Background: At the Nov. 7 workshop, Council heard a presentation about a proposed Public-Private Partnership (P3) that would help revitalize East River Street. Under the P3 agreement, pedestrian access and safety would be improved and aging sewer that serves the area would be replaced and upgraded. Incremental new tax revenue from the private investment would pay for the public improvements, which would be funded without affecting current tax revenues nor expenses. Applying new tax revenues from private investment to fund public improvements becomes a way to leverage private development to pay for needed public projects.

Facts & Findings:

1. A Development Agreement and related real estate documents (see attachments) structure the way the P3 works. By the Agreement, the private developer (River Street, 1 LLC and 601 East River Street, LLC) will complete four projects on behalf of the City of Savannah. 1) A new pedestrian bridge, its design echoing other historic Factor’s Walk bridges, will keep pedestrians from walking within the dangerous curve on General McIntosh Boulevard to access River Street. Instead, the bridge will cross the East Broad Street Ramp. 2) A staircase will enhance how pedestrians traverse access from East Bay Street/Emmett Park to River Street. 3) An elevator will provide for ADA access and for pedestrians who cannot traverse stairs. 4) The aging sewer system that serves this section of River Street and nearby properties will be replaced and upgraded. After completion of the projects, the City will purchase the improvements and accept them into public ownership.

2. The City prefers 120% coverage of new revenue-to-annual-debt service not only to generate funding to pay annual debt service for the improvements but also to add another 20% coverage to fund city services (also the 20% adds a buffer despite conservative estimates). Since the City’s acquiring the four public projects at completion would cost an estimated $5.2 million, the annual debt payment on a bond needs to total $375,000 (average payment). 160-room hotel would generate about $450,000 annually in new City tax revenue, according to the City’s Financial Services Office (based on revenues generated by similarly-sized hotels in Savannah). This meets the 120% test that new development would add ample new incremental tax revenue to fund the annual debt service on a bond. After completion of the projects, the City would request the Downtown Savannah Authority to issue the bond to acquire the public improvements.

Policy Analysis: The strategy for the leverage of new private investment to fund needed public projects remains consistent with Georgia law and the City Code which govern the acquisition of improvements that benefit the community. The City has followed the precedence of this same strategy for the West River Walk Street accessway (Rockbridge), extension of the West Riverwalk and West River Street streetscape (Plant Riverside) and planned infrastructure improvements and public park at Savannah Harbor on Hutchinson Island (Savannah Harbor Associates).

Alternatives:

1. Authorize the City Manager to execute the Development Agreement and related real estate documents between the City of Savannah and River Street 1, LLC, and 601 East River Street, LLC for specified public improvements to improve pedestrian safety and access to River Street and sewer replacement and upgrades. These public improvements will be acquired through a future bond with payments based on incremental new taxes generated from private development.

2. Move forward with the projects at a later date based on the City’s appropriating future CIP funds. These projects would be funded based on competing with other capital needs. This would also require negotiating easements from the private developer.

3. Do nothing.

Approval