The developers of a proposed $11 million downtown apartment complex are asking the city of Columbus to forgo 20 years’ worth of property taxes to help make their vision a reality.
Columbus-based Sprague Co. on Monday asked the Columbus Redevelopment Commission to:
- Fund a bond of up to $2.5 million to cover part of the construction costs, similar to that given to Buckingham Cos. for construction of The Cole apartments.
- Pay for about $150,000 in sidewalk and street repairs.
Janeen and Richard Sprague plan to build Urban Elements, a 40-unit apartment complex in the narrow Washington Street lot in front of the Cummins Inc. parking garage, between Sixth and Seventh streets. Like the garage, the property designated for the apartment complex is owned by Cummins.
Janeen Sprague is the owner of Sprague Co., a hotel developer. Richard Sprague is the owner of JR Promotions LLC. Under the Spragues’ proposal, the city would give up 90 percent of the property taxes on the project for 20 years to fund a bond that would help cover about one-fourth of the cost of the project.
In a nutshell, the city would use the developer’s own property taxes to pay off the loan to the developer. The city’s financial adviser, Reedy Financial Group, estimated that the city would give up about $214,000 a year in property taxes for a $2.3 million bond, based on the anticipated tax payments from the project.
The Spragues said they had hoped for $2.5 million. Because the project is in one of the city’s tax increment financing districts, the lost tax revenue would come from the Columbus Redevelopment Commission coffers.
Although the city would issue the bond and ultimately the Columbus Redevelopment Commission would make the payments, the upfront money would come from whoever purchases the bonds and the repayment would come from the property taxes the Spragues will pay on the property.
“There is no risk financially to the city or the taxpayers,” Mayor Kristen Brown said. “But it does mean that the city is forgoing 90 percent of the property taxes on this property for 20 years.”
About $2,211 in property taxes are being assessed annually on the vacant property now, of which the city receives about $552, the Spragues said. Even with the bond payments, the city would receive about $16,000 annually in property taxes from the project, they estimated.
The Spragues plan to build a five-story apartment complex with 26 two-story, loft-style apartments, 14 single-floor apartments and a possible 2,000-square-foot penthouse. The project also would include 8,500 square feet of street-level retail space on Washington Street.
Before turning the property over to a developer, Cummins put restrictions on the lot that include architectural approval, strict requirements on materials used and the addition of first-floor retail spaces, said Brad Manns, director of global real estate for Cummins. Manns told the Columbus Redevelopment Commission that three companies submitted proposals for the project, but only the Spragues were able to meet the requirements.
Manns said Cummins committed to screening the parking garage from the view of Washington Street. Having a five-story-tall retail building did not seem practical, so apartments with first floor retail shops were agreed upon.
If the Spragues’ proposal comes together, Cummins will sell the property to them, Manns said Tuesday.
Richard Sprague said that the construction would be more expensive because of the project’s requirements, but that is what the city, Cummins and the Sprague family all want to build. The construction will be steel, concrete and glass and is being designed by Steve Risting of CSO Architects in Indianapolis, Janeen Sprague said.
Risting is one of the principal designers with CSO Architects. He has worked on three major projects in the city: The Commons, the Cummins office building at Fourth and Jackson streets and The Cole apartments.
Part of the apartment building would stair-step backward from the street, allowing for terraces and decks on some apartments, which meant about an extra $1 million in projected costs just to reinforce the structure, Janeen Sprague said. But the Spragues want to add to the beauty of downtown Columbus, she said.
“That building is going to help so much of the rest of the whole area develop and generate so much more development, so much more growth,” Janeen Sprague said. “We are doing it more as a contribution to the city of Columbus. It is not a huge moneymaker. We want to be able to break even at least.”
She estimated that the apartment rent would range from $1,000 to $1,450 and in a presentation to the redevelopment commission, the company estimated the units would be rented to tenants who make about $80,000 a year.
The tenants also would have the use of 90 parking spots in the Cummins garage — 45 on the first floor and 45 on the third floor. That would be an average of at least two parking spaces per apartment.
Brown said the city has given tax abatements to developers to build multifamily rental units in downtown Columbus before, and she preferred that approach rather than the bond proposal. Under a tax abatement, the developer does not pay property taxes for the first year and then taxes are phased in over the life of the abatement.
The Spragues said they could not make the numbers work on the project without the upfront bond money.
The Spragues said they would have to pay for the repaving of about 80 feet of Sixth Street and the project would require them to remove the sidewalk with engraved brick pavers in front of the building. The pavers, paid for by donations, must be returned to the same spot after the construction. The Spragues estimated the cost for the street and sidewalk would be about $150,000 and asked the redevelopment commission to pay for that cost out of TIF revenues.
The presentation to the Columbus Redevelopment Commission was for discussion purposes and the commission agreed to add the proposal to its March meeting agenda. The commission would have to approve the money for the street and sidewalk reconstruction and would have to recommend approval of the bond sale to the City Council, which would have final approval, said Stan Gamso, attorney for the redevelopment commission.
Janeen Sprague said the company could start construction as soon as the city approves the bond proposal.