Title
An Ordinance approving a Chapter 100 Plan for the Montage Project.
Body
Issue/Request:
This is an ordinance to approve the Chapter 100 Plan for the Montage Project and authorizing the issuance by the City of its taxable industrial development revenue bonds in the aggregate principal amount of not to exceed $63,400,000 to finance costs of the project to be constructed by TriStar Properties (the “Developer”), as the Developer of the Project. 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:
Developer is requesting that the City approve incentives through a Chapter 100 Plan to provide sales and use tax exemption on construction materials and a fixed schedule of payments in lieu of taxes (PILOTs) for 10 years for the residential portion of the project.
Background:
At the May 14--, 2024 Council meetings, the City Council heard a conceptual presentation about the incentive request presented by Developer for the entire Lee’s Summit Crossing Project. A majority of the City Council expressed an interest in considering the incentive request presented by the developer team. The City Council did not vote or render any type of final or binding decision as part of the conceptual presentation.
The Project to be financed by the Bonds consists of a townhome and villa community of approximately 226 units to be located on approximately 54.39 acres of land situated to the northeast of the intersection of highways 291 and 150 in the City (the “Project Site,” as shown in the map below). The Project is anticipated to be completed in two phases. Phase 1 is anticipated to consist of 68 townhomes and 84 courtyard villas constructed with brick and stone facades, architectural shingles and vinyl siding. Amenities will include a clubhouse with a fitness center, a swimming pool and a dog park.
Phase 1 will also include the completion of certain public improvements, including the construction of and mass grading allocable to public streets, sidewalks, storm sewers, water supply, sanitary sewer, electric supply and communications infrastructure (the “Public Improvements”). Phase 2 is anticipated to consist of 8 townhomes and 66 courtyard villas utilizing similar construction materials to Phase 1. Phase 2 will share use of the Public Improvements and amenities constructed during the completion of Phase 1.
The Chapter 100 Plan has been requested to provide sales and use tax exemption on construction materials and fixed payments in lieu of taxes (PILOTs) starting at $2,776 per unit pursuant to Chapter 100 of the Revised Statutes of Missouri.
Impact/Analysis:
The Project is expected to cost approximately $63,400,000. The investment is anticipated to be made from 2024 through 2028 as shown in the Cost-Benefit Analysis. 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. Under this Plan, the City intends to issue the Bonds in 2024.
The sources of funds to be expended for the Project will be the proceeds of the Bonds in a principal amount not to exceed $63,400,000 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.
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 $2,776 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, and
(3) from and after completion, for a period of 10 years, a fixed PILOT calculated from a starting point of $2,776 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. The projected impact to the City for the real property tax exemption is summarized in the presentation materials that are included in the meeting packet.
Timeline:
If the Chapter 100 incentive is approved, the project is expected to begin in 2024 and the construction will last through 2028.
Presenters
David Bushek, Chief Counsel of Economic Development and Planning