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Home My WebLink About050219 EDC packetM go il 11 - W �Ql 10 1111 '0' 0 NA711111171111l May 2, 201�"' 1:30 p.m.1 Members: Staff: Others: Chairman White Cliff Moore, City Manager Councilmember Guti6rrez Rob Peterson, Airport Director Councilmember Cousens Scott Schafer, Public Works Director Cally Price, Assistant to the City Manager 1. Minute Approval a. Review February 28 draft minutes 2. Discussion a. Downtown destination b. Economic Development Plan — need updates for timeline i. Competitiveness 1. Private sites 2. City sites 3. Mill site 4. Public Port Authority — Peterson/Chamber lunch update 5. Incentives 6. Education Alignment 7. YKM , 8. Convention Center ii. Traded Sector 1. YKM 2. Clusters iii. Community pride 3. Staff and Partner Announcements a. Downtown infrastructure criteria — update from Scott Schafer b. Main Street Conference report 4. Future Agenda Items 5. Audience Participation Members: Council member White Council member Gutierrez Council member Cousens White called the meeti City Hall Staff: Cliff Moore, City Manager Rob Peterson, Airport Din Scott Schafer, Public Wor Glenn Denman, Building ( Cally Price, Assistant to tl' R ity Manager Others: Luz Gutierrez John Cooper Verlynn Best Andrew Holt Joe Mann Jean Brown Chelann Gienger 1. Review draft minutes from January 24, 2019 meeting: The January 24, 2019 meeting minutes were reviewed and approved as presented. . 2. Discussions: a. Fulcrum 20 minute presentation — Chelann Gienger Chelann Gienger, Owner of NUYU Juice bar, author of Dear Millennial and Founder of Entrepreneur Before 25 presented on the innovation center project she is working on in downtown Yakima and provided her background. The innovation center would provide living space and working space and resources where people could work on creating innovative ideas. Specific ideas for the space include: apartments, offices, dining and coaching opportunities, and would serve as a location for community events. A "Think Big" festival will be held in October — details will be provided. Gienger invited everyone to the next fireside chat that is being held on March 13 at 6:00 p.m. — location to be determined. For updates on what Fulcrum is doing you can sign up for the newsletter at fulcrumyakima.com. b. Downtown destination Moore reminded Council this was added as a Strategic Priority. c. Economic Development Plan - update timeline Workgroups are to send updates to Cally. An updated timeline will presented at the next meeting provided Price receives all the updates. II. T 1. YKM - 2. Clusters - 2WOMMIMInter7i sort Or-Fr-31-My'r-Q1 sirograrn expire in December- There V for the convention center expansion project. being worked on. Guti6rrez reported that the image campaign was to image to Yakima residents and those visiting. New videos d. Council policy requests Shipping container draft ordinance - report from Glenn Denman Denman reviewed the draft shipping container ordinance with the Committee members. Guti6rrez motioned and Cousens seconded to bring the ordinance to the full Council for consideration. 2. Downtown infrastructure criteria - report from Scott Schafer distributed a memo on staff's evaluation of the downtown core and identified short and long term strategies that need to be addressed. Short term items include things like traffic signals, pavement condition index, lighting, cleaning up signage, etc. The pavement condition index report is budgeted for in 2020. Long term strategies include traffic signals, complete grind and overlay of Yakima Avenue, landscaping, and a few other things. City staff will be meeting with DAY representatives to talk about low water use gardens. b. Everett abandoned/vacant building ordinance fee update Information was included in the packet. White suggested that Yakima use Everett's ordinance as a model for Yakima. The Committee members will meet and discuss this prior to making a recommendation to the full Council. After the Committee members meet then another meeting with DAY, Choose Yakima, and City staff needs to occur. c. Update on vacant buildings/lots in DYBID - report from Andrew Holt Holt reported that he has been in contact with CWU to talk about internship opportunities. The building vacancy list needs to be updated and this might be something students can do. d. Filling gaps information included in packet — no discussion 4. Future agenda items a. Update on Chamber port authority discussion — Peterson b. Committee members will meet to discuss Vacant building ordinance c. Update on the Main Street conference — White and Cousens Jason White, Chair SELECT AoIT,` ,U/pm=""", u10�no,mam Sign m~ LLLLJ Innovators mtile Year , Subscribe Now = YOUR ^cuouw' caoy,p,/ee@n^wrnawa*'~ � INDUSTRIES mTOPICS `ft wswS LISTS mxwxnoo PEOPLE mCOMPANIES svawm LEADERSHIP TRUST MORE... Ck FOR THE EXCLUSIVE USE OFCALLY.PR|CE@YAK|K8AVVA.GUV Fmmthe Puget Sound BuaineaoJournal; real estate hwestors Mar /,um9,x:0omPST Subscriber -Only Article Preview I For full site access: Subscribe Now Opportunity zones are the hot new topic nationally, but most real estate professionals are still trying to wrap their heads around the complicated federal tax incentive program that inabout uodramatically alter investing. Then there is Arthur "Wes" Larson of Bremerton. His Sound West Holdings LLC plans uzbreak ground this spring onon approximately $1ugmillion Bremerton waterfront development, Marina Square, |n one ofWashington's 138designated opportunity zones. It's one of the first opportunity zone projects in the country. ao°m� 11mmmV,mmu I'a"A uompo"'Ing °m",,="�,�/`u..° Bringing jobs and housing tohis hometown through the opportunity zone program fires up the longtime Bremerton developer. He's so stoked about the potential he's pursuing two more opportunity zone projects, one inBremerton down the street from Marina Square called Quincy Square and another innearby Port orchard. - 17haprogram is) the most powerful revitalization tool that exiats'^Larson said, adding that bforces investors tolook at low-income communities rather than automatically seek out investments in boom neighborhoods like South Lake Union o,downtown Bellevue. A boon for the Industry Part nfthe Tax Cuts and Jobs Act of2D1Tthe opportunity zone program directs long-term investment to low-income communities even inSeattle. Smartcap Group, a Redmond -based private equity real estate investment company, has raised $10 million from around 125 investors for an OZ industrial project in Arlington but is looking at Seattle's Sodo industrial neighborhood, company CEO Tim Shov|tzxaid. "Sodo is a really hot market," Shoultz said. Even so, he thinks it will be at least a year before the impact the OZ program is realized because program rules are still being written, causing caution among big institutional investors. "Once the market settles out the real potential for growth inplaces like Seattle will nmenge'^hesaid, Opportunity zones are a supply-side economist's dream come true, If the stars align, a virtuous cycle of economic development and job creation is created as capital gains from opportunity zone investments are funneled back into new enterprises in the same community. Investors can shelter the capital gains only if they stay in a deal long term, giving communities protection fmmfioend-f|ipnchemes. The program is still taking form. The Internal Revenue Service and Treasury Department did not issue the proposed opportunity zone regulations until 10 months after President Donald Trump signed the landmark tax act. "it seems like inthe last couple months it's really gotten some |ego'^said Jim Bowles, president ofLee mAssociates' Northwest operations. He said the market faces a learning curve with himself having spent hours poring over the rules. An opportunity zone investment requires long-term commitment — ideally 10 years — plus further investment in the enterprise itself. "It isn't the right investment tool for everybodK^Bowles said. Rural and urban opportunities Washington's opportunity zones stretch from a mammoth swath of the Olympic Peninsula ooall ofGarfield and Columbia counties inSoutheast Washington. |nbetween are zones across the central Puget Sound region. Already across Washington there's an eclectic mix of proposed projects, including the Quinault Indian Nation's plan to build the state's first transoceanic cable landing in 20 years, and a lot of interest, said Sarah Lee, a project director of the state Department of Commerce, which led the selection of Washington's opportunity zones. "We get calls every day from people who want tolearn more'^she said. The Othello neighborhood in Seattle is an opportunity zone, so the program has caught the attention of developers like Jake MuKinst,vHis company, Spectrum Development Solutions, and fellow Seattle firm Laird Norton Properties are developing a mixed-use building with 176 lower-cost apartments over a Seattle Children's health clinic. It is part of the larger Othello Square development. While the project was planned before Othello became a designated opportunity zone, the program certainly is a key component ofthe development's viability, woKinot,ysaid. Jim Warjone, former chairman and CEO of global wood products company Port Blakely, is co-owner of Seattle real estate company Engel & V61kers and he's marketing for sale a 137 -acre industrial air park next to Grant County International Airport, which iainanopportunity zone inMoses Lake. Warjone said the park could be $100 million just for the land, making it an opportunity fit for institutional investors, But Warjonesaid some cf them are holding back until they learn more about thepmg,am—fromhmwoz|aQeUvomatean investment, »ohow long ateam has ^odevelop aproject uzfiguring out the exit strategy. Opportunity zone rule clarifications still are trickling out, said Michael D'Dnmfr|o, managing director ofFlorida-based Engineered Tax Services, a national firm that specializes in taxes and investments. The thing most investors are asking D'Onofrio is where they can find high-quality, shovel -ready opportunity zone projects |nareas "where the tide seems »oberising inthat entire m,ee.^ That's why Bremerton ieattractive. The city's downtown has seen significant public and private development, including a conference center, hotel and restaurants along the new waterfront. In 2017, fast -ferry service to Seattle began, cutting travel time to Seattle in half. Kitsap Transit will add two new vessels this year. |naddition the U.S.Navy has committed toinvesting billions ofdollars over 2Oyears mmodernize the Puget Sound Naval Shipyards, where nearly l4.5VOpeople worked muofmid-oacembmr. Nearby ioLaraon'aMarina Square site, today eparking lot. |t will have a125-momCambria Hotel and 145high-end apartments. They will be in mid -rise buildings atop an underground, paid parking garage a short walk from the ferry dock and shipyard. "The opportunity zone is a critical part of our project financing," Larson said. ("It's) a great way to bring capital to places that need it, and that does put vsmnequal footing with mproject inSeatt|e.^ The program's goal is to incentivize long-term investment in underserved communities by allowing investors to defer paving taxes qncapital gained from enterprises indesignated opportunity zones. Investors must re -invest inonenterprise via a Qualified Opportunity Fund (QOF)'which ioeither set upaaapartnership or corporation. The extent cf the tax shelter depends on how long the investor retains their investment. Following five years of ownership, 10 percent of capital gains is excluded from taxation, Another 5 percent of the capital gain is extended after seven years cfownership. Investors who make it to1Oyears owe notaxes for all QOFinvestments. Up to 25 percent of the low-income census tracts in each state can be designated as opportunity zones. Gov. Jay Inslee directed the state Department ofCommerce todevelop the selection process. Marc Stiles Staff Writer Puget Sound Business Journal ��; SELECT wCITY, ,o./,ACCw", uwnED,NILuFm Sign w` Ll Innovators mth"Year ` mubserleemmm �YOUR ^ccouw, nmnppr/ow@vwwmawm.a—` INDUSTRIES mTOPICS A wswo LISTS mAWARDS PEOPLE aCOMPANIES evcwrm LEADERSHIP TRUSMORE... <� FOR THE EXCLUSIVE USE OF CALLY.PR10E@YAK1MAWA.G0V From the Puget Sound Business ]numah httpm://ww^wbizjouma|scom/aeo#|e/riews/2O1g/O3/O1/000nnor'conau|hng'gmup'opportunity-zoncm'boost.htm| oppomnity zones Marl, 2019, 3:00arn PST Subscriber -Only Article Preview I For full site access: Subscribe Now There are many questions about the new federal opportunity zone tax incentive program, and one of the biggest is how much it will lift returns on investments, O'Connor Consulting Group of Seattle has come up with a way to do the The foundation of OCG's opportunity zone matrix is what's known in investment circles as the cap rate, or overall rate of return. It's determined by dividing the net income of a property by the purchase price. 0� NNOxW�=AJI� wI'd=*°/ao'Ca"no,noncumn�, Akey oounderstanding the cap zone metric imknowing that the higher the price on investor pays for aproperty, the lower the cap rate will be. Sellers can't get too greedy with their asking prices because buyers won't buy if the rate ofreturn istoo low. According to O'Connor's matrix, an investment acquired at a 5,5 percent cap rate would generate a return of 9.25 percent onthe equity, but after the capital gains tax that would drop u,3.8percent. |fthe property were inmn opportunity zone and investors achieve the entire tax shelter, the return jumps »m78percent. Areturn ofthat size would drive upthe price ofthe real estate, but the resulting lower cap rate would make investors reluctant to buy. The two sides would have to negotiate a lower sale price and hence a higher cap rate, for the buyer. According to O'Connor's matrix, to generate a 5.5 percent overall rate of return, an investor would have to buy at a cap rate of just 3.4 percent. That's a difference of 2 full points, or 200 basis points, and most investors wouldn't accept such esteep discount, O'Connor said. "in reality, some of the upside will have to fall to the buyer," O'Connor said. He thinks a seller would settle for a higher price that would knock 25to5obasis points off the cap rate. The buyer would capture 15Ovz175basis points of additional yield. "The developer who's doing the deal, he's going to get a little of the (opportunity zone) bump. it's the buyer who's going torecognize most ofthe bump,^O'Connor said. Marc Stiles Staff Writer � Puget Sound Business Joumal