Title
Resolution Approving a Cooperation Agreement Between the City of Hampton and the Economic Development Authority of the City of Hampton, Virginia and Authorizing Execution of Same for the KB Riverdale, LLC Project
Purpose
PURPOSE/BACKGROUND:
The Riverdale Shopping Center is currently an aging and underperforming shopping center with a high vacancy rate. Redevelopment of the site is critical to sustain existing retail and tourism activity and support existing assets. Upgrading of the center will support the district by adding critical mass needed to further enhance Coliseum Central’s reputation as a retail destination. It will also further the city’s efforts to attract visitors who seek new retail, restaurant and entertainment venues; provide new shopping options to Hampton residents, and assist in increasing the tax revenue to the city. Recent market studies of the Coliseum Central district suggest any new development should not replicate the offerings at Peninsula Town Center, but rather complement it.
In accordance with the City Council strategic initiatives, staff has assisted a well-established developer,KB Riverdale, LLC, to purchase and revitalize the shopping center as well as to secure a high-quality grocer to anchor the development. Due to the high cost of infrastructure improvements and new storm water regulations, the developer requested financial assistance from the EDA to offset the increased development costs.
Staff negotiated the terms and conditions for a performance incentive, equivalent to a maximum of $4,250,000.00, payable over a 10 year period. The incentive is comprised of a reinvestment of net new incremental local sales tax revenue generated at the Project subject to a capital investment of at least $60,000,000 by the developer and other performance criteria. The incentive grant will assist KB Riverdale, LLC in offsetting these increased costs and will induce the redevelopment and repositioning of 50 acres +/- of what is now the former Riverdale Shopping Center to include demolition of certain buildings, construction of onsite infrastructure, and site work; enhancement of aesthetics and modernization of the center; internal building renovations; and development of a commercial retail project that is flexible and can expand over time.
The EDA approved the terms of the Incentive Grant Performance Agreement at its December 15, 2015meeting. The EDA requires the financial support of Council in order to fulfill the grant payment requirements in paragraph 6 of the Incentive Grant Performance Agreement. Council’s approval of the attached Cooperation Agreement is subject to appropriation.
Discussion:
See background statement.
Impact:
See background statement.
Recommendation:
Rec
Approve the Resolution.
Body
WHEREAS, the Council of the City of Hampton (the “Council”) has set as a priority the redevelopment of the former Riverdale Shopping Center to attract investment, new business and new vitality to the Coliseum Central Area of the City as set forth in the Coliseum Central Master Plan, as amended;
WHEREAS, the Economic Development Authority of the City of Hampton (the “Authority”) proposes to accomplish Council’s priorities through the issuance of a performance incentive grant to “KB Riverdale, LLC” (the “Developer”) equivalent to a maximum of $4,250,000.00 payable over a 10 year period based on capital investment by the Developer and reinvestment of net new incremental local sales tax revenue;
WHEREAS, the incentive grant is necessary to assist the Developer in offsetting increased costs associated with the redevelopment and repositioning of 50 acres +/- of the former Riverdale Shopping Center to include demolition of certain buildings, construction of onsite infrastructure, and site work; enhancement of aesthetics and modernization of the center; internal building renovations; and development of a commercial retail project that is flexible and can expand over time (the “KB Riverdale LLC Project”);
WHEREAS, the Authority has determined that the redevelopment of the former Riverdale Shopping Center cannot be accomplished without inducement to private developers;
WHEREAS, negotiations between the Authority and the Developer have culminated in an Incentive Grant Performance Agreement (the “Grant Agreement”), an executed copy of which is attached to the Cooperation Agreement;
WHEREAS, the Council has determined that the KB Riverdale, LLC Project will increase tax revenues, improve the image and economic vitality of the Coliseum Central area and enhance its redevelopment as pioneered by Peninsula Town Center, and is therefore in the best interest of the citizens of the City of Hampton;
WHEREAS, Council is willing to financially participate in the KB Riverdale, LLC Project by entering into the Cooperation Agreement to meet the obligations of the Authority under the Grant Agreement, subject to appropriations; and
WHEREAS, the City Council has determined that the transactions negotiated with the Developer as set forth in the Grant Agreement are acceptable.
NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of Hampton, Virginia, as follows:
1. That it approves the terms of the Cooperation Agreement attached hereto; and
2. That the City Manager or her Authorized Designee be and is hereby authorized to execute and deliver to the Economic Development Authority of the City of Hampton the Cooperation Agreement in substantially the form attached hereto.