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CITY COMMISSION AGENDA ITEM |
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Department: |
City Manager’s Office |
Commission Meeting Date: May 8, 2018 |
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Staff Contact: |
Diane Stoddard, Assistant City Manager |
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Recommendations/Options/Action Requested: |
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The City Commission should receive the update regarding the proposed mixed-use grocery store project at 700 New Hampshire and provide any feedback as appropriate. |
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Executive Summary: |
In August 2017, a development team led by Treanor HL submitted an application for economic development assistance for a mixed-use grocery store project proposed at 700 New Hampshire, the site of the former Borders Building.
Project Progress Since December: At the City Commission Work Session on December 12, 2017 (Work Session item 2), the City Commission received a presentation by the development team on this proposed project. There have been several refinements since that December discussion. These are outlined in the letter provided by Treanor HL. The project is still requesting a tax increment financing (TIF) district that would capture the incremental growth of the property tax and sales taxes generated by the development, along with Industrial Revenue Bond (IRB) financing that would access a sales tax exemption on construction materials. One of the major changes is that the developer is no longer requesting a $2.25 million loan from the City to fund the grocery store equipment- that expense will be handled within the project expenses. Progress has been made on further securing the New Markets Tax Credit infusion that the project needs to be feasible. Additionally, we understand that there have been further discussions between the developer and the Lawrence/Douglas County Housing Authority regarding the affordable housing units.
The required 11 units of affordable housing and proposed grocery store use of the commercial space add to the gap in the feasibility of the project because both are project costs. Affordable housing units have a cost greater than the revenues that could be derived from market rate units. Similarly, the lease revenue generated by a grocery store use is less than could be generated by another commercial tenant. Thus, both of these contribute to widening the gap between available revenues and expenses for this project and are considerations for the City in weighing the desirability of the project for downtown.
Parking: Much discussion has focused on the parking issue. In December, staff reported on a concept that focused on expanding the proposed underground parking garage to accommodate additional public parking that might involve a public-private partnership. Staff believes that an off-site parking structure in the vicinity of the project would make more sense in terms of general public availability of the parking as opposed to underground parking below a privately-owned building. It appears the project will likely be able to contribute approximately $100,000 in TIF revenue annually for the 20-year life of the TIF for a total of approximately $2 million over time that could be utilized by the City for a City-owned off-site parking garage. Some concepts that have been generally discussed include the possible development of a city-owned parking garage structure on the city-owned surface parking lot (Lot 2) directly across the street on the west side of New Hampshire Street, or in the near vicinity, such as on a city-owned surface lot in the block between 8th and 9th Street along New Hampshire. See City parking lot map.
The development team submitted a concept regarding a parking structure on Lot 2 across the street from the proposed grocery project. According to the development team, a structure that would provide approximately 300-320 spaces could be developed on the lot that currently has 72 surface spaces. Such a structure would yield a net increase of 228-248 spaces after displacement of the existing surface lot spaces is considered. The developer’s estimated cost of the structure is $5.4 million, including a $500,000 contingency. The net cost difference between the total garage cost and the contribution from the project would need to be made up by additional funding, either special assessments, city-at-large funds, or a combination. Note- city funding for this is not included with proposed CIP that is a subject of another Work Session item this same meeting. Additionally, the City may wish to explore not only the most advantageous location for such a lot but also opportunities for additional amenities that may be identified during the downtown master plan process. The developer prefers a parking garage that would be across the street from the proposed project.
In consultation with the development team, staff put together a Parking Comparison Chart that compares the parking that is existing in the area with parking as proposed with the grocery project. The chart assumes the development of the City-owned garage on the west side of New Hampshire across from the project as previously described. Currently, there are 158 public short and long-term parking spaces (110 short-term and 48 long-term) in the area. As proposed, the public short and long-term spaces would be increased to 345-365 spaces. There would also be reserved parking available for the grocery shopping uses, the existing Hobbs Taylor commercial uses and proposed residential uses. Overall, the total public and private parking spaces increase from 344 to 630-650 spaces, a net increase of approximately 300 spaces.
Financial Summary: Staff is also working on an updated financial picture of the project from our consultant, National Development Council for Tuesday’s Work Session. As soon as this briefing is available, it will be posted to these materials. |
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Strategic Plan Critical Success Factor |
Safe, Healthy, and Welcoming Neighborhoods Innovative Infrastructure and Asset Management Collaborative Solutions Economic Growth and Security |
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Fiscal Impact (Amount/Source): |
The project is requesting a property tax and sales tax TIF District, as noted. Non-developer contributions related to an off-site parking solution would need further refinement and evaluation. |
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Attachments: |
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Reviewed By: (for CMO use only) |
☐TM ☒DS ☐CT ☐BM |