07-26-1989 Council Agenda - Laserfiche WebLink

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FROM LPN, [11 HOFFMI tI MHOI COUNTRY DRIVE REDEVELOPMENT SITE June 26, 1989 Page 3 F. The key advantage of using a redevelopment district is that it provides that the duration of the district can be up to 25 years. We would project that any bond issue associated with this project should not exceed 15 to 17 years, as the additional funding which will become available with a longer bond issue is minimal. NATURE OF CITY ASSISTANCE In a redevelopment district, the City most often compensates the developer for the "excess cost" of acquiring properties which are already developed. The City would write down the existing acquisition cost to a level which is comparable with traditional vacant land market values. In this case, we would recommend that the land be "written down" to an estimated $1.25 to $1.50 per square foot. The City's Tax Increment Financing assistance would be used to pay costs over and above the developer's purchase price from the City. Our preliminary review of the proposed project and anticipated acquisition and site development costs suggests the feasibility of the City to proceed on this basis. TAX INCREMENT FINANCING PROCESS The Tax Increment Financing process in this case, should be initiated with the Letter of Intent or understanding with the developer. This will define the parameters of the project both in terms of schedule, ultimate development, and level of assistance. Once this Letter of Intent has been prepared and the developer has met minimal performance requirements, the City can proceed with the development of a Tax Increment Financing Plan. Assuming that a Letter of Intent can be completed and executed within two weeks, the City would be in a position to establish a Tax Increment Financing District and initiate the project by mid - August, 1989. We would also recommend that the project be structured so that the City only funds its assistance based upon the phased - development plan of the developer. In other words, we would not recommend advancing TIF funds over and above projected market valuations of each committed phase. This will necessitate a series of "closings" with the developer over a two to three year time period as he initiates each phase. The principal purpose for this recommendation would be to preserve the City's security in the transaction. Page 31