City commissioners unanimously approved an economic development package for local firm, CivicPlus, Tuesday, in the process bringing a new multi-story building to downtown. Commissioner Rich Jankovich abstained from voting due to his employer’s relationship with the firm.
CivicPlus, which develops, designs and builds websites for city and county governments mainly in North America, sought economic development funds to facilitate its projected growth. Ward Morgan, the company’s CEO, did not speak at the meeting but made it clear at a previous meeting that new offices are essential to expand his workforce.
“It’s all people in our business, and it takes a lot of people to build a lot of websites,” Morgan said during the first reading. “To grow we have to have more people, and we have to have high-end people
The minimum 50,000 square foot, five-story building will be located at Fourth and Pierre Streets. The first floor is envisioned to be retail and restaurant space, while the remaining floors will be high-end CivicPlus offices. The option to add residential units in the building will also remain open. The Manhattan Appliance and Sleep Source store currently sits at the site, but the city and Morgan are working to relocate the business within the community.
Lauren Palmer, assistant city manager, said the incentives package consists of three main benefits. They include a $750,000 forgivable loan, an option to issue up to $20 million in industrial revenue bonds (IRBs) and a 10-year partial tax abatement worth $2.24 million across all taxing jurisdictions (the city’s portion being $726,061).
The forgivable loan will effectively drain the city’s remaining economic development funds. Taking into account the loan and the tax abatement, the incentives package will come at roughly a $1.4 million cost to the city.
Palmer noted that the loan will be paid in four installments once performance targets such as job creation (250 jobs over 10 years), capital investment ($8.85 million), wage structure and benefits packages are met. She said CivicPlus requested the capacity to issue the IRBs to allow flexibility for additional investment beyond $8.85 million if needed. The city would issue the bonds but would act only as a financing conduit, meaning it has no legal obligation to make payments on the bonds should the firm default on a payment.
The first reading drew concern from commissioners about the tax abatement. Commissioner Wynn Butler desired a guarantee that the first floor of the building would be taxable and generate as much revenue for the city as the Manhattan Appliance and Sleep Source store.
Palmer said several changes were made to the language of the agreement to address those concerns. The economic development agreement states that no property will be eligible for tax abatement until the appraised value of that property exceed the appraised value from 2013, the base year before the initial agreement begins.
Furthermore, if the property meets that standard, the city will limit the property tax exemption to “property used exclusively by the corporation for the corporate business, and it shall not apply to portions of land, buildings or equipment used for any other purposes.” Additionally, CivicPlus has agreed to revised language, which states that the first floor of any new structure will not be eligible for tax abatement, even if the company alters its plans and uses the entire building for corporate business.
“That was excellent restructuring so I’m happy with that,” Butler said.
Overall, commissioners were quite supportive of the project. Mayor Loren Pepperd said it was a “very good plan” and something the city has needed in the downtown area.
“I think this is the best economic development proposal I’ve seen brought forward,” Commissioner Jim Sherow said.
However, commissioners did express concerns about parking issues in downtown with the addition of the building. “I think we need to stay ahead of this parking thing,” Butler said.
He noted that this would be the third mixed-use building in the downtown area, as there is one mixed-use building scheduled to go into the south end and a proposal for another.
“Over a period of three years or so we may end up with parking problems,” Butler said.
Ron Fehr, city manager, said the city is looking at the issue.
“We do plan to do some significant analysis of the area, as far as usage patterns and projections for future needs,” Fehr said.
Fehr said the city is in the process of developing a parking facilities budget, which will include the parking garage in the south end and all the downtown municipal lots. He said parking can be evaluated and managed through discussion on the parking facilities budget.
“We do need to come up with a new downtown development plan on parking,” Pepperd said.