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The cost required for the quality of design and materials specified by the City for the Town Green Market Development is much more than a typical retail development. Public investment is needed to ensure the quality matches the Town Green and the vision outlined in the Downtown Master Plan. The City and DDA have negotiated a way for this development to proceed using the value of the land and a loan from the DDA to the developer in an amount equal to the equity investment of the developer. This amount is projected to be $3.3 million and will be paid back to the DDA over ten years at three percent interest and will include a bonus of 15 percent ‘kicker’ upon sale to the DDA as a return on the risk it assumed.
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Since construction began on the Town Green, the interest in the surrounding land owned by the City and DDA has increased substantially. The BOMC and the DDA knew these properties would play an important role in delivering the vision of the Downtown Master Plan. Until recently, they thought the redevelopment of these parcels would take five to ten years. However, opportunities for development came sooner than anticipated and propelled both the BOMC and DDA to consider whether it would be in the City’s best interest to accelerate the timeline.
The initial due diligence from evaluating the proposals is promising. The BOMC and DDA strongly believe the proposals selected optimally leverage the property. Though no decisions regarding design, construction or financing have been made, the executive sessions were necessary to get to this point.
Before informing the community, the BOMC and DDA wanted to ensure these proposals were compatible with the Downtown Master Plan, the City’s Comprehensive Plan, and in the City’s best interest. Leadership also wanted to ensure these proposals are viable.
As described in the BOMC’s April 27 work session, there are three projects proposed for City/DDA owned properties:
These projects are consistent with the Downtown Master Plan, a vision created over many years with lots of community input. The parking deck will provide long-term parking solutions for the downtown and is pivotal to enabling these public-private partnerships to move forward.
The advantages of these developments to the City are multi-faceted.
All three projects are:
The Boutique Hotel:
Much research into the size and viability of this hotel has been performed by the developer, and 80 rooms is the right size for the community based on models and best practices.
The development team is talking to multiple hotel groups which are confidential at this point. Each hotel group has a boutique brand within its portfolio. The development contracts would include approval of the specific brand, and although consistent with other boutique hotels, this one would be given an Avondale-specific name which has yet to be determined. The advantage of being associated with a particular brand is that it ties into a national reservation system making the development much more viable and secure.
These development proposals are still in the very early concept phases and are undergoing due diligence. No votes or decisions have been made and input from the community will be sought, but we are encouraged by early vetting. We are unified in our excitement about these projects and remain cautiously optimistic.
If the City is to take advantage of the proposals, it needs to move forward now. Costs are rising and so are interest rates. These projects become more difficult with time. It is time to start sharing these proposals with the community so that the City is able to act.
Each of the proposed projects will be subject to Recommended Storefront Design Guidelines and Prohibited Use Restrictions set forth by the BOMC consistent with the Downtown Master Plan. The projects will be subject to the City’s zoning codes and regulations, and any requested variance will go through the City’s standard zoning review process.
Finders Keepers, located at 84 N. Avondale Road, and Edwin Jarvis, located at 88 N. Avondale Road, are highly valued and very popular businesses.
The DDA purchased these buildings several years ago in anticipation of the Town Green being built. The intent was not for the DDA to remain in a property management role indefinitely, but to control the development of this valuable land when the opportunity for ‘placemaking’ came. That time is now.
Nonetheless, the DDA is committed to working with these businesses to try and find an alternative location in the City that works for them.
All three of these proposals are attractive, and as mentioned previously, subject to extensive design and appearance guidelines, as well as prohibitive use restrictions. These types of guidelines and restrictions are what ‘placemaking’ is all about – and they are expensive. Any developer measures the investment costs required when the quality of materials used, the design, and the appearance are specified. Getting the type and quality of development the City desires has a cost – but will pay huge dividends for generations.
Fortunately, previous City and DDA leaders have provided the tools to invest in this placemaking initiative. The recent sale of a DDA-owned building often referred to as the Department of Juvenile Justice (DJJ) building created investable funds for the DDA. The Tax Allocation District (TAD) created years ago is now yielding available tax revenues from the downtown area to invest back into the public infrastructure. Briefly speaking, in a TAD, county property taxes generated above a baseline level, which has now been exceeded, stay IN the City, and can be used on infrastructure investment back in the district.
The single most difficult financial hurdle is the parking deck. The cost of the parking deck is currently estimated to be around $6.1 million, a significant sum. No developer could or would absorb that cost, as the deck is mostly a public amenity. Using the money raised from the sale of the 84, 88 and 90 N. Avondale Road properties and the windfall of tax revenue generated largely from the hotel into the TAD, this $6.1 million cost can be absorbed with no capital outlay from the City or DDA.
No, the developer will pay for the land to build the live-work units. The parking for those units will be absorbed into the parking deck.
No, the hotel developers will purchase the properties at 84, 88 and 90 N. Avondale Road at a price still to be finalized. Their initial offer was in-line with what local brokers determined to be its value. The revenue from the sale of the properties will be reinvested into the parking deck.
STEP 1: An Inter-Governmental Agreement (IGA) between the BOMC and the DDA will provide the DDA control of all the parcels mentioned above so it can use its status as a development authority to engage with the developers. This agreement will outline the requirements set forth by the BOMC/DDA for these properties. It will include covenants for design guidelines, desired and prohibited uses of the properties, stipulations for the flow of funds, and ultimate ownership of key components of the parcels.
STEP 2: Memorandums of Understanding (MOUs) between the DDA and the respective developers enabling the development teams to confidently move forward with the design and financing of their projects. The MOUs will again be subject to discussion and a vote in a public meeting.
STEP 3: Later this summer, it is anticipated the DDA will contract with each of the development teams to execute these projects. These development contracts will form the basis of governance for the financing, design, construction, occupancy, and use of the development projects.
Here is the current planned timetable: