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HomeMy WebLinkAboutA032 - Council Action Form dated December 10, 2013 ITEM # 25 Date: 12-10-13 COUNCIL ACTION FORM SUBJECT: APPROVAL OF KINGLAND SYSTEMS TIF AGREEMENT BACKGROUND: At the November 26t" meeting, the City Council reviewed the recommended provisions from the staff regarding the TIF agreement with the Kingland developers and directed staff to an agreement which reflects these provisions. Attached for your review and approval is the TIF agreement. The agreement basically reflects the issues that were presented previously. A few of the modifications are highlighted below: Paragraph B • The incremental rebate payments will continue to the developers until June 30, 2026, or until such earlier date upon which total payments equal to $2,064,530 have been made. You will note from this wording that a specific date has been included in the agreement to better clarify the intent of both parties. Assuming the improvements will not be underway and on the tax rolls until January 2015, the first two rebate payments will not be made to the developer until December 2016 and June 2017. Consequently, the contract specifies that the City's obligation to provide the tax abatement incentive will end on the specific date of June 30, 2026. • Paragraph A(4)(k) Originally, it was agreed that four suites would be constructed on the ground floor with specific square footages. The developers have expressed the desire to have the flexibility to create fewer suites with different square footages. Therefore, the wording was changed to allow them to alter the number and size of the suites. • Paragraph A(5)(d) In return for the change mentioned above, the developers have agreed to drop their ability to opt out of the second ten year term to restrict the uses in 17,244 square feet on the ground floor to Retail Sales and Services and Entertainment, Restaurant, and Recreational Trade if any suite is vacant twelve consecutive months. Therefore, for ten years after the rebate payments cease, at least 17,244 square feet of the total leasable space of 25, 596 square feet on the ground floor will be restricted. • In conversations with our Bond Attorney, there was concern expressed that the new state tax legislation might have some negative impact on TIF rebates and, consequently, our agreement with the Kingland developers. However, at the time of writing the agreement, the new legislation has not been clarified to a point that we know how, or if, it will impact our TIF rebate. Therefore, contrary to what was promised in our November 26t" staff report, this issue is not addressed in the agreement. • Paragraph A(3) You will recall the previous staff report reflected a minimum assessment agreement totaling $8,840,545. It should be noted that this amount equals the incremental value of the proposed new development. In order to assure that the City also receives tax payment on the base valuation that exists currently, the minimum assessment values have been adjusted to $12,307,745. ALTERNATIVES: 1) The City Council can approve a resolution approving the attached TIF agreement. 2) The City Council can approve a resolution approving the attached TIF agreement with specific modifications suggested by the Council. 3) The City Council can delay any action on the attached TIF agreement if additional information is desired before a final decision can be made. 4) The City Council can decide not to approve the attached TIF agreement. MANAGER'S RECOMMENDED ACTION: For many years, this City Council has established the redevelopment of the Campustown business district as one of its top priorities. Previous efforts to proactively work with a development company to accomplish this goal did not succeed. The magnitude of the incentive being offered in this agreement is unprecedented. However, because this development will serve as a catalyst project for the area, the extraordinary financial support for this first project is justified. Therefore, it is the recommendation of 2 the City Manager that the City Council adopt Alternative #1 and pass a resolution approving the attached TIF agreement. 3 DO NOT WRITE IN THE SPACE ABOVE THIS LINE;RESERVED FOR RECORDER Prepared by: Judy K.Parks,Ames City Attorney,515 Clark Avenue,Ames,IA 50010;(515)239-5146 Return recorded document to: Ames City Clerk,515 Clark Avenue,P.O.Box 811,Ames,IA 50010 DEVELOPMENT AGREEMENT FOR KINGLAND CAMPUS PROPERTIES, LLC,WITH TAX INCREMENT REBATE INCENTIVES AND PROJECT DEVELOPMENT REQUIREMENTS THIS AGREEMENT is entered into between the City of Ames, Iowa (the "City") and Kingland Campus Properties, LLC (the "Developer") as of the 10th day of December, 2013. WHEREAS, the City has established the Campustown Urban Renewal Area (the "Urban Renewal Area"), and has adopted a tax increment ordinance for the Urban Renewal Area; and WHEREAS, the Developer owns certain real property which is situated within the Urban Renewal Area and specifically described as: PARCEL 'AA' IN BEARDSHEAR'S ADDITION AND PARKER'S ADDITION TO THE CITY OF AMES, STORY COUNTY, IOWA (the "Property"), and; WHEREAS, the Developer proposes to construct a commercial facility for retail and office uses on the Property (the "Project") and has requested tax increment financing assistance in paying the costs of the Project; and WHEREAS, the City is willing to provide incentives to the Developer for this major renewal project and to promote certain types of uses within the Project to serve the needs of the Campustown community; and WHEREAS, Chapter 15A of the Code of Iowa authorizes cities to provide grants, loans, guarantees, tax incentives and other financial assistance to or for the benefit of private persons. NOW THEREFORE, the parties hereto agree as follows: 1 A. Developer's Covenants 1. The Developer agrees to construct, maintain and use the Project as a commercial facility not incorporating residential uses throughout the term of this Agreement. 2. The Developer agrees to make timely payment of all property taxes as they come due throughout the term of this Agreement and to submit a receipt or cancelled check to the City Clerk in evidence of each such payment. 3. Minimum Assessment Agreement. On the date of execution of this agreement, the Parties shall enter into a minimum assessment agreement, in form and content to be mutually agreed to but substantially as set forth on Exhibit A attached hereto (the "Assessment Agreement"), which shall set forth the minimum value of the land and completed improvements on the land until the termination date specified therein. The agreement shall provide that the land and any improvements constructed by Developer shall have an agreed taxable valuation of not less than $12,307,745.00 by January 1, 2015, subject to the terms and conditions set forth therein. The Ames City Assessor shall be free to assign a higher value, which Developer may challenge, so long as Developer does not seek a reduction of actual value below the minimum assessment amount. The Assessment Agreement shall remain in effect until June 30, 2026, or until the amount of the Incremental Property Tax Revenue payments paid to Developer reach$2,064,530.00, whichever occurs first. 4. Project Features. The Developer agrees to incorporate the following elements into its Project, in addition to the City's standard development and permitting requirements: a. A Construction Management Plan shall be submitted to the City prior to the demolition of the existing buildings and the new construction of the Project, which shall address how management of on- and off-site transportation, parking and construction general coordination issues with the Developer's General Contractor will be done. b. The architectural and site design of the Project shall be in substantial conformance to the conceptual plans attached as Exhibits B, C, and D to this Agreement, subject to Minor Site Plan Approval. c. The Welch Avenue building fagade shall have the appearance of multiple storefronts (minimum of two) at the ground level and include an entrance to the ground floor tenant space(s) onto Welch Avenue. A hard-scaped alternative public space shall be included adjacent to the Welch Avenue entrance at the south end of the building for use by commercial patrons or commercial vending. d. The Lincoln Way building fagade shall include a corner entrance near Welch Avenue for access to the ground floor tenant and shall have an architectural appearance of multiple storefront bays (Minimum of four) at the ground level. 2 e. The ground floor may include office lobby access from Lincoln Way. f. The Developer shall be required to keep the windows along the ground level storefronts substantially clear and unobstructed so as to allow for visibility into or through to the interior spaces. g. A minimum of one tenant suite shall be pre-planned and constructed so that it may be used as a restaurant. This shall include provision of necessary mechanical space, chases, and other necessary physical accommodations needed to serve as a restaurant use. h. The Developer shall include a Public Safety Security Plan for lighting and surveillance cameras within the parking areas as part of the Minor Site Plan for the Project, and shall use and maintain the security features of that plan once the Project is constructed. Security camera footage shall be recorded and retained for a minimum of two weeks and shall be made available to the Ames Police Department upon request. i. The Project shall include a minimum of seventy (70) on-site parking spaces. If a parking deck is provided, it shall have secured access for the lower level at all times, including a closeable driveway door and secured access doorways. j. A signage plan for the Project, which shall contain intended sign locations, awnings, sign materials, and finishes, for the complete building and site shall be submitted to the City Planning Director for approval , which approval shall not be unreasonably withheld, prior to issuance of a sign permit, or if no sign permit is required, prior to the request for the first tax increment payment. The approved signage plan shall be binding upon all tenants and shall be incorporated into Developer's tenant lease agreements. k. The Developer shall construct approximately 22,596 square feet of net leasable space on the ground floor divided approximately as follows: Suite A 14,049 square feet Suite B 3,195 square feet Suite C 2,770 square feet Suite D 2,582 square feet Suites B, C, and D may be divided and arranged as needed to address potential tenant requirements. 5. Use Restrictions. The Developer agrees that uses in the Project will be in accordance with the following: 3 a. Prohibited Uses. No space in the Project shall ever be used for a casino, an adult entertainment facility (as defined by the Ames zoning regulations), a firearms shooting range, a massage parlor or hot tub facility, or as a gambling or betting office, except that the incidental sale of state regulated lottery tickets approved for sale at retail outlets is permitted. b. Drive throughs are prohibited for any use. c. The Developer agrees to restrict uses on the ground floor of the Project to Retail Sales and Services and Entertainment, Restaurant, and Recreational Trade uses as defined in Article 5 of Chapter 29 of the Ames Municipal Code, which is attached as Exhibit E and is incorporated herein. This restriction commences with the signing of this agreement and shall thereafter be in effect until June 30, 2026, or until the amount of the Incremental Property Tax Revenue payments paid to Developer reach $2,064,530.00, whichever occurs first. d. Once the time period of the restriction provided for in paragraph A(5)(c) above has ended, the Developer further agrees to continue to restrict uses in not less than 17,244 square feet of floor area on the ground floor to Retail Sales and Services and Entertainment, Restaurant, and Recreational Trade uses as defined in Article 5 of Chapter 29 of the Ames Municipal Code. This restriction shall continue for an additional ten(10)years. 6. The Developer agrees that it shall not apply for or participate in any other real estate tax abatement programs on this Property until the time the TIF rebate is no longer claimed for this Property. B. City's Obligations In recognition of the Developer's obligations set out above, the City agrees to make economic development tax increment payments (the "Payments") to the Developer in each fiscal year during the term of this Agreement, pursuant to Chapters 15A and 403 of the Code of Iowa, provided, however, that the aggregate total amount of the Payments shall not exceed $2,064,530.00, and all Payments shall be subject to annual appropriation by the City Council. The Payments will be made on December 1 and June 1 of each fiscal year, beginning in the first fiscal year for which the City receives incremental property tax revenues with respect to an increase in the taxable valuation of the Property over the valuation shown on the tax rolls as of January 1, 2013 (the "Incremental Property Tax Revenues"), and continuing until June 30, 2026, or until such earlier date upon which total Payments equal to $2,064,530.00 have been made. For example, if an increase in taxable valuation of the Property is placed on the Story County tax rolls as of January 1, 2015, the first Payment will be made on December 1, 2016. Before making any Payments, the City may retain Incremental Property Tax Revenues in an amount necessary to pay the City's expenses related to the preparation and approval of this 4 Agreement and the related urban renewal plan for the Urban Renewal Area, such amount not to exceed $5000.00. Thereafter, each Payment shall be in an amount equal to 100% of the Incremental Property Tax Revenues received by the City during the six months immediately preceding each Payment Date. Incremental Property Tax Revenues are produced by multiplying the consolidated property tax levy(city, county, school, etc.) times the incremental valuation of the Property, then subtracting debt service levies of all taxing jurisdictions, subtracting the school district physical plant and equipment and instructional support levies, and subtracting any other levies which may be exempted from such calculation by action of the Iowa General Assembly. The Payments shall not constitute general obligations of the City, but shall be made solely and only from Incremental Property Tax Revenues attributable to the Property that are received by the City from the Story County Treasurer. Each Payment shall be subject to annual appropriation by the City Council. Prior to November 15 of each year during the term of this Agreement, the City Council shall consider the question of obligating for appropriation to the funding of the Payments due in the next succeeding fiscal year, an amount of Incremental Property Tax Revenues to be collected in such following fiscal year equal to the City's estimate of the amount of Incremental Property Tax Revenues that could be collected in such year (the "Appropriated Amount"). Each such estimate shall be based on then current consolidated property tax levy and most recent incremental valuation of the Property. To the extent the City Council decides to obligate funds for appropriation to the Payments, the City agrees to certify to the Story County Auditor by December 1 of each year during the term of this Agreement an amount equal to the most recently determined Appropriated Amount. C. Administrative Provisions 1. This Agreement may not be amended or assigned by either party without the express permission of the other party. However, the City hereby gives its permission that the Developer's rights to receive the economic development tax increment payments hereunder may be assigned by the Developer to a lender, as security, without further action on the part of the City. 2. This Agreement shall run with the land and shall be binding upon the Developer, its successors and assigns. Each party hereto agrees to cooperate with the other in executing a Memorandum of Agreement that may be recorded in place of this document. 3. This Agreement shall be deemed to be a contract made under the laws of the State of Iowa and for all purposes shall be governed by and construed in accordance with laws of the State of Iowa. 5 4. The parties acknowledge and agree that this Agreement is being executed without review or approval of specific plans for development of the Site. The parties acknowledge and agree that it is not possible to anticipate all the infrastructure requirements the Developer may be required to complete to properly develop the site. Therefore, the parties agree that all work done by or on behalf of the Developer with respect to, but not limited to, a traffic study and any improvements identified by that study, public streets, sidewalks, bike paths, building design, construction and utilities, both on-site and off-site, shall be made in compliance with the Iowa Code, SUDAS and all other federal, state and local laws and policies of general application, including but not limited to subdivision and zoning codes, whether or not such requirements are specifically stated in this Agreement. 5. This agreement may be terminated only with the express written consent of the other party. The City and the Developer have caused this Agreement to be signed, in their names and on their behalf, by their duly authorized officers, all as of the day and date written above. CITY OF AMES, IOWA KINGLAND CAMPUS PROPERTIES, LLC By By Ann H. Campbell, Mayor David J. Kingland, CEO Attest By Diane R. Voss, City Clerk Todd A. Rognes, President and Secretary STATE OF IOWA,STORY COUNTY ss: STATE OF IOWA,COUNTY OF STORY,ss: On this day of 2013,before me, This instrument was acknowledged before me on a Notary Public in and for the State of Iowa,personally appeared Ann , 2013, by David A. Kingland and Todd A. H.Campbell and Diane R. Voss,to me personally known,and, who, Rogues, as CEO and President/Secretary, respectively, of Kingland being by me duly sworn, did say that they are the Mayor and City Campus Properties,LLC. Clerk,respectively,of the City of Ames,Iowa;that the seal affixed to the foregoing instrument is the corporate seal of the corporation,and that the instrument was signed and sealed on behalf of the corporation, Notary Public in and for the State of Iowa by authority of its City Council, as contained in Resolution No. adopted by the City Council on the day of , 2013, and that Ann H.Campbell and Diane R. Voss acknowledged the execution of the instrument to be their voluntary act and deed and the voluntary act and deed of the corporation,by it voluntarily executed. Notary Public in and for the State of Iowa 6 DO NOT WRITE IN THE SPACE ABOVE THIS LINE;RESERVED FOR RECORDER Prepared by: Judy K.Parks,Ames City Attorney,515 Clark Ave.,Ames,IA 50010;(515)239-5146 Return recorded document to: Ames City Clerk,515 Clark Ave.,P.O.Box 811,Ames,IA 50010 Exhibit A KINGLAND MINIMUM ASSESSMENT AGREEMENT This Minimum Assessment Agreement is entered into this 10t' day of December, 2013, by and between the City of Ames, Iowa (hereinafter "City"), Kingland Campus Properties, LLC, an Iowa corporation(hereinafter"Developer"), and the City Assessor for the City of Ames, Iowa(hereinafter "Assessor"). WITNESSETH: WHEREAS, on or about December 10, 2013, City and Developer have entered into a Development Agreement with Tax Increment Rebate Incentives and Project Development Requirements (the "Development Agreement") regarding certain real property located in City; and WHEREAS, it is contemplated that pursuant to said Agreement,Developer will undertake the redevelopment of property within City and within the Campustown business district (hereinafter referred to as "Property")which is described as follows: PARCEL 'AA' IN BEARDSHEAR'S ADDITION AND PARKER'S ADDITION TO THE CITY OF AMES, STORY COUNTY, IOWA; and WHEREAS, pursuant to section 403.6 of the Code of Iowa, as amended, City and Developer desire to establish a minimum actual value for the improvements to be constructed or placed upon the Property by Developer pursuant to the Agreement, which shall be effective upon substantial completion of such improvements and from then until this Agreement is terminated pursuant to the terms herein and which is intended to reflect the minimum actual value of such improvements, exclusive of the value of the unimproved land; and WHEREAS, City and the Assessor have reviewed the preliminary plans and specifications including the Developer's agreement applicable to the improvements contemplated to be erected. NOW, THEREFORE, the parties to this Minimum Assessment Agreement, in consideration of the promises, covenants and agreements made by each other, do hereby agree as follows: 1. Upon substantial completion of construction of the improvements described in the Development Agreement for the Property, the Assessor shall establish a minimum actual taxable value for assessment purposes on the land and buildings that are constructed on said Property of at least $12,307,745.00. This minimum assessment requirement shall remain in effect until June 30, 2026, or until the amount of the Incremental Property Tax Revenue payments paid to Developer reach $2,064,530.00, whichever occurs first. 2. Nothing herein shall be deemed to waive Developer's rights under Iowa Code section 403.6(19), as amended, to contest that portion of any actual value assignment made by the Assessor in excess of the Minimum Actual Value established herein. In no event, however, shall Developer seek to reduce the actual value assigned below the Minimum Actual Value established during the term of this Agreement. 3. In the event that any portion of the Property is taken through the exercise of the power of eminent domain, the Minimum Actual Value shall be reduced by the same proportion as the value of the portion of such Property so taken bears to the value of such Property in its entirety immediately prior to such taking. 4. This Minimum Assessment Agreement shall be promptly recorded by Developer with the Recorder of Story County, Iowa. Developer shall pay all costs of recording. 5. Neither the preambles nor provisions of this Minimum Assessment Agreement are intended to, or shall be construed as, modifying the terms of the Development Agreement between City and Developer. 6. This Minimum Assessment Agreement shall inure to the benefit of and be binding upon the successors and assigns of the parties. IN WITNESS WHEREOF,the Parties have caused this Agreement to be signed by their authorized representatives as of the date first above written. CITY OF AMES, IOWA KINGLAND CAMPUS PROPERTIES, LLC By By Ann H. Campbell, Mayor David J. Kingland, CEO Attest By Diane R. Voss, City Clerk Todd A. Rognes, President and Secretary STATE OF IOWA,STORY COUNTY ss: STATE OF IOWA,COUNTY OF STORY,ss: On this day of 2013, This instrument was acknowledged before me on before me, a Notary Public in and for the State of Iowa, 2013, by David A. Kingland and personally appeared Ann H. Campbell and Diane R. Voss, to Todd A. Rogues, as CEO and President/Secretary, me personally known, and, who,being by me duly sworn, did respectively,of Kingland Campus Properties,LLC. say that they are the Mayor and City Clerk,respectively,of the City of Ames, Iowa; that the seal affixed to the foregoing instrument is the corporate seal of the corporation,and that the Notary Public in and for the State of Iowa instrument was signed and sealed on behalf of the corporation, by authority of its City Council,as contained in Resolution No. adopted by the City Council on the day of , 2013, and that Ann H. Campbell and Diane R. Voss acknowledged the execution of the instrument to be their voluntary act and deed and the voluntary act and deed of the corporation, by it voluntarily executed. Notary Public in and for the State of Iowa CERTIFICATE OF ASSESSOR The undersigned, having reviewed the plans and specifications for the improvements to be constructed upon the land described in the Development Agreement, and the market value assigned to such improvements, and being of the opinion that the minimum market value contained in the foregoing Minimum Assessment Agreement appears reasonable, hereby certifies as follows: The undersigned Assessor, being legally responsible for the assessment of the Property as described above, upon completion of improvements to be made on it and in accordance with the Minimum Assessment Agreement, certifies that the actual value assigned to land, building, equipment and other improvements shall be twelve million three hundred seven thousand seven hundred forty-five dollars ($12,307,745.00), until termination of this Minimum Assessment Agreement pursuant to the terms hereof. Date: ,2013 Gregory P. Lynch,Ames City Assessor STATE OF IOWA,COUNTY OF STORY,ss: On this day of 2013, before me, the undersigned, a Notary Public in and for said State, personally appeared Gregory P. Lynch, Ames City Assessor,to me known to be the identical person named in and who executed the foregoing instrument,and acknowledged that he executed the same as his voluntary act and deed. Notary Public in and for the State of Iowa 92844 2.doex Exhibit B BEP6LA ND♦CRA �,CMMrn bb� wpvwneummn xwAry.,mmanmm i f I I j m Z �< P.E3 s1r Lli „ass ❑ d 3 a� L------------------------------------j z O LLJ O W E I Y C) of w ui Z I -.-�7 - 4'�� dlid—L lddl. d- H -H- k- �' Iz O cc f!rJ CL C L) � I r � irourcnrt nrunrmrt.una PRELIMINARY I1 6.13 12044 SITE PLAN&FIRST FLOOR PLAN " A100 of Exhibit C BERGIAND+CRAM a MenevY.bn�m.mtan ,.• ucaxrrr i f i f I - naori ..r.a Nr C LU as,zs. ❑ a ■ E Z O e L-- E R717, ®®® ®®®® �M ®D089a4D 0 > 'I Z LLI II p a j Y LLI :r cr y j 8 1 Lli Z a O O I � Q o s� -H -I-L-Ntht� ®i O ®j •�• 0*00 ®• •A• •��6D w.� 5 PRELIMINARY 11,4,13 12044 SITE PLAN&SECOND FLOOR PLAN A102 = --- - - - 1�- _ ._._-_:....._.�=....w.....ri��ii��t�ii�rril`rir�li _ y . I� 1111111111, 1�_ I -_ ME No ......� ■■_ ■IV o1 � I - - _I ■----------III .. -I _- ■■ �i WEM__® WE 1100 MIME! 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(Noted exceptions for trade uses of lumber yard and vehicle sales) Retail Sales: Stores selling, leasing,or renting consumer, home, and business goods including: Antiques Appliances Art Art supplies Automobile supplies(no services) Bicycles and Motorized Bicycles Books and printed material Clothing Sup Computer hardware and software sales and service Convenience Store Dry goods Electronic equipment Fabric Furniture Garden supplies Gifts Groceries Hardware Home improvements Household products Jewelry Music supplies Newspaper distribution Office machines Package liquor Pets Petfood Pharmaceuticals Plants and flowers Shoes Sporting goods Stationery Tobacco products Toys Food sales(not including seating areas): Bakeries Candy Delicatessens Retail Personal, Business and Repair Services: Animal grooming salons Blueprinting and photocopying services Branch banks Business and commercial trade schools Business and management consulting services Dance or music schools Dry cleaning collection and distribution centers Emergency medical care facilities Employment agencies Hair,tanning,and personal care services Kennels Laundromats Locksmiths Martial arts instruction Office equipment rental Photo drop-off Photographic studios Quick printing Recycling drop-off Scientific and professional instrument repair Sign making Tailors Television, bicycle, motorized bicycle,clock,watch,shoe,gun,appliance and office equipment repair Upholsterers Veterinarian offices Entertainment Restaurant and Recreational Trade Definition. Facilities providing entertainment or recreation services and eating and drinking establishments. Uses Included Banquet halls Bars and taverns Billiards and pool halls Bowling alleys Catering establishments Exhibition and meeting areas(20,000 sf or less) Game arcades Health clubs and gyms Ice or roller skating rinks Indoor firing ranges Lodges and social clubs Membership clubs Movie theaters Restaurants,cafes,delicatessens(with seating areas) Swimming pools Tennis Theaters