05-11-20_AGENDA PACKET - Laserfiche WebLink

Home Browse Search

Santa Ana Redhill Development Prepared for: City of Santa Ana AECOM 6 1. Introduction The City of Santa Ana (The “City”) is seeking to analyze the potential development feasibility and fiscal and economic impacts of a proposed mix-used residential and retail development on approximately 14.69 acres of land on two parcels (430-222-16 and 430-222-07) at 2300, 2310, and 2320 Redhill Avenue (hereafter referred to as the Site) compared to an alternative light-industrial project that would comply with the maximum allowable density under the existing zoning. The proposed mixed-use project (hereafter referred to as the “Project”) comprises 1,110 dwelling units and 80,000 square feet (SF) of retail space, along with communal space for residents and a mix of surface and structured parking. Current uses of the Site include 3 buildings with approximately 212,000 SF of light industrial and flex space built in 1979 and 1981, surface parking, and vacant land. To establish a relevant comparison for high-level planning purposes, AECOM developed a light industrial prototype (hereafter referred to as Industrial Prototype) of new light industrial/flex space with approximately 320,000 SF of rentable building area (RBA) according to current zoning specifications. The development of the Industrial Prototype allows an analysis of the development feasibility of the Project compared to the Industrial Prototype and the estimation of their respective economic and fiscal impacts. The major components of AECOM’s analysis are as follows: • Market assessment - A review of market trends for residential, retail, and industrial land uses in the market area and an assessment of supportable demand for the two alternatives, the Project and the Industrial Prototype, by land use • Development feasibility analysis - A residual land value analysis of the development feasibility of the two alternatives that estimates the highest and best use of the Site from a development perspective • Economic impact analysis - An estimate of the economic impacts from construction and operations of the two alternatives • Fiscal impact analysis – An estimate of the ongoing fiscal impacts of the two alternatives on the City of Santa Ana General Fund Key Findings Residential Market Assessment –The Project is oriented towards development patterns occurring in adjacent areas in the cities of Tustin and Irvine that have seen an expansion in mixed-use properties and other uses beyond industrial and office. Newer multifamily properties in the area are characterized by rents more reflective of Orange County market rate properties, low vacancy rates, and strong absorption of new units. Industrial Market Assessment – Demand for incremental industrial space is driven by employment growth in sectors concentrated in industrial land uses, including Manufacturing, Wholesale Trade and Professional/Technical/Scientific Services in which the City of Santa Ana has relatively large concentrations. Based on projected employment growth, Santa Ana could experience incremental demand of approximatel y 2.2 million SF of new industrial space by 2026. In the vicinity of the Site, rents for industrial properties have increased by 24% since 2010 after adjusting for inflation and vacancy rates have been below the threshold for structural occupancy. Retail Market Assessment – Demand for retail space in the Project is driven by local spending patterns of residents, workers, and hotel guests in the vicinity of the Site. It is estimated the Project could support between 65,000-80,000 square feet of new retail space under current conditions and between 80,000-96,000 square feet at buildout of development currently in the known pipeline within a 2 -mile radius of the project. Development Feasibility – Both the Project and Industrial Prototype yield positive and high residual land values (RLV), indicating strong development feasibility. RLV is a method used to determine the value and potential feasibility of a property by estimating the value of the land that remains after factoring in the costs of developing, maintai ning and selling the property. AECOM developed pro-formas to compare the development costs and market value of both projects and estimated that the Project would yield an RLV of approximately $65 million ($100/SF of land) and the 3-233