ACTION REQUESTED:
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Communication from the City Manager with a Request to ADOPT an ORDINANCE Approving the 101 LIBERTY STREET, LLC. REDEVELOPMENT AGREEMENT. (Council District 1)
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BACKGROUND: 101 Liberty Street LLC, was formed in June 2019 to fully redevelop the former Nailon Plumbing Supply building into Ardor Breads and Provisions. The building was originally built for Swift Premium Meats Cold Storage Warehouse in the 1890’s, and the redevelopment will be constructed according to standards eligible for historical tax credits. The project is being redeveloped in two phases. The first was the establishment of the bakery shop which opened May 3, 2020 with Ardor Bakery occupying 1,700 sf. The second phase includes the full redevelopment of the entire building allowing Ardor to expand from 1,700 sf to approximately 6,375 sf by adding:
a) a restaurant, kitchen, and dining space;
b) an expanded bakery; and
c) event space and bar upstairs.
The project is expected to be completed in the Spring of 2022. Ardor bakery currently employs 5 full-time and 2 part-time employees. When the project is completed it is expected there will be 25 full-time and 34 part-time employees and Ardor bakery will have the capacity to expands sales of its bread and bakery products regionally and nationally.
The overall investment is estimated at $1.49 million, which includes the acquisition and build-out of phase 1 of $840,000, and the phase 2 buildout of $650,000. The project will be financed predominantly with personal equity of LLC members Dave Knaak and Larry Nailon, along with a bank line of credit. The total TIF-eligible cost is $1.49 million. A TIF reimbursement of $40,000 is being presented to cover unexpected cost overruns-sprinkling of basement, fire blocking installation due to insulation of cork, installation of shelter-in-place rooms, and an unusable basement due to flood zone regulations. This totals 2.7% of the total TIF-eligible expenses.
FINANCIAL IMPACT: The Project is estimated to generate $24,000 in property tax increment after its completion. In addition, Ardor Breads and Provisions (bakery, retail, restaurant, and bar) will generate consider sales tax as well. There will also be an indirect impact of employing/attracting approximately 35 full-time equivalents who will spend their money locally and in the region.
101 Liberty Street LLC has presented their financials to staff and a financing gap exists with cost overruns and going forward until the space becomes fully leased. The nominal TIF reimbursement of $40,000 would fill that financing gap. The reimbursement would need to be obligated before end of 2021 and paid out subject to a certificate of occupancy prior to end of 2022.
The Central Business District (CBD) TIF is set to expire December 31, 2021 with final payments to be made by Dec 31, 2022. This project was presented to City staff in 2019 but at the time it was believed all funds were obligated. It was later determined funds are currently unobligated and available within the CBD-TIF to provide TIF reimbursement assistance for this project.
NEIGHBORHOOD CONCERNS: Redevelopment of buildings in the Central Business 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 curtailed or delayed.
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