Title
An Ordinance approving the Vanguard Villas at Streets of West Pryor Land Clearance for Redevelopment Authority Redevelopment Plan. (First read by Council on April 13, 2021. Passed by unanimous vote.)
Body
Issue/Request:
An Ordinance to approve the “Vanguard Villas at Streets of West Pryor LCRA Redevelopment Plan” by the Streets of West Pryor developer for tax incentives to perform undermined remediation and off-site public improvements in connection with the development of the Vanguard Villas residential development on the western portion of the Streets of West Pryor mixed-use project.
Key Issues:
Approval of an LCRA Redevelopment Plan to provide sales tax exemption on the purchase of construction materials and 50% real property tax exemption for a period of 25 years for the Vanguard Villas development, as a reimbursement source for the extraordinary redevelopment costs associated with remediating the undermined areas and the construction of off-site road improvements.
Proposed City Council Motion:
I move for adoption of An Ordinance Approving the Vanguard Villas at Streets of West Pryor Land Clearance for Redevelopment Authority Redevelopment Plan.
Background:
The City Council approved Ordinance No. 8531 on January 8, 2019 which approved the rezoning and preliminary development plan for the Streets of West Pryor project. During January and February of 2019, the City Council also approved several other ordinances that provided an incentive package using a variety of incentive mechanisms associated with developing the areas of the project containing retail, restaurants, the grocery store and apartments. At this time, two restaurants, the grocery store and some retail is open, and the first phase of the apartments is under construction.
On February 16, 2021, Drake Development and Tegethoff Development made a conceptual presentation to the City Council pursuant to the City's Economic Development Incentive Policy for the request by for sales tax exemption on the purchase of construction materials and real property tax abatement pursuant to the Land Clearance for Redevelopment Authority (LCRA Act) to provide compensation for mine remediation costs and off-site public improvement costs associated with the Vanguard Villas consisting of 83 residential units in the western-most lot on the Streets of West Pryor area. The mine remediation is necessary to make the property developable, presenting extraordinary redevelopment costs to this part of the overall project. Developer’s request is to have the City approve an LCRA Redevelopment Plan that would provide 50% real property tax abatement for a period of 25 years as the mechanism to incentivize the undermine remediation costs for the project.
The LCRA Board of Commissioners conducted a public hearing to consider the request on March 24, 2021. Following the public hearing, the Board voted 4-1 to recommend approval of the LCRA Redevelopment Plan. The one vote against the Resolution was based on concerns about the design of the residential units and garage placement, and the relationship between these concerns and consistency between the LCRA Redevelopment Plan and the City’s Comprehensive Plan.
The attached memorandum from David Bushek provides more background and details about the request.
Impact/Analysis:
This is a snapshot of the Developer's tax projections regarding the tax impacts in year 1 and for the life of the abatement period:
Year 1
$127,364 Taxes generated in Year 1 for all taxing districts
$22,291 City share of taxes in Year 1
Full 25-Year Period
$3,828,932 Taxes generated for all taxing districts
$670,145 City share of taxes over 25 years
Abated Taxes - Benefit to Developer
$127,364 Abatement in Year 1
$3,838,923 Total Abatement over 25 years
This is a calculation of the amount of the requested incentive as a proportion of the entire project costs:
$30,462,000 Total Project Costs
$2,080,000 Net Present Value of Tax Abatement
$813,000 Value of Sales Tax Exemption to Developer
9.5% Proportion of Incentive to Total Project Costs
Timeline:
Start: Construction would commence this year
Finish: Developer has presented a phased construction schedule over the next few years, ending with completion of construction in Spring 2023.
Other Information/Unique Characteristics:
The mine remediation presents unique engineering issues. Developer has engaged a specialized engineering company for this work, and the City has also engaged a specialized engineer to evaluate and comment on Developer’s proposed engineering for the remediation.
Presenter
Mark Dunning, Assistant City Manager
David Bushek, Chief Counsel of Economic Development and Planning
Recommendation
Recommendation: Staff recommends approval of the ordinance.
Committee Recommendation
Committee Recommendation: The LCRA Board of Commissioners voted 4-1 to recommend approval of the LCRA Redevelopment Plan.