Presentation on theme: "City of North Liberty North Liberty Area Development Corporation University of Iowa Community Credit Union Economic Development Partnership Project October."— Presentation transcript:
City of North Liberty North Liberty Area Development Corporation University of Iowa Community Credit Union Economic Development Partnership Project October 5, 2010
History City approached by UI Community Credit Union in March 2010 – CU had narrowed down location options to a few within corridor – City and CU discussed possible incentives to locate in NL – CU was also considering other locations outside of NL – Incentives discussed included tax rebates and land transfers Urban Renewal Area established in June 2010 – Worked with Bond Counsel to establish new Urban Renewal Area – CCA school district, Johnson County and Kirkwood Community College notified City and CU agreed in principle on package to locate in NL in June 2010
Terms of the Agreement City and NLADC partner to purchase 64 acres – City provides grant to NLADC to purchase ground – NLADC transfers 24 acres of land to CU – City to rezone property to office/commercial use – City and NLADC enter into agreement to market and sell remaining property CU to construct 100,000 sq. ft. Customer Service Support Center on 24 acres – Facilitys minimum value will be $20 million – CU to finance project with favorable terms for the City
Benefits for North Liberty CU to construct 100,000 sq. ft. Customer Service Support Center on 24 acres – Facilitys minimum value will be $20 million – Tax generated are estimated at $600,000 annually – Office will eventually hold 400 jobs With more jobs, more spending at NL businesses More commercial development likely More appropriate use of land adjacent to Interstate Great front door development for North Liberty
Safeguards Protecting Citys Investment Minimum Assessment Agreement – 2012 property assessed at $5 million Equates to $150,000 in property taxes – 2013 property assessed at $10 million Equates to $300,000 in property taxes – 2014 property assessed at $20 million Equates to $600,000 in property taxes Loan Forgiveness – If CU does not build the Customer Service Support Center as planned, they will forgive $6.5 million of loan value
Project Financing Borrowing $11.3 million from CU for purchase of 64 acres – Favorable terms include: Forgiveness of $6.5 million if project does not happen Annual appropriation designation of $6.5 million – Does not count against Citys debt capacity No prepayment penalties – Allows City to pay on loan when properties sell with no penalty – These terms were part of the Citys negotiation position Loan amortized for 20 years – Land sales and other incremental taxes within the area will expedite loan repayment – Repayment of loan should be less than 20 years; however, for planning purposes City is projecting 20 year repayment
Property Taxes Property taxes will not increase as a result of this project – Loan will be repaid with Tax Increment Finance revenues – CU taxes will fund most of loan repayment Taxes generated: $600,000 Annual payment: $980,000 Difference: $380,000 (paid with available TIF revenues) – $20 million increase in tax base will be applied to Citys debt service levy Will generate $25,000 outside of TIF funding Have a positive impact on levy – When loan repaid, all of the taxable value will be applied to Citys levy General Fund revenues estimated at $162,000
Effect on School CCA to see an immediate increase in tax revenue – TIF financing will not effect PPEL or debt service levy Estimated revenues based on FY 11 tax rate is $66,000 – State currently back fills revenues to schools at $5.40/$1,000 in value Revenues estimated at $108,000 – School will collect over $300,000 in property taxes when loan is repaid – Rezoning will eliminate the potential for 1,400 housing units Will have positive effect on over- crowding concerns at CCA.
History of Land Costs Land purchased by current owner in 2007 for $6 million Owners developed property, installing necessary infrastructure and required utilities Landowners continue to bear holding costs, including interest, taxes, insurance and maintenance Recent appraisal determined land to be valued at $5/sq. ft. City and NLADC proposing to pay $4/ sq. ft. Land worth $1.76 million more than City and NLADC are paying
Impact to landowners and residents Commercial Landowners – This development will complement other commercial land sales and development in NL – New commercial zone proposed by City will be more restrictive than current commercial zonings Residents – Additional job opportunities at CU and other related developments – Additional retail and commercial services likely to occur – Reduce potential traffic flow issues with change in zoning – Increasing tax base; continue to provide high quality services at lowest possible tax burden to residents.