Submitted By: Roberto Ellis
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Presentation By: Aubrey Hale
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Department: Growth Management
STAFF RECOMMENDATION (Motion Ready):
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Approve Redevelopment Agreement for Project Hometown - Downtown Ocala Marriott AC between the City of Ocala and Domach, LLC, with total city incentives not to exceed $5,619,644
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OCALA’S RELEVANT STRATEGIC GOALS:
Quality of Place, Economic Hub
PROOF OF PUBLICATION:
NA
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BACKGROUND:
In 2004, the City of Ocala (City) completed the Downtown Ocala Master Plan (Master Plan), which provides implementable redevelopment and reinvestment strategies. The overall revitalization and success of downtown Ocala depend upon these strategies. The Master Plan aims to concentrate new development within the downtown core while ensuring that development concepts achieve the highest and best use of properties. Additionally, the Master Plan highlights numerous parking lots, vacant parcels, and underutilized properties located within the city center. These sites represent prime opportunities for new development, which is an essential component of downtown’s long-term success.
Subsequently, the City has continued its reinvestment and redevelopment initiative as evidenced by the completion of the Ocala 2035 Vision, Comprehensive Plan update, and additional focus area studies/master plans. In 2024, the city began the process of updating the 2035 Vision to extend it to the year 2050. The city selected Urban 3, a financial stability consultant, to conduct a study, Economics of Community Design, examining the land-value economics, property and retail tax analysis, and community design of Ocala. A primary focus of the study was the downtown core with an emphasis on the importance of mixed-use, high-intensity development in the downtown area to establish and maintain key revenue sources.
The subject property, located at 210 West Silver Springs Boulevard (Parcel ID: 2854-025-001), falls within the Community Redevelopment Agency (CRA) Downtown subarea. The subject property was acquired in 2023 and previously served as the location of a repair garage. The building was demolished, making way for a redevelopment opportunity. The property is considered a catalytic opportunity due to its prime location, investment possibilities, and the potential economic benefit to surrounding businesses and properties.
FINDINGS AND CONCLUSIONS:
City Incentives
The City of Ocala (City) and the CRA, on a case-by-case basis, support projects within redevelopment areas that have the potential for catalytic impact while furthering the City Council’s strategic priorities, specifically, Quality of Place and Economic Hub. Incentives designed to encourage private investment in these areas have proven successful in advancing the City's redevelopment goals. For this project, the City has established a maximum incentive target not to exceed a total of 10 percent of the proposed development costs when compared to the City's incentive. The Developer has proposed a project of no less than $56,196,441, qualifying for a maximum City incentive of $5,619,644. The proposed agreement allows for flexibility in the disbursement of the City incentives utilizing Tax Increment Financing (TIF), parking incentive, in conjunction with a downtown CRA grant paid out over a three-year period. The Downtown CRA is set to expire in 2038, allowing the distribution of TIF for the duration of the Downtown CRA. The parking incentive will provide free parking up to the maximum total incentive of $5,619,644. An anticipated breakdown of the incentive is further defined below and in the attached City Incentive Summary.
Per the redevelopment agreement, Non-Adjustable Incentives include the City Elevator Incentive, City Review Contributions, City Improvements, and the City Grant. Adjustable Incentives include the City Parking Incentive and City CRA Payments (Tax Increment Financing), which will be determined annually based on valorem taxes paid and parking rates. Please refer to the attached sheet - City Incentives Summary for the estimated value of each incentive. The incentives to be provided and details of the project are summarized below. Refer to the attached document labeled Redevelopment Agreement for Project Hometown for more information on the terms and conditions established for the City and Domach, LLC (Developer).
• City Grant: The City will pay the Developer a grant of $500,000, to be disbursed in three equal payments within 24 months of the City’s verification of Development Costs.
• City Review Contributions: The City will pay on behalf of the Developer, all applicable building permit and impact fees to be incurred for the project. The fees are estimated at $199,686. Payment of the Transportation Impact Fees will be the sole responsibility of the Developer. Please refer to the attached document labeled City Incentives Summary for a breakdown of the fees.
• City Improvements: The City, at its sole cost and expense, will pay or reimburse the Developer for right-of-way improvements adjacent to the Property. The proposed improvements are intended to improve the balance between facilitating traffic and creating a walkable, pedestrian-friendly environment. The estimated cost of the city improvements is $559,323. The majority of the costs are attributed to improvements necessary to offset the anticipated impacts on infrastructure from the construction of the Parking Garage and the hotel project. To review the proposed improvement plans, please refer to the document attached as Exhibits E1-E4.
• City Parking Incentive and City Elevator Incentive: The city will be providing 225 exclusive parking spaces to the Developer. Parking is a prime concern for most development projects downtown and often influences the final project design and business operation. A parking agreement, the Parking Agreement for Project Hometown - Downtown Ocala Marriott AC, is presented for approval in a subsequent agenda item. This will allow for future amendments as the exclusive parking will remain in effect long after all other City incentive obligations outlined in the redevelopment agreement are met. The project is located in the block north of the new parking garage site (Parcel ID: 2853-026-002). The value provided by virtue of waiving the regular fees for long-term contract parking is included in the total incentives.
o The original designs for the new parking garage included plans to install at least two elevators. The Developer has proposed adding a third elevator to enhance access to the dedicated parking spaces. The City will provide the City Elevator Incentive, covering 50 percent of the cost for the third elevator, which will be designated for the Developer’s use, except during certain events organized by the City.
• City CRA Payments: The City will make an annual payment to the Developer representing 100 percent of the tax increment to be realized from the increase in property value. The amount will be calculated based on the applicable City and County ad valorem taxes.
o The Developer must provide documentation to show that all taxes have been paid before each disbursement.
o Payments will terminate upon the earlier of either the expiration date of the Downtown CRA or the date on which the City CRA payments and other incentives cause the City Incentives Target to be met.
Project Summary
• Development Cost: The Developer is required to invest a minimum of $56,196,441, which covers acquisition, demolition, soft costs, building construction, furnishing, finishing, and equipment. The developer will also cover 50 percent of the cost of adding a third elevator to the parking garage, which will be restricted to support hotel operations.
• Project Description: Per the approved plans, the project includes a six-story, 176-room “Marriott AC” hotel together with a sixth-floor restaurant and bar, first-floor bar and lounge, Class-A office space, and hotel amenities including meeting rooms, business center, gym, and patios.
• Project Design: The project’s architectural design, floor plan, density, and site plan align with the principles of the Form-Based Code zoning district for Downtown Ocala.
• Project Schedule: The developer has a period of 24 months from the effective date of the agreement to complete the project. The intention is to finish the project ahead of schedule with an accelerated target date of December 2026.
• Development Team: The Developer is represented by the law firm Gooding & Batsel, PLLC, which formerly represented the City. On November 11, 2023, the Ocala City Council granted a Request for Conflict Waiver. Please refer to the attached document labeled Request for Conflict Waiver.
The Downtown CRA subarea has the highest levels of productivity based on Taxable Value Per Acre, when compared to the rest of the city. The City anticipates that this project will establish another anchor development in the downtown CRA, having a marked increase in the site’s property value once redevelopment is complete. Staff supports the proposed agreement given the project's close alignment with City Council’s strategic priorities, specifically, Economic Hub and Quality of Place.
FISCAL IMPACT:
The current taxable value within the Downtown CRA is approximately $145 million. The investment of this project is projected to increase the tax base by approximately $20 million upon completion. Investment of this level exceeds the average taxable value per acre, which is noteworthy given that 53 percent of downtown properties are tax-exempt. The estimated discounted payback period for the City's proposed $5,619,644 investment is approximately nine years. This is calculated based on the estimated annual electric revenue of $488,541 and ad valorem revenue of $219,518. Refer to the ROI Analysis Summary document attached for additional information on the other assumptions made.
The incentives to be provided are spread across multiple fiscal years. City Review Contributions will be paid from the Economic Investment Fund. The City Grant, City CRA Payments, and City Improvements will be funded through the Downtown CRA. The City Elevator Incentive is currently budgeted in the costs for the parking garage. The value of the City Parking Incentive will equate to $72,660 per year based on existing rates for long-term parking.
PROCUREMENT REVIEW:
NA
LEGAL REVIEW:
This Agreement has been reviewed and approved for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve
• Approve with Changes
• Table
• Deny