Osceola’s W192 Development Authority will be launching a new cash incentive program to spur redevelopment along the tourism corridor, and it’s banking the program with $2.5 million in seed funding.
The incentive program was included in the Development Authority’s proposed $5.5 million Fiscal Year 2021 budget, which the board unanimously approved on Thursday. The only other capital expenditure planned in the coming year is $2 million to complete the installation of LED streetlights. That project is underway and is spread over two years.
Executive Director Christina Morris had recommended launching the incentive grant program with $1.5 million, which would have brought the authority’s total budget in at $4.5 million – about $1 million less than previous years. But board members said they didn’t want the program to be cash-strapped in its first year, so they opted to add $1 million to the fund.
“We really see this as an evolution of our earlier grant programs, particularly to for the demolition and facade grants,” Chairman John Classe said. “Those were pretty restrictive, and they were relatively small dollar amounts that could only do minor improvements along the corridor.”
Classe told GrowthSpotter the board wanted to raise the stakes by offering more money and greater flexibility in how it’s spent, but also to be more selective about what types of uses were eligible.
“This bucket of money is a way for us to target and be involved with significant projects that could be real game changers for the corridor,” he added. “This is our first stab at it, so the program may evolve over time.”
The initial concept presented by GAI Consultants’ Community Solutions Group would create a three-tiered grant based on the size of the property: $75,000 for projects smaller than 1 acre; $200,000 for projects 1-10 acres in size and $1.5 million for anything over 10 acres.
The program then establishes a point-based system to score projects based on the location, type of use and total budget. The property owner could spend the grant funds on anything from environmental cleanup, to demolition, to building and roof repairs.
The scoring criteria awards the most points for projects where the developer plans to invest at least $1 million and if the property has been vacant for over a year or if it has active code violations. Location also matters. A stand-alone building on W192 between intersections would receive 15 points, but one at an intersection with another state or federal highway would receive 25 or 30 points, respectively.
The program also would award more points (15) for desired uses, such as a flag hotel or workforce housing. A full service restaurant would receive 5 points, but a fast-food restaurant or gift shop would receive none. A project would have to score at least 60 points to qualify, and the size of the grant would increase based on the number of points.
A project that scores 60-70 points would be eligible for up to 50% of the grant, based on the size of the property. One that scores 71-90 points would be eligible for 75% of the maximum grant. Anything over 90 points could collect the full grant.
An example might be a recent proposal by California-based Spruce Grove Inc. to buy the Saratoga Resort at 4787 W. Irlo Bronson Memorial Hwy and convert the vacation rental townhouse units to workforce housing. In a pre-application meeting last month, the developers learned they would have to install sprinkler systems in the townhomes if they changed the use from hospitality to multifamily.
The resort is over 12 acres, so under the new incentive program it starts at the highest level. The developer could qualify for a $750,000 grant to offset the cost of fire sprinklers and other structural improvements as long as their private investment is at least $250,000. The grant could even be used to pay school impact fees, which is the single biggest expense in most hotel-to-residential conversions.
“With this incentive, we’re a little more open on what the money can be used for, so we think it will be enticing,” Classe said.
Only a true game changer project would qualify for the $1.5 million grant, and it would need a near-perfect score. Here’s how you get there.
You take a property like the Orlando Sun Resort property at the I-4 interchange to get the 30 points for location. The private investment would have to exceed $1 million to score 40 points. The developer would earn 15 points because the property has been vacant over a year, and another 15 if they bring a flag hotel or mixed-use development.
Owned by Fortuna Realty in New York, the one-time Hyatt resort is in a prime location at the northeast quadrant of I-4 and W192. Built in 1974, the sprawling two-story motel sits on 77 acres right across from Celebration and minutes from Disney.
Classe said the board members had properties like the former Hyatt in mind when they created the program and set the max at $1.5 million.
“We thought if we had a larger source of funds, we could really make a difference, and this program gives us the vehicle to do that,” he said.
Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407)420-6261, or tweet me at @LKinslerOGrowth. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.