05-12-1997 EDA - Laserfiche WebLink

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'w • City of Mounds View Staff Report May 9, 1997 Page 2 • 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. More recently 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 of 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. Development Assistance Agreement: Since Everest has once again opened up discussions regarding finalizing a development assistance agreement for building N, the following is staff recommendation regarding the terms. 1. The assistance package would provide The Everest Group with a maximum 15 year pay as you go note at 90/10 split. This would reimburse for the fair market value of the land and TIF eligible public and site improvements to be estimated and attached to the agreement. 2. Similar to the Zep manufacturing project the agreement would state that the developer will provide satisfactory written substantiation of the amount and nature of the Development Costs for which reimbursement is sought and that only Available Tax Increment shall be used to pay the amounts otherwise due on the EDA Note. Therefore, if the increment projected is not collected,the EDA is not obligated to pay the developer more than 90% of what is available for the 15 increment years up to a maximum of$1.2 • million.