09/13/2005 Council Minutes - Laserfiche WebLink

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• • • CITY COUNCIL WORK SESSION SEPTEMBER 13, 2005 APPROVED 1 2 Community Development Director Grochala advised Hartford had now requested that the 3 Contract be amended to permit different terms for dispersal of the $1.7 million. The 4 reason for this request is that Hartford purchased the "TIF Parcel" from the Tagg's under 5 a note and mortgage, which Hartford expected to pay with proceeds of the interfund Loan 6 (assuming the conditions described above would be met, given the expected townhome 7 development). When the townhome development did not occur as planned, the Interfund 8 Loan was not disbursed, and the mortgage on the TIF parcel held by the Tagg's is now in 9 default. 10 11 Community Development Director Grochala stated the proposed amendment provides an 12 alternative disbursing procedure, summarized as follows: 13 14 1. $750,000 from the Met Council grant would be disbursed immediately after 15 approval of the Contract amendment, so long as Development Property Owner 16 secures a "forbearance agreement" from the Tagg's. That is, the Tagg's would 17 agree not to take significant mortgage foreclosure actions before December 31, 18 2005 (except as described as below). 19 20 2. If the site plan and final plat is approved by October 15, 2005, the EDA would 21 disburse the balance of $950,000 on that date, so long as Development Property 22 owner has delivered Assessment Agreements that set a minimum market value 23 needed to generate enough Tax Increment to repay the Interfund Loan. This is 24 similar to the original Contract terms, except that the Interfund Loan amount has 25 been reduced from $1.7 million to $950,000 and the requirement for a building 26 permit has been omitted. If this occurs, the Tagg mortgage would be satisfied, 27 and the development would proceed as under the original Contract. 28 29 3. If the site plan and final plat are not approved by October 15, the EDA would 30 nevertheless disburse $400,000 of the Interfund Loan on that date. However, this 31 amount would be a forgivable loan, repayable if the site plan and plat approvals 32 do not occur by April 30, 2006. Also, the City would have a third mortgage, and 33 assessment agreements must be in place to cover the full $950,000. The Tagg 34 forbearance agreement would remain in effect through December 31, 2005. 35 However, if the conditions for this partial disbursement are not met (e.g., 36 Assessment Agreements are not in place), the Tagg forbearance agreement may 37 terminate on October 15 and the Tagg's may proceed with foreclosure. 38 39 4. If the partial disbursement is made on October 15, but the site plan and plat are 40 not approved by April 30,2006, the Development will have defaulted on the 41 obligation to commence construction by that date and the EDA will have all the 42 remedies under the Contract (including the option to terminate). 43 44 Community Development Director Grochala stated that while the proposed changes 45 represent a departure from the original requirements, staff is confident that the City's