Item 7: Resolution 4966 Approving a MUPTE for 10th and Charnelton

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The Planning and Development Director has reviewed this application and recommends approval. This report is included as Exhibit B in the resolution approving the MUPTE. A copy of this MUPTE application will be placed in the council office for review. Public Comments A display advertisement was published in the Register-Guard on December 30, 2008, soliciting comments for 30 days. No comments were received during the 30-day period ending January 28, 2009. The Downtown Neighborhood Association reviewed the proposed project in July 2008, and voted in support of the project. The association was contacted specific to the MUPTE application on December 23, 2008, and has not offered any comments. Design Features Consistent with the council’s stated interests in the adopted MUPTE Standards and Guidelines, this application proposes high density housing in the core of downtown. Although the design for the project has not yet been finalized, the developers have stated their intention to construct a dense, multi-story development with the following design features: Compliance with Leadership in Energy & Environmental Design (LEED) and Green Building ? Community Standards Higher quality materials that contribute to longevity ? Prominent entry facing the public street ? Sidewalks with a minimum width of 15 feet, enhanced paving and street trees ? Impact and Need for Tax Exemptions to Encourage Housing The City and other local taxing districts forgo revenue when property is exempted from taxes. This project proposes new construction on a property that is underdeveloped and under-utilized based on the zoning and property potential. The land continues to be taxed during the exemption period. The improvements will bring substantial revenue, after ten years, beyond what is currently being collected. Fiscal Impact The property is currently in public ownership and is tax exempt. Once the property is in private ownership and the proposed project is complete, the development will pay annual taxes on the non- housing commercial portion and a yet to be determined amount on the land itself. While the City will forgo an estimated $131,526 annually on the housing portion during the 10-year exemption period, this may be balanced by the income that is received from the commercial space and the land. Impact and Need for Tax Exemptions to Encourage Housing The City and other local taxing districts forgo revenue when property is exempted from taxes. This project proposes new construction on a property that is underdeveloped and underused based on the zoning. The land continues to be taxed during the exemption period. The improvements will bring substantial revenue, after ten years, beyond what is currently being collected. th The pro-forma for the 10 and Charnelton development (Attachment C) indicates three key reasons that the project would not be built without MUPTE. First, the debt coverage ratio is low at 1.06 instead of the common bank preference for 1.25 or higher. Second, the perceived risk is high demonstrated by the Cash on Cash return well below the market-expected 10% to 15% level. The Cash on Cash only reaches Z:\CMO\2009 Council Agendas\M090223\S0902237.doc