jeremy6d/gist:8343731

## gistfile1.txt
Dear Sir or Madam,

I have continued to read about the project and I have found some problems in the most recent study by Davenport.

Please note their first assumption on page 3 of the report. It reads as follows: "All Non-Ballpark (i.e. Retail, Residential, Hotel, Office, Parking, etc.) improvements will be privately financed by the Developer." Underneath this, they repeat, underline, and emphasize their first assumption: "No allowances have been made with respect to development incentives."

Their second assumption contains the first mistake made in the compilation of their report. They appear to have misunderstood the 2009 ERA report. Davenport's study states:

"In conducting our analysis, Davenport has extrapolated the following assumptions from the original 2009 Era Report:

- Retail/Entertainment assessed valuation and sales figures per square foot;
- Grocery sales figures per square foot; and
- Hotel assessed valuation assumptions(1)."

The (1) refers to a footnote that reads as follows:

"(1) Hotel gross receipts are based on Chmura assumption of 65% occupancy and Average Daily Rate of $120."

Davenport's footnote directly contradicts the 2009 Era report. In the 2009 Era report, Chmura did not assume 65% occupancy. On the contrary, they assumed the opposite. Chmura found that we would not reach 65% occupancy or an Average Daily Rate of $120 city-wide and concluded that a new hotel in Shockoe Bottom was not justified. Page 20 of the Era report reads, in part, as follows:

"ERA does not recommend new hotel construction at either the Boulevard Diamond or Shockoe Bottom site."

In addition:

"The typical industry standards indicating support for new hotel construction require that stabilized occupancy rates are a minimum of 65% and average daily rates for the mid- to upper-scale hotel class reach $120. Instead, ERA recommends that the City of Richmond encourage future hotel development activity to focus on upgrading the existing supply of hotel properties as opposed to new construction. The Richmond Diamond site is adjacent to two hotel properties that do not appear to meet basic health/safety requirements or building code regulations."

The most recent rates I found remained well shy of 65% occupancy (http://www.timesdispatch.com/special-section/article_484f2f1a-859f-5f72-87d1-b4f460ada493.html). If Davenport has more up-to-date information, then I hope they provide it. Note that if Chmura is correct, then Davenport's first assumption of $0 in subsidation is also wrong.

If Marriot understands that hotel development in the Botttom is not justified, they will demand subsidization from the city and the city will be compelled by necessity to comply. We can't leave that area unfinished.

Additionally, their fourth assumption is that the assessments for the value of land used is based on comparable properties. This is classed under the assumptions provided by the city. Why is the city providing this assumption? Did the administration of the city provide this assumption? Did they provide the data on the comparables? Has this data been made public?

I have a masters degree in finance. I understand the difference between net income and revenue. Revenue is never negative. The largest problem I see here is Davenport does not provide revenue and expenses separately. Instead, they simply label the net income of the two projects as 'revenue'. The result of this is that they don't provide the estimated expenses. If expenses are very high relative to revenue, then 2% higher expenses and 2% lower revenue figures could lead to losses every year of the project's life. We need more detail.

Sincerely,


Jonathan Miller
(address deleted)
	Dear Sir or Madam,

	I have continued to read about the project and I have found some problems in the most recent study by Davenport.

	Please note their first assumption on page 3 of the report. It reads as follows: "All Non-Ballpark (i.e. Retail, Residential, Hotel, Office, Parking, etc.) improvements will be privately financed by the Developer." Underneath this, they repeat, underline, and emphasize their first assumption: "No allowances have been made with respect to development incentives."

	Their second assumption contains the first mistake made in the compilation of their report. They appear to have misunderstood the 2009 ERA report. Davenport's study states:

	"In conducting our analysis, Davenport has extrapolated the following assumptions from the original 2009 Era Report:

	- Retail/Entertainment assessed valuation and sales figures per square foot;
	- Grocery sales figures per square foot; and
	- Hotel assessed valuation assumptions(1)."

	The (1) refers to a footnote that reads as follows:

	"(1) Hotel gross receipts are based on Chmura assumption of 65% occupancy and Average Daily Rate of $120."

	Davenport's footnote directly contradicts the 2009 Era report. In the 2009 Era report, Chmura did not assume 65% occupancy. On the contrary, they assumed the opposite. Chmura found that we would not reach 65% occupancy or an Average Daily Rate of $120 city-wide and concluded that a new hotel in Shockoe Bottom was not justified. Page 20 of the Era report reads, in part, as follows:

	"ERA does not recommend new hotel construction at either the Boulevard Diamond or Shockoe Bottom site."

	In addition:

	"The typical industry standards indicating support for new hotel construction require that stabilized occupancy rates are a minimum of 65% and average daily rates for the mid- to upper-scale hotel class reach $120. Instead, ERA recommends that the City of Richmond encourage future hotel development activity to focus on upgrading the existing supply of hotel properties as opposed to new construction. The Richmond Diamond site is adjacent to two hotel properties that do not appear to meet basic health/safety requirements or building code regulations."

	The most recent rates I found remained well shy of 65% occupancy (http://www.timesdispatch.com/special-section/article_484f2f1a-859f-5f72-87d1-b4f460ada493.html). If Davenport has more up-to-date information, then I hope they provide it. Note that if Chmura is correct, then Davenport's first assumption of $0 in subsidation is also wrong.

	If Marriot understands that hotel development in the Botttom is not justified, they will demand subsidization from the city and the city will be compelled by necessity to comply. We can't leave that area unfinished.

	Additionally, their fourth assumption is that the assessments for the value of land used is based on comparable properties. This is classed under the assumptions provided by the city. Why is the city providing this assumption? Did the administration of the city provide this assumption? Did they provide the data on the comparables? Has this data been made public?

	I have a masters degree in finance. I understand the difference between net income and revenue. Revenue is never negative. The largest problem I see here is Davenport does not provide revenue and expenses separately. Instead, they simply label the net income of the two projects as 'revenue'. The result of this is that they don't provide the estimated expenses. If expenses are very high relative to revenue, then 2% higher expenses and 2% lower revenue figures could lead to losses every year of the project's life. We need more detail.

	Sincerely,


	Jonathan Miller
	(address deleted)