07-23-2003 Council Agenda - Laserfiche WebLink

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o{ Little Candgd COMMUNITY PRIDE 1953 - 2003 515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766 -4029 / FAX: (651) 766 -4048 www.ci.little- canada. ma us MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel Hanson, City Administrator DATE: July 18, 2003 RE: Sherman Associates Redevelopment Overview MAYOR Michael I. Fahey COUNCIL Jim LaValle i\Iart Anderson Rick Montour Bill Blesener ADMINISTRATOR Joel R. Hanson We are still putting the finishing touches on the details of the agreements for the townhome (Villas) and commercial (Village) components of the Rice Street/Little Canada Road Redevelopment project with Sherman Associates. The development agreements and purchase agreements for each of these components are included under tabs 15 through 18 of your agenda packets. Immediately following this memo are two summaries of the key points of each of these development agreements. Attached is a two page financial analysis of this project as prepared by Ehlers & Associates. While the deal works, it is far from cash rich. On the plus side, we have not built in any inflationary increments. On the negative side, more changes to the property tax class rates could jeopardize the cash flow and cause the Developer's guarantee to kick in. You will also note that we have pledged increments from other projects to make the numbers work. We also have a $350,000 letter of credit to secure construction of the commercial components that combines with the Developer's financial guarantee of a minimum tax increment collection to increase our security. The letter of credit can be released when upon the Developer's attainment of performance as follows: $100,000 when the 26,000 sq. foot office building is 50% complete. An additional $100,000 when it is substantially complete. The remaining $150,000 will be release when the other three buildings contemplated on the Budget Power and DeLonais property are complete. Also attached is a memo from the City Planner dealing with alternative layouts for the US Bank site should they decide they want back into the project. Rough sketches of the possible layouts are also attached. (Note: We are requiring Mr. Sherman to send a letter to them restating his earlier, verbal agreement with them. In this letter, Mr. Sherman will be indicating that if they want into the project by sometime in early 2005, he will provide $250,000 to facilitate the construction of a new building in the redevelopment area. He would then gain an additional pad site for a smaller building along Middle Street.) The alignment of the bank's drive - through in relation to the parking areas was one of the concerns staff had with the initial concept proposal. (The other was an access point onto Little Canada Road which the developer has now indicated he will forego.) One of the issues we are still resolving relates to the removal of contingencies in the purchase agreements. The developer is completing environmental analysis and this issue may resolve itself. Note that one of the sites is the excess parking lot land owned by Market Place Shopping Center. I have been in discussions with them about obtaining an option to purchase this land and I believe we will have a satisfactory agreement within the next few weeks. If we are unable to control that site, Mr. Sherman's guarantee would be reduced accordingly. All other issues revolve around getting the wording right for the concepts we have already agreed to. 1