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WS — Item 5 WORK SESSION STAFF REPORT Work Session Item 5 Date: July 7, 2008 To: City Council From: Mary Alice Divine & Al Rolek Re: Town Center Update Background Marshall Investments foreclosed on the Hartford Group's remaining property in the Legacy at Woods Edge in January 2008. Marshall became the controlling partner, servicing 28 banks that have provided financing to the project. Marshall will essentially be acting as master developer on the project. Marshall has hired JBL Companies to market the property. Staff has met with the Jeffrey Larson, president of JBL Companies, and his associate. Staff is working with them to provide marketing information, demographics etc. Their strategy for marketing the property is to attempt to put together a consortium of specialized developers for housing, senior housing, commercial and office space. To date, the taxes and assessments on the project remain outstanding. Staff has been unable to arrange a meeting with Marshall to discuss the delinquencies. Because there is a pool of investors, each investing bank must agree to pay the taxes and assessments and agree to the amount of its share. This process can take some time to transpire. At the June work session staff discussed the financial implications of the delinquencies. In November, 2005, the City issued $5,550,000 Taxable G.O. Improvement Bonds which were originally expected to be repaid totally out of assessments spread against the benefited properties in the Legacy at Woods Edge development project. As noted above, delinquent special assessments are likely to continue that status for some time. In a phone call with Anoka County staff in charge of property foreclosure and tax forfeiture staff learned that tax forfeiture for these properties would not take place until May, 2010 if the delinquencies have not been paid by that time. Discussion in June centered around using an interfund loan or general tax levies to pay any debt service shortfalls. Since then, a third alternative has come to our attention. We have been in contact with the City's fiscal consultant and bond counsel in regard to the situation and have discussed possible relief mechanisms available to the City. The 1