Memorandum
City of Lawrence
City Manager’s Office
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TO: |
Tom Markus, City Manager |
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CC: |
Diane Stoddard, Assistant City Manager Casey Toomay, Assistant City Manager |
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FROM: |
Britt Crum-Cano, Economic Development Coordinator |
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DATE: |
December 6, 2016 |
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RE: |
CC Public Hearing (Continuation): Vermont Place IRB and NRA Request |
Please see List of Attachments at the end of this memo.
Project & Request Overview
Vermont LLC is requesting a 10-year, 75% Neighborhood Revitalization Area (NRA) rebate and an Industrial Revenue Bonds (IRB) sales tax exemption on construction materials to support the development of two vacant parcels, located at approximately 800-815 Vermont Street in the Downtown Lawrence business district, into a mixed-use, commercial and residential project.
The project is anticipated to add:
· 1st Floor: Commercial/Retail (7,788 square feet of leasable space)
· 2nd Floor: Entrepreneurial Offices (6,504 square feet of leasable space, divided into ~30 offices)
· 3rd-5th Floors: Residential, 12 condominiums, one of which will be permanently set aside for affordable housing
· On-Site Underground Parking: 22 spaces
Vermont LLC is requesting the City, Douglas County and USD 497 participate in the NRA program. The City, County, and School District individually decide their participation in the NRA and each will conduct a public meeting to consider the request. The IRB sales tax exemption is considered only by the City. (Scheduled meetings are shown on the attached request process calendar.)
NRA Background:
The Neighborhood Revitalization Area (NRA) is an economic development tool established by the Kansas Neighborhood Revitalization Act (K.S.A. 12-17,114 et seq.) to promote reinvestment and revitalization of properties, which in turn have a positive economic effect upon a neighborhood and the City in general. In addition, NRAs fall under City policy (Resolution 6954, adopted 2011). The establishment of a revitalization area enables a property owner to receive a rebate on a portion of the incremental increase in property value resulting from improvements
The Technical Report summarizes eligibility for this particular project and concludes that the request would meet NRA policy parameters.
IRB Background
K.S.A. 12-1740 permits cities to issue revenue bonds for the purpose of paying the costs of purchasing, acquiring, constructing or equipping facilities for “agricultural, commercial, hospital, industrial, natural resources, recreational development and manufacturing purposes”. Considered a “conduit financing mechanism” whereby the City can assist companies in acquiring facilities, renovating structures, and purchasing machinery and equipment through bond issuance, IRBs can be useful to companies in obtaining favorable rate financing for their project, as well as providing a sales tax exemption on project construction materials. IRBs are repayable solely by the company receiving them and place no financial risk on the City.
IRBs fall under State requirements as well as City policy (Ordinance 8253). The Technical Report summarizes eligibility for this particular project and concludes that the request would meet IRB policy parameters.
Actions to Date
At their July 5, 2016 meeting, the City Commission heard the request and referred it to Staff for analysis, with the intention that the final request and analysis would later be referred to the Affordable Housing Advisory Board and Public Incentives Review Committee for review and recommendation.
Analysis
City Staff completed a cost-benefit analysis in accordance with the City’s NRA policy issue. Additionally, as was discussed in July, the City retained the services of National Development Council (NDC) to perform a gap analysis (“but for”) of the proposal in order to ascertain whether the project required a subsidy and if so, what is the identified gap to make the project viable. The technical report is included as an attachment at the end of this memo.
October 10, 2016: Affordable Housing Advisory Board (AHAB) Review
At their October 10, 2016 meeting, AHAB reviewed the project’s affordable housing component and voted to recommend the project to the City Commission. Motion passed 6 to 0, with one abstention.
October 18, 2016: City Commission Referral
At their October 18, 2016 meeting, the City Commission referred the revised request and analysis to PIRC for review and recommendation. A public hearing date was set for November 1, 2016 for the City Commission to consider the request.
November 1, 2016: PIRC Consideration & Recommendation
At their November 1, 2016 meeting, PIRC reviewed the request and voted to recommend the project, as requested (75% NRA rebate, 10 year period) to the City Commission. Motion passed 4 to 2.
November 1 2016: City Commission Public Hearing
City Commission public hearing to receive PIRC recommendation and consider request. Continued to December 6, 2016
Future Actions
A request processing calendar is included as an attachment at the end of this memo. The below meetings are scheduled for consideration of this request:
December 6, 2016: Continuation of City Commission public hearing
December 12, 2016: School Board to receive PIRC recommendation and consider request
December 14, 2016: County Commission to receive PIRC recommendation and consider request
December 20, 2016: City Commission final action on request
City Commission Requested Action
Receive recommendations from the Public Incentive Advisory Committee and the Affordable Housing Advisory Board and receive request from Vermont LLC for a Neighborhood Revitalization Area (NRA) and Industrial Revenue Bond financing for a mixed-use project at 800-815 Vermont Street.
Hold a public hearing on the establishment of a Neighborhood Revitalization Area (NRA) at 800-815 Vermont Street for the Vermont Place project. After the public hearing, consider first reading of Ordinance 9303 establishing the revitalization area and approving the NRA plan, and consider Resolution 7173 authorizing Industrial Revenue Bond (IRB) financing for the purpose of accessing a sales tax exemption on project construction materials.
List of Attachments: Vermont Place NRA & IRB