04-14-2004 Council Agenda - Laserfiche WebLink

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515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766-4029 / FAX: (651) 766 -4048 www.cLlittle-eanada.inn.us MEMORANDUM TO: Mayor Fahey and Members of the City Council FROM: Joel Hanson, City Administrator DATE: April 9, 2004 RE: Kandice Heights 1 Development Agreement Amendment MAYOR Michael L Fahey COUNCIL Jinn LaVaile Matt Anderson Rick Montour Bill Blesene- ADMINISTRATOR Joel R. Hanson As part of the initial Kandice Heights I development agreement dated May 1, 1990, an annual TIF guarantee of $54,675 was required. When the property was sold in the late 90's, we agreed to reduce the guarantee to an amount equal to our annual debt service requirements for the bonds associated with this project. This property generated TIF exceeding the debt service requirements until legislative changes started impacting the class rates for commercial property. As a result, TIF shortfall amounts have occurred in 2000, 2001, and 2004. (They would have occurred in 2002 and 2003 if the debt service payments had not dropped by about 25% during these years.) See the attached spreadsheet. I have spoken with the owner of this property, Mr. Jeff Royce. The concept I believe he will agree to is to pay us $11,910 at this time as payment in full for all past and future TIF guarantees. (Please note that the debt service on this issue will be paid off in 2005.) In return, we will eliminate the letter of credit requirement whereby he pays a fee to provide a LOC in the amount equal to the annual TIF guarantee. This will save him over $1,100 a year in 2004 and 2005. That leaves him a net cost of $9,694 to fulfill his TIF guarantee requirements. (Foregoing the TIF guarantee LOC under this arrangement poses no risk to the City.) Subject to Mr. Royce's final approval of this concept, I would recommend the City Council approve this amendment to the Kandice Heights I development agreement. cc: Jeff Royce