Northeast Gateway 2 Urban Renewal Plan. City of Des Moines, Iowa

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1 Prepared by: Carrie Kruse, Office of Economic Development, 400 Robert D. Ray Drive, Des Moines, IA Phone: 515/ Return Address: City Clerk City Hall, 400 Robert D. Ray Drive, Des Moines, IA Taxpayer: No change Title of Document: Northeast Gateway 2 Urban Renewal Plan Grantor/Grantee: City of Des Moines, Iowa Legal Description: See page 6, below. Related Documents: Northeast Gateway Revitalization Plan Northeast Gateway 2 Urban Renewal Plan for the Northeast Gateway 2 Urban Renewal Area City of Des Moines, Iowa Urban Design Review Board Action: 03/14/2017 Taxing Entities Consultation: 02/23/2017 City Council Approval: 03/20/2017

2 TABLE OF CONTENTS A. INTRODUCTION 1. Description of the Northeast Gateway 2 Urban Renewal Area 2. Purpose of this Plan 3. Authority to Adopt and Implement an Urban Renewal Plan B. BACKGROUND INFORMATION C. ADOPTION OF NORTHEAST GATEWAY REVITALIZATION PLAN D. SPECIFIC PROJECTS APPROVED FOR FUNDING WITH INCREMENTAL TAX REVENUES E. DURATION OF URBAN RENEWAL PLAN F. SEVERABILITY G. AMENDMENT OF URBAN RENEWAL PLAN H. ATTACHMENTS A - Legal Description of Area B - Financial Condition Report Map 1: Vicinity of Urban Renewal Area Map 2: Boundary of Urban Renewal Area 2

3 A. INTRODUCTION 1.) Description of the Northeast Gateway 2 Urban Renewal Area The Northeast Gateway 2 Urban Renewal Area contains approximately acres, and is generally located south of E. Aurora Avenue, west of Interstate 235, north of Hull Avenue and west of E. 8th Street as shown on Map 1, "Vicinity of Urban Renewal Area" and Map 2, Boundary of Urban Renewal Area, and as more specifically described in Attachment A, Legal Description of Area. 2.) Purpose of this Plan The Northeast Gateway 2 Urban Renewal Area (the "Gateway 2 Area") is entirely located within a larger area known as the Northeast Gateway Revitalization Area (the "Revitalization Area"). The City has adopted the Northeast Gateway Revitalization Plan (the "Revitalization Plan") to provide a uniform and comprehensive guide to the revitalization and redevelopment of the Revitalization Area. The purpose of the Northeast Gateway 2 Urban Renewal Plan (this "Plan") is to assist in, and to provide additional legal and financial tools to implement that portion of the Revitalization Plan applicable to the Gateway 2 Area. The implementation of the Revitalization Plan within the Gateway 2 Area is intended to guide the development of the Gateway 2 Area and to stimulate private economic investment activities within the Gateway 2 Area as further described in the Revitalization Plan, through the provision of infrastructure improvements and economic development financial assistance that is provided, in part, with the tax increment revenues generated in the Gateway 2 Area. This Plan is also intended to respond to and provide the necessary tools to remedy the conditions of blight in the Gateway 2 Area. 3.) Authority to Adopt and Implement an Urban Renewal Plan The State of Iowa has provided Iowa cities with the power to adopt and implement urban renewal plans through Chapter 403, Urban Renewal Law, Code of Iowa. If a slum, blighted or economic development area or combination of the three, as defined in Section , Code of Iowa, exists within the municipality; the municipality may designate such an area for urban renewal through the process provided for in Chapter 403. A municipality may determine that a proposed urban renewal area is an economic development area if the area is appropriate for development or redevelopment with commercial or industrial enterprises. A municipality may make a determination that a proposed urban renewal area is a blighted area if the area contains a substantial number of slum, deteriorated, or deteriorating structures; defective or inadequate street layout; faulty lot layout in relation to size, adequacy, accessibility or usefulness; insanitary or unsafe conditions; deterioration of site or other 3

4 improvements; diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land; defective or unusual conditions of title; or the existence of conditions which endanger life or property by fire and other causes; or any combination of these factors, substantially impairs or arrests the sound growth of the municipality, delays the provision of housing accommodations, or constitutes an economic or social liability and is a threat to the public health, safety, or welfare in its present condition and use. For the reasons set forth below the proposed Gateway 2 Area qualifies for designation as an urban renewal area on the basis that each portion of the Area is a blighted area, an economic development area appropriate for development or redevelopment with commercial and industrial enterprises, or both. B. BACKGROUND INFORMATION The Gateway 2 Area qualifies as a blighted area due to existing conditions including vacant buildings and sites, buildings assessed at below normal and poor condition, warehouse buildings identified as economically obsolete, homeless camps, numerous buildings that are 50 years old or more, underutilized parcels, parcels that are not adequately sized for development without assemblage with other land, dilapidated buildings and buildings valued at less than the properties they are constructed on. All of these conditions have the impact of pulling down the economic viability of the Gateway 2 Area, and create a need for revitalization. The location of the Gateway 2 Area in northeast Des Moines, adjacent to two major arterial streets (E. 14th Street and E. Euclid Avenue) and its proximity to the interstate system provide opportunities for high visibility and new investment. The age and condition of certain real estate in the Area, as well as blighted vacant buildings and sites, prompts the need for revitalization. The City of Des Moines believes that the designation of the Area as an urban renewal area and the adoption and implementation of this Plan have the potential to strengthen and revitalize the local economy through: A. Providing for planned and unified development of high quality commercial, industrial, mixed use and residential uses and the physical and economic enhancement of the Gateway 2 Area. B. Creation of a safe and attractive physical environment through the construction and installation of necessary infrastructure and other public improvements or projects supportive of the Gateway 2 Area. C. Retention and creation of quality permanent employment opportunities for residents. D. Expansion of the property tax base of the Gateway 2 Area, and subsequently contributing to the economic betterment of the entire City of Des Moines. E. Creation of financial incentives as necessary to encourage new and existing businesses to invest and expand in the Gateway 2 Area.. 4

5 C. ADOPTION OF NORTHEAST GATEWAY REVITALIZATION PLAN All those portions of the Northeast Gateway Revitalization Plan, including all maps and attachments thereto, to the full extent applicable to the properties and land area within the Gateway 2 Area, are hereby adopted by reference as an integral component of this Plan. D. SPECIFIC PROJECTS APPROVED FOR FUNDING WITH INCREMENTAL TAX REVENUES Projects and activities approved by the City Council for funding with incremental tax revenues from the Gateway 2 Area are identified in Appendix C. E. DURATION OF URBAN RENEWAL PLAN This Plan shall continue in effect until terminated by the City Council by resolution. F. SEVERABILITY In the event one or more provisions contained in this Plan shall be held for any reason to be invalid, illegal, unauthorized or unenforceable in any respect, such invalidity, illegality, lack of authorization, or unenforceability shall not affect any other provision of this Plan and this Plan shall be construed and implemented as if such provision had never been contained herein. G. AMENDMENT OF URBAN RENEWAL PLAN This Plan may be amended from time to time to respond to development opportunities. Any such amendment shall conform to the requirements of Iowa Code Chapter 403. Any change effecting any property or contractual right can be effectuated only in accordance with applicable state and local law. No land shall be acquired by City under authority of this Plan for private redevelopment until the acquisition of such land is shown by an amendment to this Plan. H. ATTACHMENTS A - Legal Description of Area B - Financial Condition Report C Approved Projects Map 1: Vicinity of Urban Renewal Area Map 2: Boundary of Urban Renewal Area 5

6 Attachment A - Legal Description Northeast Gateway 2 Urban Renewal Area Beginning at the intersection of the centerline of Hull Avenue and the centerline of Dixon Street; Thence West along the centerline of Hull Avenue to the centerline of York Street; Thence North along the centerline of York Street to the Easterly extension of the South line of Lot 59, Mann s 2nd Addition to Highland Park, an Official Plat; Thence West along said Easterly Extension and the South line of said Lot 59 to the Southwest corner of said Lot 59; Thence continuing West along the South line of Lots 52 through 58 of said Mann s 2nd Addition to Highland Park to the Southwest corner of said Lot 52; Thence South along the Southerly extension of West line of said Lot 52 to the centerline of Oak Park Avenue; Thence West along the centerline of Oak Park Avenue to the centerline of East 12th Street; Thence North along the centerline of East 12th Street to the Easterly Extension of the South line of Lot 7, Timmins Subdivision, an Official Plat; Thence West along said Easterly Extension and the South line of said Lot 7 to the Southeast corner of Lot 9, Rocky Place, an Official Plat; Thence continuing West along the South line of said Lot 9 to the Southwest corner of said Lot 9; Thence North along the West line of said Lot 9 to the Easterly Extension of the South line of Lot 140, Campus Park, an Official Plat; Thence West along said Easterly Extension and South line of said Lot 140 to the Southwest corner of said Lot 140; Thence continuing West along a straight line to the Southeast corner of Lot 111 of said Campus Park; Thence West along the South line of said Lot 111 to the Southwest corner of said Lot 111; Thence North along the West line of Lots 111, 112, 113 of said Campus Park, and the Northerly extension of the West line of said Lot 113 to the centerline of East Euclid Avenue; Thence West along the centerline of East Euclid Avenue to the centerline of East 8th Street; Thence North along the centerline of East 8th Street to the centerline of East Douglas Avenue; Thence East along the centerline of East Douglas Avenue to the centerline of East 9th Street; Thence North along the centerline of East 9th Street to the centerline of Hoffman Avenue; Thence West along the centerline of Hoffman Avenue to the centerline of East 8th Street; Thence North along the centerline of East 8th Street to the centerline of East Madison Avenue; Thence East along the centerline of East Madison Avenue to the Southerly Extension of the East Line of Lot 44, Shawnee Acres, an Official Plat; Thence North along said Southerly Extension and the East line of said Lot 44 to a line that is feet North of and parallel with the South line of said Lot 44; Thence West along said parallel line to West line of said Lot 44; Thence North along said West line and its Northerly Extension to the centerline of East Shawnee Avenue; Thence East along the centerline of East Shawnee Avenue to the Southerly Extension of the East line of the West 65 feet of Lots 32 and 33 of said Shawnee Acres; Thence North along said Southerly Extension and said East line of the West 65 feet of Lots 32 and 33 to the North line of said Lot 32; Thence West along said North line to the East line of Lot 23 of said Shawnee Acres; Thence North along said East line to a line that is feet North of and parallel to the South line of Lots 21, 22 and 23 of said Shawnee Acres; Thence West along said parallel line to a line that is 8 feet West of and parallel to the East line of said Lot 21; Thence South along said parallel line to the South line of said Lot 21; Thence West along said South line and continuing along the South line of Lots 19 and 20 of said Shawnee Acres to a line that is 65 feet East of and parallel to the West line of said Lot 19; Thence North along said parallel line to a line that is feet North of and parallel to the South line of said Lot 19; Thence West along said parallel line to line that is 1 foot East of and parallel with the West Line of said Lot 19; Thence North along said line that is 1 foot East of and parallel with the West Line of said Lot 19 to a line that is feet North of and parallel with the South Line of said Lot 19; Thence West along said line that is feet North of and parallel with the South Line 6

7 of said Lot 19 to the West line of said Lot 19; Thence North along said West line and its Northerly Extension to the centerline of East Aurora Avenue Right of Way; Thence East along the centerline of East Aurora Avenue to the West Right of Way line US Interstate 235; Thence South along said West Right of Way line to the centerline of Hull Avenue; Thence West along said centerline of Hull Avenue to the Point of Beginning. 7

8 Attachment B Financial Condition Report Northeast Gateway 2 Urban Renewal Area The City has, by Ordinance, designated the Northeast Gateway 2 Urban Renewal Area as an urban renewal area in which "Tax Increment Financing" as defined in Chapter 403, Code of Iowa, may be utilized. The expected financial undertakings and tax increment revenue with regard to this urban renewal area are discussed in this Financial Condition Report. Introduction Urban renewal is one of the few ways an Iowa municipality can undertake and financially assist community revitalization and economic development. In Des Moines, especially in the older areas with limited redevelopment opportunities, urban renewal is an important way cities can assist the private sector in the creation and retention of jobs and in the development and redevelopment of blighted, vacant and underutilized parcels that would not occur without the City's assistance. Urban renewal can provide flexibility in phasing development over a long-term period. In Iowa, a city may designate an "urban renewal area" by following the requirements specified in Chapter 403, Code of Iowa, upon finding that the area qualifies for designation as a slum area, a blighted area or an economic development area as those terms are defined in Iowa Code The Northeast Gateway 2 Urban Renewal Area was designated by the City as an urban renewal area upon a finding by the City Council that the area qualified as a blighted area and as an economic development area. As part of the designation of an urban renewal area, the city council must adopt an urban renewal plan. The plan text includes a legal description and map of the area; a description of existing land uses and conditions; the actions the city proposes to undertake in the area such as public improvements, public services, the sale or purchase of property; and any conditions the city may want to impose on the development projects. If the city wants to undertake an action not specified in the urban renewal plan, it must adopt the proposed change by an amendment to the urban renewal plan. Before the urban renewal plan or any amendment can be adopted by the city council, notice of a public hearing on the plan or amendment must be published in the newspaper. In addition, if the urban renewal area uses tax increment financing, a consultation and comment period with other taxing entities is offered prior to the public hearing. This document has been prepared in response to this consultation requirement for creation of the Urban Renewal Plan for the Northeast Gateway 2 Urban Renewal Area. Tax Increment Financing Tax increment financing ('TIF") is a financing tool that is only available in designated urban renewal areas. It allows the use of a portion of the future property tax revenues of all taxing jurisdictions (the "Tax Increment Revenue") created by an increase in the total assessed value of all the taxable property within the urban renewal area, to be used to fund obligations incurred by the city in implementing the urban renewal plan. 8

9 The Tax Increment Revenue can only be used for the activities or items authorized in the urban renewal plan. If the Tax Increment Revenue is not used to pay eligible expenses incurred in the implementation of the urban renewal plan, the revenue is released back to general revenues of the local taxing jurisdictions. On March 24, 1997, the Des Moines City Council adopted a policy that commencing in FY1997/98, the City will use, and has used, no more than 75% of the total annual Tax Increment Revenues generated by all urban renewal areas. This assures that the local taxing entities receive the benefit of at least 25% any future growth in the valuation of taxable properties in the urban renewal areas utilizing tax increment financing. Current TIF Bonding and Outstanding Indebtedness Overall, the City of Des Moines has approximately $427 million in general obligation debt. Of this debt, approximately $89 million is being serviced with Tax Increment Revenues from various urban renewal areas. The State of Iowa Constitutional debt-limit for general debt obligations by the City of Des Moines is approximately $570 million. The Northeast Gateway 2 Urban Renewal Area does not have any outstanding debt arising from the issuance of tax increment notes or bonds. Property Tax Assessments and Revenues The base assessed value used to calculate the projected Tax Increment Revenue for the Northeast Gateway 2 Urban Renewal Area is approximately $214.5 million for valuations as of January 1, Future Financial Condition Shown below is a table that projects estimated increment valuations in the Northeast Gateway 2 Urban Renewal Area. In this Financial Condition Report, the estimated Tax Increment Financing valuation used is based on a property tax levy rate of $40 / $1,000. This levy rate reflects the tax levy rate after subtracting payment of the protected debt levies (various levies not subject to allocation to Tax Increment Revenue.) The revenue projections shown are based on increases in property tax revenues conservatively estimated with an annual growth rate of 2%. The Tax Increment Revenue generated by the assessed value existing on any January 1st is paid and collected in the fiscal year commencing 18 month later. The TIF Valuation Used in the financial projection below will be updated to reflect any projects as they are approved and added to the plan. The following table and graphic represent new and updated information formulated for this amendment. 9

10 Assessment January 1st of Base Valuation Total Assessed Valuation New Increment Valuation TIF Valuation Used % Valuation Used ,465, ,465, % ,465, ,754,928 4,289,312-0% ,465, ,130,027 8,664,411-0% ,465, ,592,627 13,127,011-0% ,465, ,144,480 17,678,864-0% ,465, ,787,370 22,321,754-0% ,465, ,523,117 27,057,501-0% ,465, ,353,579 31,887,963-0% ,465, ,280,651 36,815,035-0% ,465, ,306,264 41,840,648-0% ,465, ,432,389 46,966,773-0% ,465, ,661,037 52,195,421-0% ,465, ,994,258 57,528,642-0% ,465, ,434,143 62,968,527-0% ,465, ,982,826 68,517,210-0% ,465, ,642,482 74,176,866-0% ,465, ,415,332 79,949,716-0% ,465, ,303,639 85,838,023-0% ,465, ,309,711 91,844,095-0% ,465, ,435,906 97,970,290-0% The graphic below shows the projected property tax revenues and expenditure estimates detailed in the table above. Note: The Tax Increment Revenue generated by the assessed value existing on any January 1st is paid and collected in the fiscal year commencing 18 month later. 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Projected Available TIF Revenues and Expenditures Assessment Years (Paid and Collected in FY2018/19 to FY 2036/37) Estimated TIF Revenue Available Estimated TIF Revenue used by City 10

11 This information will change as future projects, subject to the urban renewal amendment process with the individual review of each amendment and projects by the City Council and other authorities as directed by the Code of Iowa, are approved.

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