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02 TIF Agreement Res 2007-402 Economic Development Memorandum ~ Date: May 23, 2007 TO: Steven E. Sheiffer, City Manager FROM: Doug Venable, Director of Economic Development w' SUBJECT: Action on a Resolution Approving a TIF Development Agreement with MGD FUND III, LLC. for the Redevelopment of 22 S. Jackson St in TIF District No. 24 and Authorizing the City Manager to Sell the Eastern One Half of the Property at 22 S. Jackson St. (File Resolution 2007 - 402) I. Summary MGD FUND III, LLC (UMGD") has requested TIF Assistance to develop a new 8,000 SF, two-story office building on land currently owned by the City at 22 S. Jackson St. The City Administration has negotiated a TIF Development Agreement with MGD. If approved, MGD will purchase the eastern one-half of the City-owned lot at 22 S. Jackson St for $18,000; construct an 8,000 SF office building with a value of $900,000; and guarantee an annual property tax payment ranging from $16,051 to $17,804 over the life of the TIF Agreement. The City will reimburse MGD for $130,500 in development costs and construct a 28-stall public parking lot on City-owned land along Dodge St at an estimated cost of $55,000. The property tax guarantees will allow the City to fully recover its TIF costs within 12 years. On this Agenda, the Council will also consider a TIF Development with the Forward Foundation for the renovation of its properties at 14 and 18 S. Jackson St. in TIF No. 24. This $300,000 renovation will be designed to share the elevator and stairs with the MGD office building so both projects will have access to the second floors. Since the eastern one-half of the property at 22 S. Jackson St. was purchased with CBGB monies, the Community Development Authority reviewed the sale of land at their May 16, 2007 meeting and recommended that the sale be approved by the Council. The Plan Commission reviewed the sale of the eastern one-half of 22 S. Jackson St. at their May 21,2007 meeting and found the sale to be consistent with City plans, but did not review the financial aspects of the transaction. The City Administration recommends that the Council adopt File Resolution No. 2007 - 402, approving the TIF Development Agreement with MGD FUND III, LLC and authorizing the City Manager to sell the eastern one-half of the properties at 22 S. Jackson St. for $18.000. II. Background In 1998, the City purchased a 66' by 134' lot at 22 S. Jackson St. using CDBG blight elimination monies. The buildings on the site were demolished and the City has been holding the site for a future redevelopment project. In 2005, the Forward Foundation Economic Development Department +18 N. Jackson 81. + Janesville, WI +53547-5005 +608-755-3181 MGD Fund III, LLC Project May 23, 2007 Page 2 purchased the adjacent existing buildings at 14 and 18 S. Jackson St. and has been exploring a possible redevelopment project. A key component of renovating and fully utilizing the existing Forward Foundation buildings is providing handicapped access to the second floors. MGD has worked with the Forward Foundation to design a new 8,000 sf, two story office building that will be attached to the existing buildings at 14 and 18 S. Jackson St. that Forward Foundation will renovate to create a modern, 14,000 sf office building that shares the use of an elevator and second staircase. III. TIF Development Agreement The City Administration has negotiated a TIF Development Agreement with MGD for the construction of the new 8,000 sf office building. Under the terms of the proposed Agreement, MDG will purchase the eastern one-half of the City-owned vacant lot at 22 S. Jackson St. for $18,000. Since the property was originally purchased using CDBG monies, the sale proceeds will return to the CDBG fund and will be available for future projects. MGD will construct an 8,000 sf office building valued at $900,000 and guarantee to annually pay to the City property taxes ranging from $16,051 in 2008 (payable in 2009) to $17,804 in 2018 (payable in 2019). Under the terms of the Agreement, the City will reimburse MGD for $130,500 in development costs and will construct a public parking lot on the western one-half of the City-owned lot at 22 S. Jackson St. at an estimated cost of $55,000. Combined with the land that the City will purchase from Forward Foundation, the City can construct a 28-stall parking lot that will serve the needs of the businesses located within the new project as well as other businesses in the northwest quadrant of the downtown. The funding for the planned parking lot will come from TIF NO.9. MGD agrees that it will remain liable for and will pay real estate property taxes to the City. The guaranteed property tax payments will allow the City to recover its TIF costs within 12 years. This redevelopment project is also dependent upon the renovation of the existing buildings at 14 and 18 S. Jackson St. by Forward Foundation. The new office building will be constructed to allow the Forward Foundation properties to share an elevator and new stairway so that the Forward Foundation properties will be handicapped accessible. IV. Recommendation Downtown revitalization projects are difficult to complete due to the need to deal with existing buildings without adequate access to second floors and to deal with multiple property owners to assemble a development site. Development is further complicated by the need for off-street parking to serve new development. Economic Development Department .18 N. Jackson 81. . Janesville, WI .53547-5005 .608-755-3181 MGD Fund III, LLC Project May 23, 2007 Page 3 The proposed TIF Agreement with MGD provides a reasonable amount of public investment to allow the proposed redevelopment project to proceed. The TIF Agreement helps pay for the extraordinary costs associated with downtown projects, creates second floor access to two existing buildings; and provides for the creation of a new 28-stall public parking lot that will serve multiple businesses in the northwest quadrant of the downtown. The Administration recommends that the City Council adopt Resolution 2007 - 402, approving the TIF Development Agreement with MGD and authorizing the City Manager to sell the eastern one-half of the City-owned lot at 22 S. Jackson St. to MGD for $18,000. 1:>~ Douglas Ve ble Attachments: Map of Development Site Resolution 2007 - 402 Summary of TIF Development Agreement Sketch of Planned Building Economic Development Department. 18 N. Jackson 81. . Janesville, WI .53547-5005 .608-755-3181 Jackson Square Project Location I I City-Owned Property ~ City Land Sale to MGD Forward Foundation Property Forward Land Purchase by City 1 inch equals 60 feet o 1020 40 60 80 _ _ Feet May, 2007 Resolution 2007 - 402 A Resolution Approving a TIF Development Agreement with MGD FUND III, LLC for the Redevelopment of Properties at 22 S. Jackson St. and Authorizing the City Manager to Sell a Parcel of Land to MGD FUND III, LLC for a Purchase price of $18,000 WHEREAS, the Common Council have authorized the use of Tax Increment Financing ("TIF") Districts and TIF Development agreements when the Council adopted amended Council Policy Statement No. 61 (Economic Development Policy) on the 13th day of November, 2006; and, WHEREAS, the Common Council of the City of Janesville lawfully created Tax Increment Finance (TIF) District No. 24 on the 24th day of July 2002, which TIF District was duly reviewed and approved by all necessary boards and commissions; and, WHEREAS, MGD FUND III, LLC. ("MGD"), is a Wisconsin limited liability company conducting its principal business at 462 Midland Road, Janesville, Wisconsin 53545, desires to purchase certain real property owned by the CITY located at 22 South Jackson Street in the City of Janesville, County of Rock, State of Wisconsin 53545 and construct an 8,000 sf commercial office building, thereby revitalizing and redeveloping the CITY's downtown, helping eliminate blight, increasing the value of said real and personal property, adding to the CITY's tax base, and otherwise benefiting the health, welfare, peace and good order of the CITY, its downtown and the overall community; and, WHEREAS, in order to facilitate the planned renovation project, MGD and the CITY have negotiated a TIF Development Agreement ("Agreement") that is consistent with the goals of TIF No. 24; and, WHEREAS, said Agreement, which is attached hereto and incorporated herein by reference as if fully set forth verbatim, sets forth the terms and conditions of the planned renovation project and provides for MGD's full repayment of the CITY's TIF development costs in a manner and within a time allowed by Wisconsin law; and WHEREAS, under the terms of the Agreement, the CITY shall sell in fee simple the eastern one- half of the property located at 22 South Jackson Street to MGD for a purchase price of Eighteen Thousand and 00/100 Dollars ($18,000.00); and WHEREAS, the Janesville Plan Commission reviewed the proposed purchase, acquisition and sale of properties related to the planned project and found such sale of property to be consistent with CITY plans, but did not comment on the financial aspects of any specific transaction; and WHEREAS, the Common Council of the City of Janesville find that both the approval of said Agreement and the CITY's sale of the eastern one-half of the property located at 22 South Jackson Street are both in the best interest of and benefit to the City, its good order, its citizens, and the overall community; and WHEREAS, various Wisconsin's laws including, but not limited to, Wis. Stats. SS 62.11 (5), 62.22(1), 66.0101, and 66.1105 jointly and severally empower the Common Council and the City to enter into this purchase and related Agreement. Resolution No. 2007-402 Page 2 NOW, THEREFORE, BE IT RESOLVED, by the Common Council of the City of Janesville that: 1. Each of the above recitals and findings is reiterated and incorporated herein by reference as if fully set forth verbatim; and 2. The attached Agreement by and between the City and MGD FUND III, LLC is hereby approved; the City Administration may enter into said Agreement on behalf of the City; and 3. The City's sale of the eastern one-half of the real property located at 22 South Jackson Street to MGD FUND III, LLC is authorized and approved in accord with the terms and conditions set forth said Agreement; the City Administration may effectuate said surplus land sale on behalf of the City. BE IT FURTHER RESOLVED, that the City Manager, on behalf of the City of Janesville, is hereby authorized to negotiate, draft, modify, review, enter into and amend the Agreement and all other related documents, papers and agreements; to take whatever other actions; and to make whatever other changes, modifications and amendments to the sale(s) and/or purchase(s) authorized herein that the City Manager may, from time to time, deem necessary and/or desirable to effectuate the intent of this Resolution. ADOPTED: Motion by: Second by: Councilmember Aye Nay Pass Absent Brunner DeGarmo Loasching Steeber Truman Wellnitz Williams APPROVED: Steven E. Sheiffer, City Manager ATTEST: Jean Ann Wulf, City Clerk-Treasurer APPROVEDA~~ a City Attorney Proposed by: City Manager Prepared by: Economic Development Director and City Attorney Resolutions/MDG Fund 3 Resolution Sale and CC Memo.doc Summary of TIF Development Agreement By and Between City of Janesville and MGD FUND III, LLC I. Parties A. City of Janesville B. MGD FUND III, LLC II. Description of Property III. Purpose of Agreement IV. The Agreement A. The City shall: 1) Prepare a survey of the property after land purchase and sale. Cost to be shared 50/50. 2) Upon financial review, sell the eastern Y:1 of 22 S. Jackson St. for $18,000. 3) Construct new public parking lot on western Y:1 of 22 S. Jackson St. 4) Reimburse MGD for $130,500 in development costs. B. MGD shall: 1) Reimburse City of 50% of cost of survey. 2) Provide financial information about project for City to review and approve. 3) Purchase the eastern Y:1 of 22 S. Jackson St. to the City for $18,000. 4) Obtain approval of site plan and building elevations from City Site Plan Review Coordinator and Janesville Historic Commission. 5) Complete construction of new office building at 22 Jackson St. with an estimated value of $900,000 by December 31,2007 6) Guarantee to annually pay to the City a property tax payment ranging from $16,051 in 2008 (payable in 2009) to $17,804 in 2018 (payable in 2019). C. As long as City's TIF costs have not been repaid: 1) MGD cannot allow property to become tax exempt. 2) MGD cannot sell the property without the City's approval and without the buyer accepting the TIF guarantees. D. MGD contingencies to be satisfied or waived by June 30, 2007 1) Receipt of Phase One environmental audit at MGD's expense. 2) Receipt of plan approvals and permits. 2) Project financing with acceptable terms. 3) Binding leases for the renovated building. E. City not obligated to TIF Agreement until all MGD contingencies are met. F. MGD can repay City TIF investment at any time. If this is done, then restrictions on sale and tax exempt uses in Section IV.C. are removed. Community Development Department Memorandum ~ May 22, 2007 FROM: Steven E. Sheiffer, City Manager AI Hulick, Development specialiS*, Acquisition and sale of lands for TIF No. 24 Project on the corner of Jackson Street and Dodge Street. TO: SUBJECT: I. RECOMMENDATION The Plan Commission and Community Development Department recommend that the City Council find the proposed acquisition and sale of land within TIF No. 24 consistent with established City plans. The City Council will be advised that the Plan Commission has not reviewed the financial aspects of these transactions. II. REQUEST The City of Janesville is proposing to purchase the rear 62-feet of the two lots owned by the Forward Foundation located at 14 and 18 South Jackson Street within TIF No. 24. Concurrently, MGD Fund III, LLC is proposing to purchase the front 62-feet of the lot owned by the City of Janesville located at 22 South Jackson Street. This land acquisition and sale is necessary to facilitate the development of 15,000 SF office building along South Jackson Street and the development of a public parking to lot in the rear of the proposed development (see attached map and site plan). The Community Development Department asks that the Plan Commission review the proposed acquisition and sale of land for their consistency with established City Plans. III. ANALYSIS A. In 1998, the City purchased an 8,845 SF property at the corner of S. Jackson and Dodge St. The two blighted buildings on the property were demolished and the City has been holding the property for a redevelopment project. In 2005, the Forward Foundation purchased both the Red Wing Shoe at 18 S. Jackson St. and the Dermagraphics Building at 14 S. Jackson St. to help stabilize the neighborhood. Their properties combined with the City owned lot at the corner make a 17,690 SF redevelopment site. ~ PI"o'09 Dep,,,,",,' . P. o. So< 5005 . ""e"lIIe, WI 53547 · (608) 755.3085 · FAX (608) 755-3196 B. Forward Janesville and MGD Fund III, LLC are proposing to develop a two-story, 15,000 SF office building by combining their existing Red Wing Shoe and Dermagraphics buildings with a new addition on the land at the corner of South Jackson and Dodge Streets now owned by the City. The existing buildings will be renovated with a new stairwell and facades while the new addition will be designed to be architecturally compatible with the buildings in the downtown. They estimate the value of the completed project at $1.2 million, a net increase of $1.0 million in TIF No. 24. D. MGD Fund III, LLC would be the developer of the new office structure on the now vacant -City-owned corner lot. MGD would also be the builder for the renovation of the two existing buildings now owned by the Forward Foundation; however, the Forward Foundation would continue to own the existing buildings. The Forward Foundation and MGD would record joint access agreements and easements to allow both the existing buildings and the new building to utilize the elevator and stairways to access the second floors. E. In order to make the project feasible, the City will be selling the east 62-feet of the corner lot and the Forward Foundation will be selling the west 62-feet of their land to the City as shown on attached Map 2. The City will then construct a new 28-stall public parking lot off of Dodge Street along the rear of the new Forward Foundation project. The estimated cost of construction for this project is $65,000 and will be paid for by TIF funds. F. Downtown revitalization continues to be a goal of the City Council and Administration. Forward Foundation and MGD are proposing a redevelopment project that will renovate two existing structures and add additional Class A office space in the downtown G. The proposed acquisition and resale of land within the TIF District is consistent with the long range plans for the City. This development is in accordance with the recommendations of the General Development Plan, established downtown plans, and the TIF 24 Project Plan. IV. PLAN COMMISSION ACTION - 21 MAY 2007 ~ PI"o'09 Dep.""'.'" . po. 80,5005' J",,~"e. WI""" · (60B) '55-3085 · FAX (608) 755-3196 AI Hulick, Development Specialist, presented the written staff report. cc: ~ PI,nn;n, Dep'",""" 0 PO. 80,50050 Jen..,,;IIe, W; 53547 0(608) 755.3085 0 FAX (6081 755-3196 There was a motion by Chairman Williams with a second by Commissioner Zolidis to find the acquisition and sale of lands consistent with established City Plans. The motion carried on a 5-0-1 vote with Commissioner Werner abstaining. Brad Cantrell ~ Duane Chere~ <P \ ~ ~ co' ~'t--((;,.((;,. ~~~~ ) X. co' ifJ\P /\ o NORTH Date: 5-3-07 Scale: 1"= 100' Map Coordinate: L-15 Legend ~--~~-:::I City-Owned Property _ Forward Foundation Property ACQUISmON ANDSALE OF LAND IN TIF 24 I MAP 1 II it CPLANNINITY OFGJANESD,nnA n VllTMENT,LE! CORNER OF JACKSON ST & DODGE ST , LC^-l'., Community Development Department Memorandum ~ May 22, 2007 FROM: Steven E. Sheiffer, City Manager AI Hulick, Development Special is*, Acquisition and sale of lands for TIF No. 24 Project on the corner of Jackson Street and Dodge Street. TO: SUBJECT: I. RECOMMENDATION The Plan Commission and Community Development Department recommend that the City Council find the proposed acquisition and sale of land within TIF No. 24 consistent with established City plans. The City Council will be advised that the Plan Commission has not reviewed the financial aspects of these transactions. II. REQUEST The City of Janesville is proposing to purchase the rear 62-feet of the two lots owned by the Forward Foundation located at 14 and 18 South Jackson Street within TIF No. 24. Concurrently, MGD Fund III, LLC is proposing to purchase the front 62-feet of the lot owned by the City of Janesville located at 22 South Jackson Street. This land acquisition and sale is necessary to facilitate the development of 15,000 SF office building along South Jackson Street and the development of a public parking to lot in the rear of the proposed development (see attached map and site plan). The Community Development Department asks that the Plan Commission review the proposed acquisition and sale of land for their consistency with established City Plans. III. ANALYSIS A. In 1998, the City purchased an 8,845 SF property at the corner of S. Jackson and Dodge St. The two blighted buildings on the property were demolished and the City has been holding the property for a redevelopment project. In 2005, the Forward Foundation purchased both the Red Wing Shoe at 18 S. Jackson St. and the Dermagraphics Building at 14 S. Jackson St. to help stabilize the neighborhood. Their properties combined with the City owned lot at the corner make a 17,690 SF redevelopment site. ~ P'''O'09 0"""""0' · P 0 8'" 5005 . J",,~II.. W, 53547 · (606) 755-3065 . FAX (608)755-31 00 B. Forward Janesville and MGD Fund III, LLC are proposing to develop a two-story, 15,000 SF office building by combining their existing Red Wing Shoe and Dermagraphics buildings with a new addition on the land at the corner of South Jackson and Dodge Streets now owned by the City. The existing buildings will be renovated with a new stairwell and facades while the new addition will be designed to be architecturally compatible with the buildings in the downtown. They estimate the value of the completed project at $1.2 million, a net increase of $1.0 million in TIF No. 24. D. MGD Fund III, LLC would be the developer of the new office structure on the now vacant -City-owned corner lot. MGD would also be the builder for the renovation of the two existing buildings now owned by the Forward Foundation; however, the Forward Foundation would continue to own the existing buildings. The Forward Foundation and MGD would record joint access agreements and easements to allow both the existing buildings and the new building to utilize the elevator and stairways to access the second floors. E. In order to make the project feasible, the City will be selling the east 62-feet of the corner lot and the Forward Foundation will be selling the west 62-feet of their land to the City as shown on attached Map 2. The City will then construct a new 28-stall public parking lot off of Dodge Street along the rear of the new Forward Foundation project. The estimated cost of construction for this project is $65,000 and will be paid for by TIF funds. F. Downtown revitalization continues to be a goal of the City Council and Administration. Forward Foundation and MGD are proposing a redevelopment project that will renovate two existing structures and add additional Class A office space in the downtown G. The proposed acquisition and resale of land within the TIF District is consistent with the long range plans for the City. This development is in accordance with the recommendations of the General Development Plan, established downtown plans, and the TIF 24 Project Plan. IV. PLAN COMMISSION ACTION - 21 MAY 2007 ~ p,,,,;,,o.p.,,,"''''. P.O. So> 5005. J",,~I1,. WI "547 · (608) 755-3085. FAX (608) 755-3198 AI Hulick, Development Specialist, presented the written staff report. cc: ~ Plannln, Dep.rtm,,,, · P.O. e,,, 5005. Jan",vill" WI 535" · (60B)755-3OB5 . FAX (60B) 755-3100 There was a motion by Chairman Williams with a second by Commissioner Zolidis to find the acquisition and sale of lands consistent with established City Plans. 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