Long Term Business Plan 50% Draft Presentation June 8, 2016

Transcription

1 Long Term Business Plan 50% Draft Presentation June 8, 2016

2 Agenda Overview of Financial Sustainability Committee Overview of Draft Plan Current Resource Forecast Funding the PDC Strategic Plan Proposed Adoption and Implementation Timeline Overview of Amended Financial Investment Policy Questions

3 Financial Sustainability Committee Process Analyze Peer Organizations Research Funding Sources Deep Dive on Priority Funding Sources Framework for New Funding Base Meeting #1 PDC History and National Perspective Meeting #2 Prioritize Funding Sources Meeting #3 Discuss Deep Dive Relative to Local Conditions Meeting #4 Discuss Organizational Implications Business Plan Creation Business Plan Review Business Plan Adoption Implement Business Plan Meeting #5 Business Plan Review & Critique Meeting #6 Finalize Recommendation PDC Board City Council??

4 The Problem Future New Annual Revenue (in thousands) $70,000 $60,000 $50,000 Net Tax Increment Proceeds $40,000 $30,000 $20,000 $10,000 $- $(10,000)

5 Components to Proposed PDC Business Model 1. Optimize both public benefits and financial return of the remaining TIF funds. 2. Plan for the conversion of TIF funded assets to unrestricted funds. 3. Utilize the agency s real estate portfolio as the basis for creating a long term revenue stream for the agency. 4. Pursue acquisition and development of properties and the redevelopment of other publicly-owned properties. 5. Use new TIF districts in a limited, project-specific manner to provide ongoing capital funding to catalytic public and private projects. 6. Focus on boomerang revenue stream to the City of Portland to partially offset the loss of TIF. 7. Seek to maximize fee revenue to the agency.

6 Impact Investment Real Estate Model A single overall portfolio return target Investment plan for each property with defined public benefit and return. Updated disposition criteria with long term resource generation as priority. A plan for achieving self-sufficient real estate operations. Consistent use of tools to retain ownership and share in profit. PDC as a developer or owner on select projects.

7 New Revenue Model $40,000 Projected Operating Revenue By Source (in thousands) $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ TIF Legacy Public Funding New Public Loan Interest Net Real Estate Income Net Parking Income Other Fees

8 Projected Income Statement (in 000s) FY FY FY25-26 FY Revenues TIF 16,763 9,653 1,190 0 Public Funding 8,669 8,136 9,012 14,292 Net RE/Parking 1,265 5,831 13,535 16,225 Net Loan Income 1,422 2,561 2,677 2,447 Other Income 921 2,107 3,141 1,286 Total Revenues 29,040 28,288 29,555 35,250 Expenses Programs Traded Sector 1,198 1,100 1,020 1,020 Small Business 1,344 1,280 1,235 1,235 Workforce 3,618 3,259 4,820 5,066 Capacity Building 1,495 1,625 2,618 4,216 Total Programs 7,656 7,264 9,693 11,537 Grants 4,875 3,575 1,500 1,500 Personnel 12,363 13,758 14,288 17,342 Administration 4,147 3,691 4,075 4,499 Total Expenses 29,040 28,288 29,555 34,879 Surplus/(Deficit) (629)

9 Potential New Capital Sources Private Debt Property Assessed programs (CPACE/PropertyFit) New Market Tax Credits (NMTCs) Community Development Financial Institution (CDFI) Local and National Foundations Local Improvement Districts (LID)/Business Improvement Districts (BID) Crowdfunding

10 Summary of Real Estate Portfolio Real Estate Category FY FY FY FY 2030/31 Cumulative Dispositions Cumulative Sales 13,126,237 13,433,237 56,533,237 56,533,237 Existing Properities Retained Annual NOI 507, , , ,737 Properties to Develop Annual Return 0 4,154,876 10,776,575 17,099,189

11 Summary of Parking Portfolio FY FY FY25-26 FY # of Garages # of Stalls 511 1,729 2,449 2,449 Total Debt 0 8,538 36,420 30,928 Annual Revenue/Stall 2,057 4,174 4,290 5,130 NOI b/4 Debt Service 738 5,243 7,947 9,785 Net Cash Flow 738 4,682 5,936 7,774

12 Projected Impact New Small Business Loans 158 Business Loan Volume $23,000,000 New Commercial RE Loans 50 Commercial RE Loan Volume $105,000,000 Projected Leverage on Loans $600,000,000 PDC Construction Spending $193,000,000 New Enterprise Zone Investment $3,382,000,000 Construction Jobs 28,000 Permanent Jobs Created or Retained 17,000 Small Businesses Assisted 5,600

13 Next Steps Plan Adoption Board Report & Action on Investment Principles June 8 Implementation of Investment Principles July Final meeting of FSC July Discussions with City Council and Next Mayor June - Dec Public Outreach Jan June, 2017 Council/Board Action June, 2017 Full Implementation of Business Plan July, ?

14 Updated Financial Investment Policy Resolution No Adopting an Updated Financial Investment Policy and Process for Internal Review and Approval of Financial Investments

15 Updated Financial Investment Policy Investment Principles When investing public resources to achieve its Strategic Plan, PDC will apply sound financial guidelines and accountable and transparent processes. In general, all investments should seek public benefits and result in asset ownership or a financial return of and on capital. Investment should have a leverage target that maximizes the percentage of non-pdc resources in a project. Grants and infrastructure expenditures should be limited to annual agency-wide budgets that are consistent with the agency s long term plan for financial sustainability. Any forgiveness of loan principal will be considered a grant and count against the current or following fiscal year budget established for grants.

16 Updated Financial Investment Policy Scope of FIC Review Loans and grants for any financial assistance programs where approval has not been delegated by the Executive Director; Loan modifications where approval has not been delegated by the Executive Director; New and revised financial assistance guidelines; PDC debt financings; Acquisition, disposition, and long-term (greater than two years) leasing of real property; Acquisition of real property collateral (by foreclosure, deed in lieu of foreclosure, or voluntary transfer); for purpose of future sale to apply against outstanding obligations; and Additional responsibilities delegated by the PDC Board and/or the Executive Director.

17 Questions Is the plan responsive to the direction given to staff last year? Does the plan enable PDC to accomplish the objectives of the Strategic Plan? What is the direction to staff to refine and complete the plan? How should PDC start the conversation with elected leaders and stakeholders?

18 The Problem Indebtedness Summary by URA (with amendments) 03/31/2016 River District Interstate Corridor North Macadam Lents Town Center Convention Center Downtown Waterfront Gateway Regional South Park Blocks Central Eastside Airport Way NPIs Debt Issued to Date Debt Projected to be Issued Forecasted Remaining Indebtedness at Last Date to Issue $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 (Millions of Dollars)

19 Matching Resources to PDC Strategic Plan