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4773 Supplemental Economic or Tourism Development Incentive Program - Application of Trafford Holdings, LLCOrdinance No. 2024-4773 An ordinance of the City of Sanford, Florida granting an economic incentive to Trafford Holdings, LLC pursuant to the supplemental economic or tourism development program established in Chapter 2, Article III, of the City Code; providing for legislative findings and intent; providing for implementing administrative actions in strict conformity to the provisions of Chapter 2, Article III, of the City Code; providing for conflicts, providing for a savings provision and the effect of the ordinance; providing for severability; providing for non -codification as well as the correction of scrivener's errors; and providing for an effective date. Whereas, the City Commission of the City of Sanford, Florida enacted Ordinance Number 4526 to incentivize economic and tourism development within the City which Ordinance is now codified in Chapter 2, Article III, of the City Code; and Whereas, this Ordinance is enacted pursuant to the home rule powers of the City of Sanford as set forth at Article VIII, Section 2, of the Constitution of the State of Florida; Chapter 163, Florida Statutes; Chapter 166, Florida Statutes; and other applicable controlling law; and Whereas, the City of Sanford has complied with all requirements and procedures of Florida law in processing and advertising this Ordinance. Now Therefore, Be it enacted by the People of the City of Sanford: Section 1. Legislative Findings and Intent. (a). The City Commission of the City of Sanford hereby adopts and incorporates into this Ordinance the recitals (whereas clauses) set forth herein and the provisions of Section 1 of Ordinance Number 4526, which is now codified as Chapter 2, Article III, of the City Code, as the legislative and administrative findings and intent of the City Commission relating to this Ordinance. (b). Additionally, the City Commission agenda memorandum and related 1IPage materials are adopted as the basis for the action taken in this Ordinance. (c). It is hereby found and determined that the actions taken herein relative to the incentive award to Trafford Holdings, LLC is authorized by the provisions of Chapter 2, Article III, of the City Code and that the requirements of said provisions have been met. Section 2. Supplemental Economic or Tourism Incentive Award; Trafford Holdings, LLC. The City Commission of the City of Sanford hereby enacts the following: (a). The City Commission hereby grants the following incentive under the provisions of Chapter 2, Article III, of the City Code to Trafford Holdings, LLC: 100% of an amount equal to the sums paid in ad valorem taxes that have been duly paid to the City during the first 5 years in which the incentivized development is placed on the tax rolls of Seminole County calculated on new ad valorem tax revenues consistent with the provisions and intent of Chapter 2, Article III, of the City Code. (b). The City's Finance Director shall issue payments to Trafford Holdings, LLC consistent with the incentive award approved in Subsection (a) of this Section after the new ad valorem tax revenues have been received by the City. Section 3. Implementing Administrative Actions. (a). The City Manager, or designee, is hereby authorized and directed to implement the provisions of this Ordinance and to take any and all necessary administrative actions to bring into effect the provisions of this Ordinance. (b). All actions of an implementing nature shall occur in strict conformity to the provisions of Chapter 2, Article III, of the City Code. Section 4. Conflicts. All ordinances or parts thereof in conflict with this Ordinance are hereby repealed. 21 Page Section 5. Savings; Effect of Ordinance. (a). The prior actions of the City of Sanford in terms of the matters relating to any and all actions and activities of the City pertaining to the economic or tourism development of the City, or of an associated nature, are hereby ratified and affirmed. (b). Nothing in this Ordinance shall be construed to affect any suit or proceeding impending in any court, or any rights acquired, or liability incurred, or any cause of causes of action acquired or existing, under any act or ordinance hereby repealed; nor shall any just or legal right or remedy of any character be lost, impaired or affected by this Ordinance (c). Nothing in this Ordinance shall be construed, in any way, to grant any cause of causes of action to Trafford Holdings, LLC in any respect or under any legal theory. Section 6. Codification; Scrivener's Errors. (a). This Ordinance shall not be codified. (b). Typographical errors and other matters of a similar nature that do not affect the intent of this Ordinance, as determined by the City Clerk and City Attorney, may be corrected with the endorsement of the City Manager, or designee, without the need for a public hearing. Section 7. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance, or application hereof, is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such portion or application shall be deemed a separate, distinct, and independent provision and such holding shall not affect the validity of the remaining portions thereof. 31 Page Section 8. Effective Date. This Ordinance shall take effect immediately upon enactment with the incentives being paid only as set forth herein and in no other way and in no other time frame. Passed and adopted this 8th day of April, 2024. Attest: City Commission of the City of San1grd4,� Florida. sj 1j � l ro It N, ki roc., pol R tiq Traci Houchin, MMC, FCRM City Clerk Approved as to form and Legality. - William L. Colbert, Esquire City Attorney Ar 'V%od r ff Mayor,�,� 41 Page Trafford Holdings, LLC 2200 Washington Avenue Sanford, Florida 32771-4637 (321) 318-7857 March 13, 2024 City of Sanford 300 N. Park Avenue Sanford, Florida 32771 Attn: Pamela Lynch Re: Application for the economic development ad valorem property tax rebate program under Sec. 2-378 (Ord. No. 4526) Property Address: 218 Palmetto Avenue Parcel ID No.: 25-19-30-5AG-0402-0010 Dear Ms. Lynch, On behalf of the owner/developer, Trafford Holdings, LLC, pursuant to Chapter 2, Article V (Economic Development), Division 3, Section 2-378 of the Sanford City Code, I write to apply for the City of Sanford's ad valorem property tax rebate program in connection with the redevelopment of the site located at 218 Palmetto Avenue, known as The Palmetto. In addition to the explanations below, I have attached renderings of the proposed buildings. About the Project The Palmetto is an urban infill, mixed-use redevelopment project in downtown Sanford. When complete, The Palmetto will have 28 market -rate, multifamily units across two buildings, with each building featuring ground floor commercial space. This urban redevelopment site is located in the Waterfront Downtown Business District (WDBD). The site was the original Holler automobile sales lot. Until 2004, the property was used for various automotive -related uses, at which time the one-story building on the north end of the site was demolished. Most recently, the property was leased to the City for use as a paved parking lot. Like the San Leon which entered into service in November 2021, The Palmetto brings mixed-use redevelopment to the City's central business district and promotes the City's policy of encouraging urban infill development, The Palmetto demonstrates that downtown redevelopment need not be limited to large, multi -block, mega -projects. Rather, smaller, Trafford Holdings, LLC Application for the City of Sanford ad valorem tax rebate program March 13, 2024 fine-grained projects on smaller parcels are not only possible, but desirable. These smaller projects create a more organic, traditional cityscape. Ad Valorem Tax Rebate Program Eligibility Criteria The Palmetto project meets the eligibility criteria set forth in Sec. 2-377 of the ordinance. 1. The development is consistent with the City of Sanford Comprehensive Plan as well as the goals set forth in the ordinance establishing the tax rebate program. Consistency with the Comprehensive Plan. The Palmetto advances the goals, policies and objectives of the City's Comprehensive Plan. The City of Sanford Comprehensive Plan (2018 - 2030) provides in part: "OBJECTIVE FLU 1.15: Prevent Proliferation of Urban Sprawl and Develop Efficient Systems for Coordinating the Timing and Staging of Public and Private Development. The City shall continue to enforce adopted LDRs which require that proposed land uses be adequately served by requisite public facilities, including water and wastewater services, adequate stormwater management, solid waste disposal and hazardous waste management ... For example, in order to abate urban sprawl and maximize use of existing infrastructure all new development shall be required to hook up to the existing central water and wastewater system. The City's LDRs shall continue to include performance standards ... to prevent the proliferation of urban sprawl and achieve cost effective land development patterns. Urban sprawl shall be further abated through LDRs, including performance standards which shall: • Direct future development only to those areas where provision of public facilities necessary to meet levels of service standards are available concurrent with the impacts of the development; • Maximize use of existing central potable water and wastewater facilities by requiring that all new development hook up to the City's existing central systems; • Avoid expensive development at very low densities surrounding the City's urban core area; • Promote planned mixed use development within ... the Waterfront/Downtown Business District .. . Page 2 of 6 Trafford Holdings, LLC Application for the City of Sanford ad valorem tax rebate program March 13, 2024 Prevent extended strip commercial development within the areas designated planned mixed use development by mandating access and curb cut controls together with required dedication of cross easements to restrict and/or to facilitate well planned access, internal circulation, shared parking, and egress; and • Provide density and intensity threshold which promote infill." The Palmetto redevelopment, as a mixed-use development within the Waterfront Downtown Business District (WDBD), is consistent with this objective as it does not promote urban sprawl, is located in an area served by existing infrastructure, does not propose strip commercial development, and promotes infill by providing for density and intensity in an appropriate location. Similarly, another section of the Comprehensive Plan further encourages urban infill development: "Policy FLU 2. 2.7. Promote Urban Infill Redevelopment. The City shall encourage the development and redevelopment of parcels in otherwise built-up areas where public facilities, such as sewer systems, roadways, schools, and recreation areas, are already in place through the use of Urban Infill Redevelopment (UIR) projects." As urban infill redevelopment, The Palmetto promotes this policy by virtue of its location in downtown Sanford where all necessary public facilities are already in place. Consistency with the goals set forth in Division 3 of the ordinance. The ordinance sets out the following goals for the City in offering the Incentives: (1) Promoting the construction of new buildings or the rehabilitation of existing buildings within the incentive area; and (2) Supporting the establishment of ... new businesses that will: (a) Significantly increase the overall commercial activity within the incentive area, (b) Attract the city's residents and tourists into the incentive area, and (c) Increase property values within the city as a whole. The Palmetto project is consistent with these goals as it involves the construction of new buildings and, with its residential and retail uses, will increase commercial activity in the Incentive Area, thereby attracting residents and tourists, and increasing property values. Page 3 of 6 Trafford Holdings, LLC Application for the City of Sanford ad valorem tax rebate program March 13, 2024 2. The development is located within the Incentive Area. The development is located at 218 Palmetto Avenue, on the southwest corner of Palmetto Avenue and E. 2nd Street, which is located within the incentive area. 3. The development has significant costs for (i) real property acquisition, or (ii) physical improvements, or (iii) capital improvements to City infrastructure. The developer purchased the real property for the site at a cost of $898,000. Total project costs are estimated at more than $13 million, the bulk of which is for the construction of two buildings and other improvements on the site. In addition to the costs of acquisition and physical improvements, the project includes some developer -funded capital improvements to City infrastructure — a new fire hydrant and underground connection. To satisfy this provision in the ordinance, however, only one of these three elements needs to be satisfied. In this case, however, all three elements are satisfied. 4. Absent the provision of Incentives, the Development would be unlikely to occur or unlikely to occur at the level or scale contemplated by the developer. By its nature, infill development on smaller lots is inherently more expensive than suburban greenfield development where there are fewer spatial, proximity and legacy challenges. In addition to the challenges inherent to a project of this nature, current economic conditions present additional challenges. Interest rates for construction loans are the highest they have been in 40 years, around 7%. Building material costs continue to increase even after some post-COVID relief for some items. Labor costs also continue to increase. In the face of these economic headwinds, the developer is seeking all available incentives to help "bridge the gap" financially and make this project possible. The applicant has already applied to the Downtown Sanford CRA for a new construction grant and is seeking a property tax rebate and deferral of building and impact fees. Even with the benefit of the CRA award, anticipated project revenue still does not adequately support the estimated project costs, even though the developer will charge rents higher than those currently found in the downtown Sanford market. While the developer believes that it will be able to charge and collect this level of rent, these rents without additional support may not generate a return sufficient to justify the risks associated with the project. The developer believes that the City's property tax rebate program, however, would close most of the finance gap, permitting the project to move forward in its current form. Absent the tax rebate program, the developer may need to further reduce the scope of the project or abandon it altogether. Page 4 of 6 Trafford Holdings, LLC Application for the City of Sanford ad valorem tax rebate program March 13, 2024 Additional Considerations and Criteria. Section 2-378(i) specifies additional considerations and criteria that the City Commission should consider in determining whether to grant an ad valorem tax rebate: The minimum expected amount of capital investment to be made by an applicant shall b e $3, 000, 000. The expected capital investment is more than four times the minimum required. 2. The current and anticipated volume (in dollars) of business or production will be considered during the course of evaluating applications. The anticipated net operating income after stabilization from rentals alone is estimated to be more than $700,000 per year. In addition to this, the commercial space is expected to generate sufficient revenue to employ more than 80 people. 3. The total length (number of years) of the rebate period being requested maybe from one to ten years as may be authorized by controlling law and all as set forth in the agreement relating to the implementation of the rebate. The applicant is requesting a rebate period of ten years for the 100% of the City's portion of the project's ad valorem taxes. 4. Preference maybe given to redevelopment or infill projects during the course of evaluating applications. This project should be preferred as it is both redevelopment and infill. 5. The likely cost and demand for public services will be considered during the course of evaluating applications. As the project is located in the core of downtown Sanford, with minor exception, the infrastructure is already in place. The some missing infrastructure, e.g., a fire hydrant and water line extension, will be paid for by the project company. 6. The likelihood that the project relocation or expansion would have occur without the award of a rebate will be considered during the course of evaluating applications. As explained above, the inherent cost and complexity of downtown infill development coupled with current economic conditions make the rebate important to this project as currently envisioned. Building apartment buildings outside of the downtown core is considerably simpler Page 5 of 6 Trafford Holdings, LLC Application for the City of Sanford ad valorem tax rebate program March 13, 2024 and cheaper on a per unit basis than in downtown, increasing the risk without an equal increase in the return. The rebate helps level that disparity. 7. If any other publicly funded economic development incentives have been granted for the project, that fact and the level of such incentives will be considered. As mentioned, the applicant is applying for three incentives. As of the date of this submission, none have yet been granted. Request For the foregoing reasons, Trafford Holdings, LLC requests that the City of Sanford adopt an ordinance pursuant to its ad valorem property tax rebate program for 100% of the assessed value of all improvements made by or for the use of The Palmetto development and of all tangible personal property of such development for a period of ten (10) years. Respectfully submitted, TRAFFORD HOLDINGS, LLC 0 Daniel R. Matthews Its Manager Page 6 of 6 NOTICE OF PUBLIC HEARINGS REGARDING ADOPTION OF AN ORDINANCE BY THE CITY OF SANFORD, FLORIDA The City Commission of the City of Sanford, Florida, will hold public hearings at 7 PM, or as soon thereafter as practicable, in the Commission Chambers, First Floor, City Hall, 300 N. Park Avenue, Sanford, Florida, as follows: ■ on Monday, March 25, 2024, to consider approving Ordinance No. 2024-4773, on the first reading and ■ on Monday, April 8, 2024, to consider the adoption of Ordinance No. 2024-4773, title of which is as follows: Ordinance No. 2024-4773 An ordinance of the City of Sanford, Florida granting an economic incentive to Trafford Holdings, LLC pursuant to the supplemental economic or tourism development program established in Chapter 2, Article III, of the City Code; providing for legislative findings and intent; providing for implementing administrative actions in strict conformity to the provisions of Chapter 2, Article III, of the City Code; providing for conflicts, providing for a savings provision and the effect of the ordinance; providing for severability; providing for non - codification as well as the correction of scrivener's errors; and providing for an effective date. A copy of the Ordinance shall be available at the office of the City Clerk for all persons desiring to examine the same. All parties in interest and citizens shall have an opportunity to be heard at said hearings. By order of the City Commission of the City of Sanford, Florida. IN ACCORDANCE WITH THE AMERICANS WITH DISABILITIES ACT, PERSONS WITH DISABILITIES NEEDING ASSISTANCE TO PARTICIPATE IN ANY OF THESE PROCEEDINGS SHOULD CONTACT THE CITY CLERK AT 407.688.5012 AT LEAST 48 HOURS IN ADVANCE OF THE MEETING. ADVICE TO THE PUBLIC: If a person decides to appeal a decision made with respect to any matter considered at the above meeting or hearing, he or she may need a verbatim record of the proceedings, including the testimony and evidence, which record is not provided by the City of Sanford. (FS 286.0105) Traci Houchin, MMC, FCRM City Clerk Publish: Sunday, March 24, 2024 and Sunday, March 31, 2024 CITY OF 0- 0)S ANFORDD FLORIDA CITY COMMISSION MEMORANDUM 24.101 APRIL 8, 2024 AGENDA TO: Honorable Mayor and Members of the City PREPARED BY: Brady Lessard, Economic Development Dii SUBMITTED BY: Norton N. Bonaparte, Jr., ICMA-CM, W SUBJECT: Application of Trafford Holdings, LLC; Or Granting Incentive STRATEGIC PRIORITIES: ❑ Unify Downtown & the Waterfront ® Promote the City's Distinct Culture ❑ Update Regulatory Framework ® Redevelop and Revitalize Disadvantaged Communities SYNOPSIS: WS_ RM X Item No. I o. 2024-4773 Approve the adoption of Ordinance No. 2024-4773, to award the granting incentive, developed with the adoption of Ordinance No. 2019-4526, to Trafford Holdings, LLC is requested. FISCAL/STAFFING STATEMENT: City funds are not appropriated in this type of action. Funds received as a result of eligible development would be a rebate to the grantee. However, the full benefit of the new development ad valorem impact would vest with the City at the time any approved rebate expires. The City Commission determines the level of incentive and period of time the tax rebate would be granted to an applicant. The applicant in this case has applied for an incentive in an amount of 100% of the City tax revenues that are being generated as a result of the development for the first five years. BACKGROUND: The "Supplemental Economic or Tourism Development Incentive Program Ordinance" provides that the City Commission, at its discretion and on a case-by-case basis, may enter into an incentive agreement with a person, firm, or corporation providing for incentives in order to encourage and support the development of real property within the City. Each incentive agreement shall be approved by the City Commission by adoption of an ordinance. The City Commission may provide incentives in any amount and for any period of time (up to ten years). Incentives may be granted in the form of payments of amounts up to, but in no event may the amount be in excess of the sum of the fees and taxes that have been duly paid to the City during a specified period of time. Upfront abatements of fees or taxes are prohibited and unlawful. In cases where incentives continue for a period of more than a year, they may be graduated to increase or decrease year-to-year as the City Commission sees fit, but subject to monitoring by the City to ensure compliance with the terms of any incentive agreement. Funds received through incentive grants may only be used for purposes that are determined to provide for the economic or tourism development of the City. Ineligible improvements are improvements that have been included on the tax rolls prior to the effective date of an incentive award ordinance and the costs of land upon which a new business or an expansion of an existing business is to be located. Eligible improvements are up to 100% of the assessed value of all improvements made by or for the use of a development and of all tangible personal property of such development, or up to 100% of the assessed value of all added improvements made to facilitate the qualifying expansion of an existing business and of the net increase in all tangible personal property acquired to facilitate such expansion of an existing business. In order for a development to be eligible to receive incentives, the City Commission must determine that it meets, or upon completion will meet, each of the following criteria: (1). The development must be consistent with the City's Comprehensive Plan as well as the goals set forth in the Ordinance. (2). Absent the provision of incentives, the development would be unlikely to occur or unlikely to occur at the level or scale contemplated by the developer. (3). The development must be located within the incentive area, which includes at this time, all properties which the City determines to serve the economic or tourism development purposes of the City, but may be specifically delimited in the future by the City Commission. (4). The development must have: (A). Real property acquisition costs of a significant type or nature, or (B). Significant costs of physical improvements to real property, or (C). Significant costs of capital improvements to City infrastructure; or (D). On a case-by-case basis, any other eligibility criteria that must be met upon completion of a development in order to ensure that the goals are met and that the development provides benefits to the City (and its citizens) in amounts that warrant the implementation of incentives. The referenced "goals" are as follows: (1). To promote the construction of new buildings or the rehabilitation of existing buildings within the Incentive Area; and (2). To support the establishment of the categories of new businesses that the City Commission determines will: (A). significantly increase the overall commercial activity within the Incentive Area, (B). Attract the City's residents and tourists into the Incentive Area, and (C). Increase the property values within the City as a whole. Other Considerations/Criteria which the City Commission shall be guided by, as determined solely and exclusively by the City Commission, are the following: (1). The minimum expected amount of capital investment of $3,000,000. (2). The current and anticipated volume (in dollars) of business or production. (3). The total length (number of years) of the incentive period being requested. (4). Preference may be given to redevelopment or infill projects. (5). The likely cost and demand for public services. (6). The likelihood that the project relocation or expansion would have occur without the award of an incentive. (7). If any other publicly funded economic development incentives have been granted for the project. No precedent will be implied or inferred by the granting of an incentive. Each application is considered by the City Commission in its legislative capacity on a case-by-case basis, after considering the criteria as set forth in the Supplemental Economic or Tourism Development Incentive Program Ordinance and acting in its sole and absolute discretion. The City Commission recently enacted the "Supplemental Economic or Tourism Development Incentive Program Ordinance". Trafford Holdings, LLC is a Florida limited liability company whose headquarters is located at 400 Lakeview St., Orlando, Florida 32804, has applied for an incentive award under the provisions of the Ordinance. LEGAL REVIEW: The City Attorney's office has assisted in this matter and has no legal objection to the proposed action. The City Commission approved the first reading of Ordinance No. 2024-4773, on March 25, 2024. The City Clerk published notice of the 2nd Public Hearing in the Sanford Herald on March 31, 2024. RECOMMENDATION: City staff recommends that the City Commission adopt Ordinance No. 2024-4773 and hear the applicant's request and supporting documentation related to the granting of a Supplemental Economic or Tourism Development Incentive tax rebate to Trafford Holdings, LLC in the amount of 100% for the first five years calculated on new tax revenues. SUGGESTED MOTION: "I move to adopt Ordinance No. 2024-4773." Attachments: (1). Supplemental Economic or Tourism Development Incentive Program Ordinance. (2). Ordinance No. 2024-4773 (3). Application packet.