03-09-00 Planning Comm. Agenda - Laserfiche WebLink

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MnroR Michael I. Fahey 515 Little Canada Road, Little Canada, MN 55117-1600 (651) 484-2177 /FAX: (651) 484-4538 Email: cityhall@ci.little-canada.mn.us MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel Hanson, City Administrator DATE: February 4, 2000 RE: Masterpiece Home Development/TIF Assistance COUNCIL Beverly Scalze Jim LaValle Steve Morelan Sob Pedersen ADMINISTRATOR Joel R. Hanson Iit order to meet the developer's timelines for the property at Jackson Street and Little Canada Road, we need to form a new tax increment financing (TIF) district for this azea. In discussing this matter with Rusty Fifield of Ehler's & Associates, we are proposing an amendment to our existing TIF District 3-2. Attached is a spreadsheet which shows the financial implications of this transaction. You will note that we need seven years of increment collection on a "pay as you go" basis to recover the assistance to be provided. I have based the planned assistance on Mr. Howe's land acquisition cost per unit had he proceeded with the 34 unit development prior to discovering the poor soils. With the per unit cost of $14,560 times the reduced number of units (22), the equivalent land cost would be $320,320. This leaves a difference of $174,680 to be recovered. When adding capitalized interest, the total TIF assistance needed is just under $220,000. This district has more than sufficient life to recover this amount. That fact was also verified by Mr. Fifield in his earlier review of this project. One other item I would like your direction on relates to the possible use of excess TIF generated to assist with the development of our park in this area. The concept I would propose would involve the City advancing the funds for the park development and recovering them from future TIF proceeds after the developer has been reimbursed. This would mean that our dollars would not start to be recovered until approximately ten years into the project. I believe we would be able to recover capital costs plus accrued interest on the money at that time. A rough estimate would indicate we could expend approximately $120,000 of capital costs and fully recover them plus accrued interest at 9.5% by the end of this district. It should also be noted that we would not have to utilize the full amount and could leave any excess increment to assist with the redevelopment project at Rice Street and Little Canada Road. I have asked Rusty Fifield to provide further input on this matter prior to Wednesday's meeting. Page 10