Title
Conceptual Economic Development Incentive Request: Land Clearance for Redevelopment Authority (LCRA) incentives for the Fourth & Green Project; Omni 360 Development, applicant.
Body
Issue/Request:
This is a conceptual presentation pursuant to the City's Economic Development Incentive Policy for the development of a mixed-use residential project consisting of approximately 28 stacked town-home style residences and approximately 1,500 square feet of neighborhood scale commercial space on approximately 0.96 acres of property located at 105 and 109 SE 4th Street and 400 SE Green ST in the Downtown area, for sales tax exemption on construction materials and real property tax abatement through the Land Clearance for Redevelopment Authority (LCRA) Act.
Key Issues:
Evaluation of a request for sales tax exemption on construction materials and real property tax abatement in the amount of 75% for 25 years.
Proposed City Council Motion:
No motion requested as this is only a conceptual presentation. The Developer is seeking the City Council's feedback pursuant to the City's Economic Development Incentive Policy.
Background:
Developer is requesting an LCRA economic incentive in the form of (1) sales tax exemption on construction materials and (2) real property tax exemption in the amount of 75% for 25 years.
The site of the proposed development currently consists of 3 vacant lots located at 105 and 109 SE 4th Street and 400 SE Green Street.
The proposed development will be composed of approximately 53,625 square feet of finished building space, associated parking, site amenities, and utilities. The first floor of the building is proposed to contain 1,500 square feet of neighborhood commercial space. The project is also proposed to contain 18 two bedroom and 10 three bedroom residential units for a total of 28 residential units. The final layout, unit count, and unit mix is subject to change during the final design process.
The subject site is located in the southeast corner of the Downtown Core Area as shown in the Downtown Master Development Plan. The surrounding properties to the east and south are zoned TNZ. The properties to the west are zoned CP-2 and to the north are zoned CBD.
The 2021 Ignite Comprehensive Plan land use map identifies the subject site as Activity Center Downtown. The Plan identifies the Downtown Activity Center as the traditional core and heart of the community with access to downtown that is walkable for residents in nearby residential neighborhoods. The plan advocates for additional housing options to increase the ability for additional residents to live and work Downtown, as well as increase patronage of local businesses, parks, and events.
The property is located within the existing MO R-47 LCRA Redevelopment Area.
Impact/Analysis:
The sales tax exemption request would have an impact on the City based on the loss of use tax revenues. The total estimated benefit to the developer is a savings of approximately $393,213. It is estimated 30% of the construction materials purchased would be subject to local sales and use tax, resulting in an estimated $117,964 in abated sales and use tax to the City.
The tax abatement over the requested 25-year period results in about $2.76 million in abated taxes, which has a net present value benefit of about $1.3 million at a 6.5% discount rate. The NPV benefit of the proposed 25% PILOTs is $231,100 to all taxing district and about $77,000 to the City.
The total NPV benefit to the Developer is about $1.3 million from the real property tax abatement and about $393,200 from the sales and use tax exemption, for a total net benefit of about $1.7 million which is about 16.1% of the total project costs.
The total impact to the City is about $231,000 from the real property tax abatement and about $118,000 from the sales and use tax exemption. After factoring in the City’s portion of the 25% PILOTs, the net impact to the City tax revenues is an increase of approximately $163,000 over the 25 year period, with a NPV of approximately $77,000.
Timeline:
Start: Q4 2026
Finish: 2028
Presenter
Ashley Siebert, Omni 360 Development
David Bushek, Gilmore & Bell, P.C., City Economic Development Legal Counsel
Ryan Elam, Assistant City Manager