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Tuesday, July 16, 2019

City Passes Development Agreement for Central Business District Project

Fort Thomas residents gather to learn more about the Central Business District project Development Agreement.

 By Robin Gee, City Council Beat Editor

At the July council meeting, city officials passed a Development Agreement between the city and developers of the recently proposed development along North Fort Thomas Avenue in the Central Business District.

The council vote was even, three to three, so Mayor Eric Haas cast his vote in favor of the agreement to break the tie.

Before the vote, council went into Executive Session to discuss the agreement in detail citing Kentucky state law that allows for closed sessions in matters that concern discussions between a public agency and a business entity on a specific proposal if details could impact the business.

Details of the agreement were not shared with the public before the closed session, but were shared in the public meeting just prior to the vote.

The agreement outlines commitments for the developer and the city

The agreement covers the scope and parameters of the project, financing details and outlines the commitments and responsibilities of the city and the developer as well as how any future disputes might be handled. The developer also agreed to requests for screening, landscaping and other issues of concern to neighbors on Woodland Place that were outlined in the most recent proposal.

The project is valued at $20 million, will cover 1.5 acres and will be mixed use, as laid out in the proposals shared with the Planning Commission and Design Review Board earlier this year.

As the project proceeds, plans will be presented to those to bodies, especially the Design Review Board that oversees many of the construction details.

All council members and the mayor expressed favorable opinions of the developers involved, known in the agreement as NAP Fort Thomas LLC. The group includes Greiwe Development, North American Properties, Sibcy Cline and M + A Architects.

The developers plan for most funding to come through an Industrial Revenue Bond or IRB. These bonds are attractive to developers because they offer a lower interest rate and a long-term, fixed-rate financing package. The bonds are not tax exempt.

The bonds are sponsored by a public entity (in this case the city of Fort Thomas), but the bonds are used by a private business (the developer) to secure financing for the construction and other aspects of project development. The developer is totally responsible for repayment of the loan. The city would not be held fiscally responsible. This is the same tool that was used for financing of the Alexandria Circle project.

Council split over city financial commitments

Yet, disagreement concerned the city’s additional fiduciary commitments to the project. At issue for some of the council members was a part of the agreement that involved the city’s purchase of .8 acres of the property for a public parking lot for $1.6 million. This amount would be paid to the developer by December 31, 2019.

Council members Adam Blau, David Cameron and Mark Collier each expressed support for the project overall, but they voted against the agreement due to the use of taxpayer monies to purchase the parking area as a public parking lot.

"I believe this development will be a key part of the city. I think we are fortunate to have North American Properties and Rick [Greiwe] behind the development. However, personally, I am uncomfortable with some of the commitments from the city so for that reason I’m voting no tonight. I do hope it is successful in the future and as of tonight I will be supportive of the property in the future," said Cameron.

"When I’m looking at this issue, I’m looking at what the purpose of this process has been. When the city did the comprehensive plan update, redevelopment of the CBD was something that was prioritized. We have the best partners you could ever ask for in Rick Greiwe and North American Properties. The goal of getting this to a point where it creates something that can synergize other parts of the city is one that we should all embrace," explained Collier.

"But the bottom line is that even with the best partners available we can’t get to that point without subsidizing this...the sticking point for me has always been cutting a check even with the assumption that it will come back to us in the future. I just think that as fiduciaries for the city and taxpayers we can’t take a risk like this...I just can’t feel comfortable doing that right now. I am going to be supportive of this project, too, and I hope it’s going to go well, but tonight I am going to vote no," he said.

Roger Peterman, who voted in favor of the agreement, said "This happens to be the type of work I do professionally...putting together projects like this. We do need to respond to citizen input on the Central Business District, and there are other areas such as the US 27 corridor, one that I think we need to focus on."

He noted that the project has a top quality developer and that it is particularly exciting that North American Properties is a part since it is involved in projects and sees the potential throughout Northern Kentucky and downtown Cincinnati.

"Thinking of this as subsidizing this project is not the lens I would view this through," he added. "We are meeting our fiduciary responsibility to this city. This project is going to generate new revenue. No question about this. The problem is the new revenue we are going to get we will not get in the first year."

He likened the process to that of purchasing a house. Buyers usually don’t have all the money up front and must pay over time for the value of the home. He said the city is providing money upfront but would get the money back over time through revenue generated by the project itself.

Highlights of the Development Agreement

Here are a few highlights of the agreement:

Orangetheory Fitness, Newport Pavilion. 

General agreements:

  • The Developer agrees to build a mixed-use residential and commercial condominium property valued at approximately $20 million on the designated five parcels of property (1.75 acres).
  • The Developer agrees the site will be prepared and ready for construction to begin October 2019 with the understanding that the city will provide financial enhancements and public improvements as outlined in the agreement.
  • The Developer agrees to proceed on the project as presented to the Planning Commission and Design Review Board in phase one (approved in May 2019).
  • The Developer agrees to construct at least 18 condominiums with two parking spaces per unit plus visitor parking in an underground garage and will make reasonable efforts to secure tenants for the commercial mixed-use building, including a sit-down restaurant.
  • The Developer agrees to the timeline. Construction would start in October 2019 with a target completion by the second quarter of 2021.
  • The City agrees to install curbs, asphalt and light fixtures according to site plan specifications prior to the completion date of second quarter 2021.
  • The City agrees to provide post construction streetscape along North Fort Thomas Avenue, Highland Avenue and Woodland Place according to city guidelines for curbs, sidewalks, pavers and trees up to the property line of the development.

Operational agreements

  • The City agrees to sidewalk and parking lane closure on Fort Thomas Avenue during construction and to allow the Developer to erect a construction fence on Fort Thomas Avenue to run the length of the property. The fence will enclose the entire construction area from about September 2019 to May 2021 or as needed for the construction schedule.
  • The City agrees to allow the Developer to also erect a construction fence along Highland Avenue and a specified section of Woodland Place for the safety of pedestrians. The city also agrees to a temporary closure of sidewalks on Highland Avenue and Woodland Place but parking will be maintained in these locations. The City may provide crossing guards as needed.
  • Construction workers will be allowed to park in a city-owned parking lot at no charge. 
  • The City agrees to assist the Developer with maintenance of traffic around the development during critical construction dates. The Developer will give the City 48 hours notice in advance of the dates.
  • The Developer agrees to perform an environmental remediation and clean up of the site and buildings in preparation of construction using Kentucky EPA approved procedures.
  • The Developer agrees to construct a new storm water detention system that conforms with SD1 requirements.
  • The Developer agrees to upgrade or replace utilities (electrical, water, sewer) on the site.
  • The Developer will secure the property with erosion control devices to contain run off in keeping with SD1 regulations and to provide regular cleaning of the site and of adjacent streets during construction.
  • The Developer agrees to limit hours of construction from 7 a.m. to 7 p.m. Mondays through Fridays, 7 a.m. to 6 p.m. on Saturdays and, if needed to maintain schedule, 10 a.m. to 6 p.m. on Sundays. No work will commence on official holidays. An exception may be made for impending inclement weather (such as for 18-hour concrete pours).
  • The Developer agrees not to schedule deliveries of materials to the site during certain high traffic school hours, whenever possible. Deliveries will be avoided between 7:30 and 8 a.m. and between 2:30 and 3:30 p.m.
  • The Developer also agrees to maintain site safety with fenced areas and primarily will use one access drive off North Fort Thomas Avenue. Access from other points will be limited to physical needs to move materials or have access to parts of the building.

Woodland Place/Adjacent neighborhood commitments

  • The Developer will construct the revised garage plan that will include two nine-foot entry and exit garage doors and a bump out to hide the doors subject to approvals by the City commissions.
  • The Developer will provide no less than four visitor parking spots in the garage.
  • The Developer will screen the development utility boxes within code limitations.
  • The Developer agrees to use North Fort Thomas as it's primary location for construction activities and will restrict construction traffic on Woodland Place. The Developer also agreed to notify the neighborhood 48 hours in advance if access to Woodland is needed for construction.
  • The Developer agrees that the address for the development will be on North Fort Thomas Avenue.
  • The Developer agrees to limit light pollution using regulations provided by the city zoning ordinance and Design Review Board specifications for parking lot lighting. The Developer also agrees to build a berm and landscaping along the parking lot.
  • The Developer agrees to limit trash pick up to between 8 a.m. and 6 p.m. and will select a trash removal company whose trucks can exit Woodland Place without impacting street parking.
  • The Developer agrees to install and maintain landscaping in the area previously occupied by a parking lot and in accordance with the neighborhood.
  • The Developer agrees to submit details of the Woodland Place curb cut to the City and Design Review Board to review for pedestrian safety issues.
  • The City agrees to participate in the cost of removing a utility pole and boxes on the corner of Highland and Woodland to improve visibility for pedestrians and vehicles exiting the garage.

Bonding issues

  • The City agrees to issue industrial revenue bonds (IRBs) pursuant to the provisions of KRS Chapter 103, as financing for the development for a bond term of 30 years. This will be subject to the approval of a "Pilot Agreement" that will be worked out at a later date. (A pilot agreement is a payment in lieu of taxes that is made to public schools or other entities reliant on property taxes).
  • The City and Developer agree the City will have no obligation to pay the bonds and that any obligation falls to the Developer. At the closing of the bonds, the title to the property will then go to the City. At that point the City will lease back the property to the Developer.

Public parking and other financial agreements

  • The Developer agrees to prepare the site for the public parking lot including drainage, electrical access to meet city requirements. The lot will be landscaped by the Developer according to the plan specifications.
  • The Developer agrees to cause the Condominium Association to be responsible for the maintenance of the parking lot with regard to snow and leaf removal, litter removal, light bulb replacement and other day-to-day issues.
  • In exchange, the City agrees to purchase the public parking lot, approximately .8 acres on the site subject to perpetual easement for a below ground detention vault below the parking lot. 
  • The City agrees to pay $1.6 million to the Developer for the public parking lot by December 31, 2019.
  • The City must notify the Developer within a reasonable time if it is determined the Developer is not satisfying the requirement to secure commercial tenants as outlined. If the Developer has satisfied those requirements (or if it has not but the City failed to notify the Developer), and construction of the commercial building has not commenced as of January 31, 2021, the City will have the right and obligation to purchase the site of the commercial building from the Developer for $825,000.

A copy of the entire agreement has been made public and will be available by request from the city. Next steps in the project will be a continuation of the IRB process and more plan details will be presented to the Design Review Board and the city as they unfold.  
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  1. Is the developer responsible for repairs to the adjoining streets that will be required? I work near UC, so I've seen what happens to the streets when developments like these are done. Six months after the equipment is gone, the streets begin to sink.