City money sought for Keystone

But time is of the essence, said Rex Nelson, executive director of the McCook Economic Development Corp. He asked for support of the project from the city by the way of tax increment financing for 15 years, which would signal to lenders that the city is willing to be on board with the project, he said, and the possibility of city financing.

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The council agreed to a special meeting Friday at 6 p.m. in City Council Chambers to consider a "motion of intent" to use TIF, where future tax increases of the property are used to pay back a bond that funds improvements.

The council could also be asked at Friday's meeting to be willing to use the city's bonding ability to pay for constructions costs incurred for the project, which would then be paid back by the future tax increments along with about 25 percent of the MEDC's portion of revenue from the LB840 half-cent city sales tax.

Nelson said total cost of renovating 24,000 square feet of the building into a multi-use business center will come to $4.065 million, with about 50 percent of eligible costs paid by a federal grant from the Department of Commerce Economic Development Administration and a smaller grant from the USDA at $76,000.

A total of $1.02 million would be funded by TIF at $320,000 and a LB 840 bond financed by a portion of the MEDC half cent sales tax at $700,000.

The rest of the funding would come from donations and foundation investments at $100,000 and the remainder of costs would be term debt financing with local banks.

Revenue from the LB840 half-cent sales tax, that began in July of this year, is split evenly between the city and the MEDC. Estimated revenue for the MEDC will be about $360,000 a year, Nelson said. Payments on the $700,000 bond for the Keystone would be about $93,000 annually or about 25 percent of what the MEDC received from sales tax revenue, Nelson said.

The renovation would rehab floors one through four, with Class A office space on floors two through four. It would also include interior demolition for floors five and six for future development.

The historic, seven-story structure was built in 1922 and has fallen into disrepair. The building, assessed at $120,000, is currently owned by Dale and Joan Stewart, and Nelson clarified that the MEDC would soon purchase the building. After renovation, he said the building would be appraised at approximately $2 million, according to county estimates.

It's a big project but also a tremendous opportunity, he told the council. The restored building could be a sign of community pride rather than a sign of decay, Nelson explained, as the refurbished structure would also keep the property in the tax rolls and might stimulate investment in other areas downtown.

Demolition costs alone would run about $600,000 and the city would be left with a parking lot, he said.

Councilman Lonnie Anderson asked how much rent would be generated per month. Nelson did not have a monthly figure but said at 90 percent occupancy, it would be about $143,000.

He added later in the meeting that 21st Century Systems has already committed to be the anchor tenant, and would expand to create 20 new jobs, generating $3.7 million annually. The company would pay above-market rent at the Keystone, he added.

In response to a question by Councilman Aaron Kircher, Nelson said the area where the Keystone is situated was designated blighted some time ago. After the renovation, the area would still be designated as substandard because of other buildings in the area, he said.

After the meeting, Nelson said the EDA federal grant no longer has a construction date tied to it.

If TIF is approved, it will require that a specific redevelopment plan with a cost benefit analysis be presented to the City of McCook Redevelopment Authority board, along with scheduled public hearings.

Other projects in the city that have benefited from TIF include Valmont Irrigation Systems, Landmark Apartments (the original YMCA building) and the CRT/Sitel company.