To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Matt Gohl, Special Projects Manager
Title
Discussion/Direction: The View at Castle Rock Project Overview [located near the intersection of Sixth Street and Jerry Street)
Body
________________________________________________________________________________
Executive Summary
Town staff, in coordination with the Downtown Alliance and Sunflower Development Group, LLC (SDG), have been in discussions regarding the redevelopment of existing storage facilities near 6th Street and Jerry Street into a mixed-use site, that would also include 100 Town-owned public parking spaces. Terms of a potential redevelopment agreement have been negotiated amongst the involved parties in order to resolve a funding gap with the planned project. These terms and a project overview are provided in the following discussion.
Staff is seeking to provide sufficient time for Town Council to review the various items of the project and receive responses to questions from the staff recommendation to proceed with this project.
Discussion
Town staff, along with the Downtown Alliance and Sunflower Development Group, LLC (SDG), have been in discussions regarding potential redevelopment of existing storage unit property in the Downtown Castle Rock area. Following is an overview of the project, financial need assessment and recommended terms for a Redevelopment Agreement (RDA).
Project Overview
SDG has presented an overview of The View project to be located at the northeast corner of 6th Street and Jerry Street in downtown Castle Rock. The existing property is home to a storage unit facility. SDG has proposed to redevelop the location into a mixed-use site including 218 for-rent residential units (with amenities including a clubhouse, pool and terrace), 14,500 square feet of office space, 5,000 square feet of retail space and 429 parking spaces. This project would be required to install necessary infrastructure to support a restaurant including a grease trap and hood. Additionally, 100 of the parking spaces would be Town-owned and available for public use. Renderings of the proposed project are included in Attachment A.
Project Assessment
The Castle Rock Downtown Alliance engaged Development Research Partners (DRG) to perform an independent financial review of the project including the development budget and operating pro forma. This analysis is provided in Attachment B. DRG’s analysis identified a funding gap ranging from $6.5 - $7.5 million for this project. In order to bridge the financial gap, the Town has been in discussions with the Downtown Alliance and SDG to explore a potential public-private partnership.
Staff believes that The View project supports the goals of Downtown Castle Rock and that a mutually beneficial financial arrangement has been identified. Following is a summary of the proposed terms between the Town of Castle Rock and SDG.
• Property Tax Increment
o Share back 55% of the Property Tax Increment with SDG through 2038, with a cap of $3,250,000
o Current estimates indicate that the property tax valuation will increase 10 times the current amount, resulting in a net property tax increment gain as early as 2024
• Sales Tax Increment
o Share back 55% of the Sales Tax Increment with SDG through 2038, with a cap of $1,000,000
o The current use of this site generates nominal sales tax revenue, so the addition of retail options to the downtown area will result in net sales tax increment as early as 2023
• Fee Waiver
o The Town will purchase 100 public parking spaces through the waiver of $3,000,000 in fees and use tax ($30,000/space)
o Town funds will be repaid in future years by the DDA Special Fund to be made whole
• IREA Credit
o The Town will allow use of up to $100,000 of existing credits specifically for burying off-site utilities
• PIF (Public Improvement Fee)
o Town will approve a 1% PIF that will be captured by the development
Without this public-private partnership, The View project is not financially feasible. This project will continue to bolster the Downtown Castle Rock area through the proposed uses, and will result in Town ownership of 100 public parking spaces at the north end of the downtown area. Additionally, it is projected that this financial arrangement would not only bridge the financial gap for the development but also generate roughly $6.2 million to the Town’s DDA Special Fund by 2038. These funds will be used to repay Town funds for the waived fees and surplus funds can be used to support additional Downtown initiatives.
Attachment C includes a memo presented to the Downtown Development Authority on August 20, 2020. In addition to project details and analysis, this also includes the recommended terms for a RDA. The DDA Board voted unanimously in support of The View project and the terms as presented.
The developer has acquired the site at this time. Development timelines in the proposed terms for the RDA include a requirement that the developer receive the building permit no later than June 30, 2021, with a goal of submitting the permit application by December 31, 2020. Additionally, the project would need to obtain Certificate of Occupancy by August 1, 2023 with a provision for an option six-month extension.
Recommendation
Staff recommends preparing the RDA for The View project. Should Town Council support this direction, the RDA will be prepared for upcoming Town Council meetings in September and October.
Proposed Motion
“I move to direct Town staff to prepare a Redevelopment Agreement with Sunflower Development Group, LLC for The View project in Castle Rock, including the initial terms as presented.”
Attachments
Attachment A: Project Exterior Renderings
Attachment B: DRP Pro forma Review
Attachment C: DDA Board Meeting Memo