Title
An Ordinance approving the Redevelopment Agreement and Lease Agreement for the Bayberry Crossing Redevelopment Project.
(Note: First read by Council on September 24, 2024. Passed by unanimous vote.)
Body
Issue/Request:
An Ordinance approving the Bayberry Crossing Redevelopment Agreement and Lease Agreement to implement the Bayberry Crossing LCRA Redevelopment Plan and Bayberry Crossing Community Improvement District, both of which the City Council has previously approved.
Key Issues:
Request for a CID and LCRA redevelopment agreement and lease to implement the approved incentives for this shopping center rehabilitation project. The incentives provide sales tax exemption on construction materials and reimbursement for certain Developer costs associated with shopping center renovation:
- Main Center Facades and Building Envelope Integrity
- Landscaping (including irrigation)
- Signage
- LED lighting
- Amenities (benches, planters, etc.)
The LCRA redevelopment plan would be in place for the redevelopment time period only, to provide sales tax exemption on construction materials that are used in the renovation process. The property would return to the tax rolls after the redevelopment work is completed. The applicant is not seeking a property tax abatement.
Background:
A Conceptual Economic Development Incentive Request was presented to the City Council at the January 9, 2024 City Council meeting.
The City Council approved the Bayberry Crossing Community Improvement District through the adoption of Ordinance No. 9886 on April 9, 2024. The City Council approved the Bayberry Crossing LCRA Redevelopment Plan through the adoption of Ordinance No. 9887 on the same date.
Baceline, LLC ("Developer"), is proposing to undertake remodeling, updates and improvements to the Bayberry Crossing shopping center. The shopping center parcel is about 5.05 acres and the building size of the completed project is about 54,000 square feet.
The Developer proposes to use a community improvement district (CID) which would impose a 1% sales tax for up to 27 years, which the maximum duration allows by the CID Act. Developer projects that the sales tax revenues in the first year of the CID will be about $75,000/year, which represents $7.5 million in annual taxable sales, and would accelerate to about $10 million in annual taxable sales after 6 years. Developer projects that the total net present value of the reimbursement will be about $1.5 million after 27 years.
Developer also requests the use of an LCRA redevelopment plan to provide sales tax exemption on construction materials for the redevelopment work. This would provide about $72,000 in cost savings to Developer for the project. The property is located in the US 50 / M-291 Highway Urban Renewal Area that was created through the adoption of Ordinance No. 7472 in June 2014.
The CID area wound include the entire parcel at about 5 acres. Data for the proposed request (rounded to the thousands):
Total Project Costs:
$10,794,000
Total Requested Potential Reimbursement:
$1,456,000
Total Projected Actual Reimbursement:
$3,151,000 over 27 years based on sales tax projections
$1,423,000 net present value of reimbursement at 6% discount rate
Reimbursement as a Percentage of Total Project Costs:
14.2%
Impact/Analysis:
The CID would impose a 1% sales tax over the shopping center which will last for 27 years, or until the reimbursable project costs are paid in full. The LCRA Plan would be in effect during the redevelopment time period only, to provide sales tax exemption on construction materials that are used in the renovation process. The property would return to the tax rolls after the redevelopment work is completed.
Timeline:
Developer plans to start with the project in 2024 and finish in less than a year.
Presenter
David Bushek, Chief Counsel of Economic Development & Planning