R2000-257 AUTHORIZING EXECUTION OF AGREEMENT Olde Towne RD Development

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ECONOMIC AND URBAN DEVELOPMENT MEMORANDUM NO. 00-188 December 13, 2000 TO: Honorable Mayor Terry M.Howley and City Council Members FROM: Steve Garman, City Manager A.J. Krieger, Assistant City M er SUBJECT: O1deTowne Development Project Redevelopment Agreement ', Attached to this memorandum are a resolution and agreement which, if approved, will provide far the first I� major tax increment redevelopment project within the O1deTowne Redevelopment Project Area. At its May 15, 2000, regular meeting, Council approved the use of tax increment financing to encourage redevelopment activity. One of the major objectives listed within the O1deTowne Redevelopment Plan was the encouragement of commercial redevelopment within the Oakwood/University Plaza area. The attached redevelopment agreement represents the initiation of that activity. R&D Development L.L.C., a partnership between the Romano Development Company a.nd Demirco, proposes to demolish the existing Blue Mill restaurant and several residential properties to the south and east in order to construct an approximately 33,000 sqft building to house retail and office tenants. Council will consider the proposed rezoning and approval of a planned unit development to accommodate this project within another item on this agenda. Exhibit A of the agreement provides a general description of the project, calculates an estimated annual tax revenue increment, and enumerates the type and schedule of incentive offered to the developer. Note: The calculation of an annual tax increment requires certain assumptions. Because total construction value and assessed value are not always the same, changes in assessed valuation (due to occupancy, future changes/improvements) are difficult to forecast, and because it is impossible to predict future tax rates, any incremental revenue projection is subject to change. For the purposes of this agreement, the incrementa.l revenue was projected by applying the 1999 tax rate to a constant building value (equal to construction value)minus the pre-redevelopment value of the property. This redevelopment incentive is performance based in that the developer's ultimate level of reunbursement is tied to the project's total value; a greater post-redevelopment value provides for a larger reimbursement. In any case, the City's liability is limited to a rebate of 90% of the annual incremental revenue generated over a si�een year period. The City's liability is tied specifically to the availability of funds within the City's special tax increment account. Using the formula described above, it appears the annual reimbursement from the City's tax increment account will be appro�mately$54,900. City staff will be available to answer any questions. Staff recommends approval.