Loading...
HomeMy WebLinkAbout04-19-2011 Council Economic Development Committee AGENDA City of Iowa City City Council Economic Development Committee Tuesday, Aprtl 19, 2011 8:30 a.m. Lobby Conference Room City Hall 1. Call to Order 2. Consider approval of the February 15, 2011 Economic Development Committee meeting minutes 3. Consider a recommendation to proceed with an agreement pursuant to the City Manager's letter of intent for redevelopment of 118 E. College Street 4. Consider approval of City Manager's Economic Development Policy Statement 5. Staff time 6. Committee time 7. Adjournment draft MINUTES CITY COUNCIL ECONOMIC DEVELOPMENT COMMITTEE FEBRUARY 15, 2011 LOBBY CONFERENCE ROOM, 8:00 A.M. Members Present: Members Absent: Staff Present: Others Present: Regenia Bailey, Susan Mims Matt Hayek Wendy Ford, Jeff Davidson Gigi Wood RECOMMENDATIONS TO COUNCIL: Mims moved to recommend to City Council the Administrative Authority for Disbursement of Economic Development Opportunity Funds, as discussed. Bailey seconded the motion. Motion carried 2-0. Hayek absent. CALL MEETING TO ORDER: The meeting was called to order by Chairperson Bailey at 8:03 A.M. CONSIDER APPROVAL OF THE MINUTES OF THE DECEMBER 21.2010, ECONOMIC DEVELOPMENT COMMITTEE MEETING: Mims moved to accept the December 21,2010, meeting minutes as presented. Bailey seconded the motion. Motion carried 2-0. Hayek absent. CONSIDER A RECOMMENDATION TO THE CITY COUNCIL FOR ADMINISTRATIVE AUTHORITY FOR DISBURSEMENT OF ECONOMIC DEVELOPMENT OPPORTUNITY FUNDS: Ford spoke to Members regarding this recommendation. She noted that granting administrative authority to the City Manager to disburse funds from the economic development opportunity fund would aid the City in being responsive to the business community. Ford said the following stipulations would apply if the Council approves the authority. One, there would be a $50,000 limit, which is in keeping with the current consultant agreement limits set for the City Manager. Two, the use of the funds would be directly in compliance with the Economic Development policies and strategies of the City; and three, any the use of of the funds would be reported at the next scheduled meeting of the Economic Development Committee, and again in the annual report. Mims stated that she believes this makes sense, and Bailey agreed that it would allow staff be more responsive to the business community. Davidson noted that Members can Economic Development Committee Meeting February 15, 2011 add to this recommendation, or pare it back, if they desire. Members agreed that they would support this recommendation to Council. Mims moved to recommend to City Council the Administrative Authority for Disbursement of Economic Development Opportunity Funds, as discussed. Bailey seconded the motion. Motion carried 2-0. Hayek absent. STAFF TIME: Ford noted an article about Iowa City economic development efforts that was recently published in the Sunday Gazette's Business 380. She also brought reviewing the strategic policies and plans, and note that sometime in 2011, members would have that on their agenda. Typically, the committee reviews, revises and recommends an updated Strategies and Policies document to Council these about every two years, the last time being January of 2009. Davidson shared that there was a good turnout for the Riverfront Crossings presentation recently. This led to some brief discussion about the interest in this area and the University's plans for the School of Music, as well as other projects that will be moving ahead in this area. Davidson also stated that they have begun the preliminary work on the new parking facility project. He shared some of the details of this, adding that around July 1 sl they should be ready for Council's approval of the preliminary design. Davidson shared that the interest in Towncrest has been growing. Ford agreed, stating that five or six businesses have contacted the City with great interest. Ford added one more point, stating that there is a presentation in town on Wednesday called, "The Hidden Economies of College Towns," that should be interesting. The presentation is at 5:00 PM Wednesday at the Old Capitol Center. COMMITTEE TIME: None. ADJOURNMENT: Mims moved to adjourn the meeting at 8:20 A.M. Bailey seconded the motion. Motion carried 2-0. Economic Development Committee Meeting February 15, 2011 Council Economic Development Committee ATTENDANCE RECORD 2011 TERM N NAME EXP. -- ....... 01 Regenia 01/02/1 X Bailey 1 Matt 01/02/1 01 Hayek 1 E Susan 01/02/1 X Mims 1 Key: X = Present o = Absent OlE = Absent/Excused 1 ~ 1 ~~-s....a~'" !~W~~ ~~~aa.' -- CITY OF IOWA CITY MEMORANDUM Date: April 15, 2011 To: Economic Development Committee From: Jeff Davidson, Director of Planning & Community Development ~;r/(' Re: Agenda Item #3: Consider a recommendation to proceed with an agreement pursuant to the City Manager's letter of intent for redevelopment of 118 E. College Street. We are excited to present to you a redevelopment proposal for a downtown property which has been a large bar, Vito's, since the late 1970s. The building at 118 E. College Street has been purchased by developer Marc Moen, and we have been working with Mr. Moen on a redevelopment strategy for the property that is consistent with the City's goals for downtown. The property is 5,247 square feet on the first floor, and 3,814 square feet on the second floor. The second floor is currently unoccupied. There is a crawl space below the building. The building is currently in very poor condition and will require a complete gutting in order to be rehabilitated, including a new roof. The project proposal that we have worked out with Mr. Moen consists of converting the first floor space to a non-bar/restaurant retail space. Mr. Moen is currently in negotiations with several potential retailers. It is proposed to convert the second level space to Class A office space. Part of the conversion to office space would include installation of an elevator which would be positioned such that it could also be used by the adjacent building to the west if that building ever converted from its present bar occupancy. The acquisition of the property, gutting and rehabilitation of the interior, and fit-out for specific retail and office tenants is estimated to cost approximately $2 million. In exchange for committing to the proposed retail and office uses, the City has negotiated a proposal to provide a $250,000 development grant which would help defray the specific expense of the elevator, roof replacement, and new HVAC equipment. The City's grant represents approximately 12.5% of the total project expense. It is proposed to finance the development grant through a TIF project. The City Assessor has estimated that with the proposed improvements, the building will generate approximately $31,250 more annually in property taxes than it does currently. This new "increment" will be used to finance repayment of our $250,000 investment over an eight-year period. The existing property taxes will continue to be paid to the City, County, and School District, with the new increased amount of property taxes accruing to the taxing entities after the City's investment is repaid. Mr. Moen agrees to the following provisions: 1. The property shall not be used for an eating and drinking establishment, restaurant, or residential use. This provision shall be maintained over the eight-year life of the TIF project. 2. The developer is required to enter into a minimum assessment agreement in the amount of $1.56 million over an eight-year period or until the loan is retired by the tax increments derived by the property. This provision is to ensure sufficient taxable value to repay the City's investment in the project. April 15, 2011 Page 2 To summarize: at the present time Mr. Moen is legally able to establish a bar, restaurant, or second-floor residential use on the property. He has agreed not to establish these uses on the property in exchange for the City's grant of approximately 12.5% of his estimated $2 million expense to acquire, rehabilitate, and fit-out the space for retail and office uses. If Mr. Moen or his successor choose to locate one of the restricted uses into one of the spaces, they are required to repay the $250,000 on a pro rata basis over the eight-year repayment period. At the end of the eight-year period the property may be used for any use allowed under the Iowa City Zoning Code. The most significant aspect of this proposal is that if the space is converted to a non-bar use, it will not be allowed to be converted back to a bar use again by virtue of the 500-foot spacing provision which was amended into the Zoning Code shortly before the 21 Ordinance was adopted. The conversion of this space from a bar to a retail use and from an unoccupied second floor use to Class A office space is exactly what we are trying to promote downtown in light of the City Council's 21 initiative. We will be available at the April 19 EDC meeting to answer any questions. You are being asked to provide a recommendation on this matter to the full City Council. If recommended for approval, the City Council will consider the formal development agreement at their meeting on May 3. cc: Tom Markus Wendy Ford Marc Moen ppddir/mem/ECD-vilo5,doc ,1 I =.5.....1(1.., ~~~~'"!. -.;;;,... _l1li" .....,~ CITY OF IOWA CITY WWW,lcgoV.org OFFICE OF THE CITY MANAGER Thomas M. Markus City Manager tom- markus@iowa-city.org Dale E. Helling Assistant City Manager dale-helling@iowa-city.org Kathryn Johansen Administrative Assistant to the City Manager kathryn- j ohansen@iowa-city.org 410 E. Washington Street Iowa City, IA 52240 Phone: (319) 356-5010 Fax: (319) 356-5009 April 15, 2011 \))~~~~ Marc Moen 105 E. College Street Iowa City, Iowa 52240 Re: Economic Development Grant for Redevelopment of 118 E. College Street Dear Marc: Based on prior discussions between you and City representatives, I believe we have found a mutually agreeable economic development incentive package to assist you in your efforts to acquire, redevelop and improve the commercial property located at 118 E. College Street. Based on the figures you have provided (up to $2 million investment in property acquisition and redevelopment costs), I am prepared to recommend the following incentive package to the Economic Development Committee and the City Council: · A $250,000 "forgivable" up-front economic development grant to support the acquisition, redevelopment and improvement of the property currently located at 118 E. College Street (former known as "Vito's") . The redevelopment will consist of class A office space on the upper floor, installation of an elevator for accessibility and specified commerciallretail space, which property shall not be used for an "eating and drinking establishment", "restaurant" or "residential use", whether accessory, permitted or principal, as defined by the Iowa City zoning code; these uses shall be maintained over the life of the loan, and if these uses do not continue in duration, the sum of $31,250 will be repayable for any year(s) or portion thereof that said uses are not in place . In accordance with the Iowa Code and appropriate economic development policy, the City would require that Moengroup enter into a written minimum assessment agreement in the approximate amount of $1,560,000 over an eight (8) year period (beginning from November 1, 2012 based on a valuation of January 1, 2011 for the base) or until the loan is retired by tax increments derived from the specific property, whichever is later; this is to assure sufficient taxable value to repay the City's investment in the project. Please understand that this proposal is subject to the discretion of the City Council, including approval of a written development agreement that details the obligations of the company and the City, a mutually-agreeable site plan that has passed the City's internal design review committee and assurances satisfactory to the City that Moengroup has the financial wherewithal to carry out the contemplated investment. If the proposed incentive package meets with your approval, please let us know and we will provide a draft of the Economic Development TIF Agreement for your review prior to proceeding to the Economic Development Committee and City Council. Very truly yours, Thomas M. Markus City Manager Cc: Jeff Davidson, Director, PCD Wendy Ford, Economic Development Coordinator Sarah E. Holecek, First Assistant City Attorney Kevin O'Malley, Finance Director 1 ~ 1 ~~-s._~... !~We~ ~ ~aa.' --~ CITY OF IOWA CITY MEMORANDUM To: From: Date: Re: Economic Development Committee Wendy Ford April 13, 2011 Economic Development P As you recall, City Manager Markus distributed a Draft Economic Development Policies document for discussion at the January 13, 2011 City Council work session (see following page). As budget and strategic decisions germane to economic development were imminent, it was pertinent to present it to you at that time. With budget season past and many economic development projects coming to the fore, we feel it is a good time to discuss and consider a formal recommendation of these policies to the City Council. At it's core, this policy statement is simple. Its essential elements are the What, Why and How the City shall conduct economic development activities. 1) What a) Attract new development, particularly industrial and commercial operations with jobs. b) Assist existing business in their growth and expansion. c) Incubate new business operations in new ways. 2) Why a) Adding jobs fosters an environment favorable to increasing the tax base. 3) How a) Careful evaluation of public/private partnerships. b) Consider use of incentive programs to achieve results. c) Use smallest amount of incentives to achieve maximum results for public benefit. d) Be responsive to business needs oftiming and public's need for transparency. e) Never at the expense of our neighboring communities. Let's discuss this at your meeting on April 19. In the meantime, please feel free to call with any questions. DRAFT ECONOMIC DEVELOPMENT POLICIES It shall be the policy of Iowa City to maintain an economic development plan. The purpose of the plan is to attract new development including residential, commercial and industrial uses. Further, the purpose of the plan is to retain the city's existing business operations and to encourage them to expand and foster spin-off business operations. The city's plan also supports organizations which help to incubate, grow, foster, and create new business operations by providing non-traditional collaborative environments. The expected results of the economic development plan are: increased economic activity, more jobs, lower unemployment, higher wages, greater property values, more tax revenues, more ownership and entrepreneurial opportunities and revitalization of underutilized or blighted areas. The city will consider the use of incentive programs including city, state and federal economic development funds, tax increment financing, public private partnerships and other tools in order to achieve the expected results. Various evaluative tools including financial pro forma's, written evaluation reports, established benefit metrics, and other performance tools shall be used to monitor the use of economic incentives from the early stages of project development through the issuance of an incentive and post incentive to make sure the objectives are met. Developers who receive incentives will be expected to enter into development agreements which delineate the terms, conditions, understandings and the expected results of receiving an incentive. It will be the policy of the City of Iowa City to endeavor to attract, recruit, retain, foster and develop new development through the use of incentives which is new to our region metropolitan statistical area (MSA). The city will not actively recruit business from other jurisdictions within our MSA. Should business from jurisdictions within our MSA wish to relocate to the City of Iowa City we will notify our neighboring jurisdiction of the interest. It will be the general practice of the City of Iowa City to not provide economic incentives to business wishing to relocate from another jurisdiction within our MSA. When incentive programs are utilized they will be used to maximize the benefits to the City of Iowa City. The dollar amount of the incentive and time duration of the incentive shall be smallest amount necessary to achieve the maximum amount of city benefit as determined by the City of Iowa City, City Council. Despite the need for the program to be flexible and nimble in order to respond to the ever changing economic conditions of the marketplace it will be the policy of the city to insure that the process of using incentives is an open and transparent public process which instills confidence in the publics understanding of how economic development incentives are utilized.