R2011-150 AUTHORIZING REDEVELOPMENT AGREEMENT

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DEVELOPMENT SERVICES MEMORANDUM No. 11-51 September 14, 2011 TO: Honorable Mayor Michael T. McElroy and City Council FROM: Ryan P. McCrady, City Manager Billy Tyus, Assistant City Manager SUBJECT: Jackson Ford Redevelopment Agreement SUMMARY RECOMMENDATION: Staff recommends approval of the attached redevelopment agreement between the City of Decatur, Jackson Ford Inc. and Jackson Family Limited Partnership to build a new dealership on the current Jackson Ford Site at 455 E. Pershing Road. BACKGROUND: Jackson Ford and Jackson Family Limited Partnership have committed to investing an expected $4.1 million in the construction of a new auto dealership on the site currently occupied by its Ford dealership on East Pershing Road. City staff has been in negotiations with both parties regarding the terms of a possible incentive package to facilitate this development and the project, as presented, would bring a new look and feel to the corner of Martin Luther King Jr. Drive and Pershing Road. As with most new construction, it is also expected to result in added value to the site in the form of an increased Equalized Assessed Valuation (EAV) and sales. The development incentives would be taken from new sales generated by the site and through the increase in EAV, neither of which is being drawn at the current time. The City would be obligated under the proposed agreement to share 90 percent of the sales tax increment over and above the annualized average sales for the months of January 2010 through June 2011 and 100 percent of any increase seen over the property's 2010 Equalized Assessed Valuation. That means that the city will continue to collect at a minimum what it drew in real estate taxes this year (barring reassessment) and what we have drawn in sales taxes from the dealership on average for the past 18 months barring a reduction in auto sales plus a portion of new sales expected to be generated by the newly-developed site. The city's obligation will end once the developer has received the lesser of: 1. Fifty (50%)percent of the final project cost or; 2. A total reimbursement of$2,093,002 POTENTIAL OBJECTION: None. INPUT FROM OTHER SOURCES: The proposed agreement has been reviewed by city staff and the developer's counsel. STAFF REFERENCE: Any additional questions may be forwarded to Ryan McCrady at 424-2801 or Billy Tyus at 424-2727. BUDGET/TIME IMPLICATIONS: All reimbursements will be made based on incremental sales and property taxes generated to the City of Decatur.