03-24-14 Meeting of the La Porte Development Corporation Board of Directors

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REQUEST FOR CITY COUNCIL AGENDA ITEM Agenda Date Requested: March24, 2014Appropriation Requested By:Scott LivingstonSource of Funds: Department:Economic DevelopmentAcct Number: Report:Resolution: Ordinance: Amount Budgeted: Attachments:Public noticeRequested: Attachments: Project MaterialsBudgeted Item(s): YES NO Attachment: Development Agreement _____________________________________________________________________________________________ SUMMARY & RECOMMENDATION Rob Johnson Interest (RJI) has beenpursuingandnegotiatingwithmultiple, retailprospectsto lease space in Phase #1 of the new, proposed retail development.Phase#1isplannedto encompass2.86acres,whilePhase#2isplannedtoencompass1.67acres.Mr.Johnsonplansto completePhase#1 in2014andPhase#2byeitherlate2014orearly 2015. In order to accommodate a larger, national retail tenant in the retail center, RJI must construct a larger building with firewalls between the adjoining lease spaces.In order to keep the construction costs within limits that will still allow RJI to offer competitive and attractive lease rates to the prospective $40,000 national retail tenant, RJI isrequestinganadditional incentive in the amount of . On January 13, 2014, the 4B Board authorized staff to publish public notice of a 60-day petition period and schedule a public hearing on March 24, 2014 to discuss the incentive grant request in $40,000 the amount of for Rob Johnson Interests to construct a new retail strip center and attract new retail development to the City of La Porte. Per the Board’s direction on 13 January 2014, staff scheduled a public hearing to discuss this incentive grant request on 24 March 2014, which satisfied the 60-day petition period. No qualified petition has been received. This project will require that Rob Johnson enter into a performance agreement with the La Porte Development Corporation, the terms of which would establish minimum thresholds for key performance indicators such as receipt of a certificate of occupancy, a minimum capital investment, and a minimumrate of lease occupancy. All parties involved will have the opportunity to provide input on the performance agreement before it is completed. Thesubjectpropertyof both Phases #1 and #2 isonthetaxrollsfor$700,000,whichyields approximately$4,970(at$0.71/$100ofassessedvalue)annuallyintaxestotheCityofLa Porte. Oncedevelopmenthasbeencompleted on both phases,theestimatedtaxablevalueofthe newdevelopmentwill be$6,000,000to$8,000,000.Excludingsalestaxrevenue,theestimated annualtaxeswouldbe$42,600to$56,800.Takinganaverageofthetwo,iftheestimatedtaxable valueweretobe$7,000,000,theannualtaxeswouldbe$49,700.Therefore,theestimated $44,730 annualincreaseintaxesuponcompletionofthemulti-phaseprojectis.Assuming a total $106,000 incentive grant of ($66,000that has already been approved and development agreement $44,730 signedplus $40,000requested here) and new annual taxes ($49,700 -$4,970) of , the break- 2 years 4 months even point would be and.