As the Board is aware, the CRA purchased the property now known as “The Central” from the First Baptist Church of New Port Richey in December of 2005.  The church building was razed in 2010 and environmental remediation was completed thereafter. Following a competitive selection process (Request for Qualifications) in 2015, the subject property was sold to People Places, LLC, pursuant to a Purchase and Sale Agreement dated October 26, 2016, for a multifamily redevelopment project that would increase the number of households downtown, increase household income in the market area, increase the tax base, and showcase traditional neighborhood design principles.

The Purchase and Sale Agreement was later succeeded by a Performance Agreement dated January 21, 2019, and People Places, LLC, was later succeeded by a separate but related entity, Central Orange Partners, LLC.  Important aspects of the project, aforementioned agreements, and applicable development orders include:

• The subject project sits on 2.829 acres and is currently approved for 85 dwelling units, which are to be constructed over three phases.
• For each of the three phases, the Performance Agreement sets forth start and finish dates via Section 4, the “Commencement Period,” and Section 5, the “Completion Period.” 
• In order to effectuate the desired redevelopment, the CRA provided Central Orange Partners with an incentive in the form of a tax increment rebate to be paid out over 9 years at a declining rate—4 years at 100%, 3 years at 80%, and 2 years at 60%, as more particularly illustrated in Exhibit B of the Performance Agreement.  

Construction of The Central commenced in February of 2019.  Phase 1 and the first two buildings of Phase 2 were completed in 2020, and they have been leased since January of 2021.  In July of 2022, Central Orange Partners requested an extension of the Commencement and Completion Periods (approximately 11 months) due to the pandemic and subsequent disruptions to the construction industry; and at its meeting on September 26, 2022, the Board approved this request.

Following the first extension, the site work for Phase 2 was substantially completed and Central Orange Partners had anticipated commencing construction in 2023.  However, due to the interest rate environment and the associated difficulties in securing project financing, Central Orange Partners has requested a second extension of the Commencement and Completion Periods, as follows:

• Commencement for Phase 3 be extended from December 31, 2022, to December 31, 2025.
• Completion for Phase 2 and 3 be extended from December 31, 2024, to December 31, 2027.  

Last year’s rate environment and other macroeconomic factors did roil the lending market significantly reducing multifamily deal flow across the nation even in high growth areas.  As a result, staff does believe that this is a reasonable request and recommends its approval.  

It is important to note that this request would not change the terms of the tax increment rebate though the amount of the rebate has always been subject to change based upon the tax year’s corresponding total taxable value for the project and City and County millage rates.  Exhibit B of the Performance Agreement was for illustrative purposes; and while the rebate percentages and corresponding tax years were prescriptive, the absolute dollars were not and need to be calculated every year based upon actual taxable value and City and County millage rates.  

Additionally, staff believes that it is important to take this opportunity to celebrate this public-private partnership which has transformed a prominently located but underutilized property (with no taxable value) into beautiful downtown apartments, which:

• Are both modern and true to the City’s history.
• Have helped fuel the renaissance of downtown by increasing the number of households downtown, increasing household income in the market area, increasing the tax base, and showcasing traditional neighborhood design principles.
• Despite being only 49% complete, have already delivered 91% of the projected total taxable value.  (The original projected total taxable value was $7 million.  With 42 of 85 units constructed, the project is currently valued at $6.36 million.)  
• At buildout, are projected to be valued at almost twice the original projection ($14 million vs. $7 million).  
• Through an investment in a median, nearby public improvements, and a tax increment rebate of approximately $575,000 (and a lot of time and passion from all involved), will provide a return of approximately $6 million in tax increment revenue alone over the remaining life of the CRA.
• Perhaps most impactfully, illustrate the potential of not only other sites in and around downtown, but also for this form of development, which includes the possibility of homeowner-occupied condominium product, to transform the US Highway 19 corridor.