To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Frank Gray, CEO, Castle Rock Economic Development Council
Title
Resolution Approving the Economic Development Assistance Agreement Between the Town of Castle Rock, Saunders Development Company, LLC Colorado Powerline, Inc., and Lakewood Electric Company, Inc.
Body
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Executive Summary
The purpose of this memorandum is to provide an overview of the Castle Rock Industrial in the Meadows development and their request for Town support through the Castle Rock Economic Incentive Program. The development is a collaboration between Saunders Commercial Development Company, Colorado Powerline Inc., and Lakewood Electric Company, Inc. Together, they are proposing to purchase a 15.5-acre site in the Meadows, located on Lot 19 within the Meadows COI ground in order to construct two 80,000 SF industrial buildings. The first phase of the development will include building one; of which Colorado Powerline Inc. (CPI) and Lakewood Electric intend to relocate their company headquarters and occupy 40,000 SF of the building. As part of this phase, CPI and Lakewood Electric, anticipate relocating 42 full time employees to Castle Rock with an average salary range of $72,000 to $75,000. The remaining 40,000 SF of building one will be brought to market and be made available for lease. Once building one is complete and additional leases are signed, Castle Rock Industrial in the Meadows will begin phase two of the development which will include the construction of a second 80,000 SF industrial building which will be brought to market for lease.
During the due diligence process, it was discovered that the cost of the development, if built in Castle Rock, would be approximately $550,000 over the cost if the development was constructed in unincorporated Douglas County. The largest factor associated with this increase relates to the permit and fees associated with developing in the Town vs. the County. Saunders Commercial Development Company highlights the difference as representing $379,617 and provided a mockup which has been submitted, reviewed by the EDC and Town staff and is attachment to this memorandum.
Introduction of Applicants
As mentioned earlier, there are three organizations associated with his development, Saunders Commercial Development Company, Colorado Powerline Inc., and Lakewood Electric Company, Inc.
Saunders Commercial Development Company, LLC
Saunders Commercial Development Company, LLC was formed in 2016 under Saunders Construction, Inc. which was establish in 1972. The newly formed development arm allows Saunders Commercial Development Company to leverage the experience of the construction company and invest alongside their clients, aligning goals and providing product services that go beyond the traditional construction experience.
Colorado Powerline, Inc. (DBA- CPI)
Colorado Powerline, Inc. is a Colorado based electric utility construction company. Their primary customer is CORE Electric Cooperative (formerly IREA) based out of Sedalia, CO. The new space will be CPI’s office headquarters and include a warehouse, for material storage, employee training, equipment parking and a shop large enough for equipment maintenance. CPI currently has 147 employees, 30 of whom will be fulltime in the new office. As part of the project, CPI anticipates adding 11 new positions within 12 months following occupancy.
Lakewood Electric Company, Inc.
Lakewood Electric Company, Inc. was established in 1976 and currently employs 80 employees, 12 that will office at the new facility. Lakewood Electric provides electrical services throughout the Denver Metro MSA. As part of the new development, Lakewood Electric intends to higher two additional office positions and 15 new field staff.
Incentive Request
Castle Rock Industrial in the Meadows has formally requested assistance through the Castle Rock Economic Development Program. The requests are in line with the Town’s economic development policies, the request includes the following:
1. Permit fees and taxes rebate not to exceed $455,000
2. Job creation incentive for 42 relocating and new hires not to exceed $110,250
Castle Rock Industrial in the Meadows has committed, that should the Town support this request they intend to proceed with closing on the ground in the 2nd quarter of 2022.
Incentive Structure Recommendation (EDC)
The EDC supports the use of incentives to ensure that Saunders Commercial Development, CPI and Lakewood Electric proceed with Castle Rock Industrial in the Meadows. The project aligns with several initiatives associated with the Town’s Economic Development polices. It supports the focus to attract and grow primary employment within the policies target industries and increases the number of people that live and work in Castle Rock. Additionally, the 120,000 SF of available industrial space will provide Castle Rock the necessary commercial infrastructure to attract new businesses to the Town and provide opportunities for existing businesses grow.
The EDC recommends the following incentive structure.
1. Colorado Powerline Inc. (CPI) - Job creation incentive as outlined in the Castle Rock Economic Development Incentive program for up to 30 new or relocating employees with a not to exceed amount of $90,000.
2. Lakewood Electric Company, Inc. - Job creation incentive as outlined in the Castle Rock Economic Development Incentive Program for up to 12 new or relocating employees with a not to exceed amount of $36,000.
3. Saunders Commercial Development Company, LLC - The EDC’s recommendation is to split the remaining $420,000 of the request equally between the two proposed buildings. The first building will be able to request permit and fee reimburse within 30 days following the date upon which a certificate of occupancy has been issued. It is the EDC’s recommendation that the second building have the additional requirement of a tenant with at least 10 primary jobs in addition to the certificate of occupancy.
4. The EDC also recommends an incentive restriction be placed on the second building that prohibits residential storage. Residential storage is not a product type that the EDC is actively pursuing within the contexts of the economic development policies.
5. In the event that a future primary employer demonstrates interest in the remaining leasable portion of building(s), the EDC recommends that incentive opportunities remain open and managed on a case-by-case basis.
Policy Support
It is the EDC’s position that Castle Rock Industrial in the Meadows incentive request warrants the support of the Town’s economic development incentive fund. Economic vitality is a critical factor in ensuring Castle Rock’s long-term success in achieving its vision of being a self-sufficient standalone community. With increasing regional competition, it is important to Castle Rock to remain competitive and maintain an exceptional business climate.
By supporting Castle Rock Industrial in the Meadows, the Town would ensure that:
1. Castle Rock secures the corporate headquarters of CPI and Lakewood Electric.
2. CPI and Lakewood Electric are both primary employers. Primary employers are defined as employers in which 50% or more of their goods and services are sold outside of the County in which they reside. The exporting of goods enhances the economic vitality of the host community as goods flow out and new money is brought in. It’s important to note that Primary Employers by definition are location agnostic, as they are exporters and select their location based on specific real estate needs and access to employees.
3. As defined in the Town’s Economic Development Policies, primary employment that includes 25 or more new FTE positions to Castle Rock should be seen as an “Economic Catalysts/Project of Economic Development Significance”
4. Supports the growth of 30- 40 new high paying positions that qualify under the Town’s Targeted Industry category, as these newly created positions provide additional employment opportunities for Castle Rock residents and provide the necessary multiplier effect to help grow the Town’s economy
5. By supporting Castle Rock Industrial in the Meadows, we secure not only two primary employers but also support the construction of 160,000 SF of new to market industrial space of which 120,000 SF can be used to attract additional primary employment.
Additional Policy Support - Economic Planning Systems (EPS) Work Session with Town Council
The Town of Castle Rock and Castle Rock Economic Development Council (EDC) executed an Economic Development Strategic Plan with the assistance of Economic Planning Systems (EPS), which summarized a vision for growing the Town’s economy and providing a set of guiding principles based on the Town’s economic strengths and weaknesses. The analysis identified three major initiatives and presented notable findings.
Major Initiatives
1. Continue to focus on attraction and growth of primary employment within the EDC’s target industries.
1. Improve the market position of office development in Castle Rock and continue to incentivize office development in the Town.
2. Increase the number of people that live and work in Castle Rock.
Notable Findings
• 80% of Castle Rock residents are employed outside of the community.
• Castle Rock has the lowest office square footage per capita of the 10 aspirational
• communities compared.
o Castle Rock has the lowest percentage of primary employment out of the 10 aspirational communities examined.
o Castle Rock office development includes additional risks that are unique to Castle Rock.
o Slower lease up times
o Smaller tenant make up
o Higher than average commercial land cost, compared to Lone Tree, Parker and Centennial
o Higher development fees for large office and medical office than the competitive set of peers, Lone Tree, Parker and Centennial
Final EDC Recommendation
In order to achieve the Town’s economic development objectives of creating primary jobs for Castle Rock residents and increasing the commercial building inventory for primary employers, the EDC and Town staff is recommending approval of this project.
Attachments
Resolution
Economic Assistance Agreement
Attachment A: Applications
Attachment B: Castle Rock Industrial in the Meadows - Site Plan
Attachment C: Saunders’ County vs Town Fee Document
Attachment D: 2019-2021 Commercial Development overview