07-23-2003 Council Agenda - Laserfiche WebLink

Home Browse Search

0k Little Candid CCMMUIIITY PRIDE 1953 - 2003 515 Litte Canada Road, Little Canada, 5N 55117 -1600 (651) 766 -4029 / FAX: (651) 766 -4048 www.ci.little- canada.mn. us MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel Flanson, City Administrator DATE: July 18, 2003 RE: District Council #82 Development Agreement tV111YOR Michael I. Fahey COUNCIL Jim LaValle Matt Anderson Rick Montour Bill Blesener ADMINISTRd [OR Joel R. Hanson Attached is the draft development agreement with District Council #82 for TIF assistance related to soils correction. Staff is still working with the developer to finalize the terms of this agreement. Here are the key points: • Developer is asking for $408,025 of TIF assistance related to soils correction. Staff is meeting with Developer and their engineers on Tuesday to review the specifics of the corrections proposed. It may be possible to lower this number using alternative construction techniques. If we are successful, the amount of assistance would decrease by a corresponding amount. If we advance funds, we would have them repaid over the next 17 years at 5.5% interest. ▪ We are asking Developer to execute an assessment agreement guaranteeing a minimum market value of $4,000,000. They are agreeable to this. However, we must have the County Assessor approve this value as well to have a binding agreement. In any event, we believe a value of $3,500,000 is supportable. This generates about $75,000 Less total increment on a present value basis ($475,765 vs. 401,597) after allowing for administrative costs. (See Ehlers' spreadsheet attached.) • The Developer will be providing a guarantee of minimum tax increment payments to secure the repayment of our advance. While they have a good annual cash flow, this is a new organization formed by combining other smaller groups. Therefore, their assets base available to back up this guarantee is somewhat limited. • We have asked for a letter of credit of $60,000 to provide a cash surety to back up the TIF guarantee pledged by the Developer. The Developer is stating they are unable to do this, as it will impact their mortgage. (We will continue to work on this.) As of now, I am not comfortable recommending we advance funds until we know the outcome of the items I have previously listed. If we are able to lower the assistance amount and secure a higher value on the building, then I am less concerned from a risk standpoint. A letter of credit would further negate my concern. We will provide you with an update at Wednesday's meeting. Hopefully, we will be able to recommend an acceptable development agreement for your approval. cc: Frank Dunbar, District Council #82 Mary Ippel, Briggs & Morgan Mark Ruff, Ehlers & Associates