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09/20/2010 COMMUNITY REDEVELOPMENT AGENCY MEETING MINUTES CITY OF CLEARWATER September 20, 2010 Present: Chair/Trustee Frank Hibbard, Trustee George N. Cretekos, Trustee John Doran, Trustee Paul Gibson, and Trustee Bill Jonson. Also William B. Horne II - City Manager, Jill S. Silverboard - Assistant City present: Manager, Rod Irwin - Assistant City Manager, Pamela K. Akin - City Attorney, Rosemarie Call - City Clerk, and Patricia O. Sullivan - Board Reporter. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. 1. Call to Order - Chair Frank Hibbard The meeting was called to order at 9:13 a.m. at City Hall. 2. Approval of Minutes 2.1 Approve the minutes of the September 7, 2010 CRA Meeting as submitted in written summation by the City Clerk. Trustee Bill Jonson moved to approve the minutes of the September 7, 2010 CRA Meeting as submitted in written summation by the City Clerk. The motion was duly seconded and carried unanimously. 3. CRA Items 3.1 Approve a Contract For Purchase of Real Property with Society of St. Vincent de Paul Council of Upper Pinellas County, Inc., to purchase real property described as SARAH MCMULLENS SUBDIVISION, All of Block 5 North of Park Street, LESS the East 50m feet and LESS road on the North, according to the plat thereof as recorded in Plat Book 1, Page 41, Public Records of Pinellas County, Florida; together with MAGNOLIA PARK SUBDIVISION, Block 2, Lots 9 and 10, LESS road on the north, according to the plat thereof as recorded in Plat Book 3, Page43, Public Records of Pinellas County, Florida, for the sum of $587,000; authorize appropriate officials to execute same, together with all documentation required to effect closing; authorize establishment of a project account in the amount of $625,000 to cover purchase, closing and related expenses; and approve the terms and conditions of the related temporary occupancy lease Community Redevelopment Agency 2010-09-20 1 between the CRA and the Society as referenced and attached to the Contract for Purchase as Exhibit A., and authorize the appropriate officials to execute same. The subject property is located at 1015 Cleveland Street in the Town Lake Residential District of Downtown Clearwater. It directly abuts the CRA Owned redevelopment site, known as the Town Lake Parcel on the West. The parcel is approximately 44,965 sq. ft., 1.03 acres, and is comprised of a 17,800 sq. ft. building (thrift store and warehouse) and asphalt pavement /parking. This property has presented an acquisition opportunity for the CRA at this time as the property has recently been listed for sale by the Society. The rationale for this acquisition is that the addition of this parcel to the CRA prime future development site the Town Lake parcel, materially increases the likelihood that pivotal site will realize the development objectives of the CRA and City in the Downtown redevelopment agenda, a mixed-use residential/retail development with sufficient density to assist in the revitalization and reinvigoration of the Downtown. The development of rental, workforce housing for young professionals and urban residents not able to access the "for sale" market has always been seen as the most potentially successful scenario for the site. In order to get the quality of design, retail component and appropriate amenities, however, a project size of 200 units +/- has been sought by development interests. This threshold allows for on-site management and leasing, as well as a distribution of fixed and operating costs across a sufficient base to generate an acceptable per unit cost. However, the constraints of the site under these development parameters necessitate structured, expensive parking integrated with the residential component, generating an expensive construction cost per square foot that challenges the ability for projects to achieve profitability with supportable rent levels. This was an issue with the Miles Development project, and has been cited as a problem by other developers who have contemplated a project of the density and quality desired by the CRA. It will likely be an issue of greater magnitude in the immediate future development environment. Acquisition/availability of the St. Vincent de Paul parcel has always been seen as a means to increase the feasibility of development, by allowing a better segregation of uses, less costly construction costs, and better site functionality. For example, the additional acre along Cleveland Street could allow for the de- coupling of the parking and the residential structures a significant cost savings, and more opportunity to accommodate required amenities at a lesser cost. However, to date the property has not been available for purchase. CRA acquisition and consolidation of the parcel with the existing Town Lake property would allow the CRA to take a much more attractive project site to market and significantly heighten our prospect of achieving our development objective for the site. Community Redevelopment Agency 2010-09-20 2 The purchase price of $587,000 represents the mid- point between appraisals of $600,000 and $575,000 obtained on the property. The listing price was $660,000.Because the Society has the need and desire to find a relocation site for the Thrift Store location as a major concern and an acceptable alternative has not yet been found, a companion lease would allow the Society to lease back the property for $1 per annum, triple net, with the CRA held completely harmless, for up to one year. An additional lease period of six (6) months could be exercised, at the option of the Society, if relocation space had not been located within one year. That extension would be at a triple-net rate of $3/square foot. No further extension would be allowed. Since the CRA does not anticipate the need to occupy the site over the next eighteen months, accommodating the Society would allow us to close the transaction without negative impact to the CRA. Should a development interest come forward in the interim, we would have ownership and could allow development planning to move forward with surety. Funding for this acquisition is recommended to be from the CRA Redevelopment Fund and the acquisition cost was included in the updated Five Year Financial Plan presented in conjunction with the Fiscal Year 2010/2011 CRA Budget. If approved, a new project 388-94867, entitled St Vincent de Paul Property Acquisition, will be established for this purchase transferring $625,000 from project 388-94714 to the new project. Staff recommends approval of the Contract for Purchase and the lease contract. In response to questions, Assistant City Manager Rod Irwin said the city's redevelopment plan designates the area as the Town Lake Residential District. Although a residential-retail component is anticipated in the district, staff could bring forward other potential uses for the CRA's consideration. Trustee John Doran moved to approve a Contract for Purchase of Real Property with Society of St. Vincent de Paul Council of Upper Pinellas County, Inc., to purchase real property described as SARAH MCMULLENS SUBDIVISION, All of Block 5 North of Park Street, LESS the East 50m feet and LESS road on the North, according to the plat thereof as recorded in Plat Book 1, Page 41, Public Records of Pinellas County, Florida; together with MAGNOLIA PARK SUBDIVISION, Block 2, Lots 9 and 10, LESS road on the north, according to the plat thereof as recorded in Plat Book 3, Page 43, Public Records of Pinellas County, Florida, for the sum of $587,000; authorize the appropriate officials to execute same, together with all documentation required to effect closing; authorize establishment of a project account in the amount of $625,000 to cover purchase, closing and related expenses; and, approve the terms and conditions of the related temporary occupancy lease between the CRA and the Society as referenced Community Redevelopment Agency 2010-09-20 3 in the Contract for Purchase, Exhibit A., and authorize the appropriate officials to execute same. The motion was duly seconded and carried unanimously. 3.2 Approve a Development Agreement between the CRA and Mainstreet Clearwater Development LLC of Clearwater, Florida concerning the Peter Gillham's Nutrition Center, retail and restaurant project, 422-424 Cleveland Street, delineating the terms and conditions for the provision of certain economic assistance by the CRA. Mainstreet Clearwater Development LLC is developing the Peter Gillham’s Nutrition Center retail health food store and healthy restaurant project located at 422-424 Cleveland Street. The project is a build out of the existing structure, with outdoor dining, to create a 3900 square foot health food store and restaurant, a significant expansion from the current 1800 square foot operation. The Development Agreement is to secure economic assistance through the Community Redevelopment Agency (CRA) to increase the economic feasibility of a project which supports the implementation of the City of Clearwater’s District Vision for the revitalization of the CRA area, and to further the implementation of the Downtown Redevelopment Plan by the development, construction and operation of the Project to enhance the quality of life, increase employment and improve the aesthetic and useful enjoyment of the downtown. This agreement provides CRA funding of a $50,000 restaurant build out loan-to- grant generally mirroring the DDB Restaurant Relocation Program, which provides for incentive reimbursement funding of eligible restaurant build out expenses, up to a maximum of $50,000. Since the project involves the relocation and expansion of an existing business within the Cleveland Street District, rather than a new business coming to the District, the DDB Restaurant Relocation grant is not available. Staff supports CRA participation in this project for several reasons. First, Peter Gillham’s is an established, successful business in the District that indicates the likelihood of continued successful operation at the new location. Second, Peter Gillham’s contemplates a significant expansion of their operation to leverage their regional leadership position in the gluten-free market, an expanding sector of the food industry, with an expanded retail and restaurant operation consistent with the CRA recruitment strategy. Third, the cost of the tenant improvements necessary to install a kitchen and associated facilities are significant and unlikely to be affordable without incentive financing. Finally, the ability and willingness of the owner to fund and move forward with the project at this time of economic downturn, with the assistance delineated above, is very helpful in maintaining downtown’s redevelopment momentum. Facilitation of this project will keep a proven business in the District and further the objective of expanding quality restaurant and retail space on Cleveland Street. Community Redevelopment Agency 2010-09-20 4 The incentive is to be structured as a five-year forgivable loan, secured with a performance mortgage, with 20% forgiven annually as long as the property continues to be used as a full-service restaurant. If it ceases to be so operated during the five-year period, the owner will have to reimburse the CRA for the outstanding balance. Similarly, if the property was sold during the five-year period, the outstanding balance will become due and payable to the CRA, unless the CRA agreed to the assumption of the development agreement by the new owner. The source of funds is the CRA Retail Attraction/Assistance Project Account 94852. In response to questions, Assistant City Manager Rod Irwin said the current facility’s interior space is limited to 1,800 sq. ft. The facility’s new location will have 3,900 sq. ft. for interior space. Shelley Jaffe, Executive Director for Peter Gillham’s, said initially the restaurant will open for breakfast and lunch six days a week and dinner 3 days a week. Schedule will expand as demand increases. Ms. Jaffe reviewed her 20-year work history with Food Services of America. She owned a catering company in Seattle for 11 years. Ms. Jaffe has been managing Peter Gillham’s for 1.5 years. The current floor plan includes 10 tables inside (seating for 4) and 3 tables outside (seating for 2) and an exhibition kitchen with additional seating for 10. Trustee George N. Cretekos moved to approve a Development Agreement between the CRA and Mainstreet Clearwater Development LLC of Clearwater, Florida concerning the Peter Gillham's Nutrition Center, retail and restaurant project, 422-424 Cleveland Street, delineating the terms and conditions for the provision of certain economic assistance by the CRA. The motion was duly seconded and carried unanimously. 3.3 Approve second amendment to Development Agreement between the Clearwater Redevelopment Agency and Clearwater Espacio Development, LLC, and authorize the appropriate officials to execute same. On January 24, 2007, the CRA entered into a Development Agreement to develop certain parcels of real estate on the northeast corner or Cleveland Street and Martin Luther King, Jr. Avenue, known as Clearwater Centre. On May 15, 2007, the CRA approved an assignment of the Development Agreement from the original Developer, Clearwater Centre, LLC, to Clearwater Espacio Development, LLC. Construction was commenced on the project, but has since stopped. Clearwater Espacio Development is planning on recommencing construction, and is requesting an extension of the required completion date to October 1, 2012, and a change in the form of the Security For Developer’s Performance from a Performance Mortgage to a Letter of Credit. Community Redevelopment Agency 2010-09-20 5 In response to questions, the City Attorney said construction must commence before the Development Order expires at the end of this month. Amendments to the development agreement can be made contingent upon the Development Order remaining active. Staff was directed to make the amendments contingent upon the Development Order remaining active. The City Attorney said incentives on the project are limited to paying for impact fees up to $425,000, street landscaping on city property up to $500,000, and relocation of utilities up to $156,000. Assistant City Manager Rod Irwin said staff determined the city was obligated to pay for the relocation of utilities during the street realignment project. The developer may not exercise the street landscaping incentive, as it was offered prior to the city implementing the streetscaping project. In response to a question regarding the proposed condition, the City Attorney suggested amending the recommendation to say, "Approve second amendment, provided however that reconstruction must be commenced by September 30, 2010." Concern was expressed regarding the commencement date. It was stated the developer anticipates meeting that date. Mr. Irwin said the developer understands the city will not extend the Development Order. Espacio representative Jeannine Pearson said the new contractor is prepared to commence work this week and did not anticipate any problems. Trustee Paul Gibson moved to approve second amendment, provided however that reconstruction shall commence by September 30, 2010, to Development Agreement between the Clearwater Redevelopment Agency and Clearwater Espacio Development, LLC, and authorize the appropriate officials to execute same. The motion was duly seconded and carried unanimously. 4. Other Business - None. 5. Adjourn Community Redevelopment Agency 2010-09-20 6 5. Adjourn The meeting was adjourned at 9:36 a.m. r Chair Community Redevelopment Agency Attest Community Redevelopment Agency 2010-09-20 7