Submitted By: Gus Gianikas
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Presentation By: Aubrey Hale
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Department: Growth Management
STAFF RECOMMENDATION (Motion Ready):
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Approve a new construction grant program for the Community Redevelopment Areas
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OCALA’S RELEVANT STRATEGIC GOALS:
Economic Hub, Quality of Place
PROOF OF PUBLICATION:
N/A
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BACKGROUND: The four Community Redevelopment Area (CRA) subareas have provided commercial building improvement grants to existing buildings for several years, beginning with the Downtown CRA in 2013. The four CRA subareas have issued 82 grants totaling $773,815 for improvements to existing buildings between fiscal years 2019 - 2022. The success of this program in renovating existing buildings has led to greater tax revenue generated throughout the four CRA subareas. It is time to transition into encouraging and providing incentives for new construction, which will further add to tax revenue generation.
The new construction grant is intended to support projects within the CRA subareas that have the potential for catalytic impact within the subarea. This grant will allow new construction and major redevelopment to occur and will apply to the many facets of development. The grant program will partially replace the redevelopment agreement process that has been used to incentivize new construction and catalytic-type projects in the downtown area. The redevelopment agreement process has, at times, proven to be cumbersome due to changes in the construction industry. Covid-19 has had significant impacts on the supply chain and labor market.
This new grant program aims to produce similar results as the redevelopment agreement process and existing structures grants; however, in a more streamlined manner. The grant will be flexible in how the money is disbursed to the applicants with options for disbursement over the course of up to three consecutive years. The grant will include detailed scoring conducted by the CRA Advisory Board before being presented to the CRA Board for consideration.
Eligible projects are:
1) New construction; and
2) Major renovation of vacant existing building space affecting 40 percent or more of the existing floor area or an addition.
A project must exceed $1,000,000 in total capital investment. Based on the determination of the scoring, a maximum grant reimbursement for a project is $100,000 per year. However, in no case shall the grant exceed 10 percent of the estimated capital investment. Disbursement of the grant can extend up to three years consisting of equal payments; a maximum possible grant is $300,000 over a three-year period. Reimbursement may begin after substantial completion of the project, which is determined on the Certificate of Occupancy of the project.
Below is an example project:
• An applicant submits a conceptual design for a project redeveloping a portion of a city block. The project is estimated to be approximately $10,000,000. Surrounding properties consist of underdeveloped sites with a mix of vacant industrial buildings and vacant properties. The project will connect to primary streets within proximity to mixed-use retail and commercial development and will spur further redevelopment of a new area within the CRA subarea:
1) Complete Catalytic Grant application is submitted and determined to be eligible.
2) Staff schedules a site visit with a designated CRA Advisory Board member and tours the area with the applicant.
3) Return on Investment (ROI), based on the proposed increase to ad valorem tax and electric revenues, is prepared.
4) Staff schedules the application presentation to the CRA Advisory Board. A favorable ROI is presented with a payback period of five and one-half years. The CRA scores the application and recommends approval of a maximum $100,000 award.
5) Staff coordinates with the applicant on the desired payout method:
§ building permit, impact fee deferrals, and reimbursement for right-of-way (ROW) improvements for the first year not to exceed $100,000.
§ Two subsequent annual $100,000 payments.
6) The grant application is scheduled for CRA Board approval including all applicable information. CRA Board approves.
7) The payout commences after the certificate of occupancy has been issued (substantial completion date).
8) The applicant submits plans with the city and other appropriate agencies. Upon plan approval, work commences and is completed over multiple fiscal years. The applicant is required to submit annual reports on the status of the project.
9) Thirty days after substantial completion, the city will pay, on behalf of the developer, the building permit and impact fees. Upon submission of the paid invoices for improvements within the ROW, the city shall reimburse within 30 days. The grand total shall not exceed $100,000.
10) On each anniversary of the substantial completion date, the city shall make the two annual payments and issue a final payout notice with the last payment.
The proposed program framework and processing procedures have been presented to all four CRA Subarea Advisory Committees and each committee recommends approval. The same program will be available in all four CRA subareas. The goal is consistency throughout the CRA subareas regarding the grant framework and intent. The annual target will be between one and three projects in each CRA subarea. It is anticipated there will be years when no eligible projects are submitted. If this occurs, funding may be carried forward into the next fiscal year pending approval of the budget resolution.
FINDINGS AND CONCLUSIONS: One of the statutory functions of a CRA is to undertake activities that facilitate the redevelopment and improvement of properties. Incentive programs aimed at encouraging private investment into properties have proven successful in carrying out this redevelopment function. The proposed program for new construction and major renovation will further encourage private investment into undeveloped and underutilized properties.
FISCAL IMPACT: Funding is not being requested for this program in Fiscal Year 2023. Funding will be requested starting in Fiscal Year 2025; a budget resolution may be requested should funding be needed during Fiscal Year 2024. Up to $300,000 may be requested for each CRA subarea depending on other budgetary needs.
PROCUREMENT REVIEW: N/A
LEGAL REVIEW: N/A
ALTERNATIVE:
• Approve with changes
• Table
• Deny