Impact Study
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SUMMARY OF ECONOMIC IMPACT ASSESSMENT
RELATED TO PROPOSED AND ALTERNATIVE I-66 INTERCHANGES
WITH KENTUCKY HIGHWAY 80 EAST OF SOMERSET, KY


ECONOMIC IMPACT ASSESSMENT
PROPOSED AND ALTERNATIVE I-66 INTERCHANGES
WITH SR 80 EAST OF SOMERSET, KY

TABLE OF CONTENTS
1.0 Background and Study Objectives
1.1 Background and Purpose of Study
1.2 Study Objectives
1.3 Study Qualifications and Limiting Conditions
2.0 South-Central Kentucky Market Overview
2.1 Somerset, KY Metropolitan Area and Region of Influence
2.2 Pulaski/Laurel Counties Primary Market Area and Region of Influence
2.3 Economic Overview of Primary Market Area and Region of Influence
2.4 Traffic Volume Comparisons Relative to Development Potential
3.0 Interchange Alternatives Analysis
3.1 Development Potential - Base Case
3.11 Highway Oriented Services
3.12 Industrial or Distribution Development
3.13 Destination Resort and Recreation Facilities
3.14 Other Uses
3.2 Development Potential - Alternative D Interchange
3.3 Development Potential - Recommended Alternative Interchange
3.31 Highway Oriented Services
3.32 Industrial or Distribution Development
3.33 Destination Resort and Recreation Facilities
3.34 Tourist Oriented Retail Including Outdoor Retail Specialists
3.4 Other Alternative Interchange Development Scenarios
3.5 Potential Economic Benefits of Development Scenarios
3.51 Economic Benefits - Employment
3.52 Economic Benefits - Property Tax Revenues
3.5 Summary - Interchange Development Scenarios
4.0 Conclusions and Recommendations
4.1 Purpose of Assessment
4.2 Findings and Conclusions
4.21 Base Case - I-66 Not Built
4.22 Alternative D Interchange Scenario
4.23 Recommended Alternative Interchange Scenario
4.3 Recommendations
ECONOMIC IMPACT ASSESSMENT
PROPOSED AND ALTERNATIVE I-66 INTERCHANGES
WITH KENTUCKY HIGHWAY 80
1.0 Background and Study Objectives
1.1 Background and Purpose of Study

    Del Spina Properties, a southern Kentucky real estate development company, owns approximately 424 acres of property at existing Kentucky Highway 80 (KY 80) and a proposed I-66 interchange to be located approximately 19 miles east of the currently under construction U.S. 27 and proposed I-66 interchange just north of Somerset, KY, and 13 miles west of the existing KY 80 and I-75 interchange in London, KY. This 424 acre holding includes 300 acres on the north side of existing KY 80, with the additional 124 acres located directly across the KY 80 right-of-way on the south side of the existing roadway. Each of the properties has 2,000 feet of frontage along existing KY 80.

    The proposed I-66 and KY 80 interchange is located on a high priority thirty-plus mile segment of the planned Southern Kentucky Corridor (I-66) to be constructed between
Somerset and London. This high priority segment is part of the Kentucky portion of the proposed coast-to-coast U.S. East-West Transamerica Corridor, one of several high priority interstate freeway corridors identified in the 1991 Federal "Intermodal Surface Transportation Efficiency Act (ISTEA)". The East-West Transamerica Corridor was proposed to be located between the existing cross-country I-70 and I-40 freeway corridors, having an eastern terminus in Virginia and a western terminus in southern
California.

    A 1994 assessment of the proposed high priority interstate freeway corridors entitled the "Transamerica Transportation Corridor Feasibility Study", and carried out by Wilbur Smith Associates and Howard, Needles, Tammen, and Bergendoff, concluded that the
East-West Transamerica coast-to-coast corridor, in its entirety, did not meet economic feasibility criteria necessary to fund the project. However, segments of the corridor were deemed more important from a state and/or regional perspective, and should therefore be considered for development.

    Given the findings of the 1994 study, the Kentucky Transportation Center analyzed the feasibility of the Kentucky segment of the proposed East-West Transamerica Corridor, culminating in a 1997 report which concluded that the proposed Southern Kentucky Corridor (I-66) segment was economically feasible. Thus, plans are now in place to build this Kentucky corridor segment to serve a number of communities positioned along the corridor from Bowling Green in western Kentucky to the Pikeville area in far eastern
Kentucky.

    Much of this planned Southern Kentucky Corridor (I-66) will use existing right-of-ways of the Louie B. Nunn Cumberland Parkway to the west and the Hal Rogers Parkway to the east. The Somerset to London segment is considered to be of highest priority since it "fills in the gap" between the two existing southern Kentucky parkways. However, this segment of the proposed I-66 corridor will require a significant amount of right-of-way acquisition and new construction. Upon completion of this critical segment of the corridor, freeway standard limited access will be provided from I-65 in west-central Kentucky to I-75 in the east-central portion of the state.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    With regard to the Del Spina holding, the Kentucky Transportation Cabinet has proposed an interchange (Alternative D) between the proposed I-66 freeway and existing KY 80 in northeast Pulaski County that will require the taking of a substantial amount of the 124 acre south portion of the Del Spina holding. This interchange scenario provides ingress and egress to I-66 via ramps that will be built adjacent to both parcels, creating potential local access problems to the entire real estate holding.

    Given the proposed location of the I-66/KY 80 interchange and associated ramps per the
Alternative D plan of the Kentucky Transportation Cabinet, it appears that both the north and south portions of the Del Spina holding will be negatively impacted by the proposed interchange, due to: 1) the taking of a large portion of the south 124 acre parcel, and 2) local access limitations to both the north and south portions of the subject property created by the proximity of the ingress and egress ramps to each parcel.

    Due to the local access issues created by the current Kentucky Transportation Cabinet's interchange plans, QK4 has been retained by Del Spina Properties to develop interchange scenarios that: 1) will provide improved access to the subject site, and that will allow for the best economic uses of the north and south portions of the subject property. QK4 has retained Carlson & Associates to determine the economic potential of development alternatives that would best match the selected interchange scenarios provided as alternatives to Del Spina Properties.
Specifically, the purpose of this analysis has been to accomplish the following:

1) Determine the development potential of the subject property presuming the existing base case - KY 80 without I-66.

2) Determine the development potential for the subject property per current
Kentucky Transportation Cabinet interchange plans.

3) Determine the development potential for the subject property per QK4 alternative interchange proposals.

1.2 Study Objectives Per the above background and per the identified study's purpose, three primary objectives to be accomplished in this analysis effort were:

1) First, to determine the development potential of the subject property reflecting a "base case", or the existing KY 80 with no I-66, including:
An assessment of the development options appropriate to both portions of the Del Spina holding, including the potential for:
- Highway oriented services including convenience/gasoline stores.
- Industrial, distribution, or transportation oriented development.
- Destination resort and recreation facilities.
- Other property uses as roadway configurations permit.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

2) Second, to determine the development potential of the subject property reflecting the currently planned interchange configuration (Alternative D), including:

An assessment of the loss in the development potential for the 124 acre south portion of the subject property due to the substantial amount of acreage being taken for ingress and egress ramps.

An assessment of development options that would be appropriate to the
300 acre north portion of the subject property given current interchange plans, including the potential for:
- Highway oriented services including convenience/gasoline stores, restaurants, or hotels.
- Industrial, distribution, or transportation oriented development.
- Destination resort and recreation facilities.
- Other property uses as the proposed interchange alignment allows.

3) Third, to determine the development potential of the subject property reflecting a more development friendly configuration as proposed by QK4, including:
o An assessment of the positive impact on potential uses of the subject property reflecting the availability of most of the south portion of the subject property for development, and reflecting improved access to both the north and south portions of the subject property.

An assessment of the development options that would be appropriate for the entire subject property given an interchange relocation, including the potential for:
- Highway oriented services including convenience/gasoline stores, restaurants, or hotels.
- Industrial, distribution, or transportation oriented development.
- Destination resort and recreation facilities.
.
- Tourism oriented retail including large outdoor recreation specialists, outlet or manufacturing retail stores, or other recreation oriented developments.
- Specialized retail formats such as an auto-mall or other destination oriented retail uses.
- Other property uses as the proposed interchange alignments allow.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

1.3 Study Qualifications and Limiting Conditions

    The findings and recommendations of this independent research effort are based on assumptions and estimates developed by Carlson & Associates regarding market area data, market potential forecasts, and expected project performance. Every reasonable effort has been made to ensure that the data contained in this study reflect the most accurate and timely information possible.

    Data used by Carlson & Associates in this analysis was obtained from local sources, state and federal agencies, and selected industry resources. This data, whether obtained from the client, its agent and/or representative, or obtained independently, is presumed to be reliable. Every attempt has been made to verify this information. However, no responsibility is assumed for inaccuracies in this data or in any other data source used in preparing or presenting this study.

    Proposed economic uses of the subject property for which this study was undertaken reflect the assumption that either parcel of the subject holding can accommodate such uses. No assumptions were made in this analysis regarding possible brown-field issues, or building restrictions or limitations due to underlying soil and rock conditions. All potential economic uses identified in this study assume that utilities required by those uses are provided to the subject property.

    The proposed interchange scenarios presented in this report are assumed to be viable
per transportation design principles. No assumptions have been made regarding the probable timing of the completion of the proposed I-66 segment that would impact the subject property or regarding the completion of any one of the interchange scenarios presented in the report.

    No warranty or representation is made by Carlson & Associates regarding the potential success of any project or projects resulting from the findings and recommendations of this study.

    This study may not be used for purposes other than that for which it has been prepared or for which prior written consent has not been obtained from Larry E. Carlson, Principal,
Carlson & Associates. This report is not to be used in conjunction with any public or private offering of securities or other similar purposes where it may be relied upon to any degree by any person, other than the client, without first obtaining the prior written consent of Larry E. Carlson, Principal, Carlson & Associates.

    Possession of this study does not carry with it the right of publication thereof, except on behalf of the client, or to use the name of Carlson & Associates in any manner without first obtaining the prior written consent of Larry E. Carlson, Principal, Carlson & Associates. The qualification of this study should be considered in light of these limitations, conditions, and considerations.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

2.0 South-Central Kentucky Market Overview
2.1 Somerset, KY Metropolitan Area and Region of Influence

    The Del Spina subject property, for which this analysis has been undertaken, is situated in the northeast sector of Pulaski County located in south-central Kentucky. Pulaski County has been classified by the U.S. Office of Management and Budget as the Somerset, KY Metropolitan Statistical Area. This classification by the Federal government includes 578 comparable areas of the U.S. containing at least one urban cluster of between 10,000 and 50,000 in a county or adjacent territory having a high degree of social and economic integration with the core city or urban cluster.

    The Somerset, KY Metropolitan Statistical Area is one of sixteen such designated areas in the state of Kentucky. Eight of these metropolitan statistical areas are located in south-central Kentucky. These include: Campbellsville (Taylor Co.), Corbin (Whitley Co.), Danville (Boyle & Lincoln Cos.), Glasgow (Barren & Metcalfe Cos.), London (Laurel Co.), Middlesboro (Bell Co.), Richmond (Madison & Rockcastle Cos.), and Somerset
(Pulaski Co.).

    Of the eight south-central Kentucky metropolitan areas, five are directly linked via existing transportation arteries, with Somerset being the focal point. Glasgow, 70 miles West of Somerset, is connected to the Somerset vicinity via the Louie B. Nunn Cumberland Parkway. London and Corbin, located 30 and 40 miles to the east respectively, are connected via KY 80 and I-75. Danville, 45 miles north, is connected to the Somerset area via U.S. 27. Comparative population, household, and income figures for these five metropolitan statistical areas are included in Table 1 found at the end of this I-66 & KY 80 Interchange Economic Impact Assessment report.

    Somerset, KY is located at the junction of U.S. 27 and KY Hwy 80 in south-central
Kentucky. Due to the city's relatively central location on the Louie B. Nunn Cumberland
Parkway and on U.S. 27, the Somerset, KY Metropolitan Statistical Area (Pulaski Co.) is the focal point and the economic center of a large eleven county region of south-central
Kentucky. Somerset lies mid-way between the Daniel Boone National Forest to the east and Lake
Cumberland to the southwest. The city is 70 miles south of Lexington, and 125 miles southeast of Louisville. Tennessee's state border lies approximately 50 miles to the south. See Map 1 at the end of this I-66 & KY 80 Interchange Economic Assessment report for reference.

    The Somerset Metropolitan Statistical Area (Pulaski County) has shown consistent and steady growth for the past 15 years, increasing from a population of 49,489 in 1990 to
59,052 by mid-year 2005. The rate of increase of 19.3 percent is similar to that experienced by the U.S. over the same period. The Somerset metropolitan area is the largest of the five comparable metropolitan areas in south-central Kentucky.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    It is estimated that over 1.5 million travelers and tourists visit Pulaski County each year, primarily due to the recreation and fishing opportunities afforded by Lake Cumberland, one of the largest man-made lakes in the U.S. Lake Cumberland, located west and south of Somerset, was formed in the 1940's by damming a large section of the Cumberland River. Today, the 1,255 miles of Lake Cumberland shoreline support over 63,000 acres of surface water. Each year, per U.S. Army Corps of Engineers estimates, over 4.7 visitors are attracted to the Lake Cumberland region or Somerset's region of influence due to multiple recreational activities provided by the lake.

    The Somerset Metropolitan Statistical Area supports a large regional hospital complex, and retailers in the market are important destination shopping locations for the over 300,000 persons living in the eleven county region. A significant amount of retail and service square footage in Pulaski County is supported by the dollars spent by the over 4.7 million annual recreational users visiting the greater Lake Cumberland region. In addition to typical retail stores found in the market, boat servicing businesses, hotels, and restaurants all benefit from the recreational user dollar expenditures.

2.2 Pulaski/Laurel Counties Primary Market Area and Region of Influence
A number of possible economic uses that could be developed on the Del Spina subject property, located 19 miles northeast of Somerset and only 13 miles west of London, at the proposed interchange of the planned I-66 and existing KY 80, would benefit from the proximity of the subject property to both metropolitan areas, presuming adequate local and regional access is provided through a properly conceived interchange between existing KY 80 and proposed I-66.

    With adequate local and regional access, a number of possible retail uses, highway oriented services, or industrial/distribution uses would be well positioned to serve residents of and visitors to both Pulaski County (Somerset) and Laurel County (London). As such, it is expected that the primary market area that would be served by any of these selected uses would include both counties. As of mid-2005, this two county primary market area was residence to over 116,000 persons as well as the annual destination geography of over 1.5 million tourists and/or visitors.

    Any large, regionally oriented economic use developed on the Del Spina property would also be well positioned to serve the residents and tourists or visitors found within Somerset's eleven county region of influence. As noted in Section 2.1 of this report, this region is home to over 300,000 residents, and is an area currently attracting over 4.7 million tourists and/or visitors in any given year. See Map 1, which indicates the extent of the primary market area, and Table 2, which summarizes population, household, and income numbers for the two county market area and Somerset's eleven county region of influence. Both the map and table are found at the end of the report.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

2.3 Economic Overview of Primary Market Area and Region of Influence
    Of the five metropolitan areas compared in this report, Somerset and London are clearly the most dominant retail centers of south-central Kentucky. London (Laurel County), according to 2002 Census of Retail Trade data, is the leader in total retail sales, with Somerset (Pulaski County) a close second. Both Laurel and Pulaski counties' retail sales are significantly higher than experienced in the remaining three metropolitan areas.

    Combined, the London and Somerset metropolitan areas accounted for almost 53 percent of the retail sales generated in Somerset's eleven county region of influence. In 2002, total retail sales in these two primary market area counties approached $1.4 billion, up from slightly over $1.0 billion in 1997. Shoppers Goods sales in Laurel County at $218 million, and in Pulaski County at $212 million, far surpassed sales experienced in that retail category in each of the remaining south-central Kentucky metropolitan areas. Gasoline sales in Laurel County were more than double those in Pulaski County, and even Corbin (Whitley County) experienced higher sales than those in Pulaski County. The primary reason for the high gasoline sales figures in both Laurel County and Whitley County is that I-75, one of the two key north-south Kentucky interstate highways, passes through each of the counties.

    See Tables 3 and 4 in which are included retail sales figures for each of the five comparable metropolitan areas, the two county primary market area, and the eleven county region of influence. These tables are found at the end of the report. The Somerset and London metropolitan areas (Pulaski and Laurel counties) account for approximately 20 percent each of the total work force and total employment of the eleven county region of influence. Of total employment in the region in 2004 (124,611), Pulaski County employed 25,293, and Laurel County employed 24,783. Together, the two counties, with a total employment figure of 50,076, accounted for 40.2 percent of the total employment of 124,611 for the eleven county region.

    Between 1990 and 2004, employment in Pulaski County grew by 20 percent. In the same period, employment in Laurel County grew by 44 percent. In this period, total employment in the region grew by 24 percent. In the 1990-2004 period, combined employment in the two county primary market area grew by 31 percent. See Table 5 for detailed numbers. This table is found at the end of the report.
    As indicated in Sections 2.1 and 2.2 above, tourism is a very important economic component of the eleven county region. Per figures provided by the Kentucky Department of Tourism, the more than 4.7 million tourists/visitors frequenting this south central Kentucky region spent $354 million dollars in this eleven county geography in 2004. The London and Somerset metropolitan areas combined (Laurel and Pulaski counties) accounted for 51 percent of those tourist/visitor dollars with $178.8 million estimated tourist/visitor expenditures. In 2004, tourists/visitors spent an estimated
$100.8 million in Laurel County and $78.0 million in Pulaski County.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
2.4 Traffic Volume Comparisons Relative to Development Potential
    The traffic volumes in the vicinity of the subject property are shown on Map 2. The volume of traffic on KY 80, in the vicinity of the proposed site, has been increasing steadily over the past 20 years as a result of the increased economic activity in the region. The average daily traffic (ATD) count at the site in 2005 was 7,640. This represented an increase of 25 percent from the 6,110 ADT figure in 1997 and an increase of 93 percent from the 3,960 ADT figure in 1985. The nearly 8,000 vehicle average daily traffic count on KY 80 represents the amount of through traffic between Somerset and London, since there are no significant traffic generators in the vicinity of the subject site. These volumes are similar to those on portions of Louis B. Nunn Cumberland Parkway west of Somerset as well as the Hal Rogers Parkway east of London.

    The east extension of the Louis B. Nunn Cumberland Parkway is presently under construction north of Somerset. This will provide a new limited access freeway connection between the parkway just west of Somerset to KY 80 northeast of Somerset. The completion of this bypass should increase regional traffic on KY 80 (and eventually proposed I-66) by making this east-west route more convenient to travelers and commuters. The limited access Louis B. Nunn Cumberland Parkway, and the Hal Rogers Parkway are both being incorporated into the proposed I-66 project plans. The completion of the Somerset-London segment of I-66 should significantly increase traffic in this corridor by providing a good freeway route from I-65 just west of Glasgow to I-75 in London.
Completion of the proposed extension of I-66 to West Virginia east of I-75 would significantly increase traffic by providing a new alternative route across Kentucky for cross-country U.S. travelers. This portion of the proposed I-66 project is in the early planning stages with no dates specified as to when it may be constructed.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
3.0 Interchange Alternatives Analysis
3.1 Development Potential - Base Case

    The analysis of the "base case" development potential assumes that the high priority thirty-plus mile Somerset to London segment of the planned Southern Kentucky Corridor (I-66) will not be constructed, and that the existing KY 80 roadway remains as is. This hypothetical "base case" is a key assumption to this development analysis, since there has been no commercial development activity occurring on the Del Spina site from 1997, when the Kentucky Transportation Center determined that the Southern Kentucky Corridor segment of the I-66 East-West Transamerica Corridor was feasible. Even the initial proposal for a cross-country U.S. East-West Transamerica Corridor (I-66) in 1991 discouraged commercial development, because of the tentative nature of the proposal.

    The uncertainty of whether or not the proposed East-West Transamerica Corridor (I-66) and the subsequent Southern Kentucky Corridor (I-66) would be constructed, or when the roadway would be constructed, the uncertainty of its likely route and interchange construction, as well as unknown access plans to the Del Spina site, has made any commercial development very risky. Retail uses require easy access for their customers, and few if any retail businesses are interested in sites with significant unknowns or limitations on access to their establishments. Non-retail commercial uses such as industrial, wholesale, and warehouse uses also require good local and regional access for moving supplies and/or shipping product.

    The negative impact of the unknowns of the I-66 project on commercial development potential will continue until the Somerset to London (I-75) segment is completed. Even final plans will not remove the risk, since plans can always be changed and projects abandoned. Committed funds and known construction plans are critical to any economic investment. In addition, even if the final plans provide for good access, revenues generated by any business located on the subject site could be greatly impacted by road construction activity. Even with continually increasing traffic volumes on KY 80, this uncertainty has not only impacted the subject site, but has also negatively impacted the potential for development at other locations along KY 80 in northeast Pulaski County. The subject site, as currently configured, includes 424 acres, with 300 acres on the north side of KY 80 and 124 acres to the south. Located approximately 19 miles east of Somerset and 13 miles west of London, access to the south portion of the property holding from KY 80 is provided via Chimney Rock Church Road. Two access points are currently provided to the north portion of the site, including one opposite Chimney Rock Church Road and the other at the west end of the property.

    The north portion of the Del Spina site borders the Daniel Boone National Forest and there is scattered low density rural residential development south of KY 80 and to the west. With limited residential development in the vicinity of the Del Spina property, most of the traffic on this segment of KY Hwy. 80 is through traffic between Somerset to the west, and London and the I-75 freeway corridor to the east.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    The volume of traffic on KY 80 in the vicinity of the proposed site has been increasing steadily over the past 20 years as a result of the increased economic activity in the region. The average daily traffic count at the site in 2005 was 7,640. This represented an increase of 25% from the 6,110 in 1997 and an increase of 93% from the 3,960 in 1985. It is anticipated that traffic volumes will continue to increase in the future even if the proposed thirty plus mile segment of I-66 between Somerset and London is never built. Given this background, the "base case" assessment of development potential for the Del Spina site reflects the assumption that the Somerset to London segment of I-66 will never be built. This "base case" assumption includes a number of types of economic uses that could be found in rural areas such as that existing in northeast Pulaski County, where a significant highway connection exists between population centers. These include:

3.11 Highway Oriented Services
    Highway oriented services are aimed at the traveling public, normally include a gasoline/convenience store, and may include a highway type restaurant and economy motel. The amount of highway oriented services currently found in Pulaski County, Laurel County, and the eleven county region of influence are shown on Table 6 found at the end of the report. As indicated in the table, as of 2002, there were nearly 250 gasoline station/convenience stores located in the eleven county region with sales of over $380 million. Nearly 100 of these stores are located in the primary market area (Pulaski and Laurel counties), with sales of nearly $135 million. Data for food service and drinking places, and hotel and motel accommodations are also provided on Table 6.

    There is presently very little highway oriented service retail development found on KY 80 between Somerset and London. Some of the existing highway oriented service oriented retail uses that are closer in to Somerset will be bypassed by the Louie B. Nunn Cumberland Parkway extension (or north Somerset Bypass) presently under construction. The closest highway oriented service retail establishment to the east of the Del Spina site is a gasoline station/convenience store located about four miles west of London. The traffic volumes adjacent to this existing store are similar to those at the subject site, although this existing store has some residential backup resulting from residential development west of London.

    The traffic volumes of nearly 8,000 vehicles daily are sufficient to support a gasoline station/convenience store, perhaps with an attached restaurant. The recent "Convenience Store News - Industry Report 2005" indicates that nationally, gasoline station/convenience stores on average experience 400 in store transactions and 240 motor fuel transactions daily. This would represent only about five percent of the average daily traffic volumes currently found on the northeast Pulaski segment of existing KY 80.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    The ability to support this type of highway oriented service use is demonstrated by the location of two service station/convenience stores along the 18 mile section of KY Highway 461 (KY 461) between Mt. Vernon and its intersection with KY 80 east of Somerset. Traffic volumes in the mid-portion of this section of KY 461 are lower than those counts near the proposed site. The most likely location for highway oriented retail uses, such as service station/convenience stores, would be on the north portion of the subject property, since that portion of the Del Spina property is relatively flat, would have the most convenient access, and would offer the best visibility to KY 80 traffic. The south portion of the Del Spina property, near the intersection of KY 80 and Chimney Rock Church Road, would provide an alternative location if the north portion of the property were developed with other uses.

    Given the lack of sufficient traffic volumes on this northeast Pulaski County portion of KY80, and with the lack of any good north-south connector, a traveler oriented economy motel cannot be supported at the proposed site, given the existing roadway conditions. Market support for such a motel, in combination with a gasoline station/convenience store and restaurant development, could eventually develop as the traffic volumes increase; however, the lack of any connector to another major highway limits the development potential. In sum, there would be potential for the development of highway oriented retail uses under the "base case" scenario that assumes no plans for the construction of the I-66 segment between Somerset and London, but the scope of the development would be limited due to the lack of regional access that could be provided if I-66 were built.

3.12 Industrial or Distribution Development
    As with highway oriented service retail uses, there could also be the potential for
The development of industrial and distribution oriented uses on the proposed site under the "base case" scenario. Most industrial, warehouse, and distribution type uses prefer to be located in industrial parks or at "in-town" locations. However, there are a number of these types of uses, assuming adequate utilities are provided, that prefer locations out in more rural areas. Such locations can usually provide more space at a reasonable price, and can offer larger areas for truck parking and maneuvering. In addition, possible outside or covered storage can be provided with lower cost investment. Industrial, distribution, or transportation uses do require good highway access, and KY 80 currently provides that access. The north portion of the subject property is the most likely location for such uses, since a large portion of the site is flat and buildable. The south portion of the Del Spina property could be an alternative site for development, but with topographic issues, the cost of developing these types of uses on that site could limit the economic return and thus development on that portion of the subject property holding.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    The uncertainty of whether or not I-66 will be constructed in the vicinity of the Del
Spina holding, and the uncertainty of the proposed interchange near that location, limits current interest in the development of any industrial, distribution, or transportation use on the property. There could be some demand for this type of use on the proposed site, once the uncertainty of the proposed freeway project is eliminated. Since the Del Spina property is one of the few properties located along KY 80 northeast of Somerset that is developable, it is conceivable that if the I-66 Somerset to London segment is never built, this subject property holding could still offer the development opportunity for industrial, distribution, or transportation oriented uses. The largest portion of the holding (the north section of the property) offers relatively flat land that appears to be capable of supporting a number of these economic uses.

3.13 Destination Resort and Recreational Facilities
    The northern portion of the subject site has a number of advantages as a possible location for destination type resort and recreation facilities. The types of facilities that could be developed include a resort motel use including recreational facilities such a water park, stables, and trails; resort cabins, either in or near the forest area or along the river at the north edge of the property; or a recreational vehicle park (RV park) and campground that could individually be stand-alone developments or be part of a larger resort complex. The Del Spina site's location in a part of Kentucky having great natural beauty as well as the tourist draw of Lake Cumberland, and its location adjacent to the

    Daniel Boone National Forest is advantageous for the development of destination type resort and recreations facilities. These facilities could be enhanced through agreements with the National Forest for additional hiking or horseback trails, and through the upgrading of the present informal canoe and Kayak launch site on the Rockcastle River to the north and east of the site. The development potential for these types of uses is currently very much limited by the uncertainty regarding future access to the Del Spina property. The completion of the I-66 segment, if coupled with good access to the site, would enhance the development potential by making it easier for persons within driving distance of the area to get to the site and by attracting more cross-country travelers.

3.14 Other Uses
    Other uses that sometime locate in rural areas such as northeast Pulaski County, include outlet retail stores and/or off-price malls that attract customers from a large area, and thus are not dependent upon nearby residential population. However, there would be limited potential for these types of uses in this "base case" scenario, since these uses depend upon good regional access that would be provided to a large geographic area.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    The proposed I-66 freeway could, assuming convenient access is provided from the freeway to the subject site, provide much improved access to large portions of south-central Kentucky and northern Tennessee.

3.2 Development Potential - Alternative D Interchange
    The development potential of the subject property would be greatly impacted by the currently planned interchange, referred to as Alternative D. Although this interchange may work well for traffic flow in a merger of two highways, it provides very poor access to the subject site as well as other property near the proposed interchange. This differs significantly from most freeway interchanges that provide good access to all four quadrants of those interchanges. The proposed Alternative D interchange would eliminate any development potential for the south portion of the subject property. First, this interchange design would require the taking of a large portion of the 124 acre south portion of the subject property to construct the interchange. Secondly, it would leave the remaining portion of the site south of the proposed I-66 route isolated from the interchange with no direct access to any highway.

    Access to that portion of the property would be provided via the narrow, winding Chimney Rock Church Road. It is possible that the Kentucky Transportation Council (KYTC) will not take the segment of the south portion of the subject property lying between the proposed I-66 right-of-way and existing KY 80. If that segment of property were not taken, that remaining land parcel would have little development potential since it would have little depth, and would be encumbered by the ridge located on the south side of KY 80.

The proposed Alternative D interchange could well adversely affect the development potential for the north portion of the subject property as well. Factors that could negatively impact the development potential of this acreage include:

The only access to the north 300 acre site would be at the far west edge of the property which will prevent easy direct access to various potential uses on the site, and necessitate much longer private frontage roads to access the facilities.

The long exit and entrance ramps will not permit "easy off-easy on" access to highway oriented retail uses, and could lead to potential customers avoiding a visit of these facilities because of real or perceived confusing access.

The interchange configuration, together with the curving road, topography, and existing forests, will greatly handicap the visibility of any proposed development, especially before potential customers make an existing decision from I-66. Good visibility is critical for highway oriented retail uses to be successful.

Per current ramp designs, the interchange will not greatly slow traffic exiting or entering I-66. If any economic use located on the north portion of the subject property were to attract significant volumes of auto and truck traffic, this could result in the creation of a dangerous intersection at the proposed west access point to the site for "left in-left out" traffic. The danger would be exacerbated by the curve in KY 80 and by high speed west bound traffic coming over the hill.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    These factors would make it very difficult to attract most economic uses to the subject site, especially highway oriented retail uses. The key factors of success for most highway oriented retail developments are convenient access and good visibility. Under the proposed Alternative D, the subject property would have poor visibility from proposed I-66, and would be provided inconvenient and confusing access. Industrial, distribution, or transportation economic uses could also be discouraged by the limits that would be experienced by the proposed access provided by Alternative D. The long private roads required under this interchange alternative, would need to be capable of supporting heavy truck traffic. Costs associated with the construction of these private frontage roads would increase costs of development, and thus could discourage this type of economic use. In addition, these uses would most likely be discouraged by the potentially dangerous access intersection that would be provided, since the danger could increase for trucks that take time entering the highway, making turns, or accelerating into traffic on KY 80 or the ramps to I-66.

    The configuration of the proposed interchange would also have some adverse impact on destination type resort and recreation facilities that could locate on the north portion of the subject property. Convenient access is not necessarily an issue for families planning week-end or longer stays at the resort. However, to be successful, many of these types of facilities including motel rooms, restaurants, water parks, RV parks, or campgrounds would also need to attract short-term visitors. Convenience and visibility are more important in attracting these short-term customers, since they often make spur-of-the moment decisions regarding these activities and where to spend a given night.
In summary, the proposed Alternative D interchange would adversely impact the development potential of both the north and south portions of the subject property. Any economic use considering locating on either portion of the subject property would need to assess the negative implications of the proposed interchange, and factor those implications into the calculation of potential financial return.

3.3 Development Potential - Recommended Alternative Interchange
    To provide a possible solution to the limiting factors created by the currently proposed Kentucky Transportation Cabinet Alternative D interchange, QK4 has proposed the consideration of alternative interchange configurations that would best connect I-66 with existing KY 80, and that would provide more convenient access to the subject property. Alternative 1, suggested by OK4 in their I-66 Interchange Study, would be the preferred interchange configuration of the proposed alternatives. This interchange alternative proposes a diamond interchange with a relocated and upgraded Chimney Rock Church Road near the east end of the subject property. This alternative would provide a number of benefits in terms of attracting development to the subject property. These include:

    Of all proposed interchange configurations, this alternative would provide the most convenient access to the most likely developed economic uses on the subject site.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT


    "Easy off - Easy on" access to the subject property would be provided, with no unusual configurations that could confuse freeway and KY 80 travelers.

    Better visibility would be provided for highway oriented retail uses than provided under the Alternative D proposal or other alternatives suggested by QK4. In particular, this alternative provides better visibility at the place where a driver would be making a decision on whether or not to exit I-66. Visibility would also be good to both the south and north portions of the subject site from the junction of the exit ramps and re-aligned Chimney Rock Church Road.

    The need to make left turns or at-grade highway entrances and exits at locations with high speed traffic would be eliminated.
Selected highway oriented retail or industrial, distribution, or transportation uses could be developed on the south portion of the subject site under this Alternative 1 interchange proposal. The re-aligned Chimney Rock Church Road would provide easy access and visibility to the east segment of the south portion of the subject property.

    The construction of an interchange with a configuration similar to Alternative 1, as proposed by OK4, would provide the best opportunity for the development of a variety of commercial uses including highway oriented retail stores; industrial, distribution, or transportation uses; destination type resort and recreation facilities; or tourism related retail, including large outdoor recreation specialists, outlet or manufacturing retail stores.

3.31 Highway Oriented Services
    Assuming that convenient access and visibility is provided between proposed I-
66 and existing KY 80, the completion of the high priority Somerset to London segment of the Southern Kentucky Corridor should increase the development potential on the subject site for highway oriented retail uses. The completion of the key segment between Somerset and London should increase traffic flow all along the Southern Kentucky Corridor, since a fully completed limited access freeway would then provide a connection from I-65 in southwestern Kentucky to I-75 in south-central Kentucky. In addition to attracting more long distance travelers, increased traffic should also occur due to continued Somerset-London economic growth.

The development of the I-66 route, as is true with all freeways, can result in less competitive locations since all highway oriented uses must locate near an interchange. This contrasts to ordinary highways where highway oriented retail stores can be located anywhere along the route and can result in long highway commercial strips. The Somerset to London freeway segment in combination with the north Somerset bypass may cut off many existing KY 80 highway oriented retail stores from the through I-66 traffic. This is offset somewhat by the increased opportunities at major interchanges such as those that will be provided with the planned I-66 and U.S. 27 interchange as well as at this proposed I-66 and KY 80 connection.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    If the Alternative 1 type of interchange is constructed, with the good access and visibility provided by this alternative, and with increased traffic resulting from the upgrade to freeway status, there should be sufficient market potential to support a gasoline station/convenience store and a highway oriented restaurant at the subject property. Support for an economy or mid-priced motel will depend upon how many long distance travelers could be attracted to the new Southern
Kentucky Corridor (I-66) route. The completion of the extension of I-66 through West Virginia to Virginia could attract many more cross-country travelers, which would lead to increased market potential for the development of a motel facility on the subject property.

3.32 Industrial and Distribution Development
    Good access to the proposed I-66 freeway and subsequent regional access to both the I-65 and I-75 corridors should make the site more attractive to industrial, distribution, and transportation related economic uses. Wholesalers and distributors, in particular, need good access to well-developed transportation system. This alternative therefore should enhance the possibility of attracting these types of uses to the subject property. With the Del Spina property being one of the few properties in northeast Pulaski County offering flat developable land, the completion of an interchange similar in design to Alternative 1 as proposed by QK4, this property could be very attractive for the development of this type of economic use. If properly conceived, this proposed interchange would be only one of two interchanges provided east of Somerset, and would be the first interchange provided west of Laurel County, the home of London to the east.

3.33 Destination Resort and Recreation Facilities.
    The completion of the Somerset to London segment of I-66 will increase the attractiveness of the subject site for destination resort and recreational facility development. Convenient access to the proposed I-66 freeway will not necessarily contribute to an increase in the number of longer term guests, but this access will provide overnight and possibly limited weekly or weekend oriented supplemental business for motel rooms, restaurants, a water park, and an RV park and campground. This supplemental source of business increases the market potential in total for these destination and recreational economic uses. The planned opening this month of a 20 acre waterpark in north Somerset would likely preclude a standalone water oriented recreation facility on the subject property. However, a waterpark, included as part of a larger destination resort and recreation economic use, could be possible and if included in the use, would attract additional visitors to the potential development.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    Even though there are a number of RV parks and campgrounds in the Somerset area, including the Lake Cumberland RV Park and Golf Driving Range in Bronston, just south of Somerset; The Eagle Falls Resort near the entrance to Cumberland Falls Park; and the Pine Crest RV Park near Russell Springs; the subject property could be an appropriate setting for a RV Park and Campground. There would appear to be sufficient market demand, based upon tourist and visitor estimates, to support such a development on the subject site, either as a standalone development or as part of a larger resort development.

3.34 Tourism Oriented Retail Including Outdoor Recreation Specialists
    The completion of the high priority Somerset to London segment of I-66 with an interchange of I-66 and KY 80 interchange that provides adequate local access to the subject property, will create an attractive location for the possible development of a destination tourist oriented economic use. Completion of the entire I-66 corridor through eastern Kentucky to West Virginia would make this potentiality even more attractive. Providing a proposed interchange per the design principals of Alternative 1, as submitted by QK4, furnishes desirable access to and from I-66 and existing KY 80 which could enhance the potential for the location of a large recreation oriented outdoor sporting goods retailer such as Bass Pro, Cabela's, or Gander Mountain.

    Each of the above listed retail strategies provide an extensive product offering of hunting, fishing, marine, and camping merchandise, supplemented by a large collection of casual and outdoor apparel and footwear in a large "one-stop" retail environment. Given the extensive collection of these specialized retail categories, each of these retail specialists requires access to a large number of potential customers generally presiding over a large geographic area. Geographic areas offering recreational outdoor opportunities, such as are available in the south-central Kentucky region, are especially attractive, since potential users of the products offered by these retail specialists will either be residing in the area served by the these specialists or will be visiting that geographic area to experience the outdoor activity for which the products are offered.

    Primary market areas served by any one of these outdoor specialists could range from 25 to over 50 miles. As such, comparable population numbers for 25, 40, and 50 mile radius areas around the subject property and around comparable locations for these retail specialists were generated as part of this economic use assessment. As noted in Table 7 found at the end of the report regarding the development potential for the subject property, the population found within 25,
40, and 50 miles of the subject site is greater than that for many of the radii served from existing locations of the outdoor recreation specialists. Note in the table of population numbers that over 550,000 reside within 50 miles of the subject property. This number is greater than that found within 50 miles of fourteen of the comparable existing store locations. Only three Gander Mountain locations serve 50 mile radius areas having a greater population base than what is present in that radius of the subject property.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    The populations for the selected radii of the subject property do not include tourist or visitor population. As pointed out earlier in this report, this tourist/visitor base is quite substantial, with over 4.7 million visitors estimated to annually frequent the eleven county Somerset region of influence. Spending by this group of visitors would enhance the retail expenditure potential at the subject property. None of the above noted outdoor retail specialists has a store in close proximity to south-central Kentucky or specifically to the subject property. Bass Pro's closest store is located in Sevierville, TN, an eastern suburb of Knoxville, approximately 100 miles southeast of Somerset. Cabela's closest store is located in Adairsville, a northwest Atlanta suburb, over 230 miles to the southeast. Gander Mountain's nearest store location is in Charleston, WV, over
190 miles to the northeast.

    Thus based upon an analysis of probable market potential, and due to the lack of representation of any one of these specialists within 100 miles, the possibility exists that the subject property could be a very acceptable location to any one of these retail specialty operations. It would appear that the potential retail sales opportunity provided by the expenditure potential of the region's population and the supplemental tourist/visitor population could at least match the retail spending potential of many of these selected outdoor retail specialist's store locations, and perhaps surpass the potential of a number of those locations.

3.4 Other Alternative Interchange Development Scenarios
    Alternative 2, a second interchange proposed by QK4 in their I-66 Interchange Study would not be as conducive for retail development as Alternative 1. This alternative design proposes a diamond interchange with a relocated and upgraded Chimney Rock Church Road. In this Alternative scenario, the relocated road turns sharply to the north and, after a diamond interchange with the new route, joins KY 80 west of the subject property. The intersection of the relocated Chimney Rock Church Road and existing KY 80 is similar to a Y intersection. One route turns to the east and follows existing KY 80 to the subject site; the other route follows existing KY 80 to the west.

Factors relating to Alternative 2 that would affect development potential on the north portion of the subject property include:

The only access from I-66 to K 80 would be west of the subject site forcing traffic to back track to the subject site.

This configuration would not permit "easy off-easy on" access to highway oriented retail uses, and the Y and back tracking could confuse some drivers.

Potential customers tend to avoid stores with real or perceived confusing access.

This configuration does provide better visibility than Alternative D, both at the point where exit decisions are made, and at the intersection of the exit ramps and the relocated Chimney Rock Church Road.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    This configuration of the interchange would largely avoid the problem of making left turns or entering the highway at locations where vehicles may be traveling at high speeds. The likely speed of traffic on Chimney Rock Church Road at the end of the exit ramps and at the Y would, however, likely be somewhat higher than that for the Alternative 1 configuration.

3.5 Potential Economic Benefits of Development Scenarios
    Any one of the proposed economic uses suggested as possibilities under the interchange design alternatives outlined above will provide direct and indirect (reflecting a multiplier effect) economic benefits to the communities of northeast Pulaski County.
These economic benefits of new development will primarily be a product of increased employment providing increased payroll dollars and increased property tax revenues.
The amount of economic benefit will depend upon the amount and type of development that is attracted to the site.

    In this report, only the direct benefits of the proposed Del Spina property developments are outlined. Indirect benefits which could be the product of additional development beyond that provided on the Del Spina property are not provided. Employment projections assumptions noted below include both full-time and part-time employment.

3.51 Economic Benefits - Employment
    The amount of employment generated by new development on the Del Spina
Property depends on the type and size of the development. Most of the development scenarios provided above include retail uses as a major component of the development. Normal employment ratios for most general merchandise oriented retail developments assume two to three employees per 1,000 square feet of retail space. Supermarkets and restaurants usually have higher staffing needs and will more likely average three to four employees per 1,000 square feet of space. Highway oriented hotel or resort hotel employment will depend upon the level of service and types of activities that are provided for guests. Economy travel motels will usually average one employee for every three or four rooms. Resort oriented hotels that include restaurants and recreation facilities in their developments will need more employees on a per room basis.

    Based upon these employment ratios, it is probable that a major outdoor recreation specialty retailer with 200,000 square feet of retail space could conservatively generate 400 to 500 new jobs. Ancillary highway oriented retail facilities and ancillary retail uses reflecting the development of a large destination oriented retail store such as this could increase the level of employment under this development scenario. A destination type resort providing a range of recreational activities would also generate substantial employment similar to that of the recreation specialty retailer. Employment generated by other development scenarios would depend upon the number and type of developments provided under any one of the scenarios.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
3.52 Economic Benefits - Property Tax Revenues

    The development of the Del Spina property pursuant to any of the development scenarios will increase the market value of the proposed site and the resulting property tax revenues. The assessed market value (cash sale value) will vary based on size, type and quality of construction, and economic viability of the proposed use. Retail and other commercial property is normally valued on the capitalization of rental income (assumed rent for owner occupied space) assuming market rents and expenses. The current property tax rate in Pulaski County (outside of Somerset) is $6.79 per thousand of value.

    The probable assessed market value (in 2006 dollars) of possible future retail development will likely range from $75 to $100 per square foot. This amount will depend on type and quality of construction and interior improvements. As illustrative of potential property tax revenues, a 200,000 square foot retail complex would, at $75 per square foot, have a value of $15 million and, at current tax rates, and would provide about $100,000 annually in real estate taxes. Ancillary development would increase the total amount of property taxes generated by business entities operating on the property. Tax revenues generated under the other development scenarios will depend upon the amount, type, and quality of improvements provided under each scenario.

3.6 Summary - Interchange Development Scenarios
    Alternative 1, the interchange of proposed I-66 and KY 80, is the most conducive to the optimum economic development of the Del Spina property. Alternative 2, a proposed interchange similar to Alternative 1, but provided to accommodate more rapid traffic flow from and to I-66 and KY 80, could be an acceptable alternative to best move traffic on and off I-66, but the alternative is not conducive to larger developments such as a large resort oriented recreation facility or for a large outdoor retail specialist. However, even though the development potential for most of the suggested economic uses would be less for Alternative 2 than for the preferred Alternative 1, either of the proposed alternative interchanges would be better than economic opportunities presented by either the no I-66 scenario or the Kentucky Transportation Cabinet's proposed Alternative D interchange, Employment and tax revenues provided under any one of the interchange development scenarios will depend upon what economic uses are provided under any one of the scenarios. The most optimal economic benefit scenario, presuming a most optimal economic use mix, will be that provided by the development of the proposed Alternative 1 interchange of I-66 and KY 80.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
4.0 Summary and Conclusions
4.1 Purpose of Assessment

    The Kentucky Transportation Cabinet's proposed interchange (Alternative D) between existing KY 80 and the Somerset to London segment of the proposed Southern Kentucky Corridor (I-66) will require a significant taking of the 124 acre south portion of a 424 acre holding controlled by Del Spina Properties and located at the planned interchange. The current interchange plan will not only require a taking of a substantial amount of the south portion of the Del Spina property, but will also create local access limitations to the 300 acre north portion of the property.

    Because of the limitations the proposed Alternative D interchange places on the potential economic development of the subject property, QK4 has developed interchange scenarios that will provide improved access to the subject property, and that will allow for the best economic uses of the property. Carlson & Associates has determined the economic use potential of each of the development alternatives that would best match the selected interchange scenarios provided for consideration, including determining the development potential for:
o The subject property presuming the existing base case - KY 80 without I-66.
o The subject property per current Kentucky Transportation Cabinet interchange plans (Alternative D).
o The subject property per QK4 alternative interchange designs.

4.2 Findings and Conclusions
    The Del Spina property, located at the existing KY 80 and proposed I-66 interchange, is well located with respect to both the Somerset and London metropolitan areas (Pulaski and Laurel counties). These two metropolitan areas (combined populations of 116,000) are the economic hubs to an eleven county region of south-central Kentucky containing population of 308,000. Traffic volumes on the existing KY 80 that bisects the two portions of the Del Spin holding have been steadily climbing over the past 20 years to almost 8,000 vehicles per day due to increased economic activity in the region. However, potentially higher traffic counts have been restricted due to the lack of a limited access parkway connecting with the Louis B. Nunn Cumberland west of Somerset with I-75 and the Hal Rogers Parkway in London.

4.21 Base Case - I-66 Not Built
    With the uncertainty of plans regarding the Somerset to London segment of the proposed Southern Kentucky Corridor (I-66), no development activity has occurred to date on the Del Spina property. However, if it is ascertained that the proposed I-66 proposed freeway will not be built (Base Case), then the potential may exist for the development of a gasoline station/convenience store, perhaps with an attached restaurant, on the subject property.

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT

    There could also be demand for an industrial, distribution, or transportation type economic use, since the Del Spina property is one of very few flat and developable parcels all along the KY 80 corridor between Somerset and London. A smaller scale resort type development, taking advantage of the adjacency of the north portion of the subject property to the Rockcastle River and the Daniel
Boone National Forest, could possibly be economically feasible. However, this type of development would not utilize the flat, most developable portion of the north parcel; and because of a grade difference, this type of development along the river and adjacent to the national forest, would not be visible to the existing KY 80 right-of-way. Under this base case scenario, it would not appear that there is enough market potential to support any other type of economic use yielding positive financial performance.

4.22 Alternative D Interchange Scenario
    If plans proceed for the construction of the Alternative D interchange as currently proposed by the Kentucky Transportation Council, very little development potential would exist at all. In fact, the taking of a significant amount of acreage from the south portion of the holding, and the lack of adequate access to the northern portion of the holding, would severely crimp the development potential of the property to any significant economic use. It is possible, as with the Base Case scenario, that a smaller scale resort type development could be undertaken. However, access being limited in all likelihood to the extreme west portion of the north portion of the subject holding, this limit could create enough of a local access problem so as to limit the number of short-term visitors, and hence, limit the financial performance of any proposed project.

4.23 Recommended Alternative Interchange Scenario
    QK4 has proposed that the Kentucky Transportation Cabinet consider one of two proposed interchange designs as alternatives to the proposed Alternative D plan. Of these two proposed interchanges, Alternative 1 appears to offer the most development opportunity for the subject property. This alternative would provide "easy off - easy on" access, would provide for greater visibility to both the north and south portions of the holding, would eliminate the need to make left turns against high speed traffic, and would provide good local access to either the north or south parcels.
This scenario would most likely support the development of a gasoline station/convenience store and a highway oriented restaurant. Support for an economy or mid-priced motel could also be considered, depending upon how many long distance travelers can be attracted to the new Southern Kentucky
Corridor (I-66).

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I-66 / KY 80 ECONOMIC IMPACT ASSESSMENT
    Good access that would be provided between I-65 to the west and I-75 to the east via a newly completed Southern Kentucky Corridor (I-66) under this scenario should make the subject property more attractive to industrial, distribution, and transportation related economic uses. Wholesalers and distributors, in particular, would benefit from the significantly improved regional and local access.
    The completion of the Somerset to London segment of I-66, coupled with the completion of the Alternative 1 interchange will increase the attractiveness of the subject property for destination resort and recreational facility development possibly including short-term hotel rooms, restaurants, a water park, and a Ropak and campground. This interchange scenario will enhance the potential for the location of a large recreation oriented outdoor sporting goods retailer such as Bass Pro, Cabela's, or Gander Mountain.
    With a population of over 550,000 within 50 miles, and with regional access being provided by the completion of the Southern Kentucky Corridor (I-66) between I-65 to the west and I-75 to the east, any one of the sporting goods specialists would serve a population at least equal if not greater than served by selected existing stores. The 4.7 million tourists/visitors frequenting this south-central Kentucky region will also enhance the volume potential for any one of these strategies.
Alternative 2, which provides the opportunity for higher speed traffic on and off proposed I-66, would not be as conducive for highest and best economic use on the subject property as would Alternative 1. However, even this option is more development friendly than that proposed (Alternative D) by the Kentucky Transportation Cabinet, or than no I-66 corridor construction at all.

4.3 Recommendations
    The Alternative 1 interchange, as proposed by QK4, should be the interchange of choice relative to the connection between proposed I-66 and existing KY 80. This interchange configuration will support the greatest amount of economic activity, will reflect the highest and best use available to the site, and will be of highest economic benefit. Alternative 2, a modification of Alternative 1 which allows for higher speed ingress and egress between I-66 and KY80, could be possible for consideration, but the limitations of this configuration relative to local access to both the south and north portions of the subject property will limit the development potential of the Del Spina holding. The Base Case scenario, which assumes no I-66 is developed, offers minimal development potential. Alternative D, currently proposed by the Kentucky Transportation Cabinet, severely limits development potential as well. Neither of these highway construction scenarios should be considered as viable options to Del Spina Properties.

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Table 1
SOUTH-CENTRAL KENTUCKY MICROPOLITAN AREAS
DEMOGRAPHIC COMPARISONS
Somerset London Corbin Danville Glasgow
Pulaski Co. Laurel Co. Whitley Co. Boyle Co. Barren Co.
Population
1990 49,489 43,438 33,326 25,641 34,001
2000 56,217 52,715 36,865 27,697 38,033
2005 59,052 57,008 37,971 27,990 39,743
Percent Increase
1990-2005 19.3% 31.2% 13.9% 9.2% 16.9%
Households
1990 18,866 15,585 12,153 9,483 13,136
2000 22,719 20,353 13,780 10,574 15,346
2005 22,167 20,658 13,852 10,749 15,145
Income 2005
Average HH $38,157 $38,213 $31,069 $49,606 $44,070
Median HH 29,247 29,231 23,696 38,117 34,075
Per Capita 14,531 13,946 11,590 19,544 16,932
Sources: U.S. Census; ScanUS; Carlson & Associates 05/09/2006

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Table 2
SOUTH-CENTRAL KENTUCKY REGION
DEMOGRAPHIC COMPARISONS
Laurel County 11 County
Somerset London Pulaski County Region of
Pulaski Co. Laurel Co. Primary Market Influence 1/
Population
1990 49,489 43,438 92,927 261,910
2000 56,217 52,715 108,932 294,934
2005 59,052 57,008 116,060 307,957
% Increase
1990-2005 19.3% 31.2% 24.9% 17.6%
Households
1990 18,866 15,585 34,451 13,136
2000 22,719 20,353 43,072 15,346
2005 22,167 20,658 42,825 116,795
Income 2005
Average HH $38,157 $38,213 $38,189 $33,050
Median HH 29,247 29,231 29,239 25,293
Per Capita 14,531 13,946 14,244 12,708
1/ The 11 county region of influence includes: Casey, Clinton, Knox, Laurel,
Lincoln, McCreary, Pulaski, Rockcastle, Russell, Wayne, and Whitley counties.
Sources: U.S. Census; ScanUS; Carlson & Associates. 05/09/2006

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Somerset London Corbin Danville Glasgow
Pulaski Co. Laurel Co. Whitley Co. Boyle Co. Barren Co.
Retail Sales - Total
1997 $543,286 $499,830 $275,640 $301,751 $355,477
2002 677,481 711,993 434,416 359,932 447,407
Percent Increase 24.7% 42.4% 57.6% 19.3% 25.9%
Retail Sales 2002
By Store Category
Shoppers Goods 1/ $201,797 $217,830 $78,052 $150,206 $110,568
Food Stores $71,229 $64,822 $64,505 $39,167 $61,896
Sporting Goods $6,604 $5,972 $4,998 $4,487 $1,828
Gasoline Stations $57,923 $115,369 $72,959 $23,568 $55,451
Accommodation and Food
Service
Accommodation $5,172 $10,465 $7,563 $4,043 $9,183
Food Service &
Drinking Places $48,081 $39,924 $48,375 $36,974 $50,537
1/ Shoppers goods stores include: General merchandise; Clothing & clothing accessories;
Sporting goods, hobby, book, and music; Furniture and home furnishings; & Electronics and appliance stores.
Sources: U.S. Census of Retail Trade 1997, 2002; Carlson & Associates. 05/09/2006

Table 3
SOUTH-CENTRAL KENTUCKY MICROPOLITAN AREAS
RETAIL SALES
(000's)

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Table 4
SOUTH-CENTRAL KENTUCKY REGION
RETAIL SALES
(000's)
Laurel County 11 County
Somerset London Pulaski County Region of
Pulaski Co. Laurel Co. Primary Market Influence 1/
Retail Sales - Total
1997 $543,286 $499,830 $1,043,116 $2,036,015
2002 677,481 711,993 1,389,474 $2,638,557
Percent Increase 24.7% 42.4% 33.2% 29.6%
Retail Sales 2002 - By Category
Shoppers Goods 2/ $201,797 $217,830 $419,627 $683,330
Food Stores $71,229 $64,822 $136,051 $368,347
Sporting Goods $6,604 $5,972 $12,576 $21,199
Gasoline Stations $57,923 $115,369 $173,292 $426,013
Accommodations & Food Service
Accommodations $5,172 $10,465 $15,637 $35,345
Food Service &
Drinking Places $48,081 $39,924 $88,005 $193,909
1/ The 11 county region of influence includes: Casey, Clinton, Knox, Laurel, Lincoln,
McCreary, Pulaski, Rockcastle, Russell, Wayne, & Whitley.
2/ Shoppers goods stores include: General merchandise; Clothing & clothing accessories;
Sporting goods, hobby, book, and music; Furniture and home furnishings; & Electronics and appliance stores.
Sources: U.S. Census of Retail Trade 1997, 2002; Carlson & Associates. 05/09/2006

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Pulaski Laurel 11 County
County Region 1/
Work Force
1990 23,078 18,445 109,104
1995 24,184 21,502 118,119
2000 25,634 25,106 127,031
2001 26,605 24,844 129,908
2002 26,298 24,692 129,660
2003 26,678 25,384 131,196
2004 26,661 25,881 131,895
Percent Increase
1990-2004 15.5% 40.3% 20.9%
Employment
1990 21,086 17,101 100,215
1995 22,864 20,011 110,372
2000 24,518 23,077 119,950
2001 24,826 23,404 121,432
2002 24,420 23,290 120,851
2003 24,858 23,689 121,763
2004 25,293 24,783 124,611
Percent Increase
1990-2004 20.0% 44.9% 24.3%
Unemployment
Rate
1990 8.6% 7.3% 8.1%
1995 5.5% 6.9% 6.6%
2000 4.4% 8.1% 5.6%
2001 6.7% 5.8% 6.5%
2002 7.1% 5.7% 6.8%
2003 6.8% 6.7% 7.2%
2004 5.1% 4.2% 5.5%
1/ The 11 county region of influence includes Casey, Clinton, Knox, Laurel, Lincoln,
McCreary, Pulaski, Rockcastle, Russell, Wayne, & Whitley.
Sources: Workforce Kentucky - Labor Market Statistics; Carlson & Associates. 05/09/2006

Table 5
WORK FORCE, EMPLOYMENT, AND UNEMPLOYMENT TRENDS
PULASKI, LAUREL, AND ELEVEN COUNTY REGION
1990- 2004

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SOUTH-CENTRAL KENTUCKY REGION
2002 Sales
1997 2002 1997 2002 Change Per Establ.
Pulaski County 9 10 $4,121 $5,172 25.5% $517
Laurel County 11 13 $6,670 $10,456 56.8% $804
11 County Region 2/ 62 63 $31,970 $34,809 8.9% $553
Number Sales (000's) 2002 Sales
1997 2002 1997 2002 Change Per Establ.
Pulaski Co. 73 71 $41,289 $48,081 16.4% $677
Laurel Co. 53 52 $44,206 $39,324 -11.0% $756
11 County Region 2/ 308 307 $161,750 $183,667 13.5% $598
Number Sales (000's) 2002 Sales
1997 2002 1997 2002 Change Per Establ.
Pulaski Co. 60 57 $54,980 $57,923 5.4% $1,016
Laurel Co. 43 40 $79,109 $115,369 45.8% $2,884
11 County Region 2/ 245 249 $305,692 $383,623 25.5% $1,541
1/ Accommodations consist primarily of hotels and motels but include RV parks and campgrounds.
2/ The 11 county region of influence includes Pulaski, Laurel, Lincoln, Casey, Clinton, Knox,
McCreary, Rockcastle, Russell, Wayne, & Whitley.
3/ Between 67-85% of the gasoline service stations include convenience grocery.
Sources: U.S. Census Bureau, 1997and 2002 Economic Census - Retail Trade;
Carlson & Associates. 05/08/2006

Table 6
HIGHWAY ORIENTED RETAIL USES
1997 and 2002
ACCOMMODATIONS AND FOOD SERVICE AND DRINKING PLACES
GASOLINE SERVICE STATIONS
Gasoline Service Stations 3/
Accommodations 1/
Number Sales (000's)
Food Service and Drinking Places

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Table 7
2005 POPULATION COMPARISONS
25, 40, AND 50 MILE RADII
CABELA'S, BASS PRO, AND GANDER MOUNTAIN EXISTING STORES
25 Miles 40 Miles 50 Miles
Proposed Site I-66 & KY 80 178,332 365,009 551,715
Cabela's
Sidney, NE 11,765 41,921 50,196
Mitchell, SD 29,465 48,762 86,503
Prairie du Chien, WI 52,830 133,053 326,910
Kearney, NE 60,416 127,416 191,117
East Grand Forks, MN 82,963 111,550 140,746
Bass Pro
Islamorado, FL 21,244 142,996 501,745
Columbia, MO 219,870 357,841 419,683
Gander Mountain
Bemidji, MN 51,002 78,967 97,743
Marquette, MI 62,028 74,052 86,164
Baxter, MN 78,893 137,884 194,754
Mankato, MN 127,641 298,016 568,085
Traverse City, MI 144,555 223,577 291,546
Paducah, KY 147,175 274,317 448,860
Eau Claire, WI 186,270 259,642 365,341
Terre Haute, IN 191,714 342,591 533,413
Williamsport, PA 209,207 405,094 600,939
Salisbury, MD 243,457 451,943 596,386
In Bold - Most comparable population with I-66 KY Site.
Sources: Carlson & Associates and ScanUS. 05/08/2006

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MAP 1
SOUTH-CENTRAL KENTUCKY REGION
Carlson & Associates 05/2006
MAP 2
TRAFFIC COUNTS 2004
SOUTH-CENTRAL KENTUCKY REGION
Carlson & Associates 05/2006

 

 

 

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