CITY COMMISSION AGENDA MEMO June 2, 2021 FROM: Jason Hilgers, Deputy City Manager MEETING: June 15, 2021 SUBJECT: Ordinance No. 7538 Amending the South STAR Bond Area Project Plan – Manhattan Museum of Art and Light PRESENTER: Jason Hilgers, Deputy City Manager BACKGROUND The owners of Master Teacher, Bob and Tracey DeBruyn, have approached the City about a potential Sales Tax and Revenue (STAR) bond project in the downtown area. They have a vision of constructing and operating a three story, 50,000 sq ft state of the art museum featuring an immersive exhibit and interactive displays, creating a one-of-a-kind, hands- on, art and cultural attraction. The preliminary budget at this point for the project is $43,600,000. There is a good example in Paris, France of the primary feature and “attraction” of what they would like to build and operate. Here is a link to a video highlighting the projection of art in Paris at Atelier des Lumieres https://youtu.be/gIc_533Uf54. In order to proceed, the City would have to adopt an ordinance amending the Project Plan (the “Plan”) for the existing South Project Area in the STAR bond district. The DeBruyns, through their entity, The Museum of Art and Light Land, Inc., a Kansas nonprofit corporation (the “Corporation”), have provided the City a proposed Amendment to the Plan (attached). The Corporation is requesting that the City adopt an amended redevelopment plan, and eventually issue the additional STAR bonds. The City anticipates these bonds would be special revenue bonds with no general obligation or moral obligation of the City. There is a revenue history back to 2006 on the existing bonds, which should assist in validating the forecasting of revenue for the next five years. It is worth noting that even in 2020 (COVID-19 impacted) the district generated $5 million in STAR revenue. The DeBruyn’s have hired several resources to assist with the necessary documents and have started communication with the State and the Department of Commerce. It is necessary to obtain the approval of the Secretary of Commerce before any STAR bonds could be issued. On June 1, 2021, the City Commission conducted a public hearing as required by statute and approved first reading of an ordinance approving a Project Plan Amendment to the South Project Area Redevelopment Project Plan and Special Bond Project Plan for the Manhattan Downtown Redevelopment District for the Manhattan Museum of Art and Light. DISCUSSION The amended plan (attached) is a comprehensive document prepared to highlight the significance and impact the potential Art and Light Museum will have in Manhattan and the State of Kansas. The Plan identifies a total budget of $43,600,000 with a net STAR bond proceeds funding $23,000,000. The remaining roughly $21,000,000 would be from private debt and equity. The DeBruyn’s anticipate setting up a significant endowment to operate the facility. There is no expectation of the City to fund construction or operations beyond leveraging the STAR bonds. The consultants have forecasted 75,000 visitors to the Art and Light Museum, with 27% coming from outside the state, and 40% from outside of 100 miles. The City has received a letter from the Kansas Department of Commerce awarding support for the project. In addition to the adoption of the amended project plan, City Administration has prepared a Pre-Development Agreement (attached) for the development of the Art and Light Museum. The agreement focuses on a number of pre-development activities that the City and developers of the Art and Light Museum realize will have to be part of a future development agreement. Key areas addressed in the pre-development agreement are: 1. The Corporation is given the Exclusive right to negotiate with the City for this Plan Amendment; and the Corporation is paying the City $5,000 as compensation for that right. 2. STAR requirements (amended plan, Secretary concurrence, bonds) 3. Pre-Development Activities a. An Agreement on the terms of a Transfer of Property from the City to the Corporation, which would also include provisions as to: i. Demolition of City parking lot; ii. Encroachment of the project on KDOT right-of-way; and iii. the relocation of public and private utilities. b. An Agreement on the provisions of an Amendment to the existing PUD c. Project timeline and budget FINANCING Amending the Project Plan for the Art and Light Museum does not have a direct financial obligation of the City. If the Secretary approves the new Art and Light museum, the City will continue to dedicate its share of City sales tax generated within the TIF/STAR District and the $90,000 in transient guest tax annually until 2027. ALTERNATIVES It appears the Commission has the following alternatives concerning the issue at hand. The Commission may: 1. Approve Ordinance No. 7538 approving a Project Plan Amendment to the South Project Area Redevelopment Project Plan and Special Bond Project Plan for the Manhattan Downtown Redevelopment District and authorize the Mayor and City Clerk to execute a Pre-Development Agreement. 2. Deny the measure. 3. Modify to meet the needs of the Commission. 4. Table the item. RECOMMENDATION City Administration recommends the City Commission approve an ordinance approving a Project Plan Amendment to the South Project Area Redevelopment Project Plan and Special Bond Project Plan for the Manhattan Downtown Redevelopment District and authorize the Mayor and City Clerk to execute a Pre-Development Agreement. POSSIBLE MOTION Approve Ordinance No. 7538 approving a Project Plan Amendment to the South Project Area Redevelopment Project Plan and Special Bond Project Plan for the Manhattan Downtown Redevelopment District and authorize the Mayor and City Clerk to execute a Pre-Development Agreement with The Museum of Art and Light Land, Inc., for the Manhattan Museum of Art and Light. JH 21027 Enclosures: 1. Ordinance No. 7538 2. STAR Bond Project Plan Amendment 3. Pre-Development Agreement 4. Site Plan 5. Letter from Kansas Department of Commerce Gilmore & Bell, P.C. 05/13/2021 ORDINANCE NO. 7538 AN ORDINANCE APPROVING A PROJECT PLAN AMENDMENT TO THE SOUTH PROJECT AREA REDEVELOPMENT PROJECT PLAN AND SPECIAL BOND PROJECT PLAN FOR THE MANHATTAN DOWNTOWN REDEVELOPMENT DISTRICT. WHEREAS, the City of Manhattan, Kansas (the “City”) is a municipal corporation duly organized and validly existing under the laws of the State of Kansas as a city of the first class; and WHEREAS, pursuant to the provisions of K.S.A. 12-1770 et seq., as amended (the “Prior Act”), the City Commission of the City (the “City Commission”), has heretofore adopted Resolution No. 090605-A, which made a finding that the City is considering the establishment of a redevelopment district pursuant to the Prior Act and the Master Plan, set forth the boundaries of the proposed redevelopment district, provided a summary of the proposed redevelopment district plan, called a public hearing concerning the establishment of a redevelopment district for October 11, 2005 and provided for notice of such public hearing as provided in the Prior Act; and WHEREAS, a public hearing was held on October 11, 2005, after due published, delivered and mailed notice in accordance with the provisions of the Prior Act; and WHEREAS, upon and considering the information and public comments received at such public hearing, the City Commission on October 11, 2005 approved, on first reading, an ordinance making certain findings necessary to create the redevelopment district discussed at such public hearing; and WHEREAS, the City Commission on November 15, 2005, adopted Ordinance No. 6512, which made a finding that due notice of the public hearing conducted on October 11, 2005 was made in accordance with the provisions of the Prior Act, that the boundaries of the proposed redevelopment district described in Resolution No. 090605-A is located within an enterprise zone and therefore within an eligible area under the Prior Act, that the conservation, development or redevelopment of such area is necessary to promote the general and economic welfare of the City and created a redevelopment district within the City, known as the Manhattan Downtown Redevelopment District, the boundaries of which were defined in said Ordinance (the “District”); and WHEREAS, the City, in consultation with the City's Planning Commission, prepared an initial South Project Area Redevelopment Project Plan and Special Bond Project Plan dated January 30, 2007 (the “Redevelopment Plan”); and WHEREAS, on February 5, 2007 the Planning Commission of the City made a finding that the Redevelopment Plan is consistent with the intent of the City's comprehensive plan for the development of the City; and WHEREAS, on March 15, 2007, the City Commission adopted Ordinance No. 6612, which made certain findings required by the Prior Act and adopted the Redevelopment Plan; and WHEREAS, on November 27, 2006, the Kansas Secretary of Commerce (the “Secretary”): (a) determined that the District constitutes a major commercial entertainment and tourism area and is 600444.20064\ORDINANCE – STAR PROJECT PLAN AMENDMENT-2021 therefore an “eligible area” under the Prior Act and (b) approved and designated the Downtown Redevelopment Project described in the Redevelopment Plan as a “special bond project” within the meaning of the Prior Act and on December 28, 2006 approved the issuance of up to $50,000,000 in STAR bonds; and WHEREAS, K.S.A. 12-17,160 et seq., as amended, which amended and supplemented a portion of the Prior Act (the “STAR Bond Act”), particularly