So when they have the colours, so when those can do the back of the fellowship, get the cluster when I didn't pick down the askfulness, but

We will call the work session to order, and Ken Bowers and Ralph Retchie.

Good morning, Mayor and Council.

Ken Barris of Planning and Development, and I'm here to present an update on the redevelopment of city owned property east and south of Moore Square.

So just to orient everyone once again, because I know since the last time we were at the podium on this topic, there are some new members.

The stuff in green on this map is land that the city made available for disposition about three years ago through an RFP process.

It was uh some land that we'd owned for a long time around City Market, the parking lot, the old SO station, the Norwood House, and some parcels on Plake Street.

And then there was also um some land that had been acquired more recently on the east side of Moore Square.

It all totaled under four acres.

About two point six east of Moore Square and about one point two south.

And the RFP vision was to leverage this property to create quality mixed use development and a significant amount of affordable housing and to leverage what is probably the most transit-rich location because all the BRT services as well as existing bus services converge at the Moore Square Transit Center.

Um we allowed folks to bid on one or both of the sites.

Most of the other proposers had proposed affordable housing on this site.

Loden had proposed the affordable housing on the e-site, which sort of stood apart.

The team thought that a hotel would be uniquely suited to help energize and activate city market.

City market has a lot of food and beverage as well as specialty retail, just the types of things that out-of-town visitors are most likely to patron, patronize.

They had proposed at the time doing something with the Norwood House, and a key part of this was also renovating the old ESO station, this on the corner to integrate it into the overall development.

This is the total of the city property.

Later council action allowed staff to integrate the Norwood House and the two Blake Street parcels onto that assemblage.

And these are the parcels that are specifically designated for the hotel, about 0.8 acres, the zone for 12 stories of development.

Now there is a physical constraint here, which is that most parking decks are ramps that are double loaded on either side, and you need 120 feet of width to fit a ramp garage on a piece of property.

This piece of property is 105 feet wide.

So if you're going to put a parking uh multi-level parking structure on it, you have to use a different approach than is typical for almost every development.

And if you don't believe me, fire up IMAPs or Google Maps and look at aerials of all these apartments that have been built, they all have 120 feet of parking deck width.

So it's incumbent on the city to recover market value for the property.

The normal way that one would determine market value is put something on the market and see who bids the highest.

But because we used a RFP process that the selection was based not just on willingness to pay, but on the quality of the development outcome and the use that was being proposed, we made a choice based on the idea that a hotel would be the most beneficial for the city market in the Moore Square District.

Before the city put it out on the market, we upzoned the property.

It had three-story zoning on it.

We we had some uh discussion at the council table at the time uh should we go for five, seven, or twelve?

Um the maximum that the the Historic Development Commission thought would be appropriate and to provide maximum value and flexibility, the the City Council chose 12.

Um I will say no proposal that was came into us came uh came in at greater than seven stories.

Uh so apparently the that one market test was no one thought a 12-story building was viable.

That said, um uh we have an appraised value on the property for the hotel pad of 6.6 million, which is based on the comparable sales for other 12-story zone sites downtown.

Um the Loden's initial offer was $4.5 million.

Where did that come from?

It came from multiplying 150 runes by a land value of $30,000 per room, or key, as they say in the industry.

Um we had a significant gap between what they felt the project as proposed could support in terms of land value and what the appraised value came in at.

So how are we trying to bridge this gap to the best of our ability?

What we have been able to negotiate with Loden at this point, our initial is an initial payment uh lump sum at the start of construction of the hotel of four and a half million dollars.

And then there's that will not purchase the property, but it will initiate a ground lease.

The ground lease will include some lease payments that are on an annual basis that do not accrue to the purchase price.

There will also be a payment in lieu of taxes to make up for the fact that as long as as well as as long as the city owns the land, the land is not taxable.

Only the improvements are taxable.

So we would look at how the county assesses the land and calculate a payment in lieu of taxes based on the tax rate for that.

The ground lease has an ongoing option to purchase.

When the purchase occurs, it would be to fill that gap between what the appraised value was and what the initial payment was.

The other part of this is to solve the parking problem, they're essentially proposing to build a hotel that has only a very modest amount of ground floor parking, and most of the parking for guests would be through leases of city facilities.

And while the details of that are still to be determined, the city commitment is at this point based on our um analysis of where the capacity is that within a certain radius, probably mostly in the Moore Square or City Center deck, we would make a certain number of spaces available, probably around 100 is what this would require, um, somewhere between 100 and 120.

Some of those would be self-parked, and some of those would be valet parked.

What about the other parcels?

So they would like control of the Norwood House if we can work an arrangement.

We have conferred with director of our parks, recreation, and cultural resources department that if there's space available fronting the park for lease, say in city market, there's some recently renovated buildings right next door.

Um and it was no cost to us that we would be we would happily move our park operations into those buildings to allow the Norwood House to be used for some other use.

The SO station and Blake Street Building, these are two structures that sit within the Moore Square Historic local historic district, so they are protected.

They are both well, the the Blake Street building is essentially a shell.

It has no real plumbing, no bathrooms, no HVAC.

It's a four walls and a roof and a concrete floor, and that's it.

Um and the ESSO building has been sitting kind of in a vacant state for a while and is has some significant deterioration and would need a lot of work to turn into a viable commercial space.

So the idea is that the appraised value of these buildings is kind of almost is completely offset by the cost it would take to renovate them.