The owner of The Market Common and the surrounding area could have five extra years to build more housing and other planned development and finish putting in nearly $5 million worth of public improvements under a new agreement that got an initial nod by the City Council on Tuesday.
The agreement between the city and subsidiaries of property owner Leucadia National Corp. would keep the zoning the same to give the group five more years to build its planned housing developments and finish nearly $5 million of public streetscape, utilities and streetlights that go with those developments. The agreement extends a contract the two sides entered into in 2006, with the first phase - The Market Common stores with upstairs living units - already done.
More housing was planned five years ago, but got off track when the recession hit and the real estate market busted, and that's why the owners asked for more time, officials said.
"There are still public projects, mainly water-sewer, roadway infrastructure to be completed," City Manager Tom Leath said.
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Construction on some of the housing already is under way, including developments by Dock Street Communities. Leucadia and its subsidiaries plan to move forward to sign on developers to build more housing units as the market dictates, Joseph O'Connor, a Leucadia vice president, told the council.
"The sooner, the better," he said, declining to comment outside of the council meeting.
The original agreement with the owner expires in July. The new agreement extends the contract five years, adds the new owner of The Market Common - BEI-Beach LLC, a subsidiary of Leucadia that bought the property out of foreclosure - and reduces the letter of credit from the owners from $10 million to $5 million.
But some council members didn't support lowering the amount the owners must put up as a guarantee, saying the $5 million might not be able to cover the costs of the public improvements in the coming years, especially with fuel prices already rising.
"Some of that is going to have an effect on future construction," Councilman Mike Lowder said. "I just want to make sure that at the end of the day, the amount of money is there."
The city shouldn't give up the original $10 million line of credit, said Councilman Wayne Gray, adding that the city needs to have enough money guaranteed to be able to put in the roads, streetlights and other items if costs rise, the developer walks away or there's some other issue that leaves the city on the hook.
"I'd rather be safe than sorry," Gray said.
Other council members said the $5 million is enough because it covers the estimated cost, with a bit of a cushion.
"I just can't see things changing that much," Councilwoman Susan Grissom Means said.
The $4.3 million in public improvements would be done in phases, with the first set across from Valor Park expected to be done in June, and the last set expected to be complete in January 2016, according to the revised schedule.
The council unanimously gave an initial nod to the development agreement, with a final vote and public hearing scheduled for March 22. The council also approved an updated schedule for the public improvements, with Gray and Councilman Randal Wallace voting against it.
Council members said they support the project and want to see it succeed.
"We want to provide as much flexibility as possible to respond to the market," Gray said.