07-23-2003 Council Agenda - Laserfiche WebLink

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of Little Cdnecto COMMUNITY PRIDE 1953 - 2003 MAYOR Michael 1. Fahey COUNCIL Jim LaValle Matt Anderson Rick Montour Bill Blesener 515 Little Canada Road, Little Canada, MN 55117 -1600 (651) 766 -4029 / FAX: (651) 766 -4048 ADMINISTRATOR wotieci.little- canada.mn.us Joel R. Hanson MEMORANDUM TO: Mayor Fahey & Members of the City Council FROM: Joel Hanson, City Administrator DATE: July 3, 2003 RE: Hearing on TIF District 2 -2 Attached is the tax increment financing plan for the establishment of TIF District 2 -2. (Summary information of the plan is also included.) The hearing to consider the adoption of this plan is scheduled for this meeting. However, the Planning Commission has not yet commented. Therefore, we won't adopt the plan until our second meeting in July. (The EDA will also need to adopt.) The building official is also completing a report that will be included as Exhibit D by Wednesday's meeting. This district allows for TIF assistance for the District Council #82 building east of the former Knox building. Assistance is needed due to soil corrections needed to support the 57,000 square foot building. The City Council indicated a willingness to provide this type of assistance in our earlier discussions with Drywall Supply relating to the future development of that site. One issue you may want to comment on is the use of "pay as you go - PAYG" assistance whereby the developer fronts all costs and we issue a TIF note that is payable from 90% of increments generated. If increments are insufficient to retire the note, the developer is out those dollars. (This is a good hedge against property tax changes imposed by the State.) Another option would be for the City to advance the dollars and require a TIF guarantee to ensure we can retire the advance. A letter of credit is typically used to secure one year's TIF payments. The risk here is the TIF income stream falls short of projections (property tax changes or non - payment by the owner) and the developer /owner defaults on the guarantee obligation. The upside is we can earn 5.5% on the City's money versus the limited returns we are able to get in the market place. (This is similar to bonded deals we have done in the past except we would use funds on hand versus a bond issue.) Staff has not yet evaluated the credit worthiness of District Council #82. If the City Council is opposed to the latter option, we will structure a PAYG deal. A development agreement with District Council #82 detailing the nature of our assistance will be presented at the July 23'a, meeting. cc: Mark Ruff Frank Dunbar