07-22-98 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL JULY 22, 1998 The City AdminisfrlCOr was not s~ire tl~at most TIF a~reements had this provision guara~~teeing 1 tax increment shortfall. The Administrator pointed out tllat tl~e TIF District h~s done fine and the guarantee has not come into pl1y. Morelan suggested tl~at ratl~er th~n eliminate the guarantee clause, the amount be adjusted to set the minimum increment equal to the bonded debt payment. The Admiuishator agreed that this would be wise. Wes Johnson, Griftin Coinpany, pointed ouC Chat ICandice Heights II is not competitive in the marl<et. The tax burden on the propeity is unusually hi~h given thlt the buildin~ is sm~IL Kandice I-Ieights I is becoming competitive with other properties in the marl<et, however. Johnson reported th~t they are asl<ing Co be put on a competitive basis witl~ similar proper[ies, b~iC ~inderstood that Che City neetls ro get a ret~irn on its bonds. P1hey supported Council Member Morelan's recommendation agreeing Y1~aC the City needs to ensw~e thlt the project cash t7ows so that the City is not subsidizing this property. I-Iowever, the City would not want to make money at the property owne~'s expense. Wes Johnson indicated that he does not laiow the impact ofMorelan's recommendation unYil he I<nows t~he numbers. Johnson pointecl out, however, that the properCy taxes being p~id on the ICandice properties are hi~her than wl~at simil~r properties ~~ay. Johnson reported th~t he has a pw'cllase a~reement in pface on Kandice L Tl~e TIF guarantee is an issue affectin~ the s11e of this property. Scalze poii~ted out tl~at the City is awlre that Kandice II was a small project that wider~itilized the property. Tl~is is why the gulrantee is in the development agreement. Scalze reported that TIF was used to help develop these sites wiCh the idea thlt additional development would occur as welL However, the developer only completed Kandice Hei~hts I and II. Johnson ~~reed th~t Kandice II undeiutilized the site 2ntl provided no economies of scale. Fahey asl<ed Yhe effect of Morelan's recommendation. The City Administr~tor replied thlt the guarantee would equal debt service payments oi~ the bonds. Those amoiu~ts are lower tl~1n the increment projected 1s current class raYes me~ning 2 small sw~pl~is will still exist. Morelan noted that tlie City will ~et enou~h revenue to pay the bonds. Morelan felt it f~ir to set the miuimum at a point that allows the bonds to cash flow.