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HomeMy WebLinkAboutA045 - Council Meeting Minutes from December 8, 2015 S 0 6 AMENDMENT TO CAMPUSTOWN URBAN REVITALIZATION PLAN:Director Diekmann recalled that the City Council had reviewed potential changes to the Campustown Urban Revitalization Plan Criteria on both June 9, 2015, and September 8,2015. Council had directed staff to include amendments to the URA Criteria that addressed nine different issues.He indicated that staff had added minor changes to clarify that a small production facility is an allowed use on the ground floor of a mixed-use building as is permitted with the CSC zoning and that front facade means all front facades of a corner building. Mr. Diekmann detailed the requirements for Non-Formula Retail. He noted that it was important for the Council to review the appendix of Attachment A. Staff had clarified how to administer the occupancy requirement.Under the staff s recommendation,Occupancy of Non-Formula Retail space will be required at the time of initial approval of tax abatement, but, that space will not be required to be continuously occupied during the life of tax abatement. This covers two scenarios that could arise over a ten-year tax abatement: (1)The business grows after it is initially located in Campustown and exceeds the ten location limit,and(2)It addresses a circumstance that a business may fail and that the space could be vacant while searching for a new tenant.However,only a new Non-Formula Retail tenant could then occupy the required space reserved for Non-Formula Retail. The appendix also clarifies that to be eligible for tax abatement,a project must be in compliance with a site development plan, have building occupancy, and maintain required features for the life of the tax abatement. An application for final tax abatement approval must include documentation from the property owner in support of a finding of compliance with the Criteria. At the inquiry of Council Member Gartin, Director Diekmann advised that the Campustown Action Association has not had a board meeting since the amendment to the Campustown Urban Revitalization Plan had been prepared. Russell Broderick, real estate professional with Gilbane Development,which is the owner of 2310 Lincoln Way and 2311 Chamberlain, indicated that the tax abatement program in place in the City of Ames is very effective.It is one of the reasons Gilbane chose to develop in Ames. Mr.Broderick told the Council that the proposed alterations as presented will basically nullify the benefit of the tax abatement. He explained that, with the occupancy criteria now being included, investors and banks will see that as a risk factor. Mr. Broderick believes that developers can't control when they sign a tenant and presents a challenge from an underwriting standpoint.The developer has to put in a parking structure and have brick exteriors on the buildings,which are very expensive;these are required. Mr. Broderick also alleged that the sliding scale is inequitable. Mr. Broderick said that he is not against the Non-Formula Retail concept; his challenge is with the occupancy criteria. He believes that Campustown is the right place for retail,and it is important to have the space leased-up and be active. That is their intent, but the leasing of the space/the timing of the lease is not under the control of the building's owner. Council Member Gartin explained that the Council is concerned that if the overall project is cash- flowing without all the retail space being occupied, the spaces might be allowed to remain vacant. Mr. Broderick said he did not understand why any real estate professional would let space remain vacant. Speaking to Gilbane's project located at 2311 Chamberlain Avenue, Mr. Broderick recalled that a Prior Approval for Tax Abatement request had been submitted on March 31, 2015; however, the 12 request to change the criteria did not come out until December 4, 2015. The Building Permit application was submitted before the staff report was complete; that staff report did not reference an occupancy requirement. This project is now five and one-half months into the project. Mr. Broderick acknowledged that the tax abatement has not yet been approved;however,the occupancy requirement was not included when this project started and the developer did not include it when talking to the underwriter. Mr. Broderick said they began this project agreeing to a set of standards, and if the Plan amendment is approved,those standards would change. Ryan Jeffrey,Business Improvement Director for Campustown Action Association(CAA),indicated that the CAA would rather forgo the occupancy requirement criteria rather than risk the destruction of the tax abatement system for the project located at 2311 Chamberlain. The CAA believes that the occupancy requirement trigger is a good idea in general,but in this case, it doesn't seem to work and could "torpedo"the project. Council Member Betcher asked Mr. Jeffrey if he knows the cost of rent for the older Campustown buildings. Answering,Mr.Jeffrey advised that rents in the older portion of Campustown seem to rent between$15 and $24/square foot. Council Member Betcher raised the possibility of incentivizing the rental of areas in new buildings. If the buildings are cash-flowing with empty retail space, couldn't the same be true if the rents were lowered to incentivize retail. Council Member Goodman expressed his concerns over not having occupancy as a piece of the criteria. He would like to give this a little time to see what would happen. Because of the large numbers of the cash flow of the project in general,the occupancy requirement might not be a big deal. Moved by Goodman to adopt RESOLUTION NO. 15-740 approving Alternative No. 1,approving the Amendment to the Campustown Urban Revitalization Plan,with the addition that the project at 2311 Chamberlain Avenue be exempted. Council Member Betcher asked if Council could first act on the Amendment without the exemption for 2311 Chamberlain Avenue. Director Diekmann advised that the Council can't approve a Plan and then approve an exemption to it. Under a separate motion, the Council could approve a project where the improvements are completed by a certain date, e.g., December 31, 2016. Motion withdrawn. Council Member Gartin commented that to him this is a matter of fairness.The rules would in essence be changed after the developer was over five months into this project. Mr. Gartin expressed his concern that if that would be allowed,it would be setting a dangerous precedent. Director Diekmann explained that it would not be setting a precedent because each request for tax abatement is independent; each one is not the same. Council Member Goodman again pointed out that the developer would have no incentive to lease up the retail space if the occupancy requirement were to be taken out. 13 According to Council Member Orazem, forcing the space to be occupied by a certain renter and requiring occupancy by a certain date would drive the rents up. The cost of financing the project would increase. He believes that could put the entire project at risk. Council Member Corrieri asked if there would be any value in getting additional feedback from Campustown. Director Diekmann asked to whom staff would reach out,as they had already done that. Mr. Broderick brought forward the developer's prospective tonight; staff didn't have that previously. Moved by Goodman, seconded by Betcher, to adopt RESOLUTION NO. 15-740 approving Option 1, which is to amend the Campustown Urban Revitalization Plan with the criteria included in Attachment A. Director Diekmann offered that Council could approve an option, could delay the effective date for the standards, or it could ask staff to come back at the next meeting with the correct language to do with exempting a certain time frame for projects. Council Member Betcher expressed her concerns about the variation in the total retail square footage being required for different tax abatement projects. Council Member Orazem suggested that there be a separate incentive for the non-formula retail. Director Diekmann said that he would have to get clarification from the City Assessor on that. Motion withdrawn. Moved by Gartin to approve Option 1,with a modification to Column C,striking the second paragraph pertaining to the occupancy requirement, with the corresponding change to the Appendix. Motion died for lack of a second. Council Member Goodman said his desire was to send the occupancy and percentage issues to the CAA Board to get input. Moved by Orazem, seconded by Goodman, to continue the hearing until January 12, 2016, to allow feedback from the CAA Board to be received. Council Member Orazem asked to know the options to bifurcate the requirement so that the entire project is not being put at risk on the basis of that criteria; in other words, have a qualifying tax abatement known up front with no uncertainty. Director Diekmann stated that they couldn't get the bank financing answer, but staff could talk to the Assessor. Vote on Motion: 6-0. Motion declared carried unanimously. Moved by Goodman, seconded by Betcher,to get feedback from the CAA on the percentage, sliding scale, and the occupancy conversation and add the bifurcation concept. Roll Call Vote: 6-0. Resolution declared adopted unanimously, sig ned by the Mayor, and hereby made a portion of these Minutes. 14