Fort Monroe FADA Steps to Assume Management of Fort Monroe 1 Goals FY2010 to FY2016 Achieve economic sustainability that generates a reliable return on investment for the Commonwealth from Fort Monroe, a 570acre historic town that Virginia will own and operate in three years. Management Objectives: Transition 2.4 million square feet of prime, waterfront, real estate from Army occupancy to short and long-term private leases. Preserve landmark structures and add new mixed use development and in-fill housing. Provide recreational opportunities for public enjoyment. Provide educational public programs to encourage heritage tourism. 2 FMFADA needs seed money to achieve economic sustainability Today, FMFADA is seeking) funding for an operating budget of $3.1 million for FY 2010. (property transfer--15 months Next year, the operating budget for FY 2011 is estimated to increase to $4.6 million. (property transfer--3 months) Immediately following the 2011 transfer, a capital reserve of $40 million will be required with a $30 million reserve to standardize infrastructure, roads, utility systems and more environmental flood controls along with an additional $10 million for building improvements. (Drawdown over 5 years) In addition to the $40M reserve, budget and shortfall estimates for: FY 2012 $6.7 million FY 2013 $5.9 million FY 2014 $5.3 million FY 2015 $2.1 million FY 2016 $1.65 million FY 2017 Anticipate Fort Monroe will cover expenses. By FY 2021 revenue sufficient for FMFADA to issue bonds to repay Commonwealth ($40M or existing balance) 3 Capabilities and Limitations The Fort Monroe FADA is a political subdivision of the Commonwealth with enabling legislation to function independently and finance its operations and staffing needs. However, it is limited by an economic model that includes many unknowns. We have to be able to move quickly and independence is key to the flexibility we need. 4 FMFADA needs to operate as Political Subdivision Move the FMFADA from the Department of Housing and Community Development to an independent arrangement similar to the one used for Virginia Economic Development. Management Plan Fund the interim budget of the FMFADA until 2011 property transfer $7.7 million, (2010) $3.1 (2011) $4.6 FY 2012 to FY 2016 --Fund budget short fall $20 million Set up Capital Reserve $40 million – anticipate bond money Convene state financial agencies to develop a short and long term financing plan for Fort Monroe 5 Risks and Rewards Risks Addressing Risk The real estate industry may take five years to work though current toxic asset inventory, therefore short-term rentals may be our best option to produce income. Mothballing of buildings will result in an increased cost of rehabilitation. This will add millions of dollars to current estimates. FMFADA needs resources to generate revenue. Rewards Expected pay-off exceeds operational cost, and Fort Monroe will achieve economic sustainability.