A real estate redevelopment firm has acquired 5800 Main St., a 9,700 sf. single-story building built in 1945. The concrete block structure, containing hazardous materials has steadily declined in ad valorem value. Such declines in CRA property values, mitigate any incremental gains realized on other properties within the CRA district.
The acquiring developer wishes to move quickly and begin leasing the property in November 2017.
Plans are to demolish the interior space, remove asbestos, replace the exterior awning, and make major repairs with significant improvements in overall design to maximize the properties capacity to provide nearly 10,000 sf. of newly renovated downtown retail space. Of critical importance to the success of the private sector investment is the relocation and inclusion of a New Port Richey natural market. In business in New Port Richey for 23 years, the anchor tenant, Jeka, Inc. dba., Wright's Natural Market, will relocate eight jobs and hire additional staff by extending business hours and adding additional departments.
The investment is expected to increase the taxable value of the property from its 2016 value of $261,000 to an estimated $800,000, a historical high. With the leasing of all the retail units, additional tax revenues will be realized in the form Business Tax Receipts and Tangible Taxes.
According to the language set-forth in the FS 163.340 (8) “Blighted Area”, the 2016 condition of 5800 Main Street parcel contributes to five (5) characteristic listed in the CRA statute that defines a blighted area.
(b) Aggregate assessed values of real property in the area for ad valorem tax purposes have failed to show any appreciable increase over the 5 years prior to the finding of such conditions.(see attached graph)
(d) Unsanitary or unsafe conditions
(e) Deterioration of site or other improvements.
(g) Falling lease rates per square foot of office, commercial, or industrial space compared to the remainder of the county or municipality.
(h) Tax or special assessment delinquency exceeding the fair value of the land.
The 2012 CRA plan strongly recommends incentives to support private investment. The plan goes as far as identifying a grocery store as one of the targeted businesses. (See Authorizations). Additionally, the current language before the Florida Legislature regarding CRA plan compliance will require more detailed benchmark reporting. Included in the pending legislative language is the following measurement:
13. Ratio of redevelopment funds to private funds expended within the boundaries of the community redevelopment agency.
Staff is requesting the CRA, through the Commercial Real Estate Redevelopment Grant Program, supported by language in Florida Statute 163, Part III, the original 2001 & updated 2012 CRA plans, that funding be provided in the following manner:
1. 5800 Main LLC redevelopment project to be fund at 20% of the total investment, estimated at $919,700. The CRA match would be capped at $150,000.
2. Development Agreement with Jeka, Inc. dba., Wright’s Natural Market, to support their $286,850 investment to relocate in order to retain and create jobs, and to construct a leasehold build-out to open its natural market. The CRA incentive would be capped at $100,000.
5800 Main LLC’s investment will be catalytic in the continued downtown redevelopment. With the intention of anchoring a grocery story, the private sector redevelopment project will be beneficial to city residents, improve ad valorem values, support future capital investment and the continued positive business momentum the city is experiencing.
RECOMMENDATION:
Approve a Commercial Real Estate Redevelopment Grant for 5800 Main, LLC. not to exceed $150,000. Authorize the Executive Director to enter into a Development Agreement as per the same grant program with Jeka, Inc. not to exceed $100,000.
BUDGET / FISCAL IMPACT:
Not to exceed $250,000 in CRA business incentive grant funds FYE 2017.