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Home My WebLink About09-09-2008 Council Economic Development CommitteeAGENDA City of Iowa City City Council Economic Development Committee Tuesday, September 9, 2008 9:00 a.m. Lobby Conference Room Iowa City City Hall 1. Call to Order 2. Consider approval of the Minutes of the August 5, 2008 Economic Development Committee meeting 3. Consider Sheraton Hotel Request 4. Staff time 5. Committee time 6. Adjournment MINUTES draft CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE August 5, 2008 CITY HALL, LOBBY CONFERENCE ROOM,8:00 A.M. Members Present: Regenia Bailey, Matt Hayek Staff Present: Wendy Ford Others Present: Nancy Quellhorst, Chamber of Commerce, Kevin Digmann, Hodge Commercial Management, Kirsten Frey, attorney for Hodge Commercial Management, Gigi Wood, Corridor Business Journal, Gregg Hennigan, Cedar Rapids Gazette RECOMMENDATIONS Hayek moved to recommend the 3rd Amendment to the Sycamore Mall Development Agreement. Seconded by Bailey. Carried 2-0 (Champion absent). CALL MEETING TO ORDER: Chairperson Regenia Bailey called the meeting to order at 8:06 A.M. CONSIDER APPROVAL OF THE MINUTES OF THE MAY 30 AND JUNE 10, 2008 ECONOMIC DEVELOPMENT MEETINGS.: Hayek moved to approve the minutes of the May 30 and June 10, 2008 meetings as presented. Bailey seconded. Motion carried 2-0 (Champion absent). CONSIDER AMENDMENT TO SYCAMORE MALL DEVELOPMENT AGREEMENT.: Ford reviewed the memo included in the packet with the proposed 3` amendment to the Development Agreement for Sycamore Mall. She explained the original agreement requires the owners to get prior consent from the City for transfer of ownership in the project. The memo detailed the sequence of ownership from the original development entity, which was first amended in March 2004, to a group of individual L.C.'s; amended for a second time in May 2004 when the group of individuals bought out one of the partners, to the present. Kevin Digmann explained that the prospective new owners, Core Investors, would retain Hodge Commercial Management to continue to manage and operate the Mall. Hodge will also continue to be responsible for the final two TIF certifications and that the project is meeting the criteria set forth in the original development agreement. Digmann noted that Hodge Management will remain the recipient of the TIF rebates in June 2009 and 2010. He noted that Hodge's desire was never to be long-term mall owners, but rather, investors in the community. This sale would further enable the company to continue investment in new projects the community. There was discussion about Hodge remaining the recipient of the TIF rebates instead of the new owners, to which Hodge replied, that had been negotiated in with the sale price of the mall. The final two rebates in June of 2009 and June of 2010 will be for taxes paid on assessment in the years of January 2007 and January 2008. Ford noted that with five of seven years complete in the agreement, the project has largely achieved the City's goals. Property values of the mall have increased more than $10 million since 2000, the mall has achieved targeted occupancy and has just re -signed a 5-year lease with the anchor, Von Maur. She noted that the Development Agreement was for a 7 year TIF rebate requiring a minimum of 15% increase in property value, maintaining a 40,000 square foot anchor store, at least 80% occupancy rate and full payment of all property taxes due. Economic Development Committee Meeting June 10, 2008 Hayek noted his approval, saying that he likes the idea of local dollars staying local and new investment being made in the community. Hayek moved to recommend the 3rd Amendment to the Sycamore Mall Development Agreement. Seconded by Bailey. Carried 2-0 (Champion absent). CONSIDER REQUEST FOR AMENDMENT TO GLUTEN EVOLUTION CDBG LOAN.: Ford reviewed the request from Breads by Anna/Gluten Evolution to amend her CDBG loan which was executed in September, 2007. The company requests that the original loan amount of $50,000 for working capital at 3% be reduced to a 0% interest. Staff asked for another set of financial statements to review in order to make a recommendation. Based on those financials, the business seems to be healthy, increasing 22% over the last year. Liabilities exceed assets and the owner is looking for ways to reduce expenses in order to support an expansion. The average monthly interest on the CDBG loan over the length of the loan at 3% is $65 per month. In staffs opinion, the monthly savings gained in reducing the rate to 0%, would still not support a large expansion loan. Further, the rate is already favorable. There was further discussion that the owner may be seeking to expand outside the Iowa City city limits because she has not found a viable Iowa City location that is affordable. In staff's opinion, lowering the interest rate might be worth considering if we could ensure the business remain in Iowa City, but the owner was not willing to make the commitment, so staff recommends against considering this request. Hayek agreed saying that Gluten Evolution signed an agreement less than a year ago and is not in favor of making any changes to that agreement. STAFF TIME: Ford briefly described the status of the Flood Recovery Loan Program. Of the $75,000 Loan funds, $66,900 had been disbursed to 15 companies. The review committee will meet again tomorrow which will likely be the last meeting, as the funds will likely be used up with the applications reviewed at that meeting. Jeff Davidson asked Nancy Quellhorst how collection and distribution of the Chamber's flood recovery donations was to be conducted. Quellhorst said the funds would be divided between Iowa City and Coralville businesses based on need. The need could be determined by total dollars or number of businesses affected and the Chamber has elected to use the number of businesses actually flooded. In Iowa City, those number 50, and when asked by Bailey what the comparable number in Coralville is, Quellhorst reported 125 businesses with direct flood damage Hayek commented that the Iowa City funds were distributed efficiently and effectively and appear to have accomplished the goal of helping local businesses get back on their feet efficiently as well. COMMITTEE TIME: none ADJOURNMENT: Hayek moved to adjourn the meeting at 8:45 a.m. seconded by Bailey, meeting adjourned. Economic Development Committee Meeting June 10, 2008 Council Economic Development Committee ATTENDANCE RECORD 2008 TERM Lv w w cr, rn w NAME EXP. cn co M � N o o Regenia 01/02110 X X x X X X X X Bailey Matt 01102110 X X X X X X X X Hayek Connie 01/02/10 X X x x X X O/E O/E Champion Key: X = Present O = Absent O/E = Absent/Excused r CITY OF IOWA CITY MEMORANDUM Date: September 5, 2008 To: City Council Economic Development Committee From: Wendy Ford Ot__ Re: Sheraton Hotel Req ues Recall that at the May 30, 2008 Economic Development Committee meeting you discussed the Sheraton's three point request of: • Providing the Hotel with 80 parking spaces at market rate • Vacating the public easement through the interior of the building, and • Providing funding for improvements to the Dubuque Street Walkway, You approved of the parking request but not the vacation of the easement through the building. Tied to the vacation of the easement was their request to share in the costs of the improvements to the exterior walkway. You also indicated your willingness to hear other possibilities for the easement area and the improvements to the walkway which is what we are discussing today. The hotel has refined their request to address mutual public safety concerns and the enhancements of the interior and exterior passageways through and around the west side of the hotel. They request the following: 1) The ability to control access to the lobby vestibule in the night time hours, 2) A vacation of a portion of the interior easement in exchange for the exterior easement property which they own, and 3) Sharing in the costs of enhancing the exterior easement. Details of this request 1) The hotel has revised their proposed lobby and restaurant floor plans around the fact that an interior public easement must remain through the hotel. In order to enhance their lobby and restaurant capacities and to secure the safety of their property, the public, the hotel guests and the hotel employees, the hotel requests the ability to restrict access to the lobby vestibule and provide access for hotel staff and guests only during the hours of 10 p.m. to 6 a.m. They emphasize the following points: • This is a security and public safety issue for all. • Provides a safer environment for hotel guests and employees. • Eliminates/reduces incidents of raucous activity that routinely take place in the vestibule by party -goers and other non -guests who congregate in the breezeway. • During these "after-hours" times, only hotel employees and guests (with the use of room key) would be allowed entry to the lobby vestibule after 10 p.m. • Lobby vestibule will still be available during "school and business" hours. • Does not inconvenience retailers, citizens or residents in off business hours. • Easy and safe access to the Pedestrian Mall remains available through the exterior easement 24/7. September 5, 2008 Page 2 2) The hotel also requests the City vacate a portion of the interior easement to be more closely aligned with actual the traffic flow in the vestibule and to permit them to expand the existing lobby and to provide climate control and thus, energy efficiency in the vestibule. They want to own the property on which they make improvements to the lobby. They propose that the interior easement be redefined from a width of approximately 25 ft to approximately 12 ft (which is consistent with the narrowest point of the easement between the Dubuque St. parking ramp and the Ped Mall.) This would allow for the hotel to expand the relatively small lobby space and ease congestion in the lobby, thus improving the sense of arrival and attractiveness of the hotel. They emphasize the following points: Still provides ample width for covered and climate controlled access to the Pedestrian Mall and Dubuque St. during school and business hours while discouraging loitering and large group congregation. Narrows the distance between hotel lobby and restaurant/meeting space area. This provides for (1) a better hotel experience for the out-of-town visitor and for group/social business that Iowa City needs to regain from business lost to Coralville and (2) a more seamless transition from the guest rooms to the food and beverage areas. The hotel intends to relocate the ATM and remove the bank from the lobby vestibule. They desire to forego rental income from the bank branch in order to create a better lobby experience in an effort to improve the overall guest experience and attractiveness of the hotel, which helps attract more visitors and group business to Iowa City. 3) In exchange for the City agreeing to vacate a portion of the interior easement, the hotel proposes to convey to the City the exterior walkway (between the hotel and adjacent building immediately to the west) in return for the City's commitment to provide funding for improvements for a proposed extended -covered walkway. They propose to deed to the city the land between the hotel building and Martini's Bar to address the city's interest in upgrading the exterior walkway. They emphasize the following points: • The proposed design provides a covered and lighted walkway from the Pedestrian Mall through the easement area and all the way to the Dubuque St. Parking Garage. • The City and Hotel would share input on design elements of the exterior enhancements. • Allows for the City to pay for an enhanced covered pathway over the exterior easement on land it would now control. • This idea is a response to comments by the Mayor in an Economic Development meeting about wanting to control the design of the enhancements to the walkway. • Allows for the City to aesthetically improve access to and visibility of the Pedestrian Mall, further validating the City's $40 million investment in revitalizing its downtown. Staff Recommendation Staff recommends allowing for the lock -off of the vestibule between the overnight hours of 11 p.m. and 6 a.m. to better ensure public safety. The creation of this walkway in the 1980s, when the hotel was built was unique and it was unknown at the time if it would be successful. It was an experiment and has proven problematic for the community, for the hotel, and for hotel visitors in the ensuing years. The 11 p.m. to 6 a.m. lock -off would be contingent upon enhancements to the Dubuque Street Walkway from the Pedestrian Mall through the exterior easement, across the front of the hotel and into the Dubuque St. Parking Ramp. These enhancements would include lighting, architectural features that would emphasize the walkway, way -finding signage and the addition of public art. September 5, 2008 Page 3 In order to create a better guest environment, the hotel desires to increase the size of the lobby and improve the amenities within in it. It is reasonable that they would not want to make these investments on property encumbered with a public easement, so staff also recommends vacating a portion of the public easement to enable this property improvement. The vacation would shrink the easement to a 12 foot width. The improvements made would add to the valuation of the property and thus, increase property tax revenues to the City. Staff recommends against the City owning the exterior easement, primarily due to the property tax implications of adding to publicly -owned property. Instead of the ownership of the property, staff ,recommends the City's participation in a 50%-50% cost -sharing of the expenses to enhance the walkway, which have been roughly estimated at $250,000 to $300,000 and with City design input and approval. These improvements would be completed after the Lobby and interior walkway improvements were completed by the hotel. This would facilitate construction in the Lobby and interior spaces while allowing for pedestrian passage through the existing exterior walkway. When the Lobby and interior spaces were completed, the cost -shared improvements to the exterior walkway could begin. In summary, the City's approval to allow the hotel to lock -off the vestibule, to vacate a portion of the Dubuque Street easement and to share in the expenses of enhancing the exterior walkway provides the following public benefit: • Increased public safety • Higher property value due to improvements • Increased visitor experience, increased hotel occupancy and resulting increase in hotel tax revenues to the City • A better exterior walkway with more lighting and coverage • Improved aesthetic appeal from the Pedestrian Mall and from the south side of the Hotel. Let's discuss these recommendations at the meeting on the 9tn U in o 8 �� U rn vV � �P� 3 Qvrani m ��aN p o y ti ^$ig N N O O .1�\ '� a „1 .: OC •• Il.. 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