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DICW Speculative Shell Buildings_For-ProfitsTHE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Amending City of Dubuque Code of Ordinances Chapter 15 Article VI: Speculative Shell Buildings for Community Development Organizations by Amending Section 15-59 Speculative Shell Buildings: Definitions; Section 15-60 Exemption allowed; and Section 15-61 Application for Exemption by Property Owner DATE: August 27, 2008 Economic Development Director Dave Heiar is recommending that the ordinance that allows not-for-profit community development entities to build an industrial spec building and receive a property tax exemption be expanded to include for-profit entities. I concur with the recommendation and respectfully request Mayor and City Council approval. Mich I C. Van Mil igen MCVM/jh Attachment cc: Barry Lindahl, City Attorney Cindy Steinhauser, Assistant City Manager David J. Heiar, Economic Development Director THE CITY OF DUBUQUE Masterpiece on the Mississippi Dubuque All-American City 2007 TO: Michael Van Milligen, City Manager FROM: David J. Heiar, Economic Development Director SUBJECT: Amending City of Dubuque Code of Ordinances Chapter 15 Article VI: Speculative Shell Buildings for Community Development Organizations by Amending Section 15-59 Speculative Shell Buildings: Definitions; Section 15-60 Exemption allowed; and Section 15-61 Application for Exemption by Property Owner DATE: August 25, 2008 INTRODUCTION This memorandum presents for City Council amending in Chapter 15 Article VI. Speculative Shell Buildings for Community Development by amending sections 15-69 Speculative Shell Buildings: Definitions; Section 15-60 Exemption Allowed; and Section 15-61 Application for Exemption by Property Owner. BACKGROUND The speculative shell building ordinance was adopted in 2001 to allow for Community Development entities to construct speculative buildings within the City of Dubuque. The organization must have at least 15 board members representing different organizations in Dubuque. The ordinance allowed the organization to receive an exemption from property taxes for an industrial spec building until the property is leased or sold. DISCUSSION The proposed amendments will allow for the Speculative Shell Building incentives be also available to for-profit entities. Economic Development staff has received several inquiries for building a Spec Building in the Dubuque Industrial Center West. The Greater Dubuque Development Corporation has noticed move-in ready space for industrial use is limited in Dubuque and having a Spec Building will assist in recruiting new businesses to the area. RECOMMENDATION/ACTION STEP I recommend that the City Council approve amending the attached ordinance to make for-profit entities eligible for the Speculative Shell Building benefits until the building is leased or sold. F:\USERS\DHeiar\Spec Builiding Ordinance\20080825 Council Memo amending 15-59.doc Prepared by: Barry A. Lindahl, Esq. 300 Main Street Suite 330 Dubuque IA 52001 563 583-4113 ORDINANCE NO. 54 -08 AMENDING CITY OF DUBURUE CODE OF ORDINANCES CHAPTER 15 ARTICLE VI. SPECULATIVE SHELL BUILDINGS FOR COMMUNITY DEVELOPMENT ORGANIZATION BY AMENDING SECTION 15-59 SPECULATIVE SHELL BUILDINGS: DEFINITIONS; SECTION 15-60 EXEMPTION ALLOWED; AND SECTION 15-61 APPLICATION FOR EXEMPTION BY PROPERTY OWNER. Section 1. City of Dubuque Code of Ordinances Chapter 15 Article VI is amended to read as follows: ARTICLE VI. SPECULATIVE SHELL BUILDINGS OF COMMUNITY DEVELOPMENT ORGANIZATIONS AND FOR-PROFIT ENTITIES Sec. 15-59. Definitions: For the purposes of this article, the following definitions apply: Community Development Organization: An organization, which meets the membership requirements of this definition, formed within a city or county or multi-community group for one or more of the following purposes: (1) To promote, stimulate, develop, and advance the business prosperity and economic welfare of the community, area, or region and its citizens. (2) To encourage and assist the location of new business and industry. (3) To rehabilitate and assist existing business and industry. (4) To stimulate and assist in the expansion of business activity. For the purposes of this definition, a community development organization must have at least fifteen (15) members with representation from the following: (1) A representative from government at the level or levels corresponding to the community development organization's area of operation. (2) A representative from a private sector lending institution. (3) A representative of a community organization in the area. (4) A representative of business in the area. (5) A representative of private citizens in the community, area, or region. New Construction: New buildings or structures and includes new buildings or structures which are constructed as additions to existing buildings or structures. "New construction" also includes reconstruction or renovation of an existing building or structure which constitutes complete replacement of an existing building or structure or refitting of an existing building or structure, if the reconstruction or renovation of the existing building or structure is required due to economic obsolescence, if the reconstruction or renovation is necessary to implement recognized industry standards for the manufacturing or processing of products, and the reconstruction or renovation is required in order to competitively manufacture or process products or for community development organizations or for-profit to market a building or structure as a speculative shell building, which determination must receive prior approval from the city council of the city. Speculative Shell Building: A building or structure owned and constructed or reconstructed by a community development organization or afor-profit entity without a tenant or buyer for the purpose of attracting an employer or user which will complete the building to the employer's or user's specification for manufacturing, processing, or warehousing the employer's or user's product line. Sec. 15-60. Exemption Allowed: An exemption from property taxation is hereby allowed for new construction of shell buildings by community development organizations orfor-profit entities or the portion of the value added to buildings being reconstructed or renovated by community development organizations or for-profit entities in order to become speculative shell buildings. The exemption or partial exemption shall be effective for the assessment year in which the building is first assessed for property taxation or the assessment year in which the reconstruction or renovation first adds value and all subsequent years until the property is leased or sold or until the exemption is terminated by ordinance of the city council. Eligibility for an exemption as a speculative shell building shall be determined as of January 1 of the assessment year. If the shell building or any portion of the shell building is leased or sold, the portion of the shell building which is leased or sold shall not be entitled to an exemption under this article for subsequent years. An application shall be filed pursuant to Iowa Code section 4276.4 for each project for which an exemption is claimed. Upon the sale of the shell building, the shell building shall be considered new construction for purposes of Iowa Code section 4276.1 if used for purposes set forth in said section 4278.1. Sec. 15-61. Application For Exemption By Property Owner: An application shall be filed for each project resulting in actual value added for which an exemption is claimed. The application for exemption shall be filed by the owner of the property with the local assessor by February 1 of the assessment year in which the value added is first assessed for taxation. Applications for exemption shall be made on forms prescribed by the director of revenue and shall contain information pertaining to the nature of the improvement, its cost, and other information deemed necessary by the director of revenue. A person may submit a proposal to the city council to receive prior approval for eligibility for a tax exemption on new construction. The city council, by ordinance, may give its prior approval of a tax exemption for new construction if the new construction is in conformance with the zoning plans for the city. The prior approval shall also be subject to the hearing requirements of Iowa Code section 4276.1. Prior approval does not entitle the owner to exemption from taxation until the new construction has been completed and found to be qualified real estate. However, if the tax exemption for new construction is not approved, the person may submit an amended proposal to the city council to approve or reject. Section 2. This Ordinance shall take effect on publication. Passed, approved and adopted the 2nd day of September, 2008. Roy D. Buol, Mayor Attest: Jeanne F. Schneider, City Clerk EFFECT OF AMENDMENT ARTICLE VI. SPECULATIVE SHELL BUILDINGS OF COMMUNITY DEVELOPMENT ORGANIZATIONS AND FOR-PROFIT ENTITIES Sec. 15-59. Definitions: For the purposes of this article, the following definitions apply: Community Development Organization: An organization, which meets the membership requirements of this definition, formed within a city or county or multi-community group for one or more of the following purposes: (1) To promote, stimulate, develop, and advance the business prosperity and economic welfare of the community, area, or region and its citizens. (2) To encourage and assist the location of new business and industry. (3) To rehabilitate and assist existing business and industry. (4) To stimulate and assist in the expansion of business activity. For the purposes of this definition, a community development organization must have at least fifteen (15) members with representation from the following: (1) A representative from government at the level or levels corresponding to the community development organization's area of operation. (2) A representative from a private sector lending institution. (3) A representative of a community organization in the area. (4) A representative of business in the area. (5) A representative of private citizens in the community, area, or region. New Construction: New buildings or structures and includes new buildings or structures which are constructed as additions to existing buildings or structures. "New construction" also includes reconstruction or renovation of an existing building or structure which constitutes complete replacement of an existing building or structure or refitting of an existing building or structure, if the reconstruction or renovation of the existing building or structure is required due to economic obsolescence, if the reconstruction or renovation is necessary to implement recognized industry standards for the manufacturing or processing of products, and the reconstruction or renovation is required in order to competitively manufacture or process products or for community development organizations or for-profit; to market a building or structure as a speculative shell building, which determination must receive prior approval from the city council of the city Speculative Shell Building: A building or structure owned and constructed or reconstructed by a community development organization or a for profit-entity without a tenant or buyer for the purpose of attracting an employer or user which will complete the building to the employer's or user's specification for manufacturing, processing, or warehousing the employer's or user's product line. Sec. 15-60. Exemption Allowed: An exemption from property taxation is hereby allowed for new construction of shell buildings by community development organizations orfor-profit entities; or the portion of the value added to buildings being reconstructed or renovated by community development organizations or for-profit entities in order to become speculative shell buildings. The exemption or partial exemption shall be effective for the assessment year in which the building is first assessed for property taxation or the assessment year in which the reconstruction or renovation first adds value and all subsequent years until the property is leased or sold or until the exemption is terminated by ordinance of the city council. Eligibility for an exemption as a speculative shell building shall be determined as of January 1 of the assessment year. If the shell building or any portion of the shell building is leased or sold, the portion of the shell building which is leased or sold shall not be entitled to an exemption under this article for subsequent years. An application shall be filed pursuant to Iowa Code section 4276.4 for each project for which an exemption is claimed. Upon the sale of the shell building, the shell building shall be considered new construction for purposes of Iowa Code section 4276.1 if used for purposes set forth in said section 4276.1. Sec. 15-61. Application For Exemption By Property Owner: An application shall be filed for each project resulting in actual value added for which an exemption is claimed. The application for exemption shall be filed by the owner of the property with the local assessor by February 1 of the assessment year in which the value added is first assessed for taxation. Applications for exemption shall be made on forms prescribed by the director of revenue and shall contain information pertaining to the nature of the improvement, its cost, and other information deemed necessary by the director of revenue. A person may submit a proposal to the city council to receive prior approval for eligibility for a tax exemption on new construction. The city council, by ordinance, may give its prior approval of a tax exemption for new construction if the new construction is in conformance with the zoning plans for the city. The prior approval shall also be subject to the hearing requirements of Iowa Code section 4276.1. Prior approval does not entitle the owner to exemption from taxation until the new construction has been completed and found to be qualified real estate. However, if the tax exemption for new construction is not approved, the person may submit an amended proposal to the city council to approve or reject.