HomeMy WebLinkAboutMinutes - Read Before Packet - 3/4/2014 - Ura Agenda Item #2 - Ura Finance Committee Meeting Draft Minutes February 10, 2014Finance Administration
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URA Finance Committee Meeting
Draft Minutes
2/10/14
11:30 to Noon
CIC Room
Council Attendees: Mayor Karen Weitkunat, Bob Overbeck, Ross Cunniff
Staff: Mike Beckstead, Ed Bonnette, Mike DeKock, Bruce Hendee,
Randy Hensley, Tom Leeson, Sandra O’Brian, Gerry S. Paul,
John Voss, Wendy Williams, Katie Wiggett
Others: Dale Adamy, Kevin Jones (Chamber of Commerce), Eric
Sutherland
Approval of the Minutes of December 16, 2013
Mayor Karen Weitkunat moved to approve the minutes for the December 16, 2013 meeting. Bob
Overbeck seconded the motion. Minutes approved unanimously.
Union Place
Tom Leeson introduced a request from Revive Properties, a new residential development in the North
College URA area. Revive is asking the Urban Renewal Authority for financial assistance for street
improvements, sustainability features and stormwater detention improvements associated with their
construction project. Tom said that this project is an excellent example of how public-private
partnerships can be used to help the community achieve its long-term objectives related to creating
great places and reaching the community’s sustainability goals. Revive will be a unique, model
development for Larimer County because it will use geothermal energy for heating and cooling homes,
as well as solar power, in an effort to achieve a Net Zero Capable community. Revive will also be a
catalyst for redevelopment in the North College Urban Renewal Area by providing much-needed,
moderately-priced housing.
Tom explained that, in evaluating URA projects, significant consideration is given to the project’s public
benefit. Public benefit is measured by the extent to which the project aligns and achieves City policies
and remediates blight. The public benefits of the Revive properties include the following:
City Plan
•EH 4.1 – Prioritize Targeted Redevelopment and Infill
•LIV 5.1 – Encourage Targeted Redevelopment and Infill
•LIV 22.1 - Vary Housing Models and Types
•LIV 22.3 – Offer Multi-Family Variation
•LIV 22.4 – Orient Buildings to Public Streets
•ENV 6.5 – Offer Energy Efficiency Incentives
•ENV 20.4 – Develop Public/Private Partnerships (Stormwater Management)
March 4, 2014
URA Meeting
Agenda Item #2
North College Infrastructure Funding Plan
•Missing segment Mason St – Med. priority
•West Side Drainage System
Blight remediation
•Deteriorated site or other public infrastructure
•Inadequate public improvements or utilities
•Substantial physical underutilization or vacancy of sites
Tom gave details on the project description and site plan and a breakdown of Revive’s financial request.
Financial Request
Total Project Cost (Vertical Excluded) $5,401,061
Projected Actual Value (Vertical Included) $18,697,200
Projected Annual Tax Increment $135,572
Total Property Tax Increment Expected $1,762,436
Total TIF Requested $1,600,000
% of Tax Increment Requested 91%
Total TIF Recommended $1,270,414
% of Tax Increment Recommended 72%
% of TIF Relative to Project Cost (Vertical Excluded) 23%
% of TIF Relative to Project Cost (Vertical Included) 7%
Staff used the County’s projected estimate of value to calculate the TIF. Revive requested 91% of the
TIF, but Staff recommends a 72% share, staying under the 75% proposed policy guidelines.
Tom said that URA financial parameters also limit the percent TIF contribution relative to total project
cost to 15%. Revive’s total project cost is $5.4 million, excluding the vertical construction costs. This
puts the percent of TIF relative to project cost at 23%, which is higher than the URA financial
parameters. However, if the estimated vertical construction costs are included ($18,697,200), then the
percent TIF relative to total project cost is 7%. URA staff recommends evaluating the project with the
vertical construction costs included as that is what generates the property value, which generates the
tax increment.
Bob Overbeck asked for clarification on the terms vertical and horizontal in this context. Tom explained
that horizontal means the project without future construction, vertical includes the future construction.
Mike Beckstead clarified that the developer is not going to build the improvements; instead, they’ll sell
off lots and someone else will build. So, none of the vertical improvements are included in Revive’s
project costs. URA staff is recommending that the TIF include the vertical costs.
Tom went on to explain a deviation from policy within the request. Revive is asking for retroactive
reimbursement for three projects: a total of $36K for public road improvements and $370K and $84K for
sustainable features. URA Policy does not allow for retroactive reimbursement unless it is for a public
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improvement cost. The Sustainable features are not “public improvements required of the project” and,
therefore, do not meet the requirements of the URA Policy.
However, Tom pointed out, the Urban Renewal Authority Policies and Procedures also state: “The Board
may, in its discretion, amend or waive sections of this document when determined necessary or
appropriate.” URA Staff recommends that the Board waive this section of policy document for the
following reasons:
• The sustainable features incorporated into the Revive project are consistent with other
community objectives related to sustainability.
• According to the EPA, geothermal heat pumps are the most energy efficient, environmentally
clean and cost effective system for temperature control.
• The intent of the Revive developer is to construct Net Zero Capable residential units, and the
geothermal system is a major factor in reaching that goal.
• In 2008 City Council adopted new carbon reduction goals for the Fort Collins community, which
is to reduce communitywide emissions 20% below 2005 levels by 2020.
• The geothermal system and permeable pavers are a major contributor to the extraordinary
costs associated with the need for URA assistance.
• One of the state objectives of the URA is to: “Promote energy and water efficiencies within
buildings and developments.”
To sum up the financial analysis, Tom noted that:
• The developer’s request is atypical because it does not include vertical costs/returns
• The recommended TIF amount is consistent with URA Financial Parameters
• Even with the requested TIF funds, the estimated returns are below what a developer or
investor would expect for a real estate development project of this size and level of risk
The Mayor asked if the City should be concerned by the fact that this project’s return is so low. Tom
replied that the low return is a risk the developer is choosing to take in order to save their investment.
The Mayor asked if Staff feels comfortable with the developer’s capability and Tom replied, yes, they are
an experienced, capable business.
Tom presented the following Preliminary Redevelopment Agreement terms, terms set to protect the
URA’s investment in this project:
• The maximum URA reimbursement is $1,270,414.
• The reimbursement is contingent upon completion 25% of the units (22 units)
• The URA shall pay 72% of the increment annually generated by the project on the property and
paid during the preceding calendar year.
• The URA shall pay the developer a reimbursement until either: 1) the full payment of the
reimbursement obligation has been satisfied; or, February 1, 2029
• Revive Properties to complete construction of the Public Improvements by November 30, 2014.
• 25% of the units within the project by September 30, 2016.
• All units will utilize a geothermal heating and cooling system.
• All units will utilize solar photovoltaic systems and will incorporate Net Zero Capable design
Mike noted that the mechanics of the agreement are still in discussion and the nature of the project
may require annual adjustments. Bob asked if this would mean significantly more staff time. Mike said,
not necessarily, once staff had found a streamlined way to monitor the project.
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URA Staff is supportive of the financial request for the following reasons:
• The costs that the Developer is seeking assistance with are eligible public improvements
according to Colorado Urban Renewal Law.
• The URA’s financial assistance fills a financial “gap” in the project.
• The Developer’s financial return is lower than what a developer or investor would expect for a
real estate development project of this size and level of risk, even with the URA assistance.
• The Developer is seeking a proportion of total tax increment generated from the project that is
consistent with the URA financial parameters and will allow the URA to use the remaining
increment for additional North College projects.
Ross asked if Staff could gather data on the projected environmental benefit of the project. He also
stated that he was hesitant to support going against policy in paying for previously completed projects
as it may set a bad precedent. He also noted that, if the projects are not reimbursed, the percentage of
TIF needed may be closer to 50%, a percentage he would like to become the normal share.
Next Steps
Staff will finalize the Redevelopment Agreement with the applicant and bring the Agreement forward to
the URA Board.
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