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ECONOMIC DEVELOPMENT ADVISORY COMMITTEE <br />AGENDA ITEM 3A <br />STAFF ORIGINATOR: Michael Grochala, Community Development Director <br />EDAC MEETING DATE: September 5, 2019 <br />REQUEST: Lyngblomsten TIF Recap <br />BACKGROUND <br />In July of 2019 the City Council and the Economic Development Authority (EDA) approved the <br />establishment of Tax Increment Financing District 1-13 and the Contract for Private <br />Development with Lyngblomsten. As previously discussed the assistance package totaled $3.6 <br />million dollars. Approximately $382,000 is provided through housing funds generated from TIF <br />1-5 (Willow Ponds Senior Housing). The balance of funding will be provided through tax <br />increment created by the new project. <br />The assistance from TIF District 1-13 will be on a "pay as you go" basis for site improvements, <br />building and infrastructure costs. The EDA will issue a "note" in the amount of $3,218,000 in <br />exchange for the improvements identified in the agreement. The developer will be reimbursed <br />by tax increments generated by the development on an annual basis. The TIF note is expected to <br />be paid off within 7.5 years based on an initial taxable market value of $33,000,000. Should the <br />taxable market value increase the note will be paid off sooner. <br />The contract does includes a provision to reduce the principal of the TIF note based on actual <br />construction costs. The potential reduction is capped at $160,900 which represents a pro-rata <br />share of any project cost savings. <br />Additionally, the contract includes provisions for the EDA to share in the profit of any land sale <br />proceeds for the commercial area if said proceeds exceed 105% of the developer's acquisition <br />costs. <br />A summary of the provisions of the Contract for Private Development is attached. <br />EDAC CONSIDERATION <br />None required. <br />ATTACHMENTS <br />Summary of Contract Provisions <br />