08-27-1998 EDA Minutes - Laserfiche WebLink

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Mr. Batty noted that TIF is not available for this project, and discussed the merits of this plan. In it, the EDA would enter into an agreement with the city, and is a better approach for this project than a tax abatement, another form of reimbursing city taxes. EDA President Sullivan asked what would happen if the developer defaulted. Mr. Batty said the pay-as-you-go assistance kept the city from risk, because it would be reimbursed only if the project were built. Under 429, if a property defaults, assessments and taxes are paid first. Under this plan the $69,600 is the increase in the amount of taxes this property now generates. Mr. Mulrooney addressed the issue of how soon a shopping center would develop without assistance. He said that underwriting the project reduced the hurdles to development and made it more feasible by allowing greater latitude on the part of the developer to reduce rents, etc. He suggested a shopping center was unlikely to develop at that site without assistance until the market (head count) was higher, probably in the range of five years. Mr. Wessel noted that assistance makes the project less dependent on the current population. Mr. Mulrooney added that because of fiscal disparities, approximately 40% of the gross taxes went into the metro pool and were returned to the city, which is a fiscal disparities winner. Mr. Batty added that the substance of the development agreement would spell out what the city received in exchange for assistance, and a threshold could be set so if the development did not draw major development, the deal would be off. The burden would be on the developer. EDA Member Bergeson noted that if development did not occur for five years if no assistance were provided, the city was really only losing five years worth of taxes, not 10. He added that his reason to support this project was not so much financial as to keep the momentum for development of the Town Center. Mr. Batty informed the Authority of the procedure, which would require everything to come back for approval, plus a public hearing. EDA President Sullivan said a decision should be made before the city proceeded with it, since it wouldn't help the city's credibility to pull out after leading the developer on. Mr. Wessel said members should not initiate the plan until they felt comfortable with it. Ms. Divine noted that an escrow would be required of the developer before formal action that required legal services was initiated. EDA President said the members needed time to think about it, and the absent members needed information. It was agreed it would go to the next Council work session and they intended to act on it at the next EDA. ADJOURNMENT EDA Member Bergeson moved to adjourn. EDA Member Dahl seconded the motion. Motion passed unanimously.