07-22-1998 Council Agenda - Laserfiche WebLink

Home Browse Search

1% GRIFFIN CGi' I LIES. July 9, 1998 Mr. Joel Hanson City Administrator City of Little Canada 515 E. Little Canada Road Little Canada, MN 55117 Dear Joel: Attachment "D" RECEIVED JUL 1 0 1998 Thank you for meeting with us last week to discuss the 11t• agreement for Kandice Heights I and Kandice Heights II. I have enclosed with this letter a schedule which shows the financial history on these properties, going back to 1992. The schedule will show that Kandice I operated at a financial loss through 1996 and that Kandice II continues to operate at a financial loss. The value of an investment property is based almost solely on the income generated by the property. When the construction is completed, the cost of construction may have little or no correlation to the value of the property. Kandice I and Kandice II were completed in 1990 -91 ( + / -) when economic values were significantly less than construction costs. At that time, lenders were setting up trouble loan departments to deal with the large number of delinquent commercial loans, and property owners successfully protested property values to stay economically viable and competitive. The TIP agreement put in place by the Kandice Heights developer Loren Bargeman and the City of Little Canada, has caused financial hardship for the properties. The artificially high property values and minimum tax guarantee set forth in the 111' agreement, put the properties in a non - competitive market position. In order to lease space and minimize operating losses, net rentals rates were reduced, and/or the common area expenses passed through to the tenants, were capped to make the total rent paid by tenants competitive with similar properties in surrounding communities. The Kandice Heights properties cannot afford the additional tax expense that you propose to provide the yield the City wishes to achieve for the bonds associated with this development. We ask that you review the enclosed market i :formation which identifies the tax burden on properties with which we must compete, and make a decision to provide tax relief for Kandice I and Kandice II. The owner has faithfully funded the financial shortfall at these properties to fulfill his commitment to the lenders and to your community, Your consideration of providing tax relief is greatly appreciated. Thank you. Sincerely, Wes Johnson Vice President WJ/jp 612-338-2828 Fax 612- 338 -5288 Suite 300, 510 Marquette Avenue, Minneapolis, MN 55402 Page 15 C nmedd netucek.