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HomeMy WebLinkAbout11-08-2011 Council Economic Development CommitteeAGENDA City of Iowa City City Council Economic Development Committee Tuesday, November 8, 2011 8:00 a.m. Lobby Conference Room City Hall 1. Call to Order 2. Consider approval of the October 18, 2011 Economic Development Committee meeting minutes 3. Discuss possible disposition of three City -owned properties 4. Clarification of addition to economic development process and policies 5. Staff time 6. Committee time 7. Adjournment EDC October 18, 2011 1 MINUTES DRAFT CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE OCTOBER 18, 2011 LOBBY CONFERENCE ROOM, 8:00 A.M. Members Present: Regenia Bailey, Matt Hayek Members Absent: Susan Mims Staff Present: Wendy Ford, Jeff Davidson, Tom Markus Others Present: Jody Hovland, Jennifer Holan RECOMMENDATIONS TO COUNCIL: Hayek moved to recommend the FY13 funding request from Riverside Theater as discussed. Bailey seconded the motion. Motion carried 2-0; Mims absent. CALL MEETING TO ORDER: The meeting was called to order by Chairperson Bailey at 8:00 A.M. CONSIDER APPROVAL OF THE MINUTES OF THE SEPTEMBER 20, 2011, ECONOMIC DEVELOPMENT COMMITTEE MEETING: Hayek noted that the discussion concerning Lorenz 2.0 at the last meeting should note that he abstained from the discussion. Hayek moved to accept the September 20, 2011, meeting minutes as amended. Bailey seconded the motion. Motion carried 2-0; Mims absent. CONSIDER A RECOMMENDATION FOR FY13 FUNDING FROM RIVERSIDE THEATER: Ford addressed the Members, noting that staff from Riverside Theater are present. She stated that Riverside has submitted a request for funding for the next three fiscal years, in a declining amount of $30,000, for FY13, then $25,000 and $20,000 for the following two fiscal years. Ford noted in her report the economic impacts that have affected Riverside Theater. She noted that this is a critical time for the organization, as they consider positioning the theater for permanent location. Ford related some of the positive influences on the community, and wrapped by stating that staff is recommending this declining -amount request. Riverside Theater staff thanked the Committee for their consideration, noting they are proud to have produced professional theater in Iowa City for the past 31 years and look forward to the ensuing 30 years. Hayek asked Ford where the Economic Development fund stands currently. She noted that the current balance is around $196,000. Davidson and Ford then responded to Members' questions regarding the fund and the upcoming budget cycle. Bailey asked Riverside staff how they believe the situation will change in those three years, and staff responded that they believe expanded marketing will work in increasing their audiences. EDC October 18, 2011 2 Hayek moved to recommend the FY13 funding request from Riverside Theater as discussed. Bailey seconded the motion. Motion carried 2-0; Mims absent. DISCUSS FORMALIZATION OF ECONOMIC DEVELOPMENT PROCESSES AND POLICIES: Davidson began the discussion, noting that this recommendation will help to formalize the processes and policies that staff use when working on economic development projects. He stated that it will be helpful in setting expectations for those who make application to the City for financial assistance. Davidson then began a review of what staff is recommending for the Economic Development processes and procedures. He reviewed a 4-step internal process highlighting specifics milestones. Bailey asked how staff is handling the confidential aspect of such requests, and at what point such information becomes public. Davidson responded, noting that staff works with an outside contractor and follows confidential guidelines in these cases. Discussion ensued with Davidson noting under Step 2, that staff evaluates projects by looking at such criteria as whether or not the proposed project will enhance or harm the image and/or reputation of the City. Bailey asked for an example, and Davidson gave the example of the difference between a steel mill and a foundry and that a steel mill would be less desirable and a foundry more desirable environmentally. Explaining Step 3, Davidson noted this is the point at which staff begins to obtain critical information about the company making the request. Step 4 covers performance measures, according to Davidson. One important point that staff has to impart to businesses and developers seeking City assistance is that there is no entitlement to these funds. Bailey asked for clarification on Step 2, noting that it states the evaluation stage information will be taken to the Economic Development Committee for discussion. She asked if this was going to happen early on, noting that she doesn't believe this is the right spot in the process for EDC's review. Davidson added that one change here is the increased involvement by the City Manager's office in this step. This would then change the process somewhat, with information coming to the EDC at a later time. Davidson then began a discussion of those items needing the EDC's guidance, as staff finalizes policy recommendations. The first issue covered is the idea of a 'TIF generator.' Davidson noted that the City of Madison, Wisconsin recommends a policy granting no more than 50% of the TIF increment created by a project to the developer, and reiterated this would be desired, but not necessarily a requirement. Requiring a minimum 'developer equity' was discussed next. Davidson noted that typically the City has funded TIF projects in the range of 20 to 25% of project cost, and that staff recommends that the developer have at least a 50% equity investment in the project. Equity may be in the form of financing. The fourth item for which staff is requesting EDC's direction is in determining what type of projects may be eligible to receive TIF assistance. Discussion ensued. Davidson noted that staff will finalize this document and bring it to a full Council work session for further review. He then EDC October 18, 2011 3 responded to questions about the Plaza Towers' project and the successful TIF assistance there. STAFF TIME: Davidson noted that he hopes to be able to make some announcements soon about upcoming projects. He added that the design for the north wastewater treatment plant is coming along nicely. He stated that staff has been meeting with developers weekly over the Riverfront Crossings area. The interest in the Towncrest redevelopment is also going well. Davidson continued, noting that the Hieronymus Square project is showing some movement again. Ford spoke briefly the much publicized survey done recently, adding that they should have a final report in the coming weeks. COMMITTEE TIME: None. ADJOURNMENT: Hayek moved to adjourn the meeting at 8:45A.M. Bailey seconded the motion. Motion carried 2-0; Mims absent. EDC October 18, 2011 4 Council Economic Development Committee ATTENDANCE RECORD 2011 TERM N � rn NAME EXP. o w Regenia 01/02/11 X X X X X Bailey Matt 01/02/11 O X X X X Hayek / E Susan 01/02/11 X X X X O/ Mims E Key: X = Present O = Absent O/E = Absent/Excused r 1Y, .p CITY OF IOWA CITY 110 Ott cm - 1 MEMORANDUM Date: November 3, 2011 To: City Council Economic Development Committee From: Jeff Davidson Re: Agenda Item 3: Discuss possible disposition of three City -owned properties At the November 8 Economic Development Committee meeting, staff would like to discuss the possible disposition of three City -owned properties for the purpose of enabling economic development projects. All of the properties are in safe and sanitary condition, but also meet the state's definition of slum and blight. All have significant potential for increasing the taxable value of the sites. The discussion on November 8 is intended for the EDC to give an indication of whether or not you concur with staff moving forward with the disposition of these parcels. Each site is likely to involve a Request for Proposal (RFP) document and may involve the City having a role in providing financial incentives. We would intend to complete the RFP process for each site consistent with state TIF law and in an open, public process. The discussion of the disposition of City property always starts with the question of whether or not the property is needed for City purposes. In the information which follows, we will attempt to answer this question for each of the parcels under consideration. The question must also be asked of whether or not City use of a particular piece of property is the most appropriate use, or if there are other alternative sites available. There has been significant interest expressed by the private sector in each of the parcels presented in the information below. It is important for us to acknowledge in these difficult economic times that it is important for the City to be increasing the property tax base to the greatest degree possible. All of the parcels under consideration would have a significant commercial property tax value if redeveloped, and this should be a factor in your discussion. Multi -use parking facility at intersection of Court Street and Linn Street. Proposed concept Riverfront Crossings multi -use parking facility. This location is a blighted parcel which is the former location of St. Patrick's Catholic Church School. You have heard a lot already about this potential redevelopment project which would be constructed in conjunction with a 575-space City - owned parking facility. Shown is a preliminary concept of the public -private partnership project which has been developed over the last six months. The intention is for this concept to be the basis for solicitation of private developer proposals, which will lead to negotiations with a preferred developer and finalization of the concept. What is planned is a mixed -use residential/office/commercial structure to be constructed around a 575-space parking facility. The parking facility would be owned by the City and the remainder November 3, 2011 Page 2 of the structure owned by the private sector. The purpose of this project is to fulfill several policy goals of the City: 1. Increase the parking supply in order to encourage additional development projects downtown and in the Riverfront Crossings District. 2. Create a fagade around the parking facility which will enhance the aesthetics of the neighborhood. 3. Create non -student workforce housing in the downtown/Riverfront Crossings District. 4. Continue to expand office and commercial opportunities in the downtown/Riverfront Crossings District. We have worked with a private development consultant in developing the concept for this project. We believe we can structure a project which has significant potential for a private development partner. It is our hope to issue this RFP yet this calendar year. Northeast corner of the intersection of College Street and Gilbert Street. This corner is actually three properties owned by the City: the former U-Smash-Em property, which is now a surface parking lot, the former Union Bus Station, and the former John Wilson Sporting Goods building. There is also a fourth property which is a substation owned by MidAmerican Energy. When assembled, these four parcels produce a redevelopment site of one -quarter block which is directly adjacent to the 600-space Chauncey Swan parking facility and Chauncey Swan Park on the remaining three quarters of the block. There has been significant interest in this property from the private development community. If a decision is made to go ahead with the marketing of this property, we would expand the City - University (downtown) Urban Renewal District to include this quarter -block and allow the use of Tax Increment Financing as a redevelopment incentive. MidAmerican Energy has indicated to us the mechanism for disposal of their substation property in order to assemble the complete redevelopment parcel. The adjacency of the Chauncey Swan parking facility is a big advantage for the potential redevelopment of this site. There is the obvious question of the impact of the disposal of this property on the remaining City of Iowa City government campus. This campus includes City Hall, the Chauncey Swan parking facility, and the Robert A. Lee Recreation Building. The City is in the midst of a space needs study which will identify both short-term and long-term space needs for all City functions. There are no existing short-range plans for expansion of the municipal government campus in these difficult economic times. The question remains as to whether a prime redevelopment parcel that could have significant property tax generation implications is appropriate for possible future expansion of the City campus. The Recreation Building parking lot and City Hall parking lot provide potential expansion sites for City facilities in the vicinity of City Hall. We are on record with the owners of the Unitarian Church and New Pioneer Co-op properties as to our interest in the acquisition of those properties should they be vacated by their existing uses. There are flood plain issues with the New Pioneer Co-op property. We believe these sites provide ample expansion opportunities for City facilities if the corner of Gilbert and College is sold for redevelopment. For an RFP to be issued for this redevelopment site, we would need to do additional investigation of the former U-Smash-Ern and bus station properties in order to determine if there are any environmental issues. The John Wilson building is being used for storage of City November 3, 2011 Page 3 materials which would have to be relocated. We also have two tenant relationships, one involving parking for the Commerce Center, and the Bike Library in the John Wilson building. We believe the Commerce Center parking can be relocated to the Chauncey Swan parking facility. The Bike Library has been on notice since they began their occupancy that the City's plan is to eventually take down the John Wilson building. Our lease requires them to vacate the property on 60 days notice. Hopefully, a new location can be found for their program. Old Public Works site at intersection of U.S. 611A 1 and Riverside Drive. We are in the process of relocating Public Works and Transit facilities from the old Public Works site on the west side of the Iowa River south of U.S. Highway 6 to the new location south of Napoleon Park on the east side of the Iowa River. This is a long-term plan which is likely to take at least 10 more years to complete. However, we believe a significant redevelopment parcel at the corner, as shown on the attached diagram, could be made ready for redevelopment in the relatively short-term. The proposed redevelopment site would not include the Equipment Division and Transit Division, but would involve the removal and replacement of other less significant facilities. The fueling station is already scheduled to be relocated to the Napoleon Park site in the upcoming year. In order to proceed with this RFP, there would need to be provisions made for the existing City services that would be taken out of service, and additional soils investigation to establish the status of any underground issues. The property which would be marketed for redevelopment is not believed to have significant former landfill issues as does the property further east towards the river. Again, the purpose of the November 8 discussion is to establish if there is motivation to move these potential redevelopment projects forward. There is a great deal of additional study and evaluation to be completed, but we believe the potential property tax benefits to be gained make these very worthwhile projects to consider. We will attempt to answer any comments or questions at the November 8 meeting. Attachments. ppddi r/mem/EDC-3parcel s. doc Scale: 1"=300' CITY OF I0FA CITY N �` Ind 'tow I— _ 4 uc, ,1, � -,,... �t � r ..•�. ��"�"_�....-.�.J It�-'s_>�Rt a'.. Y/ttll ..,Y IAWA. A ... • � �, a.. _ l7r �■ ��.. , a. ' AMC14 s $tit s �E � ©ra t�9 � a n • � � � f •�' t'...� 14i 1 . - a�rr�iiL�TtCi I T f' L_L 7 l of Iz. I_ ::: .. .�... air a • ; , - r i a. w ' - 1 ! �h nN. 31 • • - 1i . r aY _ _ t TE � w rj� i°1 t . �•• . ..� r 91 MR elm An' lJf T tr: I -- t ST r f Zn -. c • ; e � r 'ittrrt�'t r✓« 1— s Atrp a,r meOf iT111110 if fiilfUt f. A f f • `L!� 58 tea.'•`. '��_� �� ��.Ir ♦ �� �i f t ft t SITE LOCATION: Riverfront Crossings Multi -Use Parking Facility at Court/Linn Sts. Scale: I"=200' CITY OF ION CITY NO 0 Ambc- ' f 0I. If ' i ' Ji'fiL lilt, t ok i ,ol, t4 SITE LOCATION: Southeast Corner of Riverside Dr. and Hwy. 6 CITY OF IOWA CITY MEMORANDUM To: City Council Economic Development Committee From: Wendy Ford, Economic Development Coordinator'; Date: November 2, 2011 Re: Agenda Item 4: Clarification of addition to economic development process and policies Since the EDC meeting on October 18, 2011 when you discussed a Formalization of Economic Development Policies, we have been advised that the City's Bond Counsel strongly recommends developers secure any upfront TIF incentives with Urban Renewal Revenue Notes. An Urban Renewal Revenue Note is a form of debt security issued by a lender on the premise that future revenues (tax increment, in this case) will be sufficient to meet repayment obligations. This type of security can be used in providing public financial assistance where immediate investment capital is required to begin a large project. This type of security is repaid with future expected property tax revenue from the completed project. So, we've added a fifth criterion for evaluating TIF assistance. Staff is recommending adding a policy that if developers seek upfront financing, they must secure the commitment of a buyer for an Urban Renewal Revenue Note in the amount of the requested assistance. If after discussions with area lenders who would buy such a note, the developer is unable to secure an Urban Renewal Revenue Note buyer, developer may substantiate their reasoning in writing, and the project consideration will continue with the understanding there is greater risk to the City.