SUBJECT:
Title
A Resolution of the Board of Commissioners of the Town of Erie Urban Renewal Authority Approving a Reimbursement Agreement with SpenAlu LLC
Body
DEPARTMENT: Economic Development/TOEURA
Department
PRESENTER(S): Jack Hill, Business Development Specialist
Andy Arnold, Pioneer Development Company
LuLu Clair, SpenAlu LLC
First Name Last Name, Title
TIME ESTIMATE: 20 Minutes
only required for non-consent items
FISCAL SUMMARY:
The Reimbursement Agreement authorizes TOEURA to pledge up to $566,000 in gross sales tax increment generated by the project over the next 10 years (expiring on Dec. 31, 2034), to support the $375,000 financial gap demonstrated by SpenAlu LLC and validated by the Town’s consultants at Pioneer Development Company.
POLICY ISSUES:
To utilize tax increment financing (TIF) assistance to support the redevelopment of the building on 656 Kattell Street in Downtown Erie, and ongoing (re)development in the Historic Old Town URA, increasing property valuation and generating new property/sales tax increment to TOEURA and revenue to the Town.
STAFF RECOMMENDATION:
Recommendation
Approve the Reimbursement Agreement.
End
SUMMARY AND BACKGROUND OF SUBJECT MATTER:
The Project will expand and improve the property at 656 Kattell Street, a restaurant which has been vacant and deteriorating for the past 5 years. The prospective property owners and developers, who own and operate Denver restaurants Dio Mio and Redeemer Pizza, intend to completely renovate the existing structure inside and out. The redevelopment is in alignment with the Historic Old Town Urban Renewal Plan, especially the Plan’s #7,9,10,19,20 and 21 Objectives. The restaurant requires a new roof, upgraded 3-phase power, upgraded water tap, a new kitchen hood, a new grease trap, ADA compliant flooring and layout, a façade update and an upgraded enclosable patio. Once the full project is complete, SpenAlu LLC will have invested $1,874,938 to redevelop a restaurant space that has remained vacant for 5 years in Old Town Erie.
Town staff contracted with Pioneer Development Company to review the development plans and project pro forma from SpenAlu LLC and prepare the attached Gap Funding Analysis. The analysis shows that the redevelopment project requires approximately $375,000 in gap funding assistance from TOEURA to achieve financial feasibility based on market benchmarks and current investment metrics. TOEURA and SpenAlu LLC agreed to a TIF revenue sharing agreement to overcome this funding gap, capped at $566,000 gross increment over the next 10 years to achieve the $375,000 gap funding in net present value. This agreement reflects support similar to other TIF agreements already in place within the Historic Old Town URA for 105 Wells Street (Park West), 615 Briggs Street (Coal Park), 700 Briggs Street (Legacy), 526 Briggs Street (Birdhouse), and 554 Briggs Street (Lucile’s Café).
The attached Reimbursement Agreement authorizes TOEURA to pledge 100% of the sales tax increment generated by the project, up to a maximum of $566,000 gross increment, for a period of 10 years (exp. Dec. 31, 2034), whichever first occurs.
COUNCIL PRIORITY(S) ADDRESSED:
ü Attractive Community Amenities
ü Prosperous Economy
ü Small Town Feel
ü Effective Governance
ü Fiscally Responsible
ATTACHMENT(S):
1. Staff Presentation
2. Resolution 25-001
3. Reimbursement Agreement
4. Gap Funding Analysis