Loading...
HomeMy WebLinkAboutRDA 6 DEVEL OF RESCO 04-15-85NBA .._DEVELOPMENT AGENCY Z/- I.~-~ NO. 6 4-15-85 Inter- Corn Aprtl 15, 1985 TO: FROM: SUBJECT: HONORABLE CHAIRHAN AND I~BERS OF THE REDEYELOPHENT AGENCY COHHUNITY DEVELOPMENT DEPARTHENT PROPOSED DEVELOPMENT OF RESCO (NORTHgEST CORNER OF RED HILL AND EDZNGER AVENUES) BACKGROUND: RESCO Development proposed an R & D project on the Mullln Lumber Company property of 4.7 acres located on the northwesterly corner of Red Hill and Edinger Avenues. Based on market studies, staff encouraged the developer of the project to include commercial use for the generation of sales tax revenue. The developer is agreeable to amending his development plans subject to the contribution of funds from the Redevelopment Agency for the cost of public improvements, and a waiver of the proposed Circulation Improvement Fees for the area. {letter attached) The amended plans call for a 5,200 sq. ft. restaurant on 44,625 sq. ft. of land area and two R & D buildings totaling 62,100 sq. ft. DZSCUSSZON: An analysis of costs and revenues has been made to determine justification for the Redevelopment Agency's contribution to the project. An annual increase in revenue is projected as follows: Sales tax from restaurant: $ 14,000 Property Tax Increment: Restaurant site 44,625 sq. ft. land area e $12 sq. ft. Improvements Less current tax value e $1.11 sq.ft. Increase in tax value $ 535,500 700,000 $1,235,500 - 73,455 $1,162,045 RDA tax increment $ 11,620 R&D site 160,107 sq. ft. land area ~ $12 sq. ft. Improvements Less current tax value ~ $1.11 sq. ft. Increase in tax value $1,921,284 3,250,000 178,519 $4,992,765 RDA tax increment $ 49,927 /~ Redevelopment Agency Resco page 'cwo Total RDA Tax Increment Less houstng set-aside $ 61,547 - 12,309 Net RDA tax revenue $ 49,238 Contributions to the Circulation Improvement Fund would requtre the developer to pay $2.60 per sq. ft. for the restaurant for a cost of $[3,520 and $[.80 per sq. ft. for the R & O butldtng for a cost of $[[[,780 for a total contribution of $125,300. Public improvements include a raised median on Red Hill between the Rat1 crossing and Edlnger, traffic signal relocation and modification, street improvements and storm drain. An estimate of the cost of public Improvements Is not available at thts time, but they are expected to range between $200,000 and $300,000. The total expenses of publtc Improvements and circulation Improvements that the developer has requested to be waived could amount to $425,300, which would require 8.5 years for recoupment from tax increments. It is suggested that. a five year recoupment period would be justified for the project, which would limit the contribution of the Redevelopment Agency to $250,000. RECOMMENDED ACTION: It is recommended that the Redevelopment Agency approve the RESCO project for the northwesterly corner of Red Hill and Edinger, in. concept, subject to the approval of an agreement containing the following terms and conditions and subjec~ to such other assurances as required by the City Attorney. The developer shall proceed with the plans as proposed dated April 5, 1985 to include a restaurant facility and R & O structures. The Redevelopment Agency shall contribute up to $250,000 toward the cost of public improvements, as required by the City Engineer. The developer shall contribute to the Circulation Improvement Fund the amount of $125,300 less the difference between the allocated $250,000 and the cost of the public improvements, with said fees being due and payable prior to the issuance of a Certificate of Occupancy. e the offer of contribution of the Redevelopment Agency shall be null .void if~ project is not completed within the term of the agreement. · DONALD D. LA~,''~ ~ Dtrector of Community Development DDL:RKF:do The terms of the agreement shall be one year from date of execution and and Community Development Department April 9, 1985 Mr. Don Lamm Director of Community Development City of Tustin 300 Centennial Way Tustin, CA 92680 Re: Development Funds, NWC Edinger and Redhill, City of Tustin Dear Mr. Lamm: This letter serves as our request for redevelopment dollars to be used to complete the offsite improvements associated with the development of the northwest corner of Redhill and Edinger. We understand the City's desire for a restaurant to be located on the corner of our subject parcel and we are amenable to accommodating your needs. There are however a number of adverse economic considerations that would affect us should we secure said restaurant. They are as follows: The site is zoned industrial and traditionally commercial uses such as restaurants have been a poor mix for adjacent industrial type uses. Overall we feel the parcel is better served to be developed 100% industrial/R&D. The portion of the site that you would like to have the restaurant located on is the corner of the street intersection. It is therefore the most valuable portion of the parcel and is being economically under-utilized as a res- taurant location. This also prevents us from "showcasing" our desired development. A restaurant is of no economic value to us as the developer. Restaurants pay such low rents that the best we can reasonably expect is to cover the cost of our land with no expected return on our investment. It also effectively reduces the size of the overall development by 25% because of the size of the parcel required by a restaurant to accommodate parking. Mr. Don Lamm April 9, 1985 Page two Finally, it will require a great deal more of our time and effort because we are not res- taurant developers. The learning curve we would go throughis very costly. In spite of these negative aspects we want to cooperate with the City. This is our fifth development in the City of Tustin and we have always had good cooperation and have shared a mutual trust and respect. We would propose what we feel is a mutually beneficial situation. That is, we will provide the restaurant you have requested and in exchange we would like your favorable consideration to relieve us from the Public Improvement costs and proposed Transportation fees. This could be accomplished via the Redevelopment District. This way you will have generated a continuing revenue base for at least 20 years and possibly much longer. We will receive relief in offsite costs and potential transportation fees that can help make up for the loss of revenue from the restaurant by allocating the cost savings to the industrial/R&D portion of our development. As of this date the redevelopment costs have not been precisely defined but our civil engineer and your City Engineer are working closely in resolving all issues affecting the offsite improvements. We expect a break- down any day although preliminary estimates of offsites and transportation fees are expected to be something in excess of $300,000. If you have any questions or need clarification please feel free to call me at your convenience. Sincerely, NT Michael D. Todd MDT:sw