10-24-88 Council Special Minutes

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MINUTES City Council October~ 24, 1988 Scalze pointed out that when the City fir•st considered Tax Increment Financing as a tool to attr•act development, it made the decision that the City would be an Option B community. Scalze asked why the City would be considering Option A at this point. The City Auditor went on to explain the situation with the Lee project and the developer~'s need for• $140,000 in TIF assistance and the effect of the fair market value the pr•oject will be given on this amount of assistance. The Auditor~ r•eviewed these figures as contained in his repor•t. The Auditor• then reviewed his recommendation as contained on page 15 of his r•eport. The Auditor pointed out that in this instance the City will have to decide if it will allow a developer to make an offer to the City with r•egard to the amount of TIF a project will receive, or if the City will give the developer a fairly rigid set of guidelines and tell the developer• that he must abide by these quidelines. Scalze asked who pr~ovided the City with the financing market value for• the pr•oject. The Auditor• believed that that figure was provided by Larry Lee. The Auditor went on to explain that the difference in the two market values referred to in his r•eport is the land costs versus land costs valued as high as possible including soft costs and pr•ofit. Wilson agreed that the difference was pr~ofit. The City Auditor pointed out that the key issue is the effect on City tax rolls. The Auditor• r•eported that the financial information that he reviewed for the TIF pr•oject was sketchy and it was unclear• what the market value for the project would be. The Auditor• stated that in reviewing this information he was unsure of the City's intent and whether~ the City had commited to pr~ovide 10% in TIF assistance based on a$1.4 million pr•oject, or 13% based on a$1 million project. Scalze pointed out that the issue was confusing to the Council who relied on the advice of its consultants. However, Scalze pointed out that the Council's intent was to provide 10% to the developer and retain 5% for other City pur~poses. The Auditor• asked if the intent was to pr~ovide 10% of assistance for• a $1.4 million project. Blesener agreed that this was the Council's intent. The City Cler•k pointed out that Larry Lee appr~oached the City and infor~med the City that he needed $140,000 in TIF assistance to make his pr•oject work. Wilson r•epor~ted that the appr•oach taken in this pr~oject was not uncommon. Page -2-