Council Communication Office of the City Manager	Date	May 18, 2009
	Agenda Item No. 44 Roll Call No. 09- Communication No. 09-317 Submitted by: Matt Anderson, Economic Development Administrator

AGENDA HEADING:

Approving Urban Renewal Development Agreement with Nelson Development, LLC (Jake Christensen, Co-Manager, 1045 76^th Street Suite 2000, West Des Moines, IA 50266) for renovation of property at 328 SW 5^th Street.

SYNOPSIS:

Nelson Development, LLC has proposed an $11.6 million conversion of the property at 328 SW 5^th Street, also known as the Hawkeye Transfer Building, from an historic warehouse to 70 market-rate apartment units with 57 underground and covered parking spaces.

FISCAL IMPACT:

Amount: $161,788.20 annually for a period of 10 years (payment stream has a net present value of $1.05 million or 9% of total project costs). Payment will commence on the issuance of a certificate of completion, after July 1, 2010.

Funding Sources: Metro Center Urban Renewal Area tax increment, Account 528190, Fund SP370, Org FIN909105, FY10 Operating Budget, page 115.

ADDITIONAL INFORMATION:

The building was constructed in 1912 as a warehouse for the Hawkeye Transfer Company. It was designed by Architects Proudfoot, Bird, Rawson and Souers -who also designed City Hall. The building was briefly occupied by Brown Camp Hardware in 1920, enlarged in 1925 by Great Atlantic & Pacific Tea Company and later occupied by Firestone Rubber Company. This project has several construction challenges to convert the space for residential use.

Parking

The garage space will have ingress and egress points along the south side of the building. In order to accommodate the proposed 57 parking spaces, there will be construction of two ramps: one going down into the basement of the building and one ramp to go up 40 inches to the first floor level. This includes the underpinning, shoring and excavation for ramp construction to below-grade parking and the removal of 36” structural columns and footings.

Building

In order to bring the building up to code, the building will need to undergo construction of a new elevator and stair shafts, which consist of cutting a seven story shaft into existing 18” thick floors, on all levels. It also includes the installation of a new elevator pit, jack hole and new shaft inside the existing building, new electrical and plumbing services throughout the entire building and updating the existing sump pit and piping.

Due to the condition of the seven-story building, additional work includes the exterior repair of stucco finish, spalling on all three sides, the repair of the deteriorating brick parapet, asbestos abatement and restoring all the window openings to original condition.

This project is eligible and will apply for 10-year 100% tax abatement, which will enable the project to meet its debt-service coverage ratio. This is particularly critical given the current state of capital markets and the overall lending environment. Other funding sources include the use of State and Federal Historic Tax Credits and Enterprise Zone Credits.

PREVIOUS COUNCIL ACTION(S):

Date: March 23, 2009

Roll Call Number: 09-473

Action: Preliminary Preliminary terms of agreement with Nelson Development 25 SW 5^th LLC for redevelopment of 328 SW 5^th Street (Hawkeye Transfer Building). (Council Communication No. 09-167) Moved by Hensley to receive, file and approve preliminary terms of agreement set forth in the accompanying Council Communication and to direct the City Manager to proceed with negotiation of formal agreements with Nelson Development 25 SW 5^th LLC consistent with the terms set forth in the accompanying Council Communication. Motion Carried 5-2.

BOARD/COMMISSION ACTION(S):

Date: March 17, 2009

Roll Call Number: N/A

Action: The Urban Design Review Board approved financial assistance and final project design as presented. Motion carried 6-0.

ANTICIPATED ACTIONS AND FUTURE COMMITMENTS:

City Council consideration of a State of Iowa Enterprise Zone application.

For more information on this and other agenda items, please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office on the second floor of City Hall, 400 Robert D. Ray Drive. Council agendas are available to the public at the City Clerk’s Office on Thursday afternoon preceding Monday’s Council meeting. Citizens can also request to receive meeting notices and agendas by email by calling the Clerk’s Office or sending their request via email to cityclerk@dmgov.org.