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Date
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August 20, 2007
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Agenda
Item No. 71 Roll
Call No. 07- Communication No. 07-517
Submitted by: Matthew A. Anderson, Economic Development
Administrator |
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AGENDA
HEADING:
Approving
preliminary terms of agreement with Joe’s Square LLC for development of a
mixed-use project to be located at
SYNOPSIS:
Recommend
approval to direct the City Manager to proceed with negotiations and final
document preparation with Joe's Square LLC (Joe Giudicessi, President,
The project will
feature 10,900 sq.ft. of retail space on the ground level and 10,900 sq.ft. of
office space on the second level. Each
floor consists of 5 bays that may be combined to suit the tenants’ needs. The location was previously the site of a
one-story retail building constructed in 1942.
The improvements had seen decreasing assessed values since peaking in
1999. The building was demolished
earlier this year.
The City
Manager’s Office has been working with the development team to identify a
strategy to fill the project’s financing gap.
At Council’s direction on November 6, 2006, staff has been working to
draft an urban renewal plan for Beaverdale that would allow the use of tax
increment financing. The plan is well
underway and will be presented for Council consideration later this year. However, Joe’s Square is nearly ready to
break ground and any further delay in waiting for completion of the urban
renewal plan will force the developer to delay construction until spring of
2008. In order to facilitate timely
construction of this project, it is recommended that the economic development
assistance presented below move forward with an alternative funding source: the
Economic Development Enterprise Account. These funds will then be repaid
through the project’s tax increment should Council approve the urban renewal
plan when it is presented at a later date.
Should Council elect not to approve the urban renewal plan, the Economic
Development Enterprise Account will not be repaid.
FISCAL
IMPACT:
Amount:
An economic development grant is proposed in 7 annual installments of
$50,000. Grant payments will begin after
the project has paid its first fully assessed property tax installment
(typically 18 months following construction completion).
Funding
Source: Fiscal Year 2007-08 Operating Budget, City Manager’s
Office, Economic Development Enterprise
Account, SP743 CMO980717 Account 528190, page 87. At an upcoming meeting,
Council will be asked to act on the proposed Beaverdale Commercial Area Urban
Renewal Plan. Should this plan be
approved, the Economic Development Enterprise Account will be repaid in 7
annual installments of $50,000 through project-generated tax increment.
ADDITIONAL
INFORMATION:
Joe’s Square
represents the type of in-fill neighborhood commercial development the City
Council set forth it its Goal Statements adopted October 23, 2006. The building will provide new opportunities
for businesses wishing to establish themselves in
The building
will be constructed primarily of brick in keeping with the “Beaverdale Brick”
theme. The 2-story steel frame building
is pulled to both streets to continue the pedestrian corridor common to
Beaverdale’s retail core. An arched
entry off Beaver responds to this pedestrian nature of the neighborhood and
directs visitors to the elevator lobby access to the second floor office. The retail bays are book-ended with masonry
piers that are the full height of the building.
Between these piers at the office level, the punched window openings
reflect traditional architecture. Each
retail tenant will have the opportunity to present a unique presence on the
street through storefront design and the use of canopies. A drive thru on the north end is planned for
a coffee shop at this location.
The project’s
financial gap is primarily attributable to the high quality building materials
and the cost of such construction versus the market rents in the
neighborhood. Similar new office space
in suburban projects achieves rental rates that are $2 - $4 per square foot
higher than those projected at Joe’s Square.
The following
Sources and Uses statement provides greater detail into the project’s
financing.
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Sources |
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Uses |
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$
678,946 |
Developer
Equity |
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$
535,000 |
Land |
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$ 2,120,000 |
Bank Loan |
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$ 2,125,859 |
Hard
Construction Costs |
|
City Assistance |
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$
194,950 |
Tenant Improvement Allowance |
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$
91,559 |
Architecture
and Engineering |
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$ 3,148,946 |
Total Sources |
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$
91,578 |
Brokerage fees
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$
90,000 |
Financing
charges |
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$
20,000 |
Developer
Overhead |
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$ 3,148,946 |
Total Uses |
This financing
structure will allow the project to achieve a 1.2 debt coverage ratio required
by the permanent lender.
It is
anticipated that the new project will generate approximately $90,000 per year
in new property tax increment.
PREVIOUS
COUNCIL ACTION(S):
Date:
March 26, 2007
Roll Call
Number: 07-579 thru 07-581
Action: On request from Joe’s Square, LLC, to rezone
property at
(A)
First consideration of ordinance above.
Moved by Vlassis that this ordinance be considered and given first vote
for passage. Motion Carried 7-0.
(B)
Final consideration of ordinance above, (waiver requested by applicant),
requires 6 votes. Moved by Vlassis that the rule requiring that an ordinance
must be considered and voted on for passage at two Council meetings prior to
the meeting at which it is to be finally passed be suspended, that the
ordinance be placed upon its final passage and that the ordinance do now pass,
#14,638. Motion Carried 7-0.
Date:
March 12, 2007
Roll Call
Number: 07-455
Action: On request from Joe’s Square, LLC, to rezone
property at 4049 Fagen Drive from “C-2” (General Retail and Highway Oriented
Commercial) to “NPC” (Neighborhood Pedestrian Commercial) to allow for
mixed-use pedestrian-oriented redevelopment, (3-26-07). Moved by Mahaffey to adopt. Motion Carried 6-1.
Date:
November 6, 2006
Roll Call
Number: 06-2248
Action: Communication from William J. Lillis
requesting City Council to consider initiating a Tax Increment Financing (TIF)
District in the Beaverdale area.
SPONSORS: Coleman and
Vlassis. Moved by Vlassis to refer to
City Manager for review and recommendation.
Motion Carried 6-0.
BOARD/COMMISSION
ACTION(S):
Date:
March 1, 2007
Roll Call
Number: N/A
Action: Plan and Zoning Commission recommends
approval of a request from Joes’s Square, LLC to rezone property located at
ANTICIPATED
ACTIONS AND FUTURE COMMITMENTS:
- Urban Design Review Board review and
recommendation on project design and financing
- City Council consideration of the
Beaverdale Commercial Area Urban Renewal Plan
- City Council consideration of the
final Joe’s Square Development Agreement