ACTION REQUESTED:
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Communication from the City Manager with a Request for the Following:
A. ADOPT an ORDINANCE Amending the City of Peoria 2016/2017 BIENNIAL BUDGET Relating to the Use of the Warehouse District TIF Fund Balance.
B. ADOPT an ORDINANCE Approving the 733 SW WASHINGTON LLC REDEVELOPMENT AGREEMENT. (Council District 1)
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BACKGROUND: 733 SW Washington LLC is a local development company lead by Larry Winkler. They intend to renovate their property at 733 SW Washington in Peoria’s Warehouse District into a mixed use building that will include 28 residential units and approximately 10,000 square feet of commercial space.
The total project cost is approximately $3.25 million. It is financed through a mix of sources, including a conventional bank loan of $1.79 million, $600,000 in owner equity, and $749,000 in equity generated from historic tax credits. City staff have review the project financials and there is still a gap of about $110,000. To close this gap, the City has worked with the developer to provide an advance of $110,000 in TIF funds against future property tax increment rebate. The loan would be repaid over 10 years, 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. Ordinarily, a developer would be offered a 50% rebate of those new taxes as a reimbursement for the costs of redevelopment. Given the need to repay the advance, a fixed amount of $13,562 will be applied to the loan with the remainder of the developer’s share being rebated. 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.
Once the loan is completely repaid, the developer will be entitled to a rebate of the full 50% of increment generated. This rebate is used to reimburse Mr. Winkler for the eligible costs of renovating the property.
The agreement also provides a payment of $21,950 to the developer to cover the cost of raising windows along Oak Street. When the new sidewalk was constructed along Oak Street, it partially covered windows on the first floor of the building. The developer has provided the City with a contractor’s estimate for raising those windows in accordance with historic standards. This payment is separate from the loan and will be made contingent on a full and final release being executed by the developer.
FINANCIAL IMPACT: The City will loan the project $110,000 from Warehouse District TIF. The loan is repaid over 10 years at 4% interest through the capture of a fixed amount of $13,562 withheld from a 50% rebate of incremental property taxes. The City will also reimburse the developer $21,950 for the cost of raising windows along Oak Street.
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 reduced in scale, 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