Title
An Ordinance authorizing the City of Lee’s Summit, Missouri to issue Taxable Industrial Development Revenue Bonds in a principal amount not to exceed $9,975,000 in connection with the Lakewood Business Park Project (Building 2); and authorizing certain documents and actions in connection therewith.
Body
Issue/Request:
This request stems from the approval of the Master Plan for an Industrial Development Project and Cost-Benefit Analysis for the Lakewood Business Park Project. As a part of that approval, the City Council agreed to authorize the issuance of taxable industrial development revenue bones to finance costs of the industrial project for North Oak Safety Storage, LLC, which is an affiliate of Ward Development. The Phase II Bonds will be issued pursuant to the provisions of Sections 100.010 to 100.200 of the Revised Statutes of Missouri, as amended and Article VI, Section 27(b) of the Missouri Constitution, as amended (collectively, the “Act”).
Key Issues:
The Project to be financed by the Bonds consists of up to eight buildings and related public improvements with a combined square footage of approximately 400,000 square feet, each of which will be used for warehousing, distribution, manufacturing and/or industrial flex space purposes. Additionally, the Project will include the construction and installation of streets, sanitary sewer lines and other public utilities (the “Public Improvements”) serving the Project Site (defined below). The Project will be constructed on approximately 30.75 acres located southwest of the intersection of NE Jones Industrial Drive and NE Independence Avenue in Lee’s Summit, Missouri, which is referred to as the “Project Site.”
Proposed City Council Motion:
I move for approval of the Phase II Bond Documents in the amount of $9,975,000 for the Chapter 100 Master Plan for the Lakewood Business Park Industrial Project; North Oak Safety Storage, LLC, (affiliate of Ward Development).
Background:
In July 2023, the City Council heard a conceptual presentation about the incentive request presented by Developer. A majority of the City Council expressed an interest in considering the incentive request through the formal Chapter 100 process. The City Council did not vote or render any type of final or binding decision as part of the conceptual presentation.
After presentation by Developer and City Staff on August 22, 2023, the Council voted for approval of the plan. The second reading was held on September 5, 2023.
Impact/Analysis:
The Project is expected to cost approximately $78.325 million, consisting of investments made in the years 2023 through 2031. The Project, to be financed by the Bonds, consists of eight industrial buildings and related public improvements, anticipated to be 400,000 square feet total to be used for warehousing, distribution, and/or manufacturing purposes.
A sales tax exemption certificate has been issued to the Company for the purchase of construction materials which are used in the project on a tax-exempt basis. The Master Plan includes analysis of the impact of the sales tax exemption on the affected taxing districts.
PILOTs -
The Company will make payments in lieu of taxes (“PILOTS”) for the Project as follows:
(1) during the project period, a PILOT calculated to represent 25% of the taxes that would otherwise be due on the partially completed Project improvements component (but no less than the taxes due on the applicable portion of the Project Site for the year prior to the closing of the applicable series of Bonds),
(2) in years 1 through 10 after project completion, a PILOT calculated to represent 25% of the taxes that would otherwise be due on the completed Project improvements component, and
(3) in years 11 through 20 after project completion, a PILOT calculated to represent 50% of the taxes that would otherwise be due on the completed Project improvements component.
The PILOT amounts may be fixed by agreement at the time of bond issuance, subject to adjustment at completion of the Project. The total PILOT payments are estimated in the Cost-Benefit Analysis.
The Project includes the installation of sewer improvements. Upon agreement, the City and Developer shared in the costs of the sewer improvements on a 50/50% basis because the sewer improvements are needed by the City for Airport expansion. The effective PILOTs, tax abatement and special assessments during the life of the Chapter 100 Plan are as follows:
Years 1-10:
75% Abatement
25% PILOTs
Years 11-20:
50% Abatement
50% PILOTs
Timeline:
Start: 2023
Finish: 2031
Presenter
Ryan Elam, Assistant City Manager
Recommendation
Staff recommends approval