HomeMy WebLinkAboutStudy Session Packet 11/08/2010
STUDY SESSION AGENDA CITY COUNCIL MEETING CITY OF WHEAT RIDGE, COLORADO City Council Chambers 7500 W. 29th Ave. November 8. 2010 Upon adjournment of Council Meeting Individuals with
disabilities are encouraged to participate in all public meetings sponsored by the City of Wheat Ridge. Call Heather Geyer, Public Information Officer at 303-235-2826 at least one week
in advance of a meeting if you are interested in participating and need inclusion assistance. APPROVAL OF AGENDA .1. 44th and Wadsworth Redevelopment
4 .... City of OF THE OlY MANAGER Memorandum TO: Mayor and City Council FROM: Patrick Goff, City Manager DATE: November 3,2010
SUBJECT: 44th and Wadsworth Redevelopment Project Introduction In 2008 and 2009, Renewal Wheat Ridge (RWR) , formerly Wheat Ridge Urban Renewal Authority, acquired and assembled approximately
eight acres of property at the southeast comer of 44th Avenue and Wadsworth Boulevard for a mixed-used redevelopment project. These properties have been largely vacant for decades. The
first building was constructed in the 1950's and formerly housed the Stage Stop Antique Mall. A fire destroyed a second building in the late 1960' s, which previously occupied by a discount
department store, camera and photo processing store, hardware store and other retail stores. The foundation from this building is still on site. The properties were
purchased for a total of $3,840,000 using RWR funds and a loan obtained from 1 st Bank Wheat Ridge, The remaining balance due on the loan as of October 2010 is just over $2.8 million
with a maturity date of April 2014. With the assistance of Wheat Ridge 2020, responses to a Request for Qualifications and Request for Development proposals were solicited for a mixed-use
redevelopment project in the summer of 2008. One firm responded to the requests and submitted a proposal in October 2008, The Authority rejected the proposal in December 2008 because
it did not meet the requirements of the solicitation.
44 th and Wadsworth Memo November 3,2010 Page 2 Staff subsequently made contact with the firm Weston Solutions ("Weston") at an Urban Land Institute event and an initial meeting was
scheduled to discuss the proposed project. Weston had not originally submitted a proposal in 2008. However, after several additional meetings and the identification of possible tenants
for the site, RWR entered into a Master Redevelopment Agreement with Weston on November 5, 2009. Weston hired SEM Architects to create an initial site design and layout for the site.
Project Description Phase one of the proposed project includes a 40,000 to 50,000 square-foot Jefferson County office building which will anchor the site. The office building will include
the departments of motor vehicles and health and human services. R WR has negotiated a land sale pnce with Jefferson County for a pad-ready site on which the County will build their
newly conceptualized County Service Center. The County has offered to pay no more than $8.50/sq. ft. for approximately 120,000 sq. ft. of property and has agreed to contribute $150,000
in Conversation Trust Funds towards parks and open space amenities for a total amount of approximately $1.2 million. Phase one may also include a 9,600 square-foot retail pad west of
the office building and south of 1 sl Bank. The property at this location is currently owned by 1 sl Bank and is used for tenant and customer parking. Weston negotiated a preliminary
deal with 1 sl Bank for a land swap of this property for a new bank parking lot east of 1 sl Bank and north of the office building. The current conceptual plan above proposes a parking
garage which will not be required for the current proposed development and will be replaced with surface parking. Potential end users for the retail pad include a single fast food restaurant
or two to three
44th and Wadsworth Memo November 3,2010 Page 3 smaller quick service restaurants. Weston has received interest from potential vendors for this site. Phase two of the redevelopment project
consists of approximately 3.5 acres of land on the eastern half of the development. The future use of this pad has been contemplated to include retail, senior housing, multifamily, office
and/or medical office uses. Weston has been in discussions with Wazee Partners, LLC (Wazee) who have expressed interest in this property for a multifamily development. Wazee is a direct
developer and buyer of multifamily apartment properties located throughout the western United States. Based in Denver, Colorado, the Principals of Wazee and its affiliates have purchased
over 600 units during the past five years. Wazee has extensive knowledge and experience in the development and acquisition of both market rate and affordable multifamily properties.
Wazee believes that new market rate construction is not justified during these tough market market times. Therefore, Wazee's development concept utilizes the Low Income Housing Tax Credit
(LIHTC) affordable housing development program passed into legislation by the Tax Reform Act of 1986. This program is significantly different than the Section 8 housing program in that
tenants must pay 100% of their rent payment but at a rate no higher than 60% of Area Median Income (AMI). This project would supply much needed quality housing options to the workforce
in the area including nurses, teachers, police officers, fire fighters, etc. Discussion Points Project Costs -Preliminary project costs have been estimated by Weston. Current market
rents for office, restaurant, retail and residential are significantly lower than what is required to make R WR whole, including land investment and infrastructure costs. RWR paid approximately
$1O.75/sq. ft. for the raw land (appraised at $8.49/sq. ft.) and infrastructure costs, including developer fees, for the general development are estimated at about $3.1 million. Debits
Credits Profit Infrastructure $3,100,000 Property Sales $2,595,369 Property Loan $2,800,000 TIF $266,000 Conservation Trust $150,000 Open Space $180,000 Abatement Escrow $75,000 Totals
$5,900,000 $3,266,369 ($2,633,631 )
44th and Wadsworth Memo November 3, 2010 Page 4 Assumptions: 1. RWR property (Phase I and II) is sold for $8.50/sq. ft. -retail pad sold for $17/sq. ft. 2. TIF would be paid back over
a 10 year period 3. Infrastructure costs based on engineering estimates and not actual bids 4. There is no additional unknown environmental contamination on the site Based on these assumptions,
the completion of this project will require a subsidization of approximately $2.6 million from either the City or RWR or a combination of both. Staffis requesting further discussion
with City Council and direction on the following items: 1. Should this redevelopment project be subsidized by the City or RWR at the level of approximately $2.6 million? If not, what
level is acceptable? If no subsidization is acceptable what direction would Council give staff to move this project forward? 2. If City Council chooses to move forward with this project,
R WR will be unable to pay for the redevelopment expenses until reimbursements are received from property sales. Would the City Council be willing to loan the RWR the funds necessary
to start the redevelopment until property sale revenues are available? A transfer of approximately $1.0 million from the City's General Fund reserves would be needed in the next several
months to start land preparation and initial infrastructure development. 3. The current debt service on the R WR property loan is covered with a sales tax share back from the Town Center
project (Safeway development). City Council authorized a share back of 50 percent of the Town Center sales tax increment through 2014. The 2009 share back was approximately $232,000.
If City Council agrees to subsidize this project, will City Council commit to extending this share back beyond 2014 and potentially increasing the percentage to payoff the debt sooner?
Weston and Wazee will be available at the study session on November 8th to answer any questions. We look forward to discussing this project in greater detail with the Mayor and City
Council.