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MAYOR <br />Michael 1. Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaValle <br />Matt Anderson <br />Rick Montour <br />515 Little Canada Road, Little Canada, MN 55117 -1600 ADMINISTRATOR <br />(651) 766 -4029 / FAX: (651) 766 -4048 Joel R. Hanson <br />Email: cityhall@ci .little - canada.mn.us <br />MEMORANDUM <br />TO: Mayor Fahey and Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: July 6, 2001 <br />RE: Status of Biagini Development Agreement Amendment <br />Mr. Biagini and I have still not resolved my concerns relative to his ability to perform <br />with the Phase II building. As stated in my previous memo (copy attached), property tax <br />reform will result in Mr. Biagini having to make out -of- pocket payments to fulfill his TIF <br />guarantee. While I cannot yet measure the exact impact property tax reform will have on <br />increments generated, I believe it could approach 50% of the guarantee amount on an <br />annual basis (the TIF guarantee is $76,1 14 for Phase I and $20,213 for Phase II). <br />Mr. Biagini has executed a personal guarantee as part of the development agreement to <br />help ensure these amounts are received by the City. A major source of his guarantee is <br />the net operating income from the phase one building. To secure financing for Phase II, <br />he has informed me his lender has required a pledge of 50% of the rent rolls from Phase I <br />until Phase II is 70% leased. That means that any delays in leasing the Phase II property <br />will result in less dollars being available from Phase I to help make good on the TIF <br />guarantee. <br />I will be meeting with Mr. Biagini again on Monday morning. However, without <br />extremely strong evidence of his ability to make good on the TIF guarantees, I cannot <br />recommend proceeding with the Phase II building. As a result, 1 would then recommend <br />we terminate his interests in the Phase II property. <br />cc: Dick Biagini <br />Page 51 <br />