By BECKY KISER
Hays Post
One item was added this week to the proposed development agreement for a new retail development north of Interstate 70. Hays city commissioners saw it for the first time during their work session Thursday night.
A public hearing date for the project has already been set for Tue., Nov. 22.
Dave Christie of Hays Investors LLC has submitted a petition for the creation of a 1% Community Improvement District (CID) sales tax to construct approximately 73,000 square feet of retail space directly north of Home Depot. The development is expected to consist of a 50,000 square foot building to be used by a national retailer and another 23,000 square feet of retail space.
Finance Director Kim Rupp told commissioners the draft development agreement has been reviewed by the city’s bond counsel and the city attorney.
He explained the city added a stipulation in the event certificates of occupancy for 73,000 square feet of retail space are not issued within 36 months of approval of the CID, then the CID will be dissolved. Additionally, as long as the CID is in existence, the developer will not request, and the city will not approve, any additional economic development incentives on the retail project property.
Thursday night’s Section 20 addition from the developer addressed market and economic conditions:
“The City hereby acknowledges and agrees that the development of the Project, including the Development schedule, may be adversely impacted by changing economic and market factors. Accordingly, the City hereby agrees to reasonably consider amendments to this Agreement requested by the Developer as a result of economic and/or market conditions.”
City Manager Toby Dougherty said his office received the add-on late Wednesday.
“Right now, they’re still saying we’re going to occupy 73,000 square feet within three years. But, what they’re saying here is, we would like to be able to ask you to modify the agreement,” explained Dougherty. “It has nothing to do with the 22 years the CID would be in place.”
“We think they’ve probably been told by a bank that the covenants require them to make a good faith effort to adjust the size under certain economic conditions,” City Attorney John Bird interjected. “If a potential retailer comes in and says we can’t make it work at 73,000 square feet but we can at 50,000 square feet…They’re not getting something automatically from us, and you’ll have the ability to negotiate.”
Aaron White, director of the Ellis County Coalition for Economic Development, told commissioners what was “expressed to us by their attorney.”
“Should their contracts come through and the clients are saying ‘our square footage formula (for the Hays market) dictates the facility would be 65,000 square feet instead of 73,000,’ the bank was concerned that the city could do away with the CID point-blank. Or, the other example given was if the facility is 80% complete at the 36 month deadline and they have contracts in hand to fill all the space that’s being built. Is there an opportunity for a six-month extension? So the language was designed to allow some flexibility based on the client needs or market change.”
Commissioner Lance Jones said he didn’t like it and wanted more time to think about it. “It’s gonna come back on a future commission and put them in a bind. So if we can move this forward without this Section 20 language, I’d appreciate it.”
Commissioner Henry Schwaller agreed. “He is a developer. We didn’t pick the 73,000 square feet–he did. Now, if he’s having cold feet because Retailer X may want 3- or 10,000 feet less, that’s not our fault,” Schwaller said.
“Home Depot brought a lot of sales tax to Hays,” countered Mayor Shaun Musil. “If he (Christie) brings potentially what he’s saying–it’s a big name company and I think it would be a big draw for Hays–for us to slap him around and say no, we’re not interested, I think would be a big mistake.”
White confirmed Christie has a letter of intent from the national retailer but no contract at this time.
Commissioners ultimately agreed to include the Section 20 add-on in the draft development agreement for next week’s agenda.
“It’s still possible for you next week to say ‘No, I won’t approve that as drafted. I would approve it the way we had it originally,'” Bird assured the commission, “and then let them make their decision.”
“The feedback we got from their counsel was that the bank would pull their financing without some sort of statement saying there is an option to request a change,” White added. The city has requested a copy of the bank’s written intentions.
The commission meeting is Tues., Nov. 22, rather than Thursday because of the Thanksgiving holiday.