Metropolitan Development and Housing Agency 701 SOUTH SIXTH STREET * NASHVILLE, TENNESSEE 37206 * TELEPHONE (618) 252.8400 "TELEPHONE DEVICE FOR DEAF (616) 252-8509 ‘James E, Harbison Maling Address: P.O. Box 246 Nashwile, TN 37202 Executive Director March 1, 2017 Councilman John Cooper Metropolitan Council ‘One Public Square, Suite 204 Nashville TN 37219 Dear John, Thank you for your February 27, 2017 letter request for a report on proposed sale of one parcel on Rolling Mill Hill. Without the context behind the redevelopment of Rolling Mill Hill, itis easy to assume that this transaction is simply the conveyance of a parcel from one party to another with no impairments on the use of the property, or other requirements imposed on the purchaser, and then draw conclusions based on an assumption of simple conveyance through comparisons to other unencumbered sales. The pending sale you reference is a small part of a multiyear master plan to redevelop and remediate the Rolling Milll Hill Brownfield site. Prior to its redevelopment, Rolling Mill Hill was home to grain and timber rolling mills, Nashville General Hospital, the Nashville Water Works, Public Works Municipal Garages and other industrial activities. At the request of the Metropolitan Government, MDHA acquired the hospital site in 2003 and initiated master planning. During master plan site investigation, discovery of lead, thallium, and hydrocarbons lead to an Environmental Protection Agency (EPA) declaration of Rolling Mill Hill as a Brownfield site. MDHA applied for, and received, a competitive EPA grant to address environmental issues and to complete site master planning. The resulting Rolling Mill Hill master plan was developed with significant public input and completed in October 2003. From 2003 to 2014, MDHA held six competitive requests for proposal (RFP) to select developers for different portions of the Rolling Mill Hill Master Plan. The RFP’s selection criteria included project description, developer experience, financial strength and public-private partnership. The purpose of these criteria was to maximize public benefit and minimize risk to successful execution of the Master Plan. Through a competitive RFP in 2009, MDHA selected the Mathews Company as the developer for the Trolley Barns and entered into a public-private partnership where the Mathews Company holds a master lease. This lease includes significant numbers of free parking on the site referenced in your request. As part of the incentives to relocate to Nashville, Asurion was granted free parking on Rolling Miill Hill in 2012. These parking spaces also encumber the proposed sale.In 2014, MDHA met with stakeholders to review and update the Rolling Mill Hill master plan The MDHA Board of Commissioners approved the updates in early 2015. In November 2015, MDHA issued a competitive RFP for three parcels on Rolling Mill Hill, including the one you reference, The RFP selection criteria were: Developer Experience and Expertise (25%), Project Description and Timeline for Development (25%), Financial Strength (30%) and Public ~ Private Partnerships Terms (20%). The RFP contained information on the encumbrances on the parcels, including the parking lease information, and required developers to address these constraints in their proposal. Under Public ~ Private Partnership Terms (20%), the RFP stated: “MHA intends that the developer(s) would enter into a financial arrangement such as: (1) a ‘ground lease with a base rent and contingent participation in net cash flow, (2) a direct land sale, or (3) other partnership arrangement. Proposers should present their concept for the partnership with an illustrative pro forma.” ‘The public-private partnership terms, which includes funds received by MDHA for the parcels, represented 20% of the selection criteria and was not the primary consideration for selection of the developer for this parcel. MDHA was seeking the best redevelopment of the parcel in line with the Rolling Mill Hill Master Plan, developed with public input and approved by the MDHA Board. The primary goal of the REP was to further the best practice development of Rolling Mill Hill, as established in its Master Plan. Your request assumes that the proposed sale is a single, simple sale from one party to another, and that price was the determining factor in selecting the developer. Neither assumption is accurate, and any comparison on price, or to a property that does not have the unique restrictions of redeveloping Rolling Mill Hill, is misplaced. Sales price represented 20% of the RFP selection criteria, consistent with every other Rolling Mill Hill RFP. The RFP selection criteria exist to meet the master plan goals. This parcel and the others in the RFP are subject to a number of limitations and restrictions, most critically the commitment of specified numbers of parking spaces to Asurion and to the Trolley Barns lessees. Any development on Rolling Mill is also subject to the requirements of its master plan for redevelopment and remediation, a plan refined over many years with substantial community participation. There was significant interest in these parcels as reflected the RFP responses submitted by 10 different teams of prominent developers. This competitive test of the market provided a realistic assessment of the value of these parcels given the impairments on their potential utilization. So that all of the selection criteria could be fairly evaluated, MDHA established a highly qualified RFP evaluation panel: Jimmy Granbery, Chair of the MDHA Board's Development Committee; Mark Sturtevant, Representative of the Mayor's Office; Danny Herron, President of Habitat for Humanity of Greater Nashville; Jim Thiltgen, MDHA Deputy Executive Director; and Will Biggs, MDHA Director of Affordable Housing. Based on their intensive review of the proposals and interviews with the most promising developers, this committee recommended selecting Eakin Partners. The MDHA Board of Commissioners approved this recommendation in July 2016, and negotiations began to finalize the proposed transactions, including the use of tax increment.Tax incremental financing is being used to build a public park, additional infrastructure and streetscape, and an additional 165 structured parking spaces that will be licensed to MDHA until 2040, These parking spaces will be for public use and for Mathews and Asurion parking commitments. As in all pledges of tax increment, a legally binding development agreement will proscribe the terms of tax increment use. We are confident that the members of the Budget and Finance Committee will understand that this has been a very complex transaction, and certainly not one that lends itself to the apparent simplicity of an appraisal based on downtown “comparables.” There are no comparables that mimic the nature of the constraints carried by this parcel, and any assessment of discounted sales or loss in value to our City is inaccurate, The remediation of the Rolling Mill Hill Brownfield site through the publicly developed Rolling Mill Hill master plan is a success story for all of Nashville. Ten well-respected teams of developers put their best efforts into structuring feasible projects for the most recent part of the master plan, offered in the MDHA RFP of November 2015. A top-notch evaluation team carefully considered their proposals to determine which were in the best long-term interests of Nashville. As the public stewards of Rolling Mill Hill, the MDHA Board of Commissioners, each of whom is nominated by the Mayor and confirmed by the Metropolitan Council, thoughtfully studied and then approved the evaluation team’s recommendation as the best way to continue the very successful redevelopment of Rolling Mill Hill and its tremendous contribution to our City’s value. Sincerely, Smee 6s Dane James E. Harbison Executive Director cc: Mayor Megan Barry MDHA Board of Commissioners Members of the Metropolitan Council