Title
Summary of Transformational Incentive Program Changes (B)
Explanation
In May 2007, the CRA approved significant changes to the Transformational Projects Incentive Program. At the December 2008 meeting, the Board requested that Staff provide an update on this subject, in order to familiarize new CRA members and refresh returning members as to the details of this incentive program. A summary of the revisions to the Transformational Program is presented below. Additionally, staff will provide a presentation of the program at the February 2009 CRA meeting.
The Transformational Projects Incentive Program is an important incentive tool for the CRA. This program was created to encourage investment in the urban core and is designed to promote redevelopment in the face of challenges such as land assembly, environmental issues, complex infrastructure or parking considerations, etc. To this end, the program includes a list of the public infrastructure improvements, design expenses, "green" building costs, technology infrastructure costs, and land assembly expenses for which the CRA may reimburse the developer. The program also lists the specific redevelopment goals that projects must attain in order to qualify for funding, including unique point systems tailored to each redevelopment area.
In order to best serve the needs of the CRA, the Transformational Projects Incentive Program must be responsive to the current redevelopment needs of the CRA districts. Therefore, at the September 2006 meeting, the CRA reviewed a number of recommendations regarding potential revisions and updates to the Transformational Projects Incentive Program. The CRA approved administrative changes to the program (such as the creation of a $15,000 non-refundable application fee, and rules prohibiting contact outside of public hearings between CRA members and Transformational applicants). The Board also approved a reduction in the maximum increment funding levels from 90% to 80% funding. Additionally, the CRA referred several of the proposed changes to the four Redevelopment Advisory Boards for review. The advisory boards subsequently voted on these items and, for informational purposes, the results of these votes are in the attached backup.
Based on this input and working under direction from both the CRA and the advisory boards, Staff drafted a number of changes to the Transformational Projects Incentive Program. The majority of these changes were in keeping with the recommendations of the advisory boards, however some revisions did not correlate to input from the advisory boards. These changes were adopted by the CRA at the May 2007 CRA meeting. The new program is a more concise, straightforward document that will help direct projects which meet CRA goals into the four redevelopment areas. Under the proposed changes, eligible costs funded by the program will be expanded to include wastewater trunk line improvements as well as hard/soft costs associated with attaining LEED (or equivalent) environmental standards.
The revised program is more "user friendly" in that it now provides more concrete detail regarding what projects will be supported by the Transformational Incentive program. Minimum criteria are established which all potential applicants must adhere to. These standards are as follows: First, projects with a residential component will reserve at least 10% of the units for workforce housing. (This housing component is intended to benefit working professionals, to ensure that professionals, police, teachers, etc who work in the community can also afford to live in those neighborhoods. Low-income housing is not required or incentivized by the Transformational Projects Incentive Program.) Second, all projects shall meet a minimum of LEED Certified (or equivalent) environmental building standards. Finally, location-based standards are established. At this time, such standards are proposed only for CPUH. Projects in CPUH shall be located in the following locations: University Avenue between 6th St and 13th Street, SW 2nd Avenue, Depot Avenue, NW 13th St between University Avenue and NW 7th Avenue, or in the expansion area. (Note: Those projects which include under-represented uses may be located anywhere within the CPUH district.) For the applicant's convenience, a map of these targeted locations is provided as part of the revised Transformational Incentives Program document. In addition to these minimum standards, the revised program matrix also defines under-represented market segments in each district. Under-represented uses are clearly defined and listed for each district and are described as uses that necessary and desirable within each district, but which may not be possible but for CRA incentives. Applicants can accrue points for each under-represented market use included in their redevelopment project.
Another significant change to the program involves incentives and disbursements. Based on input from Board members, disbursements will now be paid for no longer than 15 years, unless the "but for" gap cannot be met. In such cases, disbursement may be made up to the life of the district, less two years.
Revised point systems and new scoring matrices are designed to be easily understandable and user-friendly. The matrix is organized by CRA district and for each district lists the minimum criteria required of projects, the targeted under-represented uses for the district, the locations where projects may occur in each district (as noted above only CPUH targets specific locations at this time). Additionally, the matrix also provides information regarding potential additional increment awards. These awards may be provided, up to the "but for" gap, for projects meeting very specific criteria. In all districts up to an additional 10% may be earned for projects which include extensive infrastructure upgrades, such as trunk line extensions. Projects which include medical facilities may be eligible for up to an additional 5%, and projects that exceed the minimum LEED (or equivalent) environmental standards may also receive up to an additional 5%. In no instance shall a project receive more than 80% increment funding.
Overall incentive levels have also been reduced, in accordance with recommendations from the Board. Projects will continue to be ranked on a point system. Under the revised program, projects earning 50+ points may qualify for 70% increment funding (under previous standards, projects earning 50+ points qualified for 90% increment funding). Projects earning 25-49 points may receive 60% (under previous standards, such project received 80%), and projects reaching 19-24 points may receive 40% increment funding (previously 60%). The new points system is designed to be more precise in terms of encouraging development within each CRA district. Staff is cognizant of the fact each district has distinct needs and strengths. For example, a project that may be truly transformational in the Eastside may not necessarily have the same effect in CPUH. Therefore, each CRA district will have a revised points systems tailored to its specific needs in terms if project size, location and type. Ambiguous categories such as "merit points" and "creative stormwater solutions" have been removed in order to accommodate more precise criteria that will better describe the types of projects which the Transformational program is designed to support. Points are now specifically awarded for particular uses that are currently under-represented in the district. Points may also be awarded for particular locations in a district in order to encourage redevelopment along key corridors or areas.
The program also includes safeguards to ensure that projects which receive CRA support are truly "transformational" developments- innovative and unique within the redevelopment area. A project that is very similar to other developments in the area may be worthwhile, but its capacity to "literally transform" the neighborhood is materially diminished. To that end, if an applicant in Downtown or CPUH qualifies for any level of incentive under the Transformational Projects Incentive Program, yet a similar project already exists or is under construction in that district, the applicant shall qualify for the 40% funding formula under this program.
Fiscal Note
None at this time.
Recommendation
CRA Executive Director to CRA: 1) Receive update from staff; and 2) provide input as necessary.