Economic Vitality Committee Agenda and Packet 2021 09 24

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SUBJECT: STRATEGIC PLAN ITEM #1-3 DATE: AUGUST 20, 2021 PAGE 2 OF 8 One of the more significant points of negative feedback about the existing program is around the requirement that a business may not sign a lease before being approved for assistance. It generally takes between three to four weeks from completed application to City Council consideration; most of the variation in timeline is due to Council's advanced agenda. If an applicant is already negotiating on a commercial space in Louisville, a three to four week delay could be problematic to securing the space. Councilmembers expressed an interest in more flexibility around this eligibility factor but reaffirmed that philosophically, incentives are still meant to help draw and retain businesses in Louisville, not to reward those that have already selected the community. Staff feels there are two changes that would both create more flexibility without dramatically altering the existing process. First, the program could require that an application must be filed prior to lease signing. Similar to today, staff would simply confirm that a lease has not yet been signed, but would not then prohibit a lease transaction while the agreement for incentives is being prepared. Alternatively, the City could allow a 30 day window between incentive approval and lease signing. Under this structure, applicants could still submit an application after signing a lease, but there would only be 30 days to complete the process. That timeline is generally feasible from our current standards, but does leave the applicant with some risk. Importantly, it would still be a best practice and the most assurance for an applicant to submit and receive approval prior to signing a lease —because then the business has an agreement of the City's obligations already in -hand. However, there are situations where businesses are not aware of our programs at an early enough stage to go through the process. It is most common that smaller businesses miss out on incentives. Staff generally finds corporations and larger businesses are aware of such opportunities or have representatives to pursue them on their behalf. The other option around timeline for approval is that incentive agreements below a certain threshold are permitted to be approved administratively. This would likely be very limited to existing businesses that are moving or expanding and do not have significant tenant improvements and may not be large tax generators. In the current process, staff prepares an estimate and recommendation of incentives and presents it to the City Manager for concurrence before proceeding to City Council. Incentivizinq Outcomes There are several clear themes from the recently adopted Strategic Plan that are helpful to consider for how to align incentives with the outcomes the City hopes to achieve with its work over the next three to five years. Below is a summary of the key themes from staff's perspective, which is then followed by ideas for new or revised incentives —to present a menu of options for the EVC's consideration. • Desire to incentivize the use of existing vacant commercial space, especially spaces that have struggled with vacancy or have vacancies spanning multiple years. Agenda Packet P. 14