ACTION REQUESTED:
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Communication from the City Manager with a Request to ADOPT an ORDINANCE Approving the WD COMMUNITY INVESTMENT LLC REDEVELOPMENT AGREEMENT. (1st District)
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BACKGROUND: WD Community Investment, LLC has plans to invest approximately $4.5 million to renovate a property at 214 Pecan into a mixed-use building that will include 21 residential units plus ground floor retail space. WD Community Investment is a local firm owned by Jacob and Rainy Storey. They are working with The Kim Group to design, construct and operate the development. The project represents an excellent reuse of a building in the Warehouse District. Of particular note, the property is outside of the area that has had its streetscape improved, signaling the strength of the market for investors.
The project is financed through a mix of sources, including a conventional bank loan, private equity, and equity generated through the sale of historic tax credits. City staff have review the project financials and there is still a gap of about $1,000,000. The developer is working with Peoria County to obtain a low-interest loan for approximately $750,000 and have asked the City to provide a $250,000 loan to cover a portion of the costs of life safety improvements to the building (i.e. fire sprinkler system). The attached Redevelopment Agreement outlines a process by which the City would loan the developer $250,000 in unobligated Warehouse District TIF funds. The loan would be repaid, at 4% interest, through the incremental property tax generated by the project. Staff estimates that the investment will generate in excess of $60,000 in new property taxes. Each year, 50% of the increment will be applied to the loan. Once completely repaid, the developer will be entitled to a rebate of 50% of increment. This arrangement is very similar to the Agreement approved by the City Council for the development of 826 SW Adams (Sugar). The loan proceeds are not made available until all financing for the project is secured. Furthermore, half of the loan proceeds are withheld until the entire project is complete.
FINANCIAL IMPACT: The City will loan the project $250,000 from Warehouse District fund balance. The loan is repaid at 4% interest through the capture of 50% of incremental property taxes.
NEIGHBORHOOD CONCERNS: Redevelopment of buildings in the Warehouse District is a widely held community goal.
IMPACT IF APPROVED: The Redevelopment Agreement will be approved and the project will proceed.
IMPACT IF DENIED: The Redevelopment Agreement will not be approved and the project may be delayed or cancelled.
ALTERNATIVES: Council could direct staff to adjust the terms of the Redevelopment Agreement.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL’S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Vibrant Downtown: Riverfront/ Central Business District/ Warehouse District
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Reinvest in neighborhoods.
DEPARTMENT: City Manager's Office