City approves tax funds for Jennifer Lane development

At Tuesday's city council meeting members voted to allocate occupational tax funds to a new street in hopes of opening up an area for new development. However, the decision did not come without lengthy debate.

"We are here to seek funding to create Jennifer Lane," said Manmohan Patel of Krishna management.

Patel's company wishes to extend Jennifer Lane to its intersection with Highway 17 J in order to meet with the planned extension of Silverberg Drive, creating an access point for the hotel it plans to build.

Improvement districts approved at the last council meeting included the access point on Jennifer Lane between Sapp Brothers and Comfort Inn and an extension of Silverberg Drive.

The state will require extra surface thickness on Jennifer Lane to cope with the traffic, as well as additional turn lanes.

"The funding we have is not enough to take care of this additional cost," Patel said.

Patel came before the council to ask the city to apply the 2 percent occupancy tax that will be taken from Patel's anticipated hotel over the 20 year life of the street improvement district.

"Once our business is open and running, we are anticipating generating about $40,000 a year on a two percent occupancy tax," Patel said. "Not only that, our hotel will generate close to $400,000 in additional payroll per year."

Krishna is planning the hotel on two of the lots that it owns in the Wal-Mart area, so three additional lots currently in the company's possession will be open for development in the future. The company will be giving the land to the city for construction of Jennifer Lane.

"We are giving up about $150,000 worth of vacant ground to be donated to the city," Patel said.

In this area ground sells for an average of $5.75 per square foot. Once these lots are developed, it will increase the value of this property, Patel said.

Development of infrastructure for the whole area, including improvement districts for Silverberg Drive, as well as water and sewer in the area that was approved at the last city council meeting, will cost around $1.34 million, according to city manager Gary Person.

"This was in a redevelopment plan that was adopted back in 2008 that included all this infrastructure," Person said. "But it did start the clock ticking on the redevelopment cycle."

Two of the abutting property owners previously agreed to pay for infrastructure and utilities when the redevelopment plan was created.

This redevelopment plan will utilize TIF, or tax increment financing, which uses the predicted future tax revenue that will be generated from the project to fund it. The city anticipates that these funds will fall considerably short of what is needed to pay for the infrastructure.

"What M.P. (Patel) is proposing would help us take care of Jennifer Lane and help us be able to put more of the TIF revenue toward some of the other infrastructure as well," Person said.

Current estimates for Jennifer Lane come to around $400,000. When extra state requirements are added in the cost might bump up to around $500,000, Person estimated.

When revenue from property taxes and occupancy tax were added together, councilman Mark Nienhueser wanted to know how much time it would take to pay back the construction costs of Jennifer Lane.

"You're dealing with some unknown factors there," Person said.

Nienhueser asked for an estimate and wondered if it would take 1, 5 or 15 years. The city knows that it will receive seven years of TIF funding. The improvement districts for all the area infrastructure will be backed by a 20 year bond that will be required by the developer. No one could be sure of a time frame to pay off the road construction. Not all of the TIF money will go toward Jennifer Lane.

"All of those infrastructures will benefit from what's left on the TIF cycle," Person said. "So it's applied on a percentage basis to each of those districts."

Nienhueser indicated that he would like to see a cash flow schedule so the council could estimate a reasonable time frame for use of the occupancy tax to pay for the street.

"The city is putting forth the tools to make this happen," Nienhueser said. "What we need is the developer to execute it in a timely fashion and it's more important that you get the facilities built than that you get the last dollar per square foot out of the land."

If the city is providing all the money for the infrastructure so the company can sell the property for a larger price tag, Nienhueser expressed concern that the developer would sit on the land, waiting for prices to rise before selling to other interested parties.

"There needs to be some blood in the game for you guys to execute in a timely manner," Nienhueser said. "The sooner you get the property sold and buildings built up, the sooner this gets paid back and everybody goes on."

If additional businesses developed on the land, they too would contribute taxes to repayment for the infrastructure. Patel assured the council that if the road is built, developers will be more interested in the land.

"When communities decide they are doing something in the town, people, they start calling," Patel said.

He has owned this ground for six and a half years with no buyers, he added.

"If I don't have any help from the city to develop that, I won't be able to develop either," Patel said. "That's the reason that we couldn't do anything for the last six years."

Krishna is investing around $6 million in the Sidney area.

"That $6 million is yours," Patel said. "It's going to be in Sidney forever."

Krishna is taking a risk by building in this community, he argued.

"Without the city's help, we will not be able to move forward," Patel said.

The area is already congested during busy times, but once the road is constructed all businesses current and future will have better access.

"We feel this is a critical access point to a lot of revenue sources," Person said.

Making the area more traffic-friendly will benefit the city greatly, he added.

"If we work together, as a team everyone will have a really good situation," Patel said. "Everybody will win."

Nienhueser argued that Patel isn't donating the land for the road out of the goodness of his heart, but because it's necessary for the development. The council discussed putting a ten year limit on the occupancy tax contribution, but Patel insisted that there was no way that it would be paid in 10 years.

"I really would like to have that open until paid," Patel said. "If we have additional revenue it will pay off faster."

Nienhueser expressed a desire that the agreement not be open ended. The improvement district only goes for 20 years, Person said, which would limit the occupancy tax contribution to the same time frame.

"I think that entryway is gonna be a crucial part of that development," said councilman Roger Gallaway.

The council ultimately approved use of occupational taxes to fund the street, with a 20 year limit.

Shivam Patel, who works for Krishna Management Inc. in acquisitions and development, spoke with the council about the hotel his company is planning for the area in question.

Krishna owns and operates 11 properties in Wyoming, Montana, Colorado and Nebraska. The company started working in Nebraska around 10 years ago in Grand Island and is continuing to move its businesses west.

Krishna plans to build a Fairfield Inn and Suites, Marriott in Sidney.

This will be a modern hotel with cool, bright colors. It will feature a breakfast area, 24 hour coffee and an indoor pool. The smaller size rooms and standing showers in the bathrooms with cater to business travelers.

"This will be the first building in this area that will be built to this spec," Patel said.