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Title:
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Authorization to Enter into Lease and City Building Refurbishment Agreement with Poolhouse Group, LLC for the former Firehouse located at 1130 N. 1st St.
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Title
Authorization to Enter into Lease and City Building Refurbishment Agreement with Poolhouse Group, LLC for the former Firehouse located at 1130 N. 1st St.
Description
This report requests the Economic Development and Housing Subcommittee recommend City Council approval to enter into a Lease and a City Building Refurbishment agreement, and other agreements as necessary (Agreements), with Poolhouse Group, LLC (Developer) for the operation and installation of public infrastructure and capital improvements for the former firehouse located at 1130 N. 1st St. (Site).
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
The Site is approximately 26,500 square feet, including a 4,730 square foot building that was formerly used as a fire station. The building is currently vacant, occasionally utilized for a temporary use or storage, and was last operated as a fire station in the early 1970s. The Site is immediately adjacent to Margaret T. Hance Park (Hance Park) and the lease and redevelopment of the building is an integral component of the ongoing revitalization of the park. The core building infrastructure on the Site is functionally obsolete and needs to be refurbished in order for the building to be usable. Major systems such as electrical, plumbing and HVAC have largely been removed from the building and need to be replaced, while other systems such as the roof and site layout are in critical need of updating to bring the Site up to a grey shell condition attractive to a new use. The Site is controlled by the Parks and Recreation Department (Parks), which partnered with the Community and Economic Development Department (CEDD) to issue a request for proposal (RFP) for disposition and redevelopment of the Site. A previous RFP process was initiated in 2015; three proposals were received and after review by the evaluation committee, none were awarded. In 2022, a new RFP process was initiated; one proposal was received and deemed responsive. The Developer has proposed to rehabilitate the former firehouse, including refurbishment of the core building infrastructure and operate a restaurant offering high quality dining with affordable options to serve park users, event attendees, and the general public (Project). The lease of the Site will be presented to the Parks and Recreation Board (Parks Board) for approval.
Subject to Parks Board approval of the lease terms, and City Council's approval, the following major business terms have been negotiated with the Developer and would be implemented through the Agreements.
Annual lease rate: $128,250 with three percent annual escalator.
Term: 15 years with three five-year extensions.
City will reimburse Developer for construction of eligible site improvements or core building infrastructure refurbishments made to the Site. Eligible improvements are subject to Title 34. Total reimbursement not to exceed $2,405,000 and can be realized through the following funding mechanisms:
Reimbursement of the City's share of the General Fund portion of eligible Construction Sales Tax paid during the construction of the Project, not to exceed $20,000.
Reimbursement of the City's share of the General Fund portion of eligible Transaction Privilege Tax paid from activities conducted at the Site, not to exceed $667,000.
Annual rent credit through the lease of the Site (subject to Parks Board approval). The first year rent of the Site is set at $128,580 with future annual rent subject to a 3 percent annual escalator.
Contract Term
Reimbursement for eligible public infrastructure or capital improvements made to the Site and annual rent credit requests may be requested by the Developer for up to the first 20 years of the lease. The term of the lease will be one 15-year term followed by three, five-year extensions.
Financial Impact
Total reimbursement shall not exceed $2,405,000 and will occur only to the extent the Project generates sufficient funds. Financial terms of the Agreements will be provided to the Budget and Research and Finance departments prior to the execution of the Agreements. The Developer will be eligible to request reimbursement of eligible tax revenue generated from the Site or a credit of the rent until they reach the total reimbursement amount of $2,405,000. CEDD anticipates the total reimbursement will be reached in year 15 of the lease.
Public Outreach
Staff has offered to meet or provide information to the following community groups:
Evans Churchill Neighborhood Association
Roosevelt Action Association
Downtown Voices Coalition
Roosevelt Row CDC
Central City Village Planning Committee
City’s Historic Preservation Commission
Hance Park Conservancy
Location
1130 N. 1st St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development and Parks and Recreation departments.