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HomeMy WebLinkAboutMidtown Apartments Staff Report 20170803Midtown TIF Assistance Program Grant Application Staff Report Midtown Apartments, LLC, 511 W. Peach St August 1, 2017 Overview This project application is the second received under the new Midtown TIF Assistance Program. The new program places special emphasis on the five goals articulated in the urban renewal plan for relieving blighted conditions in the urban renewal area. Each of these five goals is further refined with particular criteria for a total of sixteen categories in which points can be received. In many categories, specific documentation must be received in order to receive points. The new program is designed to move away from the previous façade grant program to support projects that reinforced the goals of the new urban renewal plan, as well as projects that create significant new taxable value. Criteria for TIF Assistance Overall District Relevance Relevance to the Midtown Urban Renewal Plan: Documentation of the project’s impact in relation to the goals and objectives of the Midtown Urban Renewal Plan, particularly mixed-use development. Urban design elements are also considered, including pedestrian emphasis and quality of design. The project eliminates blight by demolishing a failing structure and replacing it with a contemporary building that adds housing units and intensifies the density of the property use. The project significantly increases the housing capacity of the site from a small single family home to a 9 unit 17 room apartment building. The building is moved far closer to the street although its front façade is not particularly engaging in terms of enhancing the pedestrian experience. The project does not provide a mix of uses and create spaces for long-term traded sector jobs. [4 of 5] Promote Economic Development Tax Generation: The project will increase the taxable value within the District. The increase in taxable value due to new construction & rehabilitation is estimated by the County Assessor’s office or State Department of Revenue to determine tax increment generation. Submit documentation of estimated tax projections to receive points for these criteria. Leland Consulting Group (LCG) created a tax revenue generation model for the Midtown URD. Using data provided by the property owner, LCG estimates that the property will provide an annual net tax revenue increase of $26,082 for the TIF district. The new construction value of the new property is $1,550,000 which represents a $1,270,000 increase in the value of the property. For the assumptions related to these projections, please see the LGC report. [4 of 4] Elimination of Blight: The project’s direct and indirect impact on the physical and fiscal deterioration within the Tax Increment Financing District and the community. Submit information showing current conditions of property. The project eliminates blight by demolishing a failing and aesthetically unapplealing structure and replacing it with a contemporary building that adds housing units and intensifies the density of development on the property. [4 of 4] Employment Generation: Total employment generated by the project assessed in terms of new permanent and part-time jobs, and construction jobs. Submit documentation of estimated new jobs to receive points for this criterion. The project will generate temporary construction jobs. [1 of 3] Improve Multi-Modal Transportation Facilitates Public Health and Mobility: Project will construct or improve sidewalks, including ADA access to buildings. Provide detailed information demonstrating that the current condition inhibits public health and mobility. The current building has 4 foot sidewalks and is not ADA accessible. The new building will have 5 foot sidewalks and feature an at-grade fully ADA accessible residential unit. [1 of 1] Reduces Resource Demand: Project promotes the use of transit, ride sharing, or car sharing. Provide plans, agreements or other methods to demonstrate reduction of resource demand. While locating housing in Midtown places it in a centrally located location, this project does not take particularly exceptional or innovative measures to promote transit use, ride sharing, or car sharing. [0 of 1] Promotes Active Transportation: Project promotes bicycling as an active transportation option by constructing or improving bike lanes, providing covered bike parking, and/or participating in a bike share program. Provide plans, agreements or other methods to demonstrate reduction of resource demand. Qualifying covered bike parking is proposed. [1 of 1] Improve, Maintain, and Support Innovation in Infrastructure Infrastructure Improvements: Project promotes innovation in infrastructure and/or reduces long term costs of maintenance. Provide plans and descriptions of innovations proposed. The project proposes the installation of wet utility service lines and on-site stormwater treatement. These improvements are necessary and not particularly innovative. The project also is not proposing any improvements beyond sidewalk widening to enhance the streetscape or pedestrian experience. The proposed roof design is ready for photovoltaic cells, but the cells will not actually be installed during initial construction. [0 of 2] Promote Unified Human Scale Urban Design Street Frontage: The project improves the street frontage by eliminating parking between the right-of-way and the building. Provide plans to demonstrate improvement in street frontage. The building removes a residential driveway from the front of the building and all parking is tucked under the building with a driveway on the side of the building. Moving parking to the side and rear of structures is a new code requirement and is consistent with the vision of the Midtown Urban Renewal Plan. [2 of 2] Vehicular Access Points: The project reduces the number of vehicular access points to the property and improves the pedestrian experience. Provide plans, agreements or other methods to demonstrate reduction. [0 of 2] The project is moving its vehicular access point, but it is not changing the overall number of access points. Street Orientation: The project enhances the North 7th Ave. entryway corridor by having buildings oriented toward the street and designed to provide interest and activity. The proposed structure would orient the structure toward the street and provide new interest and activity compared to the single-family residential-style construction of the existing building. [2 of 3] Pedestrian Experience: The project enhances the pedestrian experience with elements such as façade transparency, building articulation, street furniture and/or landscaping. Submit plans and details that address this criterion. The project provides some enhanced façade transparency and new landscaping along Peach St. frontage. The building could do more to engage the street and enhance the public realm through the use of better landscaping and a more dynamic front façade. In particular the door of the front unit faces east rather toward the street. The applicant should consider the addition of a front porch and continuing the weather protection element around the corner further engages the building with the street. Sidewalk and ADA improvements will enhance the pedestrian experience. [1 of 3] Quality of the Development Exceeds Minimum Requirements. The quality of development and overall aesthetics (architectural, site design, landscaping, etc.) are beyond that which is minimally required by the UDC. Submit documentation to demonstrate compliance with this criterion. Based on preliminary renderings, the project as proposed appears to exceed the minimal requirements of the UDC for architecture, site design, and landscaping. [2 of 2] Support Compatible Urban Density Mixed Land Uses Increases Housing Units: The project increases housing units within the District. Submit plans demonstrating an increase in the number of housing units. The project replaces a single family home with 9 residential units. [4 of 4] Mix of Uses Including Residential: The project has a mix of uses, including residential. Submit plans detailing the proposed mix of uses within the project. The project includes residential, but not a mix of uses. [3 of 4] Shared Parking: The project shares parking among compatible uses. Provide details demonstrating compliance with the UDC and as well as total number of parking spaces reduced because of a shared arrangement. The project provides parking for its uses and does not share parking among compatible uses. Future more detailed plans for parking could show a shared parking arrangement to receive points for this category. [0 of 2] Total Points (27/44) Staff Recommendation The Midtown TIF Assistance Program allows the payment of eligible costs of development to incentivize development that meets the goals of the urban renewal plan. The applicant is applying for five (5) eligible cost areas which include: Impact fees: $42,661 Demolition: $41,365 Cash in Lieu of Parkland: $4,455.61 Stormtech drainage: $33,628 Water and Fire line: $17,704 The applicant requested funding for two items stormtech drainage and a water and fire line that, while possibly eligible for funding, have benefits that are predominately internal to the project. For this reason, staff does not recommend funding these items for this project. Excluding these items, the total funding request would be $88,481.61. Leland Consulting Group (LCG) completed a financial analysis of the project (attached) to help staff evaluate the project. Their report analyzed return on investment (ROI), estimated payback period for the public assistance and proposed target metrics for the ratio of private investment to public assistance. Their analysis was based on awarding the applicant’s full assistance request. LCG recommends a ratio of private investment to public assistance of 10:1 or greater for a multi-family residential-only project; the ratio for this project is 10.294:1. LCG also created a tax generation model for the Midtown URD. According to their model, the project would produce annual taxes of $17,045, which would allow TIF assistance to be paid back in 9 years (5.2 years for new increment-based payback if assistance is provided at the staff recommended amount). This level of increment generation to payback ensures that the proposed project will contribute to the long-term ability of the District to make investments in new projects. Staff scored the application based on the program criteria. Based on our review and the application materials presented, the project received 27 of 44 available points. The project eliminates blight and advances the District goal of creating urban density land uses and providing increased housing stock within the District to drive further commercial development. Staff recommends authorizing staff to negotiate a development agreement with the Applicant for presentation to the Bozeman City Commission for approval. Recommended motion: “I move to authorize staff to negotiate a development agreement with the Applicant for TIF Assistance not-to-exceed $88,481.61 and to recommend the Midtown Apartments project for TIF Assistance to the Bozeman City Commission.”