08-25-1997 EDA - Laserfiche WebLink

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City of Mounds View Staff Report August 21, 1997 Page 2 • The EDA decided to offer Everest$450,192 of assistance for 5-7 years at 7% interest with an 85\15 split. Everest was willing to accept a total of$450,000 for 11-12 years at 8.5% interest. There was no agreement on the negotiations and therefore the project did not proceed in 1993. Everest informed the City that due to the lack of TIF the proposed tenant had elected to locate elsewhere. In 1994, discussions were open again for the development of Building N due to Everest's negotiations with a"mystery company". The proposal,which was done by Casserly, Molzahn&Associates, requested$808,441 for 9 years at 7% interest at an 85\15 split. Through these negotiations,the EDA made informal decisions with regards to parameters for use of TIF. Those parameters included the EDA's desire to use TIF for an owner occupied building verses a leased facility. The EDA did note that they would consider a long term leased project(for at least the duration of the TIF agreement) if the EDA had prior knowledge of the company prior to signing an agreement. Again,this proposal did not proceed as the"mystery company"never materialized. Again in 1995, the Everest Group came to the EDA to reconsider the decision to have an owner occupied building prior to signing a development agreement. They were ready to build the building but did not have a tenant at this time. The EDA held firm on their decision to wait until a strong tenant or owner was identified prior to entering into a development assistance agreement. In July of 1996, Everest brought forward a request for$1.3 million pay-as-you-go agreement over 15 tax increment years with an interest rate of 7%and a 90/10 split. This proposal equals approximately $4.28 per sq.ft. of assistance. After reviewing the proposal with Chuck and bond attorney Jim O'Meara an offer was made for an 8-year pay-as-you-go agreement at 7% interest which equaled approximately $2.75 per sq. ft. of assistance plus the willingness to negotiation on a low interest loan with the company that was tied to the agreement rather than a grant which was originally requested by Everest. Our proposal was not accepted by Everest. They said it was not economically feasible due to the competition and amount of dollars that were invested into the land. After analyzing financial information and through much discussion regarding this project it was decided that a 15 year pay-as-you-go agreement did not pose additional risk upon the City but allows for an equitable time frame to pay back the developer for costs incurred on the project. The most recent proposal included a 15 year, 90/10 split pay-as-you-go assistance package which equaled $1.1 million present value assistance to Everest. At that time staff felt that to make this project work this was a proposal that they could support and over the long run is a good development for the City. Therefore, staff was directed to put together the specifics of the development agreement. What followed was discussions back and forth on how the development assistance agreement would be structured. Specifically the issues included the substantiation reimbursable costs and putting a cap on the amount of increment collected. The final terms were not agreed upon by both parties therefore the negotiations once again failed. •