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 $26,105,000 in connection with the Douglas Station Apartments Project; and authorizing certain documents and actions in connection therewith.
(Note: First read by Council on December 10, 2024.)
Body
Issue/Request:
This is the ordinance to approve the implementation documents for the Chapter 100 Plan for the Douglas Station Apartments Project and authorizing the issuance by the City of its taxable industrial development revenue bonds in the aggregate principal amount of not to exceed $26,105,000 to finance costs of the residential project to be constructed by the company Douglas Station Partners, LLC (“Developer”). The 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:
Approval of the implementation documents for the Chapter 100 Plan.
Background:
At the October 18, 2022 Council meeting, 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.
On December 13, 2022, the City Council held the public hearing to consider the Chapter 100 Plan. On September 26, 2023, the City Council approved Ordinance No. 9761 which approved the Plan for a Chapter 100 Project for the Douglas Station Apartments Project.
The Project to be financed by the Bonds consists of the construction of a multifamily apartment complex of approximately 150 one and two bedroom units consisting of five three-story buildings with masonry, lap siding, and board and batten facades, high-end interior finishes, with approximately 36 garage spaces, 15 electric vehicle charging stations, a swimming pool, integrated clubhouse, fitness center, leasing office, and lounge area (the “Project”), to be situated on approximately 6.4 acres situated to the south of the intersection of NW Sloan and NE Sycamore Street in Lee’s Summit, Missouri
Impact/Analysis:
The Project is expected to cost approximately $26.2 million. Under Article X, Section 6 of the Missouri Constitution and Section 137.100 of the Revised Statutes of Missouri, all property of any political subdivision is exempt from taxation.
The sources of funds to be expended for the Project will be the proceeds of the Bonds in a principal amount not to exceed $26,105,000, to be issued by the City and purchased by the Company and, if needed, other available funds of the Company. The Bonds will be payable solely from the revenues derived by the City from the lease or other disposition of the Project. The Bonds will not be an indebtedness or general obligation, debt or liability of the City or the State of Missouri.
For purposes of determining the impact of the sales and use tax exemptions for the qualified building materials on the affected taxing jurisdictions, it is assumed that the total amount of qualified building materials purchased will be $9,972,000 and that the situs of sale for the purchases will be as follows: 5.0% within the City, 22.5% within Jackson County but outside the City, 22.5% within Missouri but outside Jackson County, and 50% outside Missouri. The sales and use tax exemption is projected to be a savings of about $613,279 for the Developer, and the projected impact to the City from this exemption is approximately $150,827 which is about 25% of the total sales and use tax savings for Developer.
The Companies will make payments in lieu of taxes (“PILOTS”) for each component of the Project as follows:
(1) prior to construction, the amount calculated to equal the taxes that would have been due on the unimproved land were it in private ownership.
(2) During construction, an amount calculated from a starting point of $1,600 dollars per door, with an inflation adjustment of 3.0% in each odd year starting with 2025, for units under construction, pro-rated by percentage of completion.
(3) From and after completion, for a period of 10 years, a fixed PILOT calculated from a starting point of $1,600 dollars per door, with an inflation adjustment of 3.0% in each odd year starting with 2025.
The total PILOT payments are estimated in the Cost-Benefit Analysis that is include in the Plan.
Presenter
David Bushek, Chief Counsel of Economic Development & Planning
Curt Petersen, Polsinelli, P.C. for Developer