New Rochelle Armory Adaptive Reuse Study Briefing Book

September 12, 2011

Table of Contents

Executive Summary Site Context Methodology Precedent Studies – Armories Precedent Studies – Sailing Comparative Analysis Stakeholder Interviews Summary of Findings Appendix

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New Rochelle Armory Adaptive Reuse Study Executive Summary

Executive Summary In June of 2011, the City of New Rochelle retained HR&A Advisors (HR&A) and JJR to conduct an analysis of the City Armory to determine if a reuse of the former military outpost can be found that is sensitive to the community, self-sustaining and consistent with the City’s vision for Echo Bay as a vibrant, mixed-use community with public access to the Long Island Sound. The City Armory, located at 260-70 East Main Street (U.S. Route 1), is currently inactive and in a major state of disrepair. Historically, the land was occupied by residential dwellings and associated out-buildings (circa 1911 through circa 1931) and by the New Rochelle Armory (circa 1931 through the present). In March 2006, the City of New Rochelle prepared a Redevelopment Plan for Echo Bay, a sheltered inlet on the Long Island Sound that consists of approximately 26 acres of contiguous land, including the City Armory property. The Redevelopment Plan sets forth the City’s vision to establish a new and exciting waterfront destination for a qualified private partner to work with the City. In 2007, the City selected Forest City Residential Group as its private partner to redevelop Echo Bay. Forest City’s initial plan called for a mixed-use residential community combined with improved public access to the waterfront. In February 2010, the City extended the MOU with Forest City through January 2012 and posed a variety of questions to the developer, including if a reuse program for the Armory – in whole or in part – can be conceived based on the specifics of the New Rochelle Armory: the building, waterfront site, the surrounding redevelopment plans, the stakeholders’ vision for the site, and nationwide best practices.

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Executive Summary To answer this question, HR&A and JJR embarked on a series of research and analyses consisting primarily of stakeholder interviews and an armory reuse precedent study. HR&A began the engagement with a site tour to understand the physical conditions and surrounding neighborhood context. HR&A conducted a series of four stakeholder interviews to understand the history of redevelopment efforts, the viability of uses that have been proposed, and the market research and financial analysis that has been done to arrive at said uses. Over the course of two months, HR&A spoke with members of the Veterans Group, Monroe College, Councilmember Albert Tarantino, Mayor Noam Branson and City Manager Chuck Strome. HR&A also spoke with Forest City to understand the state of their planning efforts.

Not surprisingly, each group held a different perspective regarding what the Armory might become and who would own and operate the building in perpetuity. However, a common but important theme emerged throughout the interviews: all parties imagined that an adapted Armory could include a civic use as well as space for the Veterans. City officials and Councilmember Tarantino specified that any potential “civic use” should appeal to a broad population of New Rochelle citizens and should be guided by the larger goals of the Echo Bay Waterfront Redevelopment Plan. What’s more, the City indicated that it is not in a position to subsidize the redevelopment or ongoing operations of the Armory. Interviews also revealed that while several different reuse scenarios have been explored, no party has conducted an in-depth market and financial analysis to understand the site’s potential to generate revenue or how operations and maintenance will be funded on an ongoing basis. If the City decides to pursue adaptive reuse, this information is crucial to understand the site’s development potential.

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Executive Summary Next, HR&A and JJR identified six adaptive reuse precedents from across the US and conducted research on the types of public/private partnership and funding strategies that were involved in bringing such projects to fruition on a capital and operating basis, and the order of magnitude costs that such partnerships historically supported. Precedents were selected based on built form, historic use, siting relative to the waterfront and current and proposed neighborhood context. Precedents included: Portland, OR (Portland Center Stage), Madison Wisconsin (University of Wisconsin Student Center), Somerville, MA (Somerville Center for the Arts), Pasadena, CA (Armory for the Arts), Lansing, MI (Nonprofit Office Space), and Duluth, MN (Armory Arts and Music Center). Because of their unique character and the large, open nature of drill halls, performing arts centers have been a popular adaptive use throughout the country. While outside of the scope, HR&A and JJR also examined two sailing uses; given New Rochelle’s waterfront location and the surrounding water-oriented uses, we felt these non-armory uses are particularly relevant. HR&A evaluated and compared the selected case studies on a number of different criteria including physical size, predevelopment conditions, use, renovation costs, and ongoing operational and maintenance costs. HR&A also interviewed representatives from precedent organizations to better understand each site context, surrounding conditions, challenges of reuse, and funding and governance models. This analysis revealed several key insights. First, the New Rochelle Armory is relatively small (16,000 SF) compared to the national precedents. The closest in size is Pasadena at 25,000 square feet but other armories, such as Portland, Madison and Duluth, are three to seven times the size of the New Rochelle Armory. This smaller size may rule out space intensive uses or incorporating multiple uses.

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Executive Summary Another key insight is the prevalence of the use of tax credits and public funds to finance capital improvements. The renovation of all but two armories took advantage of either new market tax credits, historic tax credits, state monies or some combination of the three to fund capital improvements. For example, the Lansing renovation was paid for in-full by tax credits while the Madison renovation was financed through a combination of tax credits and state general funds. In the case of Portland and Duluth, a financing gap existed after tax credits were applied but the managing organizations were able to raise the remainder of the funds through a capital campaign. Despite their fundraising abilities, both organizations stated that without tax credits, these projects would not have moved forward. In one case study, Somerville, a private developer took on the cost of privately financing the renovation. This development is currently operating at a loss because the owner/developer is unable to achieve the rent needed to cover ongoing costs and debt service. It is important to note that due to its waterfront location, the New Rochelle Armory may have more development potential than other non-waterfront armories. Lastly, the precedent armories that we studied have been successful because they are managed by stable, financially solvent organizations that dedicated staff to managing the development process. These organizations also have a proven track record of generating revenue in order to cover ongoing maintenance and operation. Lastly, these organizations have a clearly defined program with no more than two complimentary uses, and fulfill a demonstrated community need and/or demand. For instance, the Portland Armory is occupied by a successful and stable performing arts organization with experienced management and popular programming. If the City decides to move forward with its evaluation of potential reuse scenarios, the City should require a full feasibility study including a market demand study, redevelopment costs, sources and uses of funds, projected cash flows and a business plan. With this information in hand, the City will be able to better determine the best use for the armory and the organization that is best-suited to oversee its renovation and manage its operations.

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New Rochelle Armory Adaptive Reuse Study Site Context

The Armory is on the northeast side of downtown New Rochelle and is surrounded by recreational, residential and industrial uses.

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The site is located on Main Street, a mixed use corridor, in close proximity to Monroe College’s campus and has 275 linear feet of coastline and views of Long Island Sound.

Monroe College

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Main Street Corridor

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While poorly maintained, adaptive reuse costs have been ballparked between $4 to $6M* depending on use. Current Use

Storage and training for the City of New Rochelle

Gross SF Acreage

16,000 SF 2.92 acres

Current Condition

Site is extremely overgrown, building is poorly maintained

Renovation Cost (approximated)

Estimated at $4-6 M* Veteran groups estimated $1.5 to restore to working order

Surrounding Uses

Five Islands Park, the Municipal Marina, and Hudson Park; also proximate to the City Yard and Sewage Treatment Plant

Key Site Characteristics

275 linear feet of coastline

Ownership

City of New Rochelle

*Renovation costs are based on anecdotal information from Stakeholder interviews and vary depending on use. HR&A Advisors, Inc.

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New Rochelle Armory Adaptive Reuse Study Methodology

HR&A was hired to examine potential reuse scenarios for the New Rochelle Armory. To complete this work, we: Held kick-off meeting with the Department of Development to establish goals and criteria and examine the existing building and site conditions of the New Rochelle Armory. Conducted Stakeholder interviews to understand redevelopment context.

Selected adaptive reuse precedents based on built form, historic use, siting relative to the waterfront and current and proposed neighborhood context. Researched and compiled information on eight precedents including physical conditions before and after reuse, project costs and funding sources, governance, process and timeline, and financial outcomes. Prepared Briefing Book detailing findings.

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Based on the site visit, stakeholder interviews and discussions with the City, HR&A established the following guiding principles for our research:

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Research adaptive reuse scenarios that provide a public benefit to their respective communities.

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Explore uses that will maximize the physical benefits of the site, primarily its waterfront access.

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Understand how financing structures affect the owners’ ability to generate sufficient revenue to finance the capital improvements and meet annual debt and operating cost obligations.

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New Rochelle Armory Adaptive Reuse Study Precedent Case Studies

HR&A conducted research on 6 armory precedents and evaluated their applicability to the site.

Waterfront

Proximity to Downtown

Pre-renovation Condition

Portland, OR Madison, WI Somerville, MA Pasadena, CA Lansing, MI Duluth, MN

Highly similar Fairly similar Not similar HR&A Advisors, Inc.

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Portland Center Stage, Portland, OR

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The Portland Armory is located in the heart of the Pearl District, a formerly industrial area that is now a vibrant arts district.

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Adapted as the Gerding Theater, the Armory is now home to a 599-seat main stage theater, a smaller, 200-seat black box theater, administrative offices, a rehearsal hall and production facilities. Current Use

Performing arts center and nonprofit arts office space

Gross SF

20,000 SF (shell) 56,000 SF (with addition)

Physical Condition Prior to Renovation

Excellent

Acquisition Cost

$3.1 M

Renovation Cost Renovation Cost/SF

$38 M $841/SF

Sources of Funds

$21 M Capital Campaign $17.5 M Tax Credits

Development Timeline

2006-2008 (13 months)

Ownership

Construction – Development Corporation Operation – Portland Center Stage

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The Portland renovation was a $38M project, however, the building was in excellent condition prior to construction.

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High costs are attributed to state-of-the art facilities and high quality fixtures.

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Portland leveraged Historic and New Market Tax Credits, which require savvy planning and complicated development structures. Its funding also includes a $21M Capital Campaign.

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The Red Gym, Madison, WI

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The Red Gym sits on 1acre of the University of Wisconsin’s campus and on Lake Mendota’s waterfront. It is 2 blocks north of State Street, a main retail corridor.

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The University of Wisconsin was able to secure State funds and private gifts to finance the total cost of the renovation into a student center. Current Use

University of Wisconsin Student Center

Gross SF Acreage

77,690 SF 1 acre

Physical Condition Prior to Renovation

Good

Acquisition Cost

$0

Renovation Cost Renovation Cost/SF

$12.7M $163/SF

Sources of Funds

$5.7 M State General Fund $7 M Private gifts

Development Timeline

1991-1998

Ownership

University of Wisconsin (State of Wisconsin)

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Armory for the Arts, Somerville, MA

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The project’s private-financing requires a high annual debt service, and thus higher rents than tenants can afford. The owner is currently operating at a loss. Current Use

Performing arts center and nonprofit office space

Gross SF

34,000 SF

Physical Condition Prior to Renovation

Fair

Acquisition Cost

$2.6 M

Renovation Cost Renovation Cost/SF

$6 M $176/SF

Sources of Funds

Privately financed

Operating Costs

$420,000 per year to cover operating expenses and debt service

Ownership

Highland Armory Realty Trust

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Private event rentals were projected to bring in more income than they have generated to date.

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Armory Center for the Arts, Pasadena, CA

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Located in Pasadena, CA, an affluent area, the Armory Center for the Arts was able to raise the capital improvement funds through a Capital Campaign. Ongoing maintenance is paid for by the City. Current Use

Exhibition space and arts education nonprofit

Gross SF

25,000 SF

Physical Condition Prior to Renovation

Excellent

Acquisition Cost

$0

Renovation Cost Renovation Cost/SF

1998: $375,000 renovation to shell 2000: $2.5M to build 5K SF addition $115/SF

Sources of Funds

Capital campaign

Development Timeline

1987-1989

Ownership

City retains ownership and rents space to Pasadena Arts Center in exchange for providing free community classes

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Lansing, MI

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The Armory is between two major thoroughfares - Saginaw Street to the North and Michigan Ave to the South. Michigan Ave is a major commercial district that ties East Lansing and Michigan State University to Downtown Lansing which is 1.5 miles away.

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The Lansing Armory was in excellent condition (pictured below as a basketball gymnasium) prior to renovation. Tax Credits and grants are funding the renovation cost to convert the gym into shared office space for 7 local non profits. Current Use

Currently being fitted out for a shared workspace for a group of local nonprofits

Gross SF

38,000 SF 4.82 acres

Acquisition Cost

$200,000 at auction after City failed to achieve anticipated asking price of $700,000

Renovation Cost Renovation Cost/SF

$5.1 M $134/SF

Sources of Funds

$5.1M Tax Credits and Grants

Development Timeline

2009-2011 (anticipated)

Ownership

Gillespie Group will maintain ownership; It anticipates $16/SF gross rents

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Duluth, MN

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The Duluth Armory is 117,000 SF and sits on prime lakefront real estate.

Current Use

Currently being renovated to host a performing arts center and art nonprofit office

Gross SF

117,000 SF

Physical Condition Prior to Renovation

Excellent

Acquisition Cost

$1 M

Renovation Cost Renovation Cost/SF

$7.6 M $65/SF

Sources of Funds

$5.7 Tax Credits $1.9 Capital Campaign

Development Timeline

Not available

Ownership

Armory Arts and Music Center (AAMC)

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A variety of funding sources have been assembled to finance the improvement costs including $5.7M in tax credits.

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New Rochelle Armory Adaptive Reuse Study Comparative Analysis

The New Rochelle Armory, at 16,000 SF, is small in comparison to the precedent armories.

Gross SF 140,000 120,000 100,000 80,000 60,000 40,000 20,000 0

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Projected adaptive reuse costs* are similar to other armories…

Total Development Costs $45 $40 $35 Millions

$30 $25 $20 $15

$10 $5 $0

*New Rochelle Adaptive reuse costs are projected at $6M, which assumes the building is adapted for a different use as opposed to just restoring to working order. HR&A Advisors, Inc.

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However, projected renovation cost per square foot* are high. Portland’s high renovation costs are attributed to its state-of-the-art, LEED platinum facility.

$800

Renovation Cost/SF

$700 $600 $500 $400 $300 $200 $100 $0

*New Rochelle Adaptive reuse costs are projected at $6M, which assumes the building is adapted for a different use as opposed to just restoring to working order. HR&A Advisors, Inc.

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Financially solvent precedents have used a combination of tax credits and private donations to finance capital costs. Privately-financed operations, such as Somerville, struggle to meet debt service and other annual obligations. Sources of Funds 100% 90% 80% 70%

60%

State General Fund

50%

Capital Campaign

40%

Tax Credits

30%

Private Funds

20% 10% 0%

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New Rochelle Armory Adaptive Reuse Study Sailing Precedents

Given the Armory’s naval history and bay frontage, two additional successful precedents were explored to understand the potential for water recreational use. Key Elements of these programs:  Community Sailing and Rowing facilities are often shared by multiple programs making it economically feasible.  Provide the opportunity for public-private-non profit partnerships between:  Community recreation programs  Public and private schools  Colleges  Sailing and rowing clubs

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Community Rowing Center, Brighton, MA

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Community Rowing Inc., a 20-year-old community rowing nonprofit, funded the construction of this new structure to house 170+ boats, administrative offices and classrooms. Gross SF

30,000 SF 3.5 acres

Current Use

Community Rowing Facility

Renovation Cost

$11.5 - $16 M

Sources of Funds

Membership Fees, Grant Funded Community Programs, Donations

Development Timeline

2006-2011

Ownership

Community Rowing, Inc.

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Community Sailing Center, Milwaukee, WI

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Milwaukee Community Sailing Center is a two-level facility that provides year-round classrooms, community meeting space, shower facilities, boat maintenance area, casual club room with fireplace, and outdoor BBQ area. Gross SF

6,000 SF

Current Use

Community Sailing Center

Construction Cost

$1.7 M

Sources of Funds

Membership, capital campaign, private donations, and earned Income from meeting space rental

Annual Operating Costs

$500,000

Ownership

Milwaukee Community Sailing Center

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New Rochelle Armory Adaptive Reuse Study Stakeholder Interviews

At the City of New Rochelle’s direction, HR&A conducted four stakeholder meetings/interviews.

Veteran Affairs  Peter Parente, Veteran Affairs  Ronald Tocci, Veteran Affairs Chairman, Emeritus Monroe College  Marc Jerome, Executive Vice President  David Dimond, Vice President, New Rochelle Campus Dean City of New Rochelle  Noam Branson, Mayor of New Rochelle  Chuck Strome, City Manager District Two  Al Tarantino, Councilmember

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Interview questions included the following:  What are the most important issues (or concerns) surrounding Armory reuse?  What should be the top priority decision criteria (or values) to guide screening of possible uses for the Armory?  In your view, what is the highest and best use of the Armory building and site?  What other public uses should be considered?  Is there sufficient market demand to support these new use(s)?  Who do you envision the armory being owned and operated by in this scenario?  Do you know the cost for redevelopment to accommodate this use?  What entity would pay for the redevelopment costs?  Do you know the ongoing operating cost for this use?  What entity would pay for the ongoing operating costs?  If this is a use that has been previously considered for development in New Rochelle, have other sites been considered? If so, where?

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Veterans Affairs

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Interviews with the Veterans revealed the following key insights:  Save Our Armory has been a 13 year effort that has included hundreds of Veterans and concerned citizens.  The Veterans have a strong preference for either the City or a Veteran group to retain control of the site.  The Veterans hired LAM Architectural Design to produce a set of drawings illustrating a mix of spaces to be shared by the Veterans, the community and Monroe College. The main components of this program are:  Open Space: garden, picnic area, boat dock, boat house, and parking  Cellar: Monroe College locker rooms and Veteran amenity space  First Floor: NCAA regulation basketball court, meeting rooms and a screening room  Second floor: function/event space including a kitchen

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Interviews with the Veterans revealed the following key insights:  Under this development scenario, the Veterans propose to:  Buy the building from the City for $1.  Refinance the American Legion Building, which they own, to pay for capital costs.  Receive rent payments from Monroe College and any other tenants as well as special event income.  The Veterans expect their redevelopment costs to be $3-$4M.  No financial analysis of this development scenario was available for review.  Other uses that have been considered by the Veterans include:  Youth/teen center  Beach club  Norman Rockwell Museum  Museum of New Rochelle History  Museum of Silent Film  Museum of Military History HR&A Advisors, Inc.

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LAM Architectural Design Plan prepared for Veteran Affairs

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Site Plan

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Cellar

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First Floor

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Second Floor

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Monroe College

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Interviews with Monroe College revealed the following key insights:  Monroe College remains open to taking over ownership of the Armory Building.  The space has been determined to be too small for athletic facilities. However, Monroe is interested in locating other academic uses on the site, such as facilities for its culinary program or additional classrooms.  The site would provide Monroe with outdoor amenities for its students, which are currently lacking on the campus.  Monroe would expect the City to transfer ownership at no cost and provide a ten-year tax abatement.  In return, Monroe would be willing to take on the cost of the redevelopment and provide the Veterans meeting and amenity space at no cost.  Monroe is also interested in leasing office space in other Echo Bay buildings.

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City of New Rochelle

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Interviews with Noam Bramson, Mayor of New Rochelle and Chuck Strome, City Manager, revealed the following key insights:  The City’s position is that the adaptive reuse of the Armory should be guided by the Echo Bay Waterfront Redevelopment Plan and not vice versa.  The use of the Armory should take advantage of its waterfront location.  The City is not in a position to subsidize the financing or operations of the Armory.  The City is open to a number of different uses, but reiterated that the use should be guided by the Echo Bay Waterfront Redevelopment Plan and public uses should appeal to a broad range of residents.  The City feels that the reuse of the Armory should reflect its history as a military building by providing meeting space for the veterans, incorporating a memorial to the Veterans in the physical design, or both.

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Councilmember Albert Tarantino

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An interview with Albert Tarantino revealed the following key insights:  Councilmember Tarantino’s position is that the adaptive reuse of the armory should appeal to a broad cross-section of New Rochelle residents and should be aligned with the larger development goals of the Echo Bay Waterfront Redevelopment Plan.  Councilmember Tarantino feels the Armory must be financially sustainable without subsidy from the City.  Councilmember Tarantino would advise that the parking needs of potential uses be carefully evaluated, particularly where parking would be situated on this waterfront site.

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In addition to key stakeholders, HR&A spoke with Abe Naperstek of Forest City to understand the current state of their plans and their position in regard to the Armory:  The original Echo Bay Redevelopment Plan is currently being reevaluated by the City based on a more limited program.  Forest City imagines the Armory could have a civic use with significant open space such as a plaza.  Forest City’s assessment of the building concurs that it is structurally sound.  Forest City’s evaluation of a potential basketball gymnasium determined that the space is too small to house a regulation standard court and bleachers.

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In summary:  All parties agree that the building is structurally sound.  All parties agree that the site could have a civic focus and include space for the Veterans.  No party has conducted an in-depth financial analysis to understand the site’s potential to generate revenue or how operations and maintenance will be funded.  The City is not in a position to subsidize the redevelopment or ongoing operations of the Armory.

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New Rochelle Armory Summary of Findings

Summary of Findings  Successful armory reuse precedents:  Are managed by a stable, financially solvent organization that can manage a development process, raise funds and generate sufficient revenue to cover ongoing maintenance and operation.  Have a clearly defined program with no more than two complimentary uses.  Fulfill a demonstrated community need and/or demand.  New Rochelle, due to its waterfront location, may have the ability to generate a higher return than non waterfront precedents.  A full market study is needed to determine the best uses and their potential returns.

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Summary of Findings  Despite conflicting ideas about ownership, Stakeholders agree that a development scenario can be found that includes designated space for the Veterans and other uses.  When determining who will take ownership of the Armory and responsibility for its adaptive reuse and operation, the City should require a full feasibility study including:  Market demand study  Redevelopment costs  Sources and uses of funds  Projected cash flows  Business plan

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Appendix

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The Armory in Red Bank, New Jersey has been converted to an Ice Complex. They were unable to be reached for an interview.

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Seabra’s Armory in Perth Amboy, New Jersey has been adapted into a Portuguese restaurant and banquet facility. They were unable to be reached for comment.

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