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Home My WebLink AboutA003 - Council Action Form dated May 27, 2008 ITEM # & DATE 05/27/08 COUNCIL ACTION FORM SUBJECT: SETTING THE DATE OF PUBLIC HEARING FOR JULY 8, 2008, TO AMEND THE PLANS FOR URBAN REVITALIZATION AREA #7 (SOMERSET), THE SOMERSET URBAN REVITALIZATION AREA, AND TOWN CENTER WEST URBAN REVITALIZATION AREA (SOMERSET) 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 as an incentive to develop three specific uses within the district: 1. Sit-down restaurants; 2. Grocery stores; and, 3. Commercial buildings with residential on the upper floors. Subsequent actions by City Council on Urban Revitalization in Somerset included (see also map attached): • In March 2001 , the City Council approved an amendment to Urban Revitalization Area #7 and also established the Somerset Urban Revitalization Area, allowing a three-year, 100% tax abatement for single-family residential uses and for buildings constructed for the retail sales of goods and services in both of these areas. • With the build-out of all eligible properties, the tax abatement for single-family residential uses was allowed to expire on May 2, 2004. • In March 2005, the City Council amended the Urban Revitalization Plans for Urban Revitalization Area #7 and Somerset Urban Revitalization Area to allow tax abatement for buildings constructed for single-family residential uses and for buildings built for the retail sales of goods and services until July 1, 2008. • In December 2005, the City Council established the Town Center West Urban Revitalization Area in Somerset providing for tax abatement for buildings constructed for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code, from May 1 , 2001 until July 1, 2008. Without further action by the City Council, as of July 1, 2008, the only new tax abatement in Somerset will be for buildings built for sit-down restaurants, grocery stores, and commercial buildings with affordable residential units on the upper floors. Please note that existing approved tax abatements for completed projects will not be affected. At this time, the request before the City Council is to set the date for public hearing for July 8, 2008 to amend the plans for any and all of the Somerset Urban Revitalization Areas to address the deadlines. The tax abatement status for properties in Somerset is as follows (see map attached): • 38 properties have received tax abatement for single-family residential uses • 16 properties have received tax abatement for retail commercial uses • 1 property has received tax abatement for use as a sit-down restaurant • No properties have received tax abatement for use as a grocery store or for affordable residential units on the upper floors • Buildings have been constructed on 11 commercial properties that have not received tax abatement • 14 parcels that the current Master Plan designates for retail uses are vacant Although an Urban Revitalization Plan may have deadlines for eligibility for tax abatement, the expiration of those deadlines does not automatically eliminate the Urban Revitalization Area. In the case of the Somerset Urban Revitalization Area and the Town Center West Urban Revitalization Area, the construction of the footings must begin before July 1 , 2008. If so, and the project qualifies otherwise, the usual deadline for applying for the tax abatement would be February 1, 2009, with the State law for applications, and under some circumstances application can be made up to three years after that. If the City Council intends to eliminate an Urban Revitalization program completely and permanently, it would be best to repeal the Urban Revitalization Area by ordinance and terminate the Urban Revitalization Plan by resolution. The ordinance should have an effective date and clearly specify a deadline for applications to be made. ALTERNATIVES: 1 . The City Council can approve the resolution setting the date of public hearing for July 8, 2008, to amend the plans for Urban Revitalization Areas in Somerset as follows: a. to terminate Urban Revitalization Area #7, effectively immediately; b. to amend the Somerset Urban Revitalization Area to allow tax abatement for buildings constructed for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code, without a deadline for construction; and c. to amend the Town Center West Urban Revitalization Area to eliminate the deadline for construction of buildings for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code. The Council should opt for this alternative if it is believed that: 1) the tax incentive is acccellerating the successful build-out of the City's first village, 2) the tax incentive is needed to complete the successful build-out of the City's first village, or 3) it is only fair that all property owners in the City's first village have a tax incentive available to them until the area is totally developed. 2. The City Council can approve the resolution setting the date of public hearing for July 8, 2008, to amend the plans for the Somerset Urban Revitalization Area and for the 2 Town Center West Urban Revitalization Area to eliminate the deadlines for construction, leaving all other criteria for tax abatement in Somerset unchanged. 3. The City Council can approve the resolution setting the date of public hearing for July 8, 2008, to amend the plans for the Somerset Urban Revitalization Area and for the Town Center West Urban Revitalization Area to establish new deadlines for construction, leaving all other criteria for tax abatement in Somerset unchanged. 4. The City Council can approve the resolution setting the date of public hearing for July 8, 2008, to eliminate all Urban Revitalization Areas in Somerset and direct staff to specify February 1, 2009, as an effective date and deadline for all applications. The Council should opt for this alternative if it is believed that that tax abatement program offered in the Somerset Village to "jump-start" construction in the City's preferred type of development has accomplished its goal. The existence of a substantial core of businesses in Somerset will assure its ultimate build- out. 5. The City Council can refer this request back to staff and/or the applicant for additional information. MANAGER'S RECOMMENDED ACTION: The City Council established and expanded Urban Revitalization tax abatement programs in Somerset in order to support and stimulate interest in what the Land Use Policy Plan declared as the preferred development option, the "Village". It appears that the tax abatement incentive available in these programs is accomplishing generally, what the City Council had hoped for. Exceptions to this would be the affordable residential units, the grocery store, and perhaps the wider variety of retail providing daily needs of area residents. Since it appears there is little likelihood for the development of the affordable residential units and the grocery store that were the sole purpose of Urban Revitalization Area #7, then it could be argued that Urban Revitalization Area #7 should now be eliminated. It should be noted that the elimination of Area #7 will not end the current tax abatement for the building occupied by the Cafe. The commercial areas in Somerset have developed with the tax abatement incentive in place. In order to avoid interrupting this construction in Somerset and to be fair to the owners of the remaining vacant commercial property, the tax abatement for buildings constructed for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code, should continue until such sites are built out. Therefore, it is the recommendation of the City Manager that the City Council act in accordance with Alternative#1, which is to approve the resolution setting the date of public hearing for July 8, 2008, to amend each of the plans for Urban Revitalization Areas in Somerset as follows: a. to terminate Urban Revitalization Area #7, effective immediately; 3 b. to amend the Somerset Urban Revitalization Area to allow tax abatement for buildings constructed for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code, without a deadline for construction; and c. to amend the Town Center West Urban Revitalization Area to eliminate the deadline for construction of buildings for retail sale of goods or services, as defined in Table 29.501(4)-3 of the Ames Municipal Code. 4 y M a � F w' a' RMTTT7 '-d , � `�•• til2ltlt' - tN�gt AS PEN DR mersat U KI � 'A BRISTJL DR N AVE { .J 4i�11-NSURN DR PINE GIR h � � Urban Revitalization Areas in Somerset N Legend Town Center West Somerset URA W E URA#7 Somerset Boundary S 200100 0 200 Feet a Prepared by the Department of Planning and Housing November 16,2005 — 5 Commercial Tax Abatement in Soln ei•set .._ Asr�errRo _. ; f Town Centel Wftt Somerset URA i Legend N Somerset URA -Built with Abatement r-----rr �.---;Ta+rvn Center West ��. ,. Potentially Eligible URA#7 Built without Abatement Somerset Boundary Prepar olam g Housing MOO 22,2008 6