10-28-2015 Council Packet - Laserfiche WebLink

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515 Little Canada Road, Little Canada, MN 55117-1600 (65 I) 766-4029 / FAX: (651) 766-4048 www.ci.little-canada.mn.us MEIN/IORANDUM TO: Mayor Keis & Members of the City Council FROM: Joel Hanson, City Administrator DATE: October 23, 2015 RE: Bally's Redevelopment Considerations MAYOR John Keis COUNCIL Rick Montour Michael McGraw Tom Fischer Christian Torkelson ADMINISTRATOR Joel R. Hanson Mr. Steve Wellington of Wellington Management has entered into a purchase agreement for the form Bally's Fitness site off of Minnesota Avenue. He is trying to put together a package that will allow for a new fitness club to be constructed on the site. To make the project financially feasible, tax increment financing would be needed. To make this development happen, the developer is guaranteeing a maximum property tax per square foot for the term of the 15 year lease. (Note: This is the developer's decision relative to his negotiations with the prospective tenant and not typical for this type of transaction.) TIF cannot be used for that specific purpose. However, we can use it for other eligible costs (land write down, parking, soil corrections, etc.) that could be structured in a manner that corresponds to the tax guarantee component; i.e. TIF would only be in play if the guarantee kicked in and then only to the extent increment is available. The exact nature of how this may work is too complicated for this memo, but we would like to review the general concepts at Wednesday's workshop to see if it may be a project you want to pursue. I should also emphasize that closing on the purchase agreement is contingent on a viable project. Mr. Wellington, his associate Todd Kaufmann, and Mark Ruff of Ehlers will also be present to participate in this discussion. I have also attached is some background information on TIF to aid in your consideration of this concept. cc: Mark Ruff, Ehlers Todd Kaufman, Wellington Management