The Millyard

A Proposal to Revitalize Trenton

Knox Development Group Roebling Redevelopment Area, Block 2, Trenton, NJ

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I. Executive Summary The historic Roebling Complex is located in Chambersburg, the Trenton neighborhood immediately south of downtown. Here, workers produced the wire rope used in the Golden Gate and George Washington Bridges, establishing Trenton as an internationally known center of production. Today, the buildings that remain are among the most precious reminders of New Jersey’s industrial heritage. While other parts of the Roebling Complex have been reoccupied, the buildings of Block 2 have lain vacant since 1974. Economically feasible, contextually appropriate adaptive reuse development is necessary to sustain the site’s long-term occupation and productive use and stemming further “demolition by neglect”. The project we propose, The Millyard, capitalizes on the inherent advantages of its Trenton location while circumventing the challenges. When completed, the mixed-use, mixed-income project will add 242 housing units, 13,340 square feet of retail space, and 12,530 square feet of office space, and creates new and inviting public spaces. The Millyard will revitalize Chambersburg, generate tax revenue, jobs, income, and provide attractive residential and non-residential development. The project is instrumental to the larger and long-term revitalization of Trenton, New Jersey. Our firm, Knox Development Group (or KDG), operates primarily in the Mid-Atlantic and brings years of experience to the table.

II. Site Analysis

History The history of Roebling dates to 1848, when John Augustus Roebling, a Prussian engineer known today for designing the Brooklyn Bridge, bought land in what was then the town of Chambersburg. Here, close by the cluster of mills producing iron, Roebling constructed factories to manufacture his iron wire. Beginning with iron wire used in the aqueducts and bridges Roebling designed, the company soon expanded into other fields. Following a peak during World War II, employment declined as global competition stiffened. The Roebling family sold the company in 1953 to a conglomerate, Colorado Iron & Fuel. The last operating Roebling facilities closed in 1974. Vacant since 1974, Block 2 has been subject to one failed development scheme after another. Most recently, officials intended to build a new school, only for their plans once

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again to flounder. The New Jersey School Development Authority, however, did begin to remediate the site. At present, the City of Trenton owns one building and is expected to take control of the remaining six. Once it owns the site in full, the municipality intends to sell the property to a private developer for a nominal fee.1

Present-Day Block 2 Site: From Left to Right: Building 54 (Formerly Flat Wire Shop No. 3A),

Building 51 (Power Generator), and Building 57 (Flat Wire Shop No. 1)

Location Future development will encompass a rectangle-like lot, designated as “Block 2” officially, that occupies most of a pentagonal superblock. This superblock is bounded by South Clinton Avenue on the west, Mott Avenue on the north, and Hudson Street on the east.

1 The fee will likely be $1. See “How to Buy Property from the City of Trenton, Department of Housing and Economic Development, 2010.

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Block 2 is one of the three contiguous superblocks constituting the bulk of the Roebling Complex. The project site is within the Roebling Complex Redevelopment Area. The Redevelopment Plan calls for the space to be zoned as Mixed-Use (MU). Preserving the neighborhood’s historic character is one of the Plan’s objectives; promoting retail and cultural uses is another. To ensure their preservation, the Plan defines the buildings of Block 2 as “Key Buildings”, or the highest historical significance in the district, and stated that its “structures shall not be demolished except under extraordinary circumstances.” (Roebling Complex Redevelopment Plan, 12).

Inside the Abandoned Building 57, Formerly Flat Wire Shop No. 1, (Fronting Mott Street)

The 8-acre project site comprises seven buildings. The Roebling buildings on adjacent blocks have been repurposed. Block 1, across South Clinton Avenue from Block 2, was redeveloped in 1998 and features Roebling Market. Redevelopment on Block 3, abutting

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Hamilton Avenue and Route 129, is underway and on track to be completed by Spring 2017. The millennial residents, the project’s target demographic, and who value urban areas and sites served by multi-modal transportation, will have the several forms of transit at hand. The property is within a quarter-mile of River Line, a New Jersey Transit light rail line that reports two million passenger-trips per year. Bus service runs along the South Clinton Avenue corridor, with a stop at Mott Street, on the corner of the property. The location is also a short drive from Routes 29 and 129, enabling commuters to come and go by car with ease.

Land Use Regulations The Redevelopment Plan defines Block 2 as a Mixed-Use (MU) District as defined by the Trenton Land Development Ordinance. Pursuant to said Ordinance, Mixed-Use Districts may include “multifamily dwelling structures, and dwelling units, located over nonresidential uses”, “Public facilities of the City of Trenton”, and “Mixed use structures”. Permitted conditional uses include “restaurant, retail, and personal services uses” (2010 City of Trenton Land Development Ordinance, 77-79). The State Historic Preservation Office inspected the entire Roebling Complex in 1980 and deemed the entirety of the Roebling Complex, Block 2 included, eligible for inclusion on the National Register of Historic Places. Blocks 1 and 3 are on the Register already. The buildings of Block 2 do not have historic designation; given the 1980 opinion, however, their inclusion on the Register should be a formality. The nomination for Block 2 would be made on the basis of (A) aesthetics (B) connection with a prominent historical figure; and (C) its significance in history. The (C) criteria pertains to the economic history of both Trenton and the nation, not to mention the role Roebling wire played in structures like the Golden Gate Bridge.

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Demographics

Trenton is home to a diverse, multiethnic population, 84,913 persons, according to the 2010 Census. African-Americans remain the largest demographic group, 49 percent of residents, but Hispanics now constitute 38 percent population share that continues to increase. Chambersburg, formerly the heart of the local Italian-American community, is again a haven for immigrants, with 40 percent of the population born in another country.2 The neighborhood is especially known as a Guatemalan enclave. Twelve percent of residents citywide, many of them in Chambersburg, claim Guatemalan ancestry (2011-2015 American Community Survey, or ACS).

Economic and Housing Statistical Profile Our development concept is founded on the city’s economic and housing profile. Vacant residential and business properties blanket the city. Valassis Lists, a supplier of real estate data, reports that 16 percent of business properties and 10 percent of residential properties were vacant in Trenton as of mid-2016. Units for sale and for rent account for only a small share, so presumably property abandonment is responsible for the bulk of vacancies. Chambersburg is especially littered with vacant business property, 17 percent, according to Valassis Lists.

2 The population estimate was derived by using PolicyMap, a GIS-based statistical tool created by The Reinvestment Fund, a community development firm headquartered in Philadelphia.

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Vacant Building at Block 2

The market for owner-occupied housing is weak. An estimated 45 percent of owner-occupied homes in Trenton are valued below $100,000. This figure is well below the median for Mercer County, $276,000 (2011-2015 ACS). Prices are even lower for homes in Chambersburg. The average price of a Chambersburg home sold in 2015 was $39,716, according to Boxwood Means, a commercial reseller of sales data.3 The data, however, indicate opportunities exist in the rental market. Rentals account for 62 percent of all Trenton housing units. Multifamily housing in Chambersburg, however, is in short supply. Multifamily units comprise 19, 19, 7, and 6 percent of the housing units within the four census tracts that largely align with the neighborhood’s boundaries. By comparison, multifamily structures provide housing for 24 percent of Mercer County residents. The paucity of multifamily units may be responsible for the relatively high rent 3PolicyMap, a venture of the community development firm, The Reinvestment Fund, provided Boxwood Means data. Boxwood Means counted 204 home sales in Chambersburg in 2015. The firm recorded aggregate home sales of $8,102,104. Hence, the average home sale value is calculated to be $39,176.

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demanded for Chambersburg rentals. The median rent, which is $985 in Trenton as a whole, ranges from $983 to $1,173 in Chambersburg, according to Census data that largely predate the recent spate of new development (2011-2015 ACS).

Statistics further indicate Trenton’s struggling economy is in need of projects like The Millyard to revitalize its neighborhoods. The financial struggles of Trenton households mirror the city’s struggling real estate market. Twenty-eight percent of Trentonians live in poverty; the median household income in the city is $34,257.

Neighborhood Assets Chambersburg is an up-and-coming hub for entertainment and culture. The Roebling Center plays host to some of the most well-attended cultural events in Central New Jersey. Art All Night welcomes 30,000 visitors in a 24-hour period. Nearby, the Sun National Bank Center, a 9,500-seat arena, is an attractive space for concerts. Sports fans can venture there or to the Arm & Hammer Ball Park, home of the Trenton Thunder. Families and friends can enjoy spring and summer days and nights at the latter while checking out prospects for the New York Yankees. The area surrounding the development has some of the amenities residential tenants most desire, but lacks others. Food Bazaar, a supermarket chain known for its expansive selection of ethnic food, is across South Clinton Street, in Roebling Market. A cluster of

Gross Rent 0 or 1 bedroom % 2 bedroom % 3 or more bedroom % Total< $300/month 1,633 12% 503 7% 162 2% 2,298 < $500/month 2,428 18% 680 9% 298 4% 3,406 < $750/month 3,820 28% 1,384 18% 531 8% 5,735 < $1000/month 5,280 38% 2,803 37% 1,065 15% 9,148 > $1000/month 564 4% 2,299 30% 4,967 71% 7,830 Total 13,725 100% 7,669 100% 7,023 100% 28,417

Gross Rent 0 or 1 bedroom % 2 bedroom % 3 or more bedroom % Total< $300/month 2,289 8% 534 3% 3,660 1% 6,483 < $500/month 3,601 12% 776 4% 8,823 3% 13,200 < $750/month 5,861 20% 1,743 9% 17,707 6% 25,311 < $1000/month 11,017 37% 4,207 22% 34,673 12% 49,897 > $1000/month 6,670 23% 11,463 61% 218,792 77% 236,925 Total 29,438 100% 18,723 100% 283,655 100% 331,816

Source: ACS 2011-2015 via PolicyMap

Rental Housing by Type and Gross Rent, City vs CountyCity of Trenton

Mercer County

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Guatemalan restaurants dot the streets around Block 2, the most visible part of Little Guatemala that has but recently blossomed. There is also an assortment of Spanish, Mexican, Italian, and Chinese restaurants within three blocks of the project site, with Jamaican and Polish establishments a little further away.

Roebling Market (Opposite Proposed Millyard Development)

Trenton is a popular location for farmers markets, particularly around Chambersburg. The Capital City averages 5.9 farmers markets per 100,000 people, roughly triple the statewide rate (USDA, 2016). Three farmers markets operate near the lofts: the Greenwood Avenue, St. Francis Medical Center, and Capital City Farmers Markets. Farmers markets are events with minimal or no cost to property owners, who get the chance to show their real estate, and bring cultural cachet to neighborhoods. More importantly, farmers markets, create a weekly stream of visitors to a neighborhood, making it more vibrant, increasing revenue for local businesses, and adding so-called ”eyes on the street”, a proven tactic for deterring crime. The farmers markets selling fresh, organic food are also a draw for millennials.

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Model Brownfield Projects Beyond Trenton, redevelopment of other legacy industrial sites in Mid-Atlantic cities illustrate Block 2’s potential. Working in tandem, planners and developers in Bethlehem, Pennsylvania, turned a shuttered 9.5-acre Bethlehem Steel site into the SteelStacks Arts and Cultural Campus, combining office and cultural space.4 Elsewhere, officials in Baltimore transformed the sprawling historic Clipper Mill complex into a vibrant, mixed-use site, featuring upscale residential housing, retail, office, and art space.5 In the Garden State itself, Bloomfield-based Prism Capital recently announced plans to create 333 apartments and 20,000 square feet of retail space at the empty General Electric plant in West Orange.6

Comparable Trenton Projects The rents for the Millyard’s market-rate units are consistent with those offered at comparable luxury properties in Trenton. One-bedroom units at Circle F Lofts, the Chambers Lofts, and the Roebling Lofts, all projects nearby, begin at $1,200, $1,275, and at $1,345 per month, respectively. Retail space, four restaurants, specifically, will be available at the Millyard at an average rent of $16 per square foot. This $16/sf figure represents a discount to restaurant rents elsewhere in Mercer County. Office space, meanwhile, will be filled by a public or quasi-public agency, at $15 per square foot, approximate to the going rate for such space.

III. Financial Analysis Knox Development Group projects the Millyard will realize a pre-tax internal rate of return (IRR) of 20.25%. This estimate is based on the rents, cost structure, and public incentives offered in the current environment.

4 See Urban Land Institute, Case Study: SteelStacks Arts and Cultural Campus, Bethlehem, Pennsylvania, 2015. 5 Urban Land Institute, Case Study: Clipper Mill, Baltimore, Maryland, 2009. 6 NJBIZ, “Redevelopment Underway at Former Thomas Edison Factory Complex”, April 26, 2017.

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Revenue Annual revenue is estimated to reach approximately $3,465,376 upon stabilization. The residential component features one- and two-bedroom apartments and includes both market-rate and affordable units. The market-rate units, one- and two-bedroom, respectively, will initially rent for $1,300 and $1,500 per month. The rent for the affordable units, in accordance with HUD regulations, will be restricted to $872/month for one-bedrooms and $1,046/month for two-bedrooms. Even with the restrictions, because Trenton housing is very affordable compared to the broader region, the rent for apartments at the Millyard are not dramatically lower than rents set by the market.

Selling Cap Rate 6.00%Selling Costs (% of Sales Price) 2.00% Term (in months) 18Rent Growth 3.00% Interest Rate 3.00%Tenant Reimbursement (per GLA, Yr 2) 8.39 Loan Fee 1%Reimbursement Growth 4%Expenses (per GLA, Yr 2) 6.81 Loan Fee (% of Loan) 2.50%Expense Growth 2.00% Loan Amortization (years) 10Vacancy (Beginning Year 3) 6.00% Loan Term (years) 10Construction Period (in months) 18 Interest Rate 4.50%

Source: KDG LLC

Project AssumptionsConstruction Loan

Permanent Financing

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Costs We project total development costs of $52,147,400. Redevelopment in New Jersey is an expensive process. Construction costs are on par with New York or Philadelphia and the state mandates contractors pay prevailing wages. Furthermore, anecdotal sources report that rehabilitating a historic property is 10 to 20 percent more expensive than the cost of constructing a new development.

Unit Type # of Units Rent Total Revenue1-bedroom 66 units $1,300/unit $1,029,6002-bedroom 76 units $1,500/unit $1,368,000

Total $2,397,600

Unit Type # of Units Rent Total Revenue1-bedroom 48 units $872/unit $502,2722-bedroom 12 units $1,046/unit $150,624

Total $652,896

Restaurant 15,200 sq ft $16/SF $243,200Total $243,200

SHPO 12,540 sq ft $15/SF $188,100Total $188,100

$3,481,796

Project RevenueMARKET-RATE RESIDENTIAL

AFFORDABLE RESIDENTIAL

Source: KDG LLC

RETAIL

OFFICE

TOTAL MILLYARD REVENUE

Hard Costs $38,850,592Soft Costs $10,500,160Professional Services $3,150,048TOTAL MILLYARD COSTS $52,500,800

Source: KDG LLC

Project Costs

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Public Support

Thus, public aid is an essential part of our plan. Fortunately, the site is an ideal candidate to use, among others programs, both Low-Income Housing Tax Credits and federal Historic Rehabilitation Tax Credits (HRTC). New Market Tax Credits will be the third prong of our public finance strategy.7 The Low-Income Housing Tax Credit (LIHTC) program is a popular program for inner-city development. Developers can cover either 30 or 70 percent of total development costs in return for allotting a share of units to low-income tenants. For instance, the maximum rent 7 New Market Tax Credits are another popular tool for financing redevelopment.

End of Month Project Costs Interest Ending Balance PayoffLender's

Cash Flow0 241,588$ 1 $3,020,442 0 $3,020,442 0 (3,020,442)2 $3,020,442 $5,034 $6,045,918 0 (3,020,442)3 $3,020,442 $10,077 $9,076,436 0 (3,020,442)4 $3,020,442 $15,127 $12,112,006 0 (3,020,442)5 $3,020,442 $20,187 $15,152,634 0 (3,020,442)6 $3,020,442 $25,254 $18,198,330 0 (3,020,442)7 $503,407 $30,331 $18,732,068 0 (503,407)8 $503,407 $31,220 $19,266,695 0 (503,407)9 $503,407 $32,111 $19,802,213 0 (503,407)

10 $503,407 $33,004 $20,338,624 0 (503,407)11 $503,407 $33,898 $20,875,928 0 (503,407)12 $503,407 $34,793 $21,414,129 0 (503,407)13 $503,407 $35,690 $21,953,226 0 (503,407)14 $503,407 $36,589 $22,493,222 0 (503,407)15 $503,407 $37,489 $23,034,117 0 (503,407)16 $503,407 $38,390 $23,575,914 0 (503,407)17 $503,407 $39,293 $24,118,615 0 (503,407)18 $503,407 $40,198 $24,662,219 ####### 24,158,812

Total 21,143,093$ $271,0354.50%

Year of Loan 2 3 4 5 6Payment 1,087,147 1,087,147 1,087,147 1,087,147 1,087,147Mortgage Balance 24,158,812 24,158,812 24,158,812 ####### 24,158,812Interest 1,087,147 1,087,147 1,087,147 1,087,147 1,087,147Principal 0 0 0 0 (0)

Summary of Permanent LoanYield to Lender

Construction Loan Draws and Repayment

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under LIHTC rules for a 2-bedroom unit in Trenton is $1,046/month. Only 29 percent of 2-bedroom units in the city, however, paid gross rent in excess of $1,000/month. Thirty properties in Trenton used LIHTC to create equity and remain in service today. This total include 9 rehabilitated properties including historic Trenton sites like the Aleda Apartments, Broad Street Bank, and the Roebling buildings on Block 1 (LIHTC via PolicyMap).

Federal Historic Rehabilitation Tax Credits are another source of equity. Credits for certified historic properties amount to 20 percent of rehabilitation costs. Properties must

Project Name Address Construction Type Total Units202 E HANOVER ST 202 E HANOVER ST Not Indicated Not Indicated660 CENTRE ST 660 CENTRE ST Both New Construction and A/R 21ACADEMY PLACE 248 ACADEMY ST Acquisition and Rehab 40ARTISAN'S MILL #538 600 Artisan St Acquisition and Rehab 31ESCHER STREET SRO 50 ESCHER ST New Construction 100ESPERANZA APTS 10 WOOD ST New Construction 46CAPSTONE FAMILY HSG #545 1056 STUYVESANT AVE Acquisition and Rehab 21CLINTON COURT 70 N Clinton Ave New Construction 26ACADEMY PLACE #467 125A Olive St Not Indicated 40EAST HANOVER STREET #566 140 Academy St Not Indicated 22LAMBERTON STREET REDEVELOPMENT #324 150 Ferry St Both New Construction and A/R 26BROAD STREET BANK 143 E State St Acquisition and Rehab 124CHESTNUT MONMOUTH FAMILY HSG #602 Not Available Acquisition and Rehab 13CIRCLE F SENIOR APTS 720 MONMOUTH ST New Construction 69DUNHAM HALL RESIDENCE #555 127 Academy St New Construction 90PROJECT FREEDOM AT THE TRENT CENTER 547 GREENWOOD AVE New Construction 52SCATTERED SITE TRANSITIONAL HSG 38 COMMERCE ST New Construction 20PELLETTIERI HOMES 615 S Clinton Ave New Construction 69WARREN STREET APTS, PHASE I 227 S WARREN ST New Construction 11WARREN STREET APTS, PHASE II 227 N WARREN ST New Construction 31HANOVER STREET HSG #530 218 W HANOVER ST Both New Construction and A/R 17HUMBOLDT SWEETS #333 35 Fountain Ave Acquisition and Rehab 8MT ZION URBAN RENEWAL, 131 PERRY ST New Construction 40TRENTON SCATTERED SITE 132 N Warren St Not Indicated 20STOCKTON STREET REHAB #1 210 E HANOVER ST Acquisition and Rehab 8PATRIOT VILLAGE 362 PENNINGTON AVE Not Indicated 36WARREN STREET APTS, PHASE III 250 S WARREN ST Acquisition and Rehab 9STEPPING STONES COMMONS #504 27 N Clinton Ave Acquisition and Rehab 64UJIMA VILLAGE #652 1001 Pennington Rd New Construction 51LITC#05906 TRENTON PROSPECT HOUSE 70 INDEPENDENCE WAY Not Indicated 110

Source: LIHTC via PolicyMap

Low-Income Housing Tax Credit (LIHTC) Projects in Trenton, NJ

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be certified as historic, which commonly requires listing on the National or New Jersey Historic Register. The Masonic Temple, Dunham Hall Residence, and American Cigar Company sites in Trenton were all rehabilitated with the assistance of the HTC program (National Park Service via PolicyMap).

Lastly, New Market Tax Credits will benefit the project. This federal program offers a 39 percent credit, distributed over a seven-year period, that is awarded to investors of certified Community Development Entities (CDEs). CDEs encompass a broad range of organizations, from state departments to community development organizations. The primary requirement is they make Qualified Low-Income Community Investments (QLICIs) in low-income communities. KDG is the recipient of NMTC-derived grant from New Jersey Community Capital (NJCC), a community development finance institution, amounting to $5 million. Public programs thus furnish total equity of approximately $22.1 million. This equity sharply reduces the debt KDG would otherwise be compelled to take on a $52.1 million project. Such a colossal level of debt would prove prohibitive in the absence of government support. With the HRTC, LIHTC, and NMTC aid to the project, KDG anticipates a project mortgage of $30.1 million. It should be noted that publicly funding the Millyard’s rehabilitation is not limited to these three strategies. Should the stakeholders prefer so, there are other avenues KDG can take. For example, while the residential share of the Economic Redevelopment and Growth (ERG) program is presently oversubscribed, funding in the future would ensure redevelopment proceeds to the Millyard in the future. The ERG program is especially helpful to cities such as Trenton that have been designated Garden State Growth Zones.

Project Year Awarded Cost Use127 Academy Street (Dunham Hall Residence) 2002 $5,428,554 Residential140 Academy Street 2002 $310,252 Residential142 Academy Street 2002 $305,284 Residential207 Academy Street 2002 $403,277 Residential209 Academy Street 2002 $403,277 Residential240 Academy Street 2002 $349,826 Residential241 E. Hanover Street 2002 $860,004 Residential242 E. Hanover St 2002 $456,556 Residential143 East State Street (Broad Street Bank Building) 2007 $29,750,000 Commercial, Residential, Office100 Barracks Street (Trenton Masonic Temple) 2010 $4,153,000 Office176 Division Street (Chambers Lofts) 2015 $7,700,000 Residential

Source: National Park Service via PolicyMap

Historic Rehabilitation Tax Credit Projects in Trenton, NJ

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Financing assistance for redevelopment can also be secured with the help of agencies like the New Jersey Housing and Mortgage Finance Agency (NJ HMFA), which lend at below-market interest rates to projects that provide affordable housing or spur economic development.8

Rate of Return The tax credits provide the needed “gap financing” and assure prospective lenders and investors that a mixed-use development in a legacy brownfield site is not just viable, but significantly profitable. Given the tax credits, KDG projects a before-tax IRR of 20.25 percent.

IV. Development Concept and Design

Target Tenants KDG will target a demographic currently underserved in Trenton: millennial renters seeking to live in a dense, vibrant urban setting. The millennial generation, those born in 1981 or later, are less likely to buy a home in the suburbs, for reasons that include range

8 Loans are also available via the New Jersey Economic Development Agency.

Year 1 2 3 4 5 6 7 8 9 10Rent 3,481,796 3,586,250 3,693,837 3,804,652 3,918,792 4,036,356 4,157,447 4,282,170 4,410,635 PGI 3,481,796 3,586,250 3,693,837 3,804,652 3,918,792 4,036,356 4,157,447 4,282,170 4,410,635 Less : Vacancy 261,135 215,175 221,630 228,279 235,128 242,181 249,447 256,930 264,638 EGI 3,220,661 3,371,075 3,472,207 3,576,373 3,683,665 3,794,174 3,908,000 4,025,240 4,145,997 Total Expenses 1,515,000 1,537,725 1,568,480 1,599,849 1,631,846 1,664,483 1,697,773 1,731,728 1,766,363

Net Operating Income 1,705,661 1,833,350 1,903,728 1,976,524 2,051,818 2,129,691 2,210,227 2,293,512 2,379,634 Less : Debt Service 1,087,147 1,087,147 1,087,147 1,087,147 1,087,147 - - - - Net Operating Income (51,655,241) 618,515 746,203 816,581 889,378 964,672 2,129,691 2,210,227 2,293,512 2,379,634

Operating Period Cash Flows

35,494,858709,897

24,158,81210,626,149

Sale Price (received by investor)Sales costsMortgage BalanceBefore-tax Cash Flow

After-Tax Cash Flow From Sale

Year 0 1 2 3 4 5 6Before-Tax Cash Flow (845,559) (5,518,371) 618,515 746,203 816,581 889,378 11,590,821

BTCF IRR 20.25%

Before and After-Tax Cash Flow From Sale

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from lack of credit to changing consumer tastes. What’s more, the cost of living is skyrocketing in the major cities nearby, New York or Philadelphia. Trenton, a train ride away from both, offers an affordable alternative to those who prefer an urban lifestyle.

Development Concept The Millyard will repurpose and fill six historic buildings. The two block-length structures, Buildings 57 and 58, will be designed exclusively for housing. Building 57, fronting Mott Street, will house 44 one-bedroom units and 4 two-bedroom units; Building 58, within the contain 16 one-bedroom and two-bedroom apartments apiece.

Vision for Inner Courtyard

Three structures, Buildings 51, 54, and 62, will be mixed-use. Building 51, at the corner of Mott Street and South Clinton Avenue, will have 8 two-bedroom units in addition to being the site for the police substation. Building 58 will have both residential and office space. For the residential component, the structure has 70 apartments, 22 one-bedroom and 48 two-bedroom; for the office component, 12,540 square feet of office space. The current plans call for a state agency, the State Historic Preservation Office (SHPO) most likely, to fill the office space, set on the ground floor. The seat of New Jersey government, Trenton is a location where many public agencies need to be based. Government is a stable tenant, creating a reliable level of foot traffic, boosting business for retailers and helping to secure the site. SHPO is an especially apt tenant, underlining that the Millyard is a prime example of heritage-based development. Building 58’s office entry space, open to the public during the day, will display artifacts that enliven the site’s history. These will include various examples of the flat wire produced at the site and equipment used by workers. The office will also include

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large-format versions of historic black-and-white photographs taken during the various phases of Block 2’s proud stint as a world-important production site.

Building 54 (right): Presently Vacant; Future Mixed-Use (Office/Residential)

Building 62, the block-long structure on Hudson Street, is comprised of 32 one-bedroom, 12 two bedroom residential units and a quartet of restaurants. The four restaurants, each one of them unique, will fill the project’s retail component, located on the ground floor. A Baskin Robbin’s will anchor this restaurant row, giving a name brand that helps to fill the remaining space. The restaurant with the most meaning for the area will be a new restaurant, small but upscale, that specializes in Guatemalan cuisine. This restaurant will benefit from the South Clinton corridor’s rapidly growing reputation as a hive of Guatemalan food. Until now, however, no upscale restaurants have yet graced the South Clinton Corridor, a gap this restaurant will fill. The third space will be taken by a coffee shop and is meant to appeal to twenty- and thirty-somethings. Finally, a pizza place, a popular amenity with residents everywhere, albeit one surprisingly absent from Chambersburg a neighborhood with a rich Italian-American heritage. In all, the four restaurants will take up 15,056 square feet.

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Buildings 57 (left) and 62 (right)

The sixth building, the 5,542-square foot Building 52, will be converted into a covered space, used primarily for picnics and for a weekly farmers market, but which could be rented for other events. These uses contribute to the sense of community embodied in the Millyard’s design. The weekly farmers market builds on Trenton’s nascent reputation for being a popular site of locally grown produce. Rentable event space in Building 52 will be an ancillary source of income.

Looking Toward Building 52, Across Courtyard

The property’s restoration will follow the Secretary of the Interior’s Standards for the Treatment of Historic Properties, the primary specifications dictating preservation regulation at the federal level and for projects securing federal historic tax credits. KDG will not make any major changes to the structures on the property aside from the addition of a new floor that adds space for housing at Building 62. The Secretary of the Interior

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Standards permit such an addition “if such an alteration does not damage or destroy the structural system...or destroy character-defining places,” accurately describing the impact at Building 62. As part of its development, KDG will collaborate with city officials to finally add Roebling’s Block 2 complex to the National Historic Register as the Flat Shop Historic District. The Flat Shop Historic District, as the nomination to the Register will elaborate, played a singular role in the Roebling business as the company’s sole facility producing flat wire. Flat wire is the very thin wire used in electric devices.9

Security

The Millyard will include measures meant to allay fears, well-founded or not, about crime in the area. KDG has held informal discussions with the Trenton Police Department about establishing a police substation at the development site. This step is modeled after a Dallas, Texas, project that included a police substation. Even with such a small space, no more than 500 square feet, a substation would substantially reduce crime.10

Surveillance cameras will be both plentifully and prominently installed. The mere sight of cameras will both deter crime and assuage tenants. Camera footage will be shared in real time on the Police Department CCTV channel. If criminal activity does transpire, the police response will be especially effective.

Simple security measures will also be built into the complex. Employing a card reader, the Salto lock is a stand-alone technology that can be added easily to any door. It is best for a multi-building site like the Millyard. Such a system restricts access to only those permitted at the site, securing space, and protecting residents and workers. Access can also be remotely controlled.

V. Sustainability Our development will be certified LEED Gold. Rehabilitation is more environmentally-friendly than new construction, but to achieve LEED certification, the facilities will include innovations to enhance their sustainability. It is cheaper to restore the giant windows on site than to replace them. Extensive caulking, weather stripping, and replacement sealers will mitigate any heat loss owing to the window’s huge size. A radiant flooring system, an energy-efficiency measure, will also conserve heat, a concern given the high ceilings and spacious compartments. Rainwater management, water metering, and a cooling tower will maximize water conservation. 9 See C.W. Zink, The Roebling Legacy. 10 John Renne and David Listokin. “Guide to Facilitate Historic Preservation Through Transit-Oriented Development. Southwest University Transportation Center, 2016.

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LEED Standards for New Construction and Major Renovation

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VI. Economic Impact Analysis Data consistently indicate that historic rehabilitation is a potent way to grow state and local economies. The Preservation Economic Impact Model developed for the National Park Service found that 14.4 jobs are created for every $1 million spent on rehabilitation in New Jersey. Assuming this figure remains constant, our $52 million state-level project would create 751 new Garden State jobs. Construction and manufacturing employment benefit the most, representing almost 2 out of every 3 jobs created.11

VII. Fiscal Impact Analysis New development affects the municipal budget, increasing both tax revenue and spending on services. While some projects alleviate the pressure on a city’s budget, others only widen the deficit. Context matters. Redevelopment usually provides fiscal relief to municipalities, like Trenton, that have a limited number of taxable properties. Under our plan, and applying standard fiscal impact analysis methods, total public service costs incurred by the development are estimated to be $258,227. This estimate for costs represents services required for both municipal and school purposes. The building’s residential component is the main driver of public spending. New apartments bring new residents into communities. While a net positive, these residents add new demand for government services, primarily taxing the budgets of the municipality and the school district. While students are responsible for a greater marginal cost, residents of all types are responsible for the greatest gross costs. The Millyard’s one- and two-bedroom units are responsible for similar portions of the new expenditures. We estimate that one-bedroom apartments and two-bedroom units will require $108,843 and $106,705, respectively.

11 David Listokin, Michael Lahr, and Charles Heydt. “First Annual Report of the Economic Impact of the Federal Historic Tax Credit”. National Trust Community Investment Corporation, Washington DC, May 2010.

Effect ExpenditureEmployment (Jobs) 14.4Income $709,515State Taxes $29,550Local Taxes $19,611Gross State Product $933,672

Economic Impact of Historic Preservation in New Jersey Per Million Dollars of Initial Expenditure

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Two-bedroom units trigger higher cost per pupil, since 2-bedroom units are likely to house households with some schoolchildren. The retail and office components will also trigger additional public spending, albeit not as much as the residential portion. KDG projects the new state offices and restaurants to increase spending by $26,407 and $15,234, respectively. Total public expenditures - related to new residential, retail, and office space - will increase by $257,189.

The Millyard, however will bring substantial revenue to government coffers. The long-abandoned site has not contributed any tax revenue in decades. Development will thus dramatically increase the net tax revenue it creates. The effective tax rates in Trenton are 3.68% for the municipality and 1.07% for the school district. Were the property taxed at these levels, it would yield an estimated tax revenue of $1,347,348. With the aforementioned costs, the public realizes a substantial net fiscal benefit, $1,090,159. Moreover, our projections are conservative that do not reflect our belief that the Millyard will be a catalyst for other projects, creating a positive feedback loop that further boosts property values and, thus, tax revenue.12

VIII. Conclusion KDG is convinced that the Millyard will be a long-lasting economic catalyst for the city of Trenton. The project is a great fit for the South Clinton Corridor, intruding little on the current neighborhood and benefiting from its host of amenities. The development will

12 See Robert Burchell and David Listokin, The Fiscal Impact Handbook, New Brunswick, NJ: Rutgers Center for Urban Policy, 1978.

Total Municipal Cost $234,738Total School Cost $22,451Effective Municipal Tax Rate 3.68%Effective School District Rate 1.05%Estimated Property Value $28,355,538Municipal Taxes $1,044,387School District Taxes $302,961Estimated Total Property Taxes (Municipal and School) $1,347,349Estimated Total Cost $257,189Estimated Net Fiscal Impact $1,090,159

Fiscal Impact Analysis

Source: Fiscal Impact Handbook

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bring life to the decaying Roebling Block 2, ensuring that one of Trenton’s most prized historical assets is maintained for generations to come.