11-24-2014 Council Agenda - Laserfiche WebLink

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515 Little Canada Road, Little Canada, MN 55117-1600 (651) 766-4029 / FAX: (651) 766-4048 www.ci.little-canada.inn.us MEMORANDUM TO: Mayor Blesener & Members of the City Council FROM: Joel Hanson, City Administrator DATE: November 21, 2014 RE: Notice of Default — Sherman Associates, Inc. MAYOR Bill Blesener COUNCIL Rick Montour John Keis Michael McGraw Shelly Boss ADMINISTRATOR Joel R. Hanson Pursuant to the terms of our development agreement with Sherman Associates, Inc. for the Village portion of the Rice Street/Little Canada Road Redevelopment Area, staff is recommending that we issue a "Notice of Default" to the developer and the mortgage holder. The developer has breached the terms of our agreement not making current real estate taxes (Provision 8.1 of the Development Agreement). The developer has also not made the required Commercial Tax Increment Shortfall payments pursuant to Section 8.2 of our agreement. We have had conversations with the Developer about resolving these issues. Catchup on TIF shortfall payments were to be made in three installments starting October 15th. The first installment was not made by that date. He then assured us he would make two payments by November 15th• That also did not occur. As a result, we need to pursue our remedies as available in the development agreement. TIF Shortfalls through 2013 totaled $51,077 including accrued interest. Taxes payable in 2014 for Parcel 1 were $100,830 and $11,086 for Parcel 2. Given that payments have not been made by the required dates, penalties and interest will also have accrued. Our recommendation is to authorize the City Attorney to provide the proper notice of default and provide the developer with the required opportunity to cure. If the default is not cured, we do have the right to "reentry" to the property. It is doubtful either the developer or the lender would want that to occur. cc: City Attorney