HomeMy WebLinkAboutA002 - Staff Report dated July 13, 2021 f
Item No. 26
Staff Report
STATUS OF REINVESTMENT DISTRICT PROJECTS
July 13, 2021
INDOOR AQUATICS CENTER:
The City Council will recall that the City had applied for$21,527,983 of incentive funding
through the Iowa Reinvestment District Program. It was hoped that these state monies
combined with $10,000,000 from private donations would cover almost the total projected
cost of approximately $27,494,000 (plus $4,426,746 in estimated interest payments on
debt) for a new Indoor Aquatics Center on Lincoln Way across from the IDOT
headquarters.
On June 25, 2021, the Iowa Economic Development Authority approved provisional
funding decisions for the current round of Reinvestment District funding. A summary of
the allocations is highlighted below.
Applicant Requested Funding Provisional Funding
Ames $21 527 983 $10.000 000
Cedar Rapids $39,500,000 $9,000,000
Des Moines $27,100,000 $23,500,000
Fort Dodge $18,000,000 $17,000,000
Merle Hay Reinvestment District $30,000,000 $26,500,000
Newton $15,469,661 $14,000,000
Total 1 $161 597 644 $100 000 000
It should be emphasized that these funding totals are considered provisional
because much of the information included in each application was preliminary.
The cities now have until February 25, 2022 to submit their final applications which
will reflect the final design plans and expenditure/revenue projections for the
projects.
Given this $11,527,983 reduction in Reinvestment District funding, the gap that will
require property taxpayer support is now estimated to be $7,494,000, as reflected
in the next table.
Estimated Cost of Aquatics Center Project 2022 Dollars $27,494,000
Minus: Donations -$10,000,000
Estimated Amount of Debt Needed To Be Issued $17,494,000
Minus: Reinvestment District Revenue -$10,000,000
GAP: Estimated Amount Td Be'Paid B Pro a Taxes, $'7,494;00Q
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FINANCING OPTIONS
The City Council has three principal options to finance the project. It should be
emphasized that under Options 1 and 2,the City would issue$17,494,000 in General
Obligation debt. However, it is anticipated that the net impact to taxpayers would
be $7,494,000, after accounting for the $10,000,000 of Reinvestment District
funding. These three options for the Council to consider consist of:
1. Urban Renewal
Since the proposed site of the Aquatics Center will be situated within a
designated Urban Renewal Area, under the Iowa Code the $17,494,000 in
G.O. Bonds issued for this project can be issued as an Essential Corporate
Purpose. These bonds can be issued by the City Council following a hearing,
without holding a public referendum to authorize the sale of the bonds.
However, a referendum can be required if the Council receives a valid
petition requesting a vote. The petition must contain signatures equaling at
least 10% (3,189) of the number who voted in the last regular election. The
petition may be signed by any person residing in Ames who is eligible to vote at
the time they sign the petition (petition signers need not be registered to vote, but
simply be eligible to register). The petition must be filed with the City Clerk prior to
the conclusion of the public hearing authorizing the issuance of the debt. A
minimum ten-day notice is required prior to the hearing. This option is what the
staff has referred to as a "Reverse Referendum."
2. Referendum Election
The City Council can decide to bring forward for a public referendum a
question to authorize $17,494,000 in G.O. Bonds. This referendum would
require a 60% approval from voters. State law allows a vote at a Special
Election on September 14, 2021 or March 1, 2022, or at the General Election
on November 2, 2021. Given the amount of time needed to adequately
educate the public regarding the project, the earliest a referendum should be
held is November 2021.
In order to place this issue before the voters, a Council resolution must be
submitted to the Story County Auditor at least 46 days in advance of the election.
The last regular scheduled City Council meeting 46 days before November 2 is
September 14.
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To educate the public for the vote, an informational campaign would be organized
and would require funding from the City Council. Issues that should addressed in
the informational campaign include: the features contained in the Aquatics Center,
the location, operating costs, user fees, and the unusual funding situation whereby
it would be estimated that property owners would only have to pay taxes of
$7,494,000 of a total project cost of$27,494,000.
3. Hybrid Urban Renewal and Referendum Election
Under this option, the Council would separately approve $10,000,000 in Essential
Corporate Purpose G.O. bonds within the Urban Renewal Area (subject to a
reverse referendum) and authorize a $7,494,000 G.O. Bond referendum election.
Although the same total of G.O. Bonds would be issued, a possible rationale to
bifurcate these bond issuances is to isolate the benefit of the Reinvestment District
revenue.
With any of the three options highlighted above, the City Council could reduce the
amount needed to be financed by the taxpayers by eliminating the second floor of
the Aquatics Center which is intended to house the walking track and exercise area.
This approach would reduce the gap from $7,494,000 to $2,805,000.
LINCOLN WAY REDEVELOPMENT PROJECT (CLARK TO KELLOGG):
As you will recall, our Reinvestment District application represented a development
concept that was originally presented to the City Council. The proposal described in the
application included a full-service hotel (136 rooms), conference space (23,000 sq. ft.),
hotel restaurant, office space (75,465 sq. ft.), residential apartments (71 units),
retail/restaurant space (14,500 sq. ft.), and a large outdoor plaza space.
The staff was aware at the time of preparing the application that the property owner was
continuing talks with various development teams and the project might be altered, but not
so significantly that it would jeopardize eligibility for the Reinvestment District incentive
funding.
On June 28, 2021, City staff met with the property owner and his development team for
an update about the project. The developer described an updated concept that would
include some of public parking located in a garage north of the tracks, in our Central
Business District parking lot behind Wells Fargo, with a pedestrian bridge connection to
the south over the railroad tracks. The developer described how adjusting the location of
parking would allow for a more intensive development on the Lincoln Way site. While the
final square footages have not been determined, along with a full-service hotel and
conference meeting space, they are exploring more residential and office space than was
included in previous concepts. The additional square footage would help the developer
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more efficiently develop the site and the City would realize more of its vision for the Focus
Area with additional uses.
A significant amount of work remains for the developer to complete a detailed concept
and financing plans for staff to evaluate and then present to the City Council. These plans
and accompanying developer agreement would need to be finalized by the end of
2021. This is necessary to complete the final Reinvestment District application by
February 2022.
DOWNTOWN PLAZA:
6th Street Parking Lot
Since public parking spaces in the lot east of City Hall will be removed to make way for
this new public gathering space, a new parking lot will be constructed on the north side
of 6th Street across from the City Hall. This land was purchased by the City with federal
Community Development Block Grant funds as a potential site for affordable housing.
However, efforts to attract developers for this type of housing proved unsuccessful as it
was learned that the property was not large enough for developers to generate a sufficient
return on their investment.
Therefore, the next step is to repay Department of Housing and Urban Development
(HUD) for the appraised value property. Staff intends to bring this matter before the City
Council in July. The $200,000 required to reimburse the HUD is included in the FY
2020/21 budget. along with $275,000 for the design and construction of the new parking
lot on 6th Street.
Public Works staff has hired Bolton and Menk to design the new parking lot north of City
Hall along 6th Street. This parking area will replace part of the parking displaced by the
plaza project. It currently is planned that the project will be bid in September 2021 with
construction anticipated in the spring of 2022. The new parking spaces along the west
side of Clark adjacent to City Hall will be incorporated into the design and construction of
the plaza. The $225,000 to install this additional parking is included FY 2020/21.
Plaza
In July, staff plans to bring a recommendation to the Council to waive Purchasing Policies
and Procedures and authorize the hiring of Confluence to design the new Downtown
Plaza. This company developed the plaza concept and cost projections for the
Reinvestment District application and therefore, is most familiar with our project. Second,
by contracting with this company immediately, we can avoid a time consuming bidding
process that would cause the project to be delayed by another year.
The current plan is for the plaza project to be bid in December 2021 with
construction beginning in the summer of 2022. The FY 2020/21 budget includes
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$3,925,000 for the design, installation of the parking to the west of Kellogg, the
construction of the plaza, and the commission for a signature art piece.
Artwork
The plaza concept includes three elements of public art, with a focus on a signature large
sculpture at the center of the plaza. The total estimated budget for artists' commissions,
fabrication, and installation by the artists is $340,000. This amount is included within the
$3,925,000 total plaza budget. Due to central location, creative interests, and size of the
signature sculpture, staff believes a Request for Qualifications to select an artist is the
best approach.
plans tans to work with a subcommittee of the Public Art Commission
ion to release an RFQ
for the signature art sculpture with a budget of$150,000 $175,000 in July. The propo
sals
will be reviewed by a committee of staff and Public Art Commission representatives.
Selection of the artist and beginning work on concepts for sculpture in September and
October is critical to finalizing the overall plaza design plans by December. The other
tanned artwork elements will be decided at a later date once the final plan for the Plaza
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is approved.
ONONDAGA PROPERTIES (330 5T" STREET/412 BURNETT):
This project, which was under construction, was added to the Reinvestment District
application to take advantage of the retail sales that were projected from the
redevelopment of these properties into new retail/restaurant space. The renovation of this
property is progressing very well and the Nelson family has done a wonderful job
revitalizing these buildings.
STAFF COMMENTS:
A final Reinvestment District application is necessary to secure the $10 million
provisionally approved by the State. Based upon the original projections for the Lincoln
Way project itself, it appears that the Lincoln Way project alone could be the sole source
of retail sales tax and hotel motel tax receipts needed to support the $10 million of
Reinvestment District funds pledged by the State. The final application requires updated
project plans, project pro forma, and revenue projections to meet State requirements.
The final application is due to the State by February 25, 2022. To meet this deadline
staff believes that all of Reinvestment District project components must be
solidified by December 31 to allow time for staff and its economic consultant to
complete their final evaluation and projections for the Reinvestment District
Application.
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The critical components to move forward on this project are: 1) Resolving the
projected funding gap for the aquatics center, 2) Creating an Urban Renewal Area,
and 3) Reaching an agreement with the developer of the Lincoln Way project,which
represents the primary source of the projected Reinvestment District revenue. The
Lincoln Way project will likely include a conceptual development plan with a developer
agreement approved by City Council, followed by a more detailed Major Site
Development Plan that is also subject to City Council approval prior to development of
each building on the site.
To move forward with the Reinvestment District projects, the first major decision
for the City Council is to determine which of the three financing options for the
Aquatics Center highlighted above should be pursued. It should be emphasized
that the Staff is not seeking a decision at the July 13th meeting regarding which of
the three financing options the City Council wishes to pursue. This can come at
later date. However, if a referendum option is preferred, it would be beneficial to
make this decision as soon as possible so that there is plenty of time to present an
adequate public informational campaign.
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