To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Robert J. Slentz, Town Attorney
Title
Ordinance Approving the Encore CR Downtown Redevelopment and Financing Agreement and Authorizing the Lease and Conveyance of Certain Town-owned Property (Second Reading - Approved on First Reading on August 20, 2019 by a vote of 6-1)
Body
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Changes from the first reading of the Agreement are highlighted. These changes are not substantive other than the date for completion of the first residential unit in 3.07 was corrected to read March 31, 2022.
Executive Summary
The Encore CR Downtown Redevelopment and Financing Agreement (“RDA”) addresses the construction of a 601-space parking garage (“Parking Garage”) on the site of the existing Town Hall parking lot. The Parking Garage and related improvements will be constructed by CD-Festival Commons, LLC (“CDFC”), developer of the mixed-use project to be known as Encore CR (“Project”). The Project will have 124 for-sale condominium residential units and 27,000 square feet of retail/office. Upon completion of the Parking Garage, the Town will purchase 308 condominium parking spaces for public use for approximately 40% of the estimated $24.2 million Parking Garage development cost, with the purchase price capped at $9,750,000. The RDA provides for the allocation between Town and CDFC of the incremental public revenues the Project will generate. It is projected that the Town will be able to recover over time its investment in the Parking Garage from such incremental revenues. The provisions of the RDA can be broken down into the Parking Garage construction and financing, the real property aspects, and the disposition of incremental Project revenues.
Parking Garage Construction
CDFC will construct the Parking Garage, a roundabout at South and Wilcox and a pedestrian plaza between the Project and Town Hall. The cost of the Parking Garage and plaza will be at the initial expense of CDFC; the Town will pay directly the design and construction cost of the roundabout. The Town will reimburse CDFC $800,000 for the plaza upon its completion and acceptance. The Parking Garage is to be completed within one year. At the start of construction of the Parking Garage, CDFC will demonstrate its ability to fund construction of the Parking Garage and provide a standby letter of credit in the amount of $14.5 million to provide the Town a funding source to complete the Parking Garage should CDFC default in its obligation to do so. That said, as is the case of any project undertaken by a private party, it is not feasible to insure against all possible construction risks. Most importantly however, CDFC’s associated entities have demonstrated the ability to successfully develop a multitude of projects of this scale in the metro area, and of course the Riverwalk apartments.
---Property interests
The Town will not relinquish its interest in the real property upon which the Parking Garage will be constructed until the 308 parking units are concurrently conveyed to the Town. Retaining ownership is security that the Town will have an unassailable position in any dispute that may arise during construction. The Town will lease the property to CDFC in order to permit construction of the Parking Garage and it is expected that CDFC will encumber its interest in the lease but that encumbrance will not attach to the Town’s ownership interest. The lease contains typical commercial provisions for insurance and indemnities. The quality of title to the Town property and the condominium parking units are fixed by the RDA. The proposed form of the Encore CR condominium Declaration has been agreed to and is identified in the RDA. The Declaration provides an equitable method for maintaining the Parking Garage and assurances that the Town will have the exclusive control and use over the Town parking units. The RDA provides for a Real Estate Closing, at which the Town will convey the property upon which the Parking Garage is constructed and pay CDFC $9,750,000 (subject to adjustment), and CDFC will convey to Town the 308 condominium parking units. The Town anticipates issuing Certificates of Participation to fund the purchase. CDFC will complete the $900,000 funding of the quiet zone implementation with a second installment of $700.000 (the initial $200,000 installment is required at the Construction Closing). The subject ordinance authorizes all of the necessary real property actions by Town under the RDA in accordance with the Municipal Code.
Project Finances
The Project retailers will generate Town sales tax and an additional 1% public improvement fee (“Add-On PIF”) on retail transactions will be imposed by private covenant mandated by the RDA. Upon completion of the Project there will be a significant increase in assessed valuation. The incremental property tax will be deposited in a Town maintained special fund per the Downtown Development Authority statutory structure. This incremental property tax will include the revenue collected from a 45-mill property tax imposed through the general improvement district (”GID”). However, under the RDA the GID component of the property tax will be disbursed from the special fund entirely to the Town. The sales tax, Add-On PIF, and property tax increment will be allocated between Town and CDFC as follows:
Irrespective of the above allocation, when the Town has recovered the purchase price for the parking units and interest, thereafter the Town will no longer receive Add-On PIF or GID revenue.
Staff Recommendation
Staff recommends approval of the Encore CR Downtown Redevelopment and Financing Agreement, as presented on second reading.
Proposed Motion
“I move to approve Ordinance No. 2019-021 as introduced by title, on second reading.”
Attachments
Attachment A: Ordinance