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City of Grand Forks

熙 ::llll]￨IIictober.9′ 2020
Agenda Item: The Beacon by Epic Redevelopment Tax Incentive Pre-Application

Submitted by: Todd Feland, City Administrator

Staff Recommended Action: Invite applicant to submit full tax incentive application

October 28, 2019 - Committee Recommended Action: N/A

November 4, 2019 Council Action:

BACKGROUND:
The proposed Beacon by Epic redevelopment project was submitted by Mr. Lance Johnson and Ms. Amy
Hass of Epic Companies and is proposed as a major mixed use redevelopment with a public plaza at the
site of the existing Townhouse Hotel and surrounding properties at 710 North l"'Avenue. The concept
and idea is to activate a new community and downtown space with new living and commercial
opportunities. Part of the plan includes enlanced parking in the area, a community plaza with an
associated programming, financial, and organizational plan, and broadening and connecting to the
existing downtown and beyond. The primary partners include the Developer - Epic Companies and
Dakota Commercial, Architectural Manager - Epic Companies, and Construction Manager - Community
Contractors. The proposed plan calls for the demolition of the Townhouse Hotel in the winter of 2020/21
with the phased construction start of the first mixed use building in the spring of 2021. The proposed and
phased mixed use redevelopment project will eventually include approximately three mixed use buildings
that will surround a public plaza amenity. The mixed use development buildings are currently proposed as
apartments, condominiums, commercial space, underground parking, and connective features with the
broader downtown area. The community plaza is an estimated $7 million public amenity that is proposed
to have various community programming and events.

The 2020 assessed value ofthe Townlouse Hotel and surrounding property is approximately $2.3 million
and the estimated value of the completed Beacon by Epic project development is approximately $50
million. The developer is requesting the consideration of a tax incentive bond and/or exemption for a
greater than five (5) year period of time. The community plaza will require an ongoing financial,
programming, and management plan to ensure the successful outcome of the community plaza as the
development tax incentives are being reviewed and recommended to community policy makers.

With City Council concunence, the next step in the process is to invite the applicant to submit a full tax
incentive application, which includes a $2,500 fee. The tax incentive request is proposed to exceed five
(5) years. The complete application will be provided to Baker Tilly (formerly Springsted) for third party
financial review and analysis. This review will then be presented to the Local Govemment Advisory
Committee (LGAC), which consists of representatives of the four local taxing entities. City Council
President Dana Sande and City Council Vice President Jeannie Moch serve as the City's LGAC
representatives. The recommendation from LGAC will then be forwarded to City Council for preliminary
action at which point a public hearing date (approximately 45 days later) will be set. During thar time
period, the tax incentive request will be heard by the Grand Forks County Commission and Grand Fork
School Board, per North Dakota Century Code requirements.
ANALYSIS AND FINDINGS OF FACT:
. The pre-application is the first step to allow frfther financial review of a tax incentive request to
proceed.
o The third-party review takes into consideration appropriate indusky standards and expected rates of
return, which helps to depoliticize the decision-making process and "right-size" the tax incentive
structures. Baker Tilty performs this service for other regional communities and has assisted the City
in this process for other incentive projects. The $2,500 application fee offsets the cost ofthe review.
o The timeline ofthe tax incentive process is approximately two to three months from beginning to end
and includes City Council Pre Application tax incentive approval; third party financial analysis;
LGAC review and recommendation; City Council preliminary recommendation and public hearing
date setting; Grand Forks County Commission, Grand Forks Public School Board, and City Council
final actions.
o The Beacon by Epic project is in a Grand Forks Opportunity Zone as certified by the State of North
Dakota and United States Department of Treasury and the applicant may also propose to use this
Federal tax incentive on a portion ofthe project as a complement to the local tax incentive.
o The Beacon by Epic project is in the Renaissance Zone and is eligible to use this state and local tax
incentive program.

SUPPORT MATERIALS:
o City of Grand Forks Tax Incentive Pre-Application from Epic Holdings II
. The Beacon by Epic Power Point Presentation
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