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515 Little Canada Road Little Canada, MN 55117 -1600 <br />(651) 484 -2177 / FAX: (651) 484 -4538 <br />Email: cityhall@ci little- canada.mn.us <br />MEMORANDUM <br />TO: Mayor Fahey & Members of the City Council <br />FROM: Joel Hanson, City Administrator <br />DATE: February 4, 2000 <br />RE: Masterpiece Home Development/11k Assistance <br />MAYOR <br />Michael I. Fahey <br />COUNCIL <br />Beverly Scalze <br />Jim LaValle <br />Steve btorelan <br />Bob Pedersen <br />ADMINISTRATOR <br />Joel R. Hanson <br />In order to meet the developer's timelines for the property at Jackson Street and Little Canada <br />Road, we need to form a new tax increment financing (111^) district for this area. In discussing <br />this matter with Rusty Fifield of Ehler's & Associates, we are proposing an amendment to our <br />existing 11.1-, District 3 -2. <br />Attached is a spreadsheet which shows the financial implications of this transaction. You will <br />note that we need seven years of increment collection on a "pay as you go" basis to recover the <br />assistance to be provided. I have based the planned assistance on Mr. Howe's land acquisition <br />cost per unit had he proceeded with the 34 unit development prior to discovering the poor soils. <br />With the per unit cost of $14,560 times the reduced number of units (22), the equivalent land <br />cost would be $320,320. This leaves a difference of $174,680 to be recovered. When adding <br />capitalized interest, the total TIF assistance needed is just under $220,000. This district has more <br />than sufficient life to recover this amount. That fact was also verified by Mr. Fifield in his <br />earlier review of this project. <br />One other item I would like your direction on relates to the possible use of excess TIF generated <br />to assist with the development of our park in this area. The concept I would propose would <br />involve the City advancing the funds for the park development and recovering them from future <br />TIF proceeds after the developer has been reimbursed. This would mean that our dollars would <br />not start to be recovered until approximately ten years into the project. I believe we would be <br />able to recover capital costs plus accrued interest on the money at that time. A rough estimate <br />would indicate we could expend approximately $120,000 of capital costs and fully recover them <br />plus accrued interest at 9.5% by the end of this district. It should also be noted that we would not <br />have to utilize the full amount and could leave any excess increment to assist with the <br />redevelopment project at Rice Street and Little Canada Road. I have asked Rusty Fifield to <br />provide further input on this matter prior to Wednesday's meeting. <br />Page 25 <br />