ACTION REQUESTED:
Title
Communication from the City Manager with a Request to ADOPT an ORDINANCE Approving the 1001 CHIC LLC REDEVELOPMENT AGREEMENT. (Council District 1)
Body
BACKGROUND: 1001 Chic LLC, a development team led by Katie Kim of The Kim Group, is seeking to redevelop 1001 SW Adams, a three story building with full basement at the corner of Adams Street and Maple Street. The building, commonly referred to as the “Chic Manufacturing” building, is listed as a contributing structure in the Warehouse District National Historic District. The project will create approximately 12,000 square feet of leasable commercial space on the first floor and in the basement and 25 residential units on the second and third floors. The project’s budget is estimated at $7.6 million and is financed with a mixture of private equity, bank financing and equity resulting from state and federal historic tax credits. Construction is anticipated to start early this summer and be completed by the end of 2017. A “vision book” outlining the concepts, renderings and proposed floor plans for the project, is attached.
FINANCIAL IMPACT: The developer is not seeking any advance assistance from the City. Generally, developments in TIF districts receive a 50% rebate of incremental property taxes for the remaining life of the TIF. Developers can request a greater percentage rebate if they can demonstrate a need to close a financial gap in their revenue models. 1001 Chic LLC has requested to receive a rebate of 100% of any incremental property taxes for the first five years of the project (taxes paid 2019-2023), 50% in the following two years (2024 and 2025) and 0% after that point (2026-2031). City staff reviewed the project financials and agree this level of incentive, which is very similar to the Murray Place agreement, is warranted based on projected occupancy levels. Thus, the attached Redevelopment Agreement places a restriction on the incentives: Should the occupancy rate of the project exceed 85% in any of the first five years, the rebate for that year will decrease to 75%. The developer will need to provide documentation regarding occupancy on an annual basis.
Finally, since the developer receives no rebate after 2025, staff estimates that the City will gain over $60,000 more in incremental taxes over the life of the TIF than it would under the traditional 50/50 rebate model.
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