Submitted By: Aubrey Hale
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Presentation By: Aubrey Hale
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Department: Growth Management
STAFF RECOMMENDATION (Motion Ready):
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Consider a twelfth amendment to the Acquisition and Redevelopment Agreement for Mixed-Use Development (Hilton Garden Inn)
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OCALA’S RELEVANT STRATEGIC GOALS:
Quality of Place
PROOF OF PUBLICATION:
N/A
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BACKGROUND: The Hilton Garden Inn (aka Downtown Hotel) is subject to a city redevelopment agreement. The Acquisition and Redevelopment Agreement for Mixed Use Development was originally approved at the November 3, 2015, City Council meeting and was subsequently executed on November 16, 2015. Per the mixed-use development agreement, the Developer is required to provide a project consisting of at least 100,370 SF of building area and a two-story second building adjacent to the eastern boundary of the property, at a cost of no less than $15,733,700.00. The project has performed site and building construction of the primary hotel building which was completed on September 21, 2020.
The agreement was amended eight times between the original execution date of the redevelopment agreement and the completion of the first phase of construction, addressing changes to the conceptual plan, easements, timelines, etc. At the time of the completion of the hotel, the Covid-19 pandemic was in its early stages and disrupted some of the timelines that affected the agreement. Therefore, the agreement was again amended (9th Amendment) to reflect the impacts. The agreement would be amended two additional times (10th and 11th Amendments) to address changes in parking locations within the parking garage and the timeline for the completion of the second building. Below is a synopsis of important dates and history of the development:
§ An Invitation to Negotiate was released by the Procurement Department on March 11, 2015, to invite developers to propose mixed-use development of various city-owned sites in downtown Ocala.
§ On October 5, 2015, the negotiation team voted to recommend ITN#CMO/15-001 be awarded to Downtown Ocala LLC.
§ Approved Award of Invitation to Negotiate # CM)/15-001 and contract for the downtown mixed-use property development project to Downtown Ocala, LLC on November 3, 2015, at the City Council meeting.
§ Acquisition and Redevelopment Agreement for Mixed Use Development Agreement Executed November 16, 2015.
§ Developer is required to provide a project 100,370 S.F building at cost no less $15,733,700.00.
§ Financial review approval received on November 14, 2016.
§ Franchise Agreement between Hilton Franchise Holdings LLC and Digvijay Gaekwad. Effective date February 8, 2017. Expiration Date February 28, 2039.
§ Site Plan Approval granted November 2, 2017.
§ Special Warranty Deed for parcel is dated February 23, 2018. Property sold to developer for $100,000.00. Property valued at $802,816 at the time.
§ Hotel Construction Commencement Date May 8, 2018
§ Special Warranty Deed March 5, 2019, for corner clip. (Consideration $10,000)
§ Hotel construction work completion date is August 8, 2019
§ Project Certificate of Occupancy issued on September 21, 2020.
§ Incentive includes Tax Increment Financing (TIF) 70% of the developer ad valorem tax payment over 10 years.
§ 120 Spaces reserved for the Hotel and residential units. Commencing on the third anniversary of the date the hotel is completed, the Developer will pay the city $54,000.00 per year (subject to escalation pursuant to a CPI Rider) for the parking spaces.
§ All Ad Valorem Taxes were Paid.
FY22 Taxable Value: $9,163,893
FY22 Tax Bill: $195,686.03
FY22 Ad Valorem taxes (to be paid to CRA and Downtown Development District):
§ County: $30,699.04
Ocala Basic: $60,643.89
Downtown A: $15,748.15
Following a recognition by both the Developer and City staff, certain elements of the original Redevelopment Agreement for Mixed-Use Development and the subsequent eleven amendments were not complete. City staff, the Developer, and his counsel engaged in a lengthy process by which they negotiated a twelfth amendment, which endeavors to resolve those outstanding elements.
FINDINGS AND CONCLUSIONS: This Twelfth Amendment to Acquisition and Redevelopment Agreement for Mixed-Use Development which is presented to City Council for its consideration does the following:
1) Requires the Developer to replace and maintain the $100,000.00 of adequate assurance;
2) Requires the Developer to complete the buildout of the first floor (7,000 square feet);
3) Allows the Developer to construct a parking lot on the adjacent parcel in place of a second, mixed-use structure; and
4) Allows the Developer to assign or transfer its interest in the property and/or to sell the hotel and related improvements.
Staff has prepared a twelfth amendment for City Council consideration.
FISCAL IMPACT: N/A
PROCUREMENT REVIEW: N/A
LEGAL REVIEW: This agreement has been reviewed and approved for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve with changes
• Table
• Deny