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HomeMy WebLinkAboutOrdinance 20-22 To: Members of Dublin City Council From: Dana L. McDaniel, City Manager Date: May 17, 2022 Initiated By: Matthew L. Stiffler, Director of Finance Re: Ordinance No. 20-22 – Removing and Establishing a Tax Increment Financing District (Bridge Park) (Block F) Summary On August 26, 2019, Council passed Ordinance 36-19 establishing the Bridge Park Tax Increment Financing District for Block F within the Bridge Park development. Ordinance 20-22 would remove the current F Block TIF on one parcel and establish a new TIF on that parcel with the same financial structure and terms as the current F Block TIF. The advantage of taking this action is to reset the 30 year TIF timeframe to better align with private improvements (the Bailey – see attached) to be constructed on that parcel. As it stands, the Bailey, which is anticipated to be completed in late 2023 / early 2024, is estimated to have only 26-years of TIF collections (2025- 2050). In order to capture a full 30-years of TIF collection from the Bailey, the Original F Block TIF Ordinance 36-19 needs to be amended to allow the Bailey parcel to be subject to its own 30-year project TIF beginning in the first year the County Auditor recognizes incremental value for the Bailey. Estimated Financial Impact Aligning the private improvements with a new TIF for the Bailey parcel is estimated to generate an additional $2,200,249 of total increased TIF Revenues (i.e. $550,062 per year). The City is estimated to receive $1,100,124 of these increased funds. This increased funding will be distributed as required under the City’s Amended Development Agreement with Crawford Hoying as part of the pledged revenue waterfall (see attached) that was part of the G Block Preliminary Term Sheet approved by the Bridge Park NCA at their regular meeting on November 22, 2021. Additionally, Bailey TIF service payment revenues are pledged to the G Block bonds that were approved by the Bridge Park NCA in November 2021 and issued in January 2022. If the existing TIF is not amended, $315,000 of bond proceeds must be immediately redeemed. These bond proceeds would then no longer be available to fund the improvements planned as part of the G Block Bond issuance. Financial terms This TIF District is established under provision of ORC 5709.41 on the undeveloped parcel within Block F (identified in Exhibit A to the Ordinance). This section of ORC permits the legislative authority of a municipal corporation to declare any improvement to a parcel of real property to be a public purpose if (1) the municipal corporation held fee title to the parcel prior to the adoption of the ordinance and (2) the parcel is leased, or the fee of the parcel is conveyed, to any person Office of the City Manager 5555 Perimeter Drive • Dublin, OH 43017-1090 Phone: 614-410-4400 • Fax: 614-410-4490 Memo Memo re. Ordinance No. 20-22 – Removing and Establishing a Tax Increment Financing District (Bridge Park) (Block F) May 17, 2022 Page 2 of 2 either before or after adoption of the ordinance. Service payments generated on improvements to parcels within this type of TIF are permitted to be used to finance public and private improvements. TIFs created under 5709.41 are the base TIFs for the Bridge Park development with the Incentive District TIF (created under ORC 5709.40(c) – Ordinance 45-15) being ‘layered’ on top, applying only to those ‘residential’ properties. It is acceptable that the geography of these two TIF overlap which will allow flexibility in the future for any of the owner-occupied residential units (i.e. condominiums) to be converted to apartments without losing TIF revenues. The service payments generated within the Bridge Park TIFs will be used to fund the public roadway improvements, parking garages and a conference/events facility. The modified Development Agreement approved by City Council on October 22, 2018 stipulates indicates how the service payments generated from the improvements will be applied. This proposed TIF is within the defined area covered by the Bridge Street District Cooperative Agreement between the Dublin City School District (DCS) and the City. As a reminder, the Cooperative Agreement permits the City to authorize various tax incentives, including TIFs, within the BSD that provide for the following (for each incentive authorized):  Years 1-15 – DCS agrees to forego 100% of the applicable real estate taxes in respect of the improvements to any particular parcel within the applicable tax incentive district.  Years 16-30 – DCS will receive 10% of what it would have received if the applicable tax incentive district had not been in place. In exchange for this TIF structure, the City will pay $50 million to DCS over a 33 year time period (from 2014 – 2046 with $1.5 million paid annually in years 2014 through 2045, and $2 million paid in 2046). Additionally, as part of the Cooperative Agreement, DCS waived any right to receive notification of the passage of any Ordinance or legislation authorizing the real property tax exemptions. However, staff has notified Dublin City Schools of the removal and establishment of a new TIF within the Bridge Street District is being considered by City Council. Recommendation Staff recommends that Ordinance No. 20-22 be adopted by City Council at the second reading/public hearing on June 13, 2022. o: 614.335.2020 a: 6640 Riverside Drive, Suite 500, Dublin, Ohio 43017 w: crawfordhoying.com The Bailey at Bridge Park Crawford Hoying Development Partners and Friendship Village of Dublin, a leading local retirement community, will construct a senior housing development at Bridge Park in Dublin, OH. Friendship Village’s newest residential option, The Bailey at Bridge Park by Friendship Village of Dublin (The Bailey), will be located just south of the newly opened Springhill Suites Hotel between Dale Drive and Mooney Street. The senior living community will not only provide a new residential option at Bridge Park, but it will also fill a gap in the senior-living market. Recent market research shows there is growing demand for older adults looking to downsize, many of whom are looking for an urban, mixed- use environment with eventual access to healthcare and other support needs. By combining Friendship Village’s 40 years of senior living experience with Crawford Hoying’s expertise in vibrant, urban-living development, this partnership solves this issue for this demographic. The Bailey rises six stories and will include 87 apartment units equipped to go above and beyond in fundamental senior accommodations. The property will be a mix of 67 two-bedroom units and 20 three-bedroom units with an average unit size of 1,353 SF. Amenities at The Bailey will include a 10,000 SF deck with a secondary terrace, an activity room and a fitness room. Key benefits for seniors choosing this new option include the services and support of Friendship Village of Dublin without living on campus, as well as a simplified rental arrangement that facilitates an easy transition to the main campus when/if the time is right. Additionally, an onsite resident services coordinator will be available to assist with social activities, fitness, and wellness, as well as coordination of health services as needed. Access to their Friendship at Home program, scheduled transportation, valet-type services, and numerous amenities within the Bridge Park community round out this special living experience.   crawfordhoying.com 2 Location: Bridge Park: Developed by Crawford Hoying, Bridge Park is an approximately 30-acre site located in the City of Dublin, OH and positioned along the east and west side of the Scioto River and connected via a Pedestrian Bridge. Bridge Park is a master planned, high-density mixed-use development which will deliver (when completed) 2.5 million SF of new development including 540,000 SF of Class A office, a 150-key AC Marriott Hotel, a 1,000 person conference center (Exchange Events Center), 115,000 SF of restaurant space, 80,000 SF of retail, 34,400 SF of public market space, 720 luxury apartments, and 150 for-sale condo units. Bridge Park started construction in 2015, delivered its first product in the fall of 2016, and is anticipated to be fully completed by 2025. The Sponsor: Crawford Hoying Crawford Hoying is a full-service provider for each aspect of real estate development, management, construction and sales in today’s dynamic real estate market. At Crawford Hoying, the goal is to add value for each project while maintaining the highest level of integrity. Invested heavily in the Ohio market, Crawford Hoying has developed several mixed-use projects including the transformative Bridge Park in Dublin and Water Street District in Dayton. In addition to development, Crawford Hoying manages more than eight million SF of multifamily and commercial properties and has completed more than two billion dollars in real estate transactions since 1999. In 2004, Crawford Hoying acquired Brackett Builders, a construction company with 30+ years of experience providing commercial, residential and renovation construction services. • $1.3 Billion in Development • 200+ Employees • 19 Million+ SF of Commercial & Multifamily Space Managed • 20 Residential Communities • 39,000 Residents 5/12/2022 1 Finance Committee 2022 Operating Budget Status Report Bridge Park NCA - F Block TIF 2022 Bond Issuance Update Department of Finance MAY 10, 2022 Bridge Park NCA F Block Tax Increment Financing District 5/12/2022 2 Bridge Park NCA – Block F TIF City legislatively approved this TIF through Ord 36-19 Authorized pursuant to ORC 5709.41 Covers all commercial property Incentive District (Residential TIF) established in 2015 layers on all parcels in Bridge Park Block F Hotel – 145-key Springhill Suites by Marriott, including 6,500 SF ground-floor retail/restaurantParking garage Private Improvement Valuation - $10 million (estimate) TIF estimated to generate $10.2 million (over 30 years) Provides funding for the Community Facilities; Creation of TIF provided for in Development Agreement with Crawford Hoying Bridge Park NCA – Block F TIF Parcel 273-013080 (red circle) Springhill Suites Hotel Currently exempted as part of F Block TIF CY 2021 first year in TIF Parcel 273-013081 (orange circle) The Bailey 88 unit senior living facility Currently this parcel is in F Block TIF Removing the current TIF then reapplying a new TIF district will restart the 30 year clock on this parcel to match the private improvements to occur in 2022 This action is estimated to increase the overall amount of service payment revenue generated by this parcel by at least $378,000 over the next 30 years. 5/12/2022 3 Bridge Park NCA – Block F TIF Increasing the service payment revenue allows additional public infrastructure to be constructed. By taking this action $315,000 in additional public improvements can be financed Should Council decide not to approve a new TIF by July 27,2022, $315,000 in previously issued debt for G Block will be immediately redeemable per the G Block Bond agreements. The public improvements planned for these funds are displayed on the graphic to the right. Bridge Park NCA – F Block TIF Creation of a Tax Increment Financing District Legislative Approval by City Council This step authorizes the creation of a TIF district, but does not create it. Department of Finance files an exemption application (DTE 24) with County Auditor in the year that the property value increases (may not be the year immediately following legislative approval) This step requires the City to file an application for Real Property Tax Exemption and Remission on one or more parcels in a legislatively approved TIF district. Approval of County Auditor, County Treasurer and Department of Taxation Funds collected by County Auditor and distributed to City 5/12/2022 4 Bridge Park NCA – F Block TIF Legislatively Approved TIF Districts with no exemption filed – “Delayed” Cardinal Health – South Campus (No development) Ohio University – (No taxable development) Primrose – (Future office building/day care – timeline?) TIF Districts can be exempted parcel by parcel – “Rolling” H2 Hotel (2 parcels) Exemption on one parcel filed and generating service payment revenue 2nd parcel still in Cooker TIF and H2 Hotel exemption not filed (no development) Tuller 40 Parcels have different 30 year effective dates based on construction Parcels improved in 2017 and in 2018 as the project was constructed in two phases The Corners – (Will be filed for certain parcels in 2022 and others as development occurs) If the 30 year clock in these districts started when the TIF was legislatively approved, none of them would maximize service payment revenue over the life of the TIF district Bridge Park NCA – Block F TIF Different types of commercial TIFs Named after the ORC for which they are created ORC 5709.XX 40 – service payments limited to public improvements 41 – service payments may be used for public or private improvements Additional restrictions on the creation of these TIFs apply Dublin has a mix of 40 and 41 TIFs 41 TIF are mainly located in Bridge Street District and currently include all Bridge Park TIFs and the Tuller 41 TIF Under current and prior law, 40 TIFs can be “delayed” and/or “rolling” Under current law and a previous Department of Taxation interpretation, 41 TIFs could be “delayed” and “rolling” A change in interpretation by the Department of Taxation around 2019 eliminated “delayed” and “rolling” 41 TIFs This interpretation was legislatively superseded in House Bill 110 of the 134th G.A. in 2021 which changed the law to codify the prior interpretation allowing “delayed” and “rolling” 41 TIFs did not permit this interpretation to apply retroactively 5/12/2022 5 Bridge Park NCA – Block F TIF Summary: Removing the current TIF then reapplying a new TIF district will restart the 30 year clock on this parcel to match the private improvements to occur in 2022. This recommendation is consistent with current law on how 41 TIFs may function and the City’s practice regarding TIF districts. This action is necessary because of a change in interpretation of the law by the Ohio Department of Taxation that was later superseded by the General Assembly to ensure that 41 TIF districts could function in this fashion.