12-19-2003 - Laserfiche WebLink

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Enclosed is a spread sheet we have prepared to show how the mushrooming TIF deficit on this project can be remedied by the application of surplus increment from TIF District 1, after the tax increment bonds from Mounds View Business Park are retired and the interfund borrowing is paid off. Our dilemma in trying to remedy the TIF deficit payments and complete Building N to 100% occupancy, is that ideally it would be best to pay off the Revenue Note upfront, in a lump sum, so that funds are available to invest in completing tenant improvements to fill up the building. We understand, however, the City's priorities in paying off the TIF bond debt and the interfund borrowing debt. We also understand that the City has other funding needs and desires — e.g. for sidewalk and other infrastructure projects—that it may want to fund in the future from the District 1 increment surpluses. In recognition of these City goals and desires, our proposal provides for continuing the payments under the Revenue Note through August, 2005, exclusively from increment generated by the project (approximately $47,000/year). Beginning in 2006, we propose that supplementary semi- annual payments of$199,500 be made under the Revenue Note from • available District 1 increment surplus. Continuing these supplemental payments for a period of only four (4) years will pay off the Building N Revenue Note in full, by August 2009, some 4.5 years early. As a result, the City will collect the full tax increment generated by the project over these last 4.5 years, saving substantial interest payments. Under this proposal, the City is able to pay off the Mounds View Business Park bonded TIF debt, and its interfund borrowing debt, over the next two years, as currently planned. In addition, spreading the supplemental payments over a period of the succeeding four (4) years leaves approximately $600,000 per year available to the City in District 1 surplus increment, and over $1 Million per year thereafter, for application to other eligible projects. To demonstrate our desire and commitment to apply the requested supplemental increment to successfully finish off the project, we propose that the supplemental funds be placed in an escrow account, subject to a written escrow agreement between the City and Michael Investments which requires that the funds be applied only to payment or reimbursement of costs • necessary to complete the occupancy of the project (i.e. - costs of interior buildout, leasing commissions, etc.) This presents a true "win/win" 3