To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Robert J. Slentz, Town Attorney
Title
Ordinance Approving the Downtown Redevelopment Agreement Between the Town of Castle Rock, the Castle Rock Downtown Development Authority and CD Wilcox, LLC [Second and Wilcox Streets] (Second Reading - Approved on First Reading on May 2, 2017 with a vote of 4-0)
Body
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Executive Summary
The public assistance package for the Riverwalk mixed-use development (“Project”) encompasses financial incentives from the Town and DDA and the incorporation of real property into the project that is currently owned by Douglas County. Consequently, there are four related formal approvals the Town Council must consider granting in aid of the Project:
1. Ordinance approving the Riverwalk Downtown Redevelopment Agreement (“DA”)
2. Ordinance approving the Sales Tax Credit
3. Ordinance approving the Property Transfer Agreement
4. Resolution approving an IGA with County
These elements are not divisible and the failure of Council to approve any one will impair the Project proceeding as currently envisioned. Consequently this memorandum addresses all four agenda items and it is requested that the Mayor open the Council hearing on all four agenda items concurrently.
Redevelopment Agreement and Sales Tax Credit Ordinance
In conjunction with the DDA, it was determined that the Project will not be financially available absent significant public financial assistance. This determination is supported by the detailed independent financial analysis which is Exhibit 2 to the DA.
The DA authorizes four financial incentives for the Project (numbers refer to sections in the DA):
A. The Town permits the Developer to use up to $350,000 of credits earned by the Town under the IREA Franchise Agreement to defray up to $350,000 of the cost of relocation of IREA utility lines required to accommodate the Project (3.02). The Council recently approved the modification to the Franchise Agreement that authorized this type of private development use of the franchise credits.
B. The Project will be relieved of payment of all building, impact fees and use tax imposed under Town Codes and regulations up to $4,000,000 (3.01). Based on the projection of such fees and tax contained in Exhibit 3 of the DA, the fee and tax waiver is estimated at approximately $3,200,000.
C. The Project will capture 75% of the incremental property tax generated on the real property which constitutes the Project. This property tax pledge will expire either in 2038 or when the aggregate incremental property tax payment and Credit PIF (see D. below) reaches $11,500,000, whichever occurs first (5.01).
D. The Project will capture 2.7% of the Town’s 4.0% sales tax rate through the mechanism by which a Credit Public Improvement Fee (“PIF”) is imposed by the Developer on the Project in substitution of the Town’s sales tax (IV). The Credit PIF will expire when the aforementioned $11,500,000 cap is reached or 2042, whichever occurs first.
The incremental property tax pledge is made under the debt authority granted with the DDA formation in 2008. The Credit PIF is utilized in lieu of a similar sales tax pledge to “conserve” the remaining 2008 debt authorization for other downtown projects. The Sales Tax Ordinance inserts in the municipal code the 2.7% reduction in sales tax for the Project property only.
In order to qualify for the incentives under the DA, the Project must be built to the design and configuration detailed in Exhibit 1 of the DA. Deviations from the Project as approved by the Design Review Board must be approved by the DDA and/or the Town Manager and DDA Executive Director. In addition, a building permit for one of the two buildings must be pulled not later than February 1, 2018 and the corresponding certificate of occupancy granted by June 30, 2020 (2.03).
Property Transfer Agreement and IGA
As depicted on Exhibit B of the Transfer Agreement, Douglas County owns a parcel upon which the North Building will be constructed (“Wilcox Property”). This parcel currently is used as an alternate access for high-profile vehicles utilizing the County parking garage. The Developer has committed to construct a new access driveway from Third Street abutting the east wall of the parking garage. Once that driveway is completed, the Wilcox Property is surplus to the County needs. The IGA with Douglas County provides that the County will convey the Wilcox Property to enable the concurrent conveyance of the parcel from the Town to the Developer. The obligation of Developer to construct the alternative access is secured by an escrow deposit and agreement between the County and Developer. In any event, the Developer may not occupy the Wilcox Property until the alternate access is completed.
Staff Recommendation
Staff recommends approval of the Ordinances and Resolution as presented.
Proposed Motion
“I move to approve Ordinance No. 2017-012 on second and final reading.”
Attachments
Attachment A: Ordinance