4.5%

122,600
77,000
100,000
122,600
267,474
689,674

1.0%
0.6%
0.8%
1.0%
2.2%
5.6%

TOTALCLOSINGCOSTS

1,245,574

10.2%

HARDCOSTS
ElectricSubstation
Sitework
Infrastructure Improvements (REX2 Meter Replacement & Smart Grid System)
Bond
CMFee
13%
HardCostContingency
TOTALHARDCOSTS

4,425,000
1,176,120
509,000
62,323
122,202
792,244
7,086,890

36.1%
9.6%
4.2%
0.5%
1.0%
6.5%
57.8%

475,105
69,097
125,000
113,390
51,380
150,000
50,000
88,000
16,600
48,696
16,500
5,417
75,000
182,918
500,253
1,967,357
10,299,821
1,200,000
3,167,357
11,499,821
757,600
$12,257,421

3.9%
0.6%
1.0%
0.9%
0.4%
1.2%
0.4%
0.7%
0.1%
0.4%
0.1%
0.0%
0.6%
1.5%
4.1%
16.1%
84.0%
9.8%
25.8%
93.8%
6.2%
100.0%

50%

0.00%

50%

4.00%

FINANCINGCOSTS
DebtPlacementFee
ConstAdmin/Monitoring/Trustee
LenderLegal/Expenses
Bond/LoanFee
BondInsurancePremium&Expenses
TOTALFINANCINGCOSTS

SOFTCOSTS
A&E
Overhead/Admin
ProjectManagement
Legal
Accounting
InspectingEngineer
Entitlements
Studies
Permits/Fees
Utilites/Security
BRandGLInsurance
TaxesDuringConstruction
Testing&Commissioning
10%
SoftCostContigency
6%
DevelopmentFee
SoftCosts,Subtotal
TOTALCOSTSBEFOREINTEREST&METEDCOST
MetEd'sInfrastructureDesign/Upgrade(69kVTAPOption)
TOTALSOFTCOSTSW/OPEX
TOTALCOSTSBEFOREINTEREST
ConstructionLoanInterest
TOTALPROJECTCOST

Page 6

Woodland Hills Development

Fiscal & Economic Impact Analysis

Page 7

Multipliers
Total Household Size

Population Multipliers

Type

Burchell
Listokin
1980

Bedrooms

Listokin New Home Study

1980

1990

2000

Average
of
Multipliers

Apartment

1
2
3

1.390
2.163
3.341

1.520
2.450
3.500

1.480
2.130
3.100

1.530
2.110
3.100

1.480
2.213
3.260

Townhome

2
3

2.037
2.833

2.090
3.060

2.060
2.760

2.000
2.660

2.047
2.828

Twin

2
3

2.322
3.429

2.090
3.060

2.060
2.760

2.000
2.660

2.118
2.977

Single Family

3
4

3.287
4.061

3.280
4.120

3.160
3.840

2.980
3.770

3.177
3.948

School-Age Children

Population Multipliers

Type

Burchell
Listokin
1980

Bedrooms

Listokin New Home Study

1980

1990

2000

Average
of
Multipliers

Apartment

1
2
3

0.017
0.231
0.857

0.030
0.360
1.080

0.060
0.240
0.740

0.080
0.250
0.770

0.047
0.270
0.862

Townhome

2
3

0.164
0.550

0.220
0.760

0.140
0.440

0.160
0.440

0.171
0.548

Twin

2
3

0.269
0.846

0.220
0.760

0.140
0.440

0.160
0.440

0.197
0.622

Single Family

3
4

0.734
1.366

0.770
1.430

0.610
1.080

0.580
1.080

0.674
1.239

Page 8

Population Impacts
Total Household Size - Woodland Hills

Type

Bedrooms

# Homes

Multiplier

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Population
Impact
at
Buildout

Year 8

Apartment

1
2
3
Subtotal

70
150
20
240

1.480
2.213
3.260

13
41
8
62

26
82
16
124

39
123
24
186

52
164
32
248

65
205
40
310

78
246
48
372

91
287
56
434

104
332
65
501

104
332
65
501

Townhome

2
3
Subtotal

59
66
125

2.047
2.828

15
23
38

30
46
76

45
69
114

60
92
152

75
115
190

90
138
228

105
161
266

121
187
308

121
187
308

Twin

2
3
Subtotal

23
23
46

2.118
2.977

6
8
14

12
16
28

18
24
42

24
32
56

30
40
70

36
48
84

42
56
98

49
68
117

49
68
117

Single Family

3
4
Subtotal

50
50
100

3.177
3.948

19
24
43

38
48
86

57
72
129

76
96
172

95
120
215

114
144
258

133
168
301

159
197
356

159
197
356

TOTALS

511

157

314

471

628

785

942

1,099

1,282

1,282

School-Age Children - Woodland Hills

Type

Bedrooms

# Homes

Multiplier

Apartment

1
2
3
Subtotal

70
150
20
240

0.047
0.270
0.862

Townhome

2
3
Subtotal

59
66
125

Twin

2
3
Subtotal

Single Family

Year 1

Year 2
-

Year 3

Year 4

Year 5

Year 6

Year 7

Population
Impact
at
Buildout

Year 8

5
2
7

1
10
4
15

2
15
6
23

3
20
8
31

3
25
10
38

3
30
12
45

3
35
14
52

3
41
17
61

3
41
17
61

0.171
0.548

1
4
5

2
8
10

3
12
15

4
16
20

5
20
25

6
24
30

7
28
35

10
36
46

10
36
46

23
23
46

0.197
0.622

1
2
3

2
4
6

3
6
9

4
8
12

5
10
15

5
12
17

5
14
19

5
14
19

5
14
19

3
4
Subtotal

50
50
100

0.674
1.239

4
7
11

8
14
22

12
21
33

16
28
44

20
35
55

24
42
66

28
49
77

34
62
96

34
62
96

TOTALS

511

26

53

80

107

133

158

183

222

222

Page 9

Comparison of Existing Data and Forecast - Woodland Hills

Middletown Borough
2010 Census Data

Woodland Hills
Forecast

4,411

Housing Units

511

8,901
2.018

Population
Population Multiplier

1,282
2.509

1,610
0.365

School-Age Children
School-Age Children Multiplier

222
0.434

Fiscal Impacts
Millage Rates
County
Middletown Borough

Library

Municipal

6.876

5.631

School
22.15

Municipal Revenues Increase In RE Taxes From Woodland Hills

Type

Average
Sales
Price

# Homes

Total
34.657

100%

Real Estate Tax Levied

at Full Build-Out
per Home

Effective
RE Tax
Rate

Assessment
Ratio

Total

3.47%

1% Transfer Tax Levied

at Home Closing
per Home

Total

Apartment

210

160,626

904.49

189,942

1,606

337,315

Townhome

125

196,277

1,105

138,154

1,963

245,346

Twin

46

228,800

1,288

59,265

2,288

105,248

Single Family

100

262,500

1,478

147,814

2,625

262,500

TOTAL

511

535,175

950,409

Page 10

Municipal Revenue Increase During Build-Out - Woodland Hills

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Real Estate Taxes

Transfer Tax*
Earned Income Tax**
Building Permits & Fees
Utility Revenues ***
Other Revenues***
Annual Municipal Revenue Increase

66,897
118,801
16,948
95,813
43,420
6,454
348,332

181,279
124,741
33,895
95,813
86,839
12,909
535,476

271,919
131,275
50,843
95,813
130,259
19,363
699,471

362,559
138,492
67,790
95,813
173,678
25,817
864,149

405,713
146,500
84,738
95,813
217,098
32,271
982,132

448,867
155,426
101,685
95,813
260,517
38,726
1,101,034

474,759
165,429
118,633
95,813
303,937
45,180
1,203,750

535,175
184,973
135,580
95,813
347,356
51,634
1,350,531

535,175
47,520
135,580
347,356
51,634
1,117,267

535,175
47,520
135,580
347,356
51,634
1,117,267

Cumulative Municipal Revenue Increase

348,332

883,808

1,583,278

2,447,427

3,429,559

4,530,592

5,734,342

7,084,874

8,202,140

9,319,407

Year 8

Year 9

* Transfer Tax of 1% upon initial Home Closing plus 5% of homes resold per year.
** Earned Income Tax of .5% on the average expected household income. Income expected to utilize 20% on 30 year amortized mortgage payment at 4% interest.
Avg Sale

195,000

5% Down

Principal

185,250 Payments/Yr

10,613 Income/Yr

53,065

*** Ulitity Revenues are determined to be $47.70 per month per unit for Apartments and an avergae of $69.85 per month per unit for all other housing types
****All other taxes based on per capita revenues for existing revenue items.

40.28 per capita

Municipal Expenditures Increase from Woodland Hills

Item

Expenditure
Total

Increase
in Expenditures
from Woodland Hills

PerCapita

General Government
Public Safety
Public Works
Electric Utility
Other Expenditures

324,305
2,686,981
1,329,694
not available
1,433,799

36.43
301.87
149.39
161.08

46,709
387,003
191,514
274,457
206,508

Total Expenditures

5,774,779

648.78

1,106,191

Municipal Expenditure Increase During Build-out - Woodland Hills

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 10

General Government
Public Safety
Public Works
Utility Costs*
Other Expenditures
Annual Municipal Expenditure Increase

5,720
47,394
23,454
34,307
25,290
136,165

11,440
94,788
46,908
68,614
50,580
272,331

17,161
142,183
70,361
102,921
75,870
408,496

22,881
189,577
93,815
137,228
101,160
544,661

28,601
236,971
117,269
171,535
126,450
680,827

34,321
284,365
140,723
205,843
151,740
816,992

40,042
331,760
164,176
240,150
177,030
953,157

46,709
387,003
191,514
274,457
206,508
1,106,191

46,709
387,003
191,514
274,457
206,508
1,106,191

46,709
387,003
191,514
274,457
206,508
1,106,191

Cumulative Municipal Expenditure Increase

136,165

408,496

816,992

1,361,653

2,042,480

2,859,472

3,812,629

4,918,820

6,025,011

7,131,202

* Utility Costs are determined to be $37.69 per month per unit for Apartments and an average of $55.19 per month per unit for all other housing types.

Page 11

NET MUNICIPAL FISCAL IMPACT FROM WOODLAND HILLS DEVELOPMENT

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Full
Build-Out
Year 9

Year 10

Total Revenues
Total Expenditures

348,332
136,165

535,476
272,331

699,471
408,496

864,149
544,661

982,132
680,827

1,101,034
816,992

1,203,750
953,157

1,350,531
1,106,191

1,117,267
1,106,191

1,117,267
1,106,191

Net Annual Fiscal Impact

212,167

263,145

290,975

319,488

301,305

284,041

250,593

244,340

11,076

11,076

Cumulative Net Fiscal Impact

212,167

475,311

766,286

1,085,774

1,387,079

1,671,120

1,921,713

2,166,053

2,177,129

2,188,204

Year 9

ECONOMIC IMPACT FROM WOODLAND HILLS DEVELOPMENT

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

8,875,000
1,008,000
385,000
10,268,000

13,995,000
1,078,000
1,113,000
16,186,000

11,656,000
1,078,000
1,460,000
14,194,000

10,013,000
1,078,000
1,548,000
12,639,000

7,683,000
1,078,000
1,444,000
10,205,000

4,445,000
750,000
972,000
6,167,000

1,250,000
750,000
720,000
2,720,000

500,000
400,000
462,000
1,362,000

76,650
333,843
258,566
142,282
68,985
880,325

306,600
1,335,371
1,034,264
569,126
275,940
3,521,301

459,900
2,003,056
1,551,396
853,689
413,910
5,281,952

613,200
2,670,742
2,068,528
1,138,253
551,880
7,042,602

766,500
3,338,427
2,585,660
1,422,816
689,850
8,803,253

919,800
4,006,112
3,102,792
1,707,379
827,820
10,563,903

1,073,100
4,673,798
3,619,924
1,991,942
965,790
12,324,554

1,226,400
5,341,483
4,137,056
2,276,505
1,103,760
14,085,204

1,250,928
5,448,313
4,219,797
2,322,035
1,125,835
14,366,908

1,275,947
5,557,279
4,304,193
2,368,476
1,148,352
14,654,246

Total Annual Spending - Woodland Hills

11,148,325

19,707,301

19,475,952

19,681,602

19,008,253

16,730,903

15,044,554

15,447,204

14,366,908

14,654,246

Cumulative Spending - Woodland Hills

11,148,325

30,855,626

50,331,578

70,013,180

89,021,432

105,752,335

120,796,889

136,244,093

150,611,001

165,265,247

Direct Spending - Development

Construction
Salaries
Services
Total Direct Spending
Indirect Spending - Resident
Housing Services
Transportation
Food & Beverages
Health Care
Utilities
Total Indirect Spending

Annual Spending:
Housing Services Estimate
Utilities Estimate

2,400
2,160

Transportation

PA Dep't of Community & Economic Development, Dauphin County Profile, Spending per household per year
10,453
Food Beverages
8,096

Year 10
-

Health Care

All spending increases at 2% per year after buildout of community.

Page 12

4,455

Proposed Woodland Hills Development Site Plan

& Borough Facility Plan

Page 13

 2015 Torti Gallas Urban, Inc. | 1326 H Street NE 2nd Floor Washington, DC 20002

Site Plan
urigroup
torti gallas and partners, Inc.

Woodland Hills

 2015 Torti Gallas Urban, Inc. | 1326 H Street NE 2nd Floor Washington, DC 20002

Proposed Borough Facility

urigroup
torti gallas and partners, Inc.

Woodland Hills