Loading...
HomeMy WebLinkAbout4/5/2000 - STAFF REPORTS (2) DATE: APRIL 5, 2000 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: REDEVELOPMENT DIRECTOR OWNER PARTICIPATION AGREEMENT WITH LOWE'S HOME IMPROVEMENT CENTER RECOMMENDATION: It is recommended that the Agency approve an Owner Participation Agreement for a tax-increment incentive financing package for Lowe's HIW, Inc., a Virginia Corporation, to effectuate the construction of a new retail home improvement center at 5001 East Ramon Road, in the Ramon-Bogie Project Area. BACKGROUND: Lowe's HIW, Inc.(Owner) has a sublease on a 13.88 acre parcel of Indian-owned land at 5001 East Ramon Road. The Owner entered into the lease in 1999 for the purpose of constructing a retail home improvement center of approximately 175,000 square feet. Lowe's is one of the largest national retailers in the category of home improvement/hardware/lumber and this facility would be the largest of its type in the Coachella Valley. The Ramon Road property is in a 38.83 acre portion of Assessment District 155, which was created in 1989 to construct streets and other off-site improvements in the area east of the airport. The original principal and interest obligation on the entire parcel was $1,393,375 and the remaining debt is $889,715. The annual assessmentwould be about$136,000. Lowe's, however,would only be responsible for its pro rata share of the overall assessment cost; if they used 13.88 acres and the assessment were pro-rated strictly on square footage, the share owed by Lowe's would be approximately $48,000 per year. Over the past ten years, the City has struggled with the bond payments on AD 155 because of the high number of leaseholder defaults. The City is currently in litigation with the District's bond Counsel to attempt to recover a portion of the past assessment payments; therefore, a waiver of the assessment payment could undercut the City's legal position in that suit. Thus, it was a condition of Lowe's Planning Commission approval that they agree to pay the remaining assessment. The City has not sought to recover any of the past assessment payments from Lowe's. In lieu of granting Lowe's an appeal of that requirement, staff urges the Agency to enter an OPA with Lowe's to provide for the rebate of the assessment district costs from tax increment generated by the project. This ensures that the assessment district continues to be paid, rather than prolonging its poor economic health or costing the General Fund additional dollars. Tax increment received by the Agency represents approximately 64%of the property taxes paid on the assessed valuation. In the case of Lowe's, it is expected that the tax increment received will be about $50,000 per year, or an amount close to the assessment payment. Therefore,the Economic Development Incentive Zone(EDIZ) program would be able to rebate the entire assessment payment due from Lowe's. The EDIZ program was developed in 1994 to help the leaseholders in the nearby Knutson Tract that were having difficulty developing their parcels. In the early 1990's those leaseholders were hurt by the generally weak economy, an unfamiliarity (and subsequent discomfort) with Indian lease land on the part of lenders, especially those from outside the area, and the "negative value" that the assessment district A created in the eyes of real estate appraisers. While other factors also stifled development on those parcels, the EDIZ was expanded in April, 1999 to include the 38.83 acre parcel directly on the corner of Gene Autry and Ramon Road. That area, over the past several years, has begun to be seen as the catalyst for the entire Section 20 area. With the opening of the Mid-Valley Parkway and the generally strong economy in Palm Springs, it is hoped that the entire Section 20 area would be a strong retail and commercial growth area for the City. The EDIZ program was created to attempt to stave off further lease defaults in the Knutson Tract and keep AD 155 solvent, reducing the financial risk to the City. This OPA takes another step toward that, in addition to effectuating a major development in the area that will help the entire City. JOHN S. R YMOND Red velop ent Dire " �r/� APPROVED: ur-tom•�C�� e� �y Executive Director ATTACHMENTS: 1. Resolution 2. Owner Participation Agreement ar�� RESOLUTION NO. Withdrawn OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN OWNER'S PARTICIPATION AGREEMENT WITH LOWE'S HIW, INC. A VIRGINIA CORPORATION, TO EFFECTUATE THE CONSTRUCTION OF A NEW RETAIL HOME IMPROVEMENT CENTER AT 5001 EAST RAMON ROAD, PALM SPRINGS (RAMON-BOGIE PROJECT AREA/BLOCK #12) -- -- -- - - - - - - - - WHEREAS Lowe's HIW, Inc. desires to construct a new 175,000 square foot home improvement warehouse at 5001 East Ramon Road in the Ramon-Bogie Redevelopment Project Area; and WHEREAS the City and Redevelopment Agency seek to encourage the improvement of property, construction of new facilities, and the development of new tax-generating uses within redevelopment areas; and WHEREAS this development will benefit the project area by serving as a catalyst for future developments in the Ramon-Bogie Redevelopment Area, and WHEREAS the California Community Redevelopment Law, §33444.6 permits an Agency to assistwith financing "facilities or capital equipment, including, but not limited to, pollution control devices," and WHEREAS the Agency desires to implementthe Redevelopment Plan forthe Ramon-Bogie Project Area, which allows for"the development of undeveloped areas which are stagnant or improperly utilized" (§I, subsection B); "The strengthening of commercial and industrial functions in the area" (§I, subsection C); and, "The establishment of financial mechanisms to assist and encourage the development of an auto-sales center and, light industrial and commercial development." (§I, subsection H) NOW THEREFORE, the Community Redevelopment Agency of the City of Palm Springs, California, does hereby resolve the following: SECTION 1. The Owner's Participation Agreement with Lowe's HIW, Inc., which provides for a rebate in arrears of the tax increment generated by its property improvements in an amount equal to assessments due and paid on Assessment District Number 155, and is on file with the City Clerk, is hereby approved. SECTION 2. It is appropriate for financial assistance to be provided for improvements which will benefit the community as a whole. SECTION 3. The Executive Director or his designee are authorized to sign all necessary documents in a form approved by the City Attorney. ADOPTED this day of , 2000. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA R 3 By Assistant Secretary )<xecutive Director am REVIEWED AND APPROVED: �L DATE: APRIL 5, 2000 TO: CITY COUNCIL FROM: REDEVELOPMENT DIRECTOR OWNER PARTICIPATION AGREEMENT WITH LOWE'S HOME IMPROVEMENT CENTER/FINDING OF APPROPRIATENESS OF PUBLIC ASSISTANCE RECOMMENDATION: It is recommended that the City Council make a finding that the provision of such improvements as streets, sidewalks, gutters, sewers, and utilities, including the financing of the installation of public improvements with tax increment funds, are necessary to effectuate the purposes of the Redevelopment Plan. BACKGROUND: The Community Redevelopment Agency adopted an Owner's Participation Agreement with Lowe's HIW, Inc. to effectuate the construction of a new retail home improvement center at 5001 East Ramon Road in the Ramon-Bogie Redevelopment Project Area by providing certain tax increment funds to reimburse expenses for the construction of the public improvements. California Community Redevelopment Law(Health&Safety Code Section 33421.1) requires that the legislative body make a finding that the provision of public improvements such as streets, sidewalks, utilities, or other public improvements which an owner or operator of the site would otherwise be obliged to provide is necessary to effectuate the purposes of the Redevelopment Plan. This tract has never had any buildings constructed on it, despite having full off-site improvements there since 1990. The lack of prior development of this parcel, along with the former Knutson Tract, precipitated a crisis in Assessment District 155 which the City is still working to resolve. The Agency is not precluded from making such agreements under State law, and given the proposed use of this parcel this is a very appropriate use of future tax increment f nds. JOH V S. AYMO Redevel pm Directct� APPROVED: 6,7 I Executive Director ATTACHMENTS: 1. Resolution RESOLUTION NO. Withdrawn OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, MAKING A FINDING PURSUANT TO SECTION 33421.1 OF THE CALIFORNIA HEALTH & SAFETY CODE RELATING TO AN OWNER'S PARTICIPATION AGREEMENT OF THE PALM SPRINGS COMMUNITY REDEVELOPMENT AGENCY TO EFFECTUATE THE CONSTRUCTION OF A NEW HOME IMPROVEMENT WAREHOUSE AT 5001 EAST RAMON ROAD, PALM SPRINGS (RAMON-BOGIE PROJECT AREA, BLOCK#12) - - - - - - -- - - - - - - WHEREAS the City Council of the City of Palm Springs, California adopted Ordinance 1202, adopting the Redevelopment Plan for the Ramon-Bogie Project Area effective December 30, 1983 for the purposes of "the development of undeveloped areas which are stagnant or improperly utilized" (§I, subsection B); "The strengthening of commercial and industrial functions in the area" (§I, subsection C); and, "The establishment of financial mechanisms to assist and encourage the development of an auto-sales center and, light industrial and commercial development." (§I, subsection H), and WHEREAS, the City Council approved Assessment District 155 in 1989 for the purposes of providing public improvements in several of the industrial areas of Palm Springs,including several in the Ramon-Bogie Redevelopment Project Area, and WHEREAS the Community Redevelopment Agency adopted an Owner's Participation Agreement with Lowe's HIW, Inc., a Virginia Corporation and the owner of Lowe's Home Improvement Center,to effectuate the construction of a new home improvement warehouse at 5001 East Ramon Road in the Ramon-Bogie Redevelopment Project Area by providing certain tax increment funds to reimburse expenses for the construction of the public improvements, and WHEREAS the California Health&Safety Code Section 33421.1 requires that the legislative body make a finding that the provision of public improvements such as streets, sidewalks, utilities, or other public improvements which an owner or operator of the site would otherwise be obliged to provide is necessary to effectuate the purposes of the Redevelopment Plan. NOW THEREFORE, it is hereby resolved by the City Council of the City of Palm Springs, California, that it finds that the provision of such improvements, including the financing of the installation of public improvements with tax increment funds, as provided in the OPA, are necessary to effectuate the purposes of the Redevelopment Plan. ADOPTED this day of , 2000. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED AND APPROVED: