HomeMy WebLinkAboutA005 - Council Action Form dated November 12, 2002 2t�I lS
ITEM #
DATE 11/12/02
COUNCIL ACTION FORM
SUBJECT: RESOLUTION APPROVING A REQUEST FOR DESIGNATION OF URBAN
REVITALIZATION AREA FOR 1305 COCONINO ROAD, DIRECTING STAFF TO
PREPARE AN URBAN REVITALIZATION PLAN, AND SETTING A DATE OF PUBLIC
HEARING FOR JANUARY 14, 2003.
BACKGROUND:
In September of 2002, City Council received a letter from Arlington Place, Incorporation
from Sauk Rapids, Minnesota indicating a desire to construct a 56-unit assisted living
facility in the City of Ames. From the beginning, it has been the intent of Arlington Place
Incorporated to pursue income tax credit financing to assist in constructing this facility. The
income tax credit program of the State of Iowa requires some form of local financial
participation. Initially, staff was concerned that the City would be asked to become
financially involved in the development of an assisted living facility where this type of
involvement has not occurred anywhere previously. As this project has evolved, it has
been determined that an abatement of real estate taxes under the Urban Revitalization
Program could suffice as a means of financial participation. In analyzing this request, staff
is viewing that this assisted living facility should be seen as a multiple family dwelling that
is eligible to be considered under the existing Urban Revitalization Program that has been
established in Ames.
On November 6, 2002, the City of Ames received a Request for Designation of Urban
Revitalization Area for property located at 1305 Coconino Road. This property has a site
plan for a three (3) story, 56-unit assisted living building of wood and masonry construction,
with 39 parking spaces being provided. It would be constructed on a lot that currently has
a vacant steel shed on the property.
The action to be taken by the City Council is to determine if the request meets the
conditions for eligibility under the Urban Revitalization Multiple Family Residential
Criteria Matrix. If the City Council determines that it does, a date of public hearing
needs to be set for approval of the request and staff should be directed to prepare
an Urban Revitalization Plan.
ANALYSIS:
The applicants have submitted a Request for Designation of Urban Revitalization Area for
1305 Coconino Road under the Multiple Family Residential Criteria Matrix (see attached
request). Staff has determined that the request is complete and the information submitted
is correct. The applicant indicates that there is a vacant steel shed on the site that will be
removed.
The total current assessment for the property is $936,600, with a taxable value of
$483,919, and the total tax revenue is currently $14,934. The estimated cost of the new
assisted living building is $5,000,000 and the estimated future tax revenue without
abatement would be $168,269.70.
The following analysis is from the building value estimated by the property owner
and the established land value by the Ames City Assessor. The project is taking
advantage of the law governing the assessments of projects funded under the Iowa
Finance Authority for Housing Tax Credit Award under the Section 42 Program. The
program requires that Section 42 rental properties are appraised on the income to
value approach. The State of Iowa has placed statewide taxable limit of 9.98% on the
income streams of properties eligible under the Section 42 program, which
dramatically reduces the taxable value on these projects.
The projected tax rate on the remaining taxable value is the current tax rate, with no
change being taken into consideration over a 10-year period on the value of the
property and the rate of taxes.
The taxes deferred and collected analyzing the three different tax schedules are listed
below based on the following valuation:
Estimated Value $ 1,700,000 Tax rate/$1 ,000 Valuation = $30.86
Land Value $ 280,000
Total Value $ 1,420,000
Yearly tax revenue on improvements,
existing value = $43,821 .20
No tax exemption over a 10 year period = $438,212
Taxes Exempted Per Taxes Paid Over 10-Year
Schedule Period
3-Year: $131 ,463.60 $306,748.40
5-Year: $131 ,463.60 $306,748.40
10-Year: $192,813.28 $245,398.72
Required Conditions.
The conditions for eligibility under the Multiple Family Residential Criteria Matrix (see
attached sheet), mandate that the property must display one of two required conditions
before it can be determined that the property is eligible to be considered further. These
two threshold conditions are:
- Slum and Blighted
- Underutilized
The applicant has indicated that the site is underutilized in its present condition.
To meet the underutilized condition of the matrix, the property has to meet the following:
- Properties that are vacant in an in-fill area and were previously developed and
have had the principal structure removed; or
- Properties that are non-conforming with respect to the base zone must be brought
into compliance; or
- Properties that are non-conforming with respect to the flood way fringe must be
brought into conformance with applicable floodplain regulations.
It is staff's belief that the applicant's request meets the underutilized requirement in
that the current farmstead is non-conforming with respect to the base zoning (RH)
Residential High Density Zone.
Since staff believes the applicant meets one of the two required conditions, it has analyzed
the optional conditions. The applicant has selected the following optional condition:
"Affordable Housing and Availability of Affordable Units". Staff's analysis of the request
with respect to these optional conditions, is as follows:
Optional Conditions.
The two options selected by the applicant under the optional conditions of the Multiple
Family Residential Criteria Matrix are:
Affordable Housing
- Thirteen percent (13%) of the dwelling units in an apartment building are leased,
for an annual rental amount as determined by HUD standards (which are
adjusted annually), to families with children, elderly, and/or disabled individuals
whose income is at or below 80% of the Story County median income.
- Seven percent (7%) of the dwelling units in an apartment building are leased as
above to qualified persons at or below 50% of the Story County median income.
AND
Availability of Affordable Units
- Tax schedule and length of time units are available to the program:
- 3-year/5-year, 5-year/5-year, 10-year/10Year
The applicant has proposed that 100% of the proposed assisted living units will be
affordable to senior households at or below 60% of the Story County median income, and
that 15% of the units will be affordable to senior households with incomes at or below 40%
of the Story County median income level. The length of the affordable housing program is
proposed to be 50 years and will be stated in a land use restrictive covenant.
The applicant is exceeding all the optional standards by very substantial amounts. Staff
is recommending that the intent of the affordable housing option is being met and
exceeded by the applicant's proposal.
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In addition, the applicant has a site plan that shows the assisted living building designed
with brick construction on 100% of the street face and on the sides of the building, for a
total brick coverage of 60%.
The applicant is also proposing to provide landscaping at 150% of the required
landscaping.
STAFF CONCLUSIONS:
Initially staff was concerned that in order for the City to participate in the
development of this assisted living facility, it would require the City to create a whole
new policy with respect to using financial resources. As this project has evolved,
it has now been determined that this request for Urban Revitalization Tax Abatement
fits within the established program of the City and therefore no new incentive
precedent will be created as a result of the request to consider abate of real estate
taxes.
City staff has determined that the applicant has met the required underutilized
condition from the Multiple Family Residential Criteria Matrix. Staff has also
determined that the project does meet the optional condition of "Affordable Housing
and Availability of Affordable Units".
It is staff's belief that since the request meets the required and optional conditions,
this request should be approved. Further, the proposal should be allowed to
proceed to the next step in the process, which is for City Council to set a date of
public hearing for approval of the request.
ALTERNATIVES:
1 . The City Council can determine that the Request for Designation of Urban
Revitalization Area for 1305 Coconino Road meets the conditions for eligibility and
set a date of public hearing for approval of the request. City Council can also direct
staff to prepare the Urban Revitalization Plan.
2. The City Council can determine that the Request for Designation of Urban
Revitalization Area for 1305 Coconino Road does not meet the conditions for
eligibility.
3. The City Council can refer this request back to staff for additional information.
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MANAGER'S RECOMMENDED ACTION:
Staff has determined that the project does meet the required condition of underutilized and
the optional condition of "Affordable Housing and Availability of Affordable Units" of the
Multiple Family Residential Criteria Matrix. Since the project meets both the required and
optional conditions, it is the recommendation of the City Manager that the City Council
adopt Alternative #1 . This action will approve the Request for Designation of Urban
Revitalization Area for 1305 Coconino Road, direct staff to prepare an Urban Revitalization
Plan, and set a date for public hearing of January 14, 2003.
COUNCIL ACTION:
Attachment
S:\Council Action Forms\Urban Revite\1305 Coconino Road— 11-12-02.doc
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