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HomeMy WebLinkAboutA021 - Council Action Form dated February 22, 2005 ITEM # d&74 DATE 02/22/05 COUNCIL ACTION FORM SUBJECT: A RESOLUTION AMENDING THE PLANS FOR THE SOMERSET URBAN REVITALIZATION AREA AND FOR URBAN REVITALIZATION AREA #7 TO ALLOW FOR COMMERCIAL TAX ABATEMENT BACKGROUND: In September 1997, the City Council approved Urban Revitalization Area (URA)#7 for the central, mixed-use portion of Somerset. This URA allowed the use of tax abatement for three specific uses within the district: 1. Sit-down restaurants; 2. Grocery stores; and, 3. Commercial buildings with residential on the upper floors. In March 2001 1 y Cound roved an amendment to URA #7 that allowed tax abatement for all commercial uses. t the same time, it established the Somerset Urban Revitalization area. RA allowed for a three-year, 100% tax abatement for single-family residential uses. The amendment and the new URA were approved with a three-year time limit, which expired on May 1, 2004. On April 27, 2004, the City Council referred to staff a letter from the Somerset developers requesting an extension of the three-year, 100% tax abatement for all commercial uses in URA#7 and in the Somerset URA. Staff never responded to this request and this request never came back to the City Council for action. Therefore, as mentioned previously, the only uses currently eligible for tax abatement within URA #7 are: 1. Sit-down restaurants; 2. Grocery stores; and, 3. Commercial buildings with residential on the upper floors. While no uses are currently eligible fortax abatement in the Somerset URA,the district still exists. On August 18, 2004, the Development Review Committee (DRC) approved a Minor Site Development Plan to allow for the construction of the Ames Racquet and Fitness Center on Stange Road in the Somerset Subdivision. As the site is located within the Somerset URA, the owner of this site believed that tax abatement was available for this development and secured financing for his project accordingly. On February 1, 2005, Tom Dirken,the owner of Ames Racquet and Fitness Center, applied for tax abatement under the Somerset URA. At that time, it was brought to everyone's attention that the previous amendment to URA #7 and the Somerset URA had expired. It was never the intention of City staff that the amendment would be allowed to expire. It was merely an oversight. At its February 22, 2005 meeting, the City Council passed a resolution setting a public hearing on March 8, 2005 prior to considering amending the existing URA #7 and Somerset URA that would begin retroactively on May 1, 2004 and have no established end dates. Related to this request, on February 8, 2005, the City Council unanimously approved an amendment to the Major Site Development Plan for Somerset, which changed the proposed uses on an approximately 4-acre parcel of property located on the west side of Stange Road from village apartments, village houses, and one commercial day care site to all commercial uses. It is the request of the Somerset developers that the tax abatement be extended to include this parcel, as well. These proposed amendments to URA#7 and the Somerset URA will not apply to the new parcel at this time. Including the 4-acre parcel will require amending the boundary of either URA#7 or the Somerset URA, or will require the creation of a new URA. This will require creation of a legal description and additional preparation. It is the intention of staff to bring that amendment back to a City Council meeting in the near future. ALTERNATIVES: 1. The City Council can approve the resolution amending the plans for Urban Revitalization Area #7 and the Somerset URA, allowing for a three-year 100% tax abatement for all commercial uses with no expiration date. Staff supports this alternative because it would allow the areas to develop at their own pace, and not be constrained by an expiration date that would cause the URA to be extended in the future. 2. The City Council can deny approval of the resolution amending the plans for Urban Revitalization Area #7 and the Somerset URA, allowing for a three-year 100% tax abatement for all commercial uses with no expiration date. This alternative would result in no tax abatement for Ames Racquet and Fitness Club or other new businesses in Somerset. This action may generally inhibit development in Somerset and impact interest in similar new "Village" developments yet proposed. 3. The City Council can refer this request back to staff and/or the applicant for additional information. This alternative could be considered if Council would like to consider additional or revised projects that should be eligible for tax abatement in either or both U RA's. CITY MANAGER'S RECOMMENDED ACTION: In March 2001, the City Council expanded the eligibility for the Urban Revitalization tax abatement incentive for all commercial uses in the Somerset Village. The City Council believed this action was warranted in order to support what the Land Use Policy declared as the preferred development option, the "Village." At that time, it appeared as though there was limited interest in developing at Somerset and expanding the tax abatement eligibility was seen as a method for stimulating interest in the Village concept. The expanded eligibility was to expire after three years, presumably as a test period to prove the success of this strategy. 2 It appears that this expanded tax abatement incentive did accomplish what the City Council had hoped for. The commercial areas in Somerset began to develop after the policy change was made. If we hope to attract developers to build subsequent villages, it is important that the Somerset Village is successful. We don't want to jeopardize the building momentum that is occurring at Somerset. Therefore, it is the recommendation of the City Manager that the City Council approve Alternative #1. This action would adopt two resolutions that amends URA#7 and the Somerset URA,that allows a three-year, 100% tax abatement for both commercial uses with no expiration date. COUNCIL ACTION: 3 1: •.--:„ ::,-� :•. ,,:I� a .e fl!l.l u.!!.., .1:1-.:Y....: �,r-,..I:!? I:I L,L... ... f I I ,J.J........I: i�F,,... I.: .I I ..1 I ,I ..h..::,.. .:I. I �,:, :: ..I......1,., u: ,I � :���:�,r• I li.:..!���� ..II i. JII .L � ...,i. .I :: I , ..�� .:Ii �. I :I I:u: !i ::. - •.)ll' .! I I:.II .!:.! IL... , ..I.I: :. I.I I I :) .I ,. 1,. 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