04-14-1997 EDA - Laserfiche WebLink

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City of Mounds View Staff Report April 10, 1997 411 Page 2 minimize the impact on the mature oak trees which make this property so visually appealing. Section 3.2(b)(ii)states that the developer will provide satisfactory written substantiation of the amount and nature of the Development Costs for which reimbursement is sought. Section 3.2 (d) states 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 60%of what is available for the six increment years. Lease to Zep Manufacturing: Section 2.2 (h) stipulates that throughout the term of the agreement Zep Manufacturing will occupy and lease facility. If Zep no longer leases the building,the EDA has the right to cancel this agreement and stop paying tax increment to the project. State Job and Wage Requirements: Section 2.2(I) outlines that this project will create at least 2 new jobs in Minnesota over a 2 year period with an hourly wage of at least$7. • "But For"Clause: The"but for" statement is covered under Section 2.2(f)and says that the developer represents that it would not be able to undertake, complete and provide for the operation of the improvements in the reasonable foreseeable future without the assistance. Signage Easement to the City: Section 3.4 covers the obligation of the developer to provide the City with a Perpetual Easement for the erection and maintenance of a sign indicating the limits of the City and location of the golf course. Cash Flow and Present Value Analysis: I have included a copy of the cash flow projections and present value analysis showing that over 6 years at 7%interest with an estimated market value of$1.1 million and administrative fees of 10%,the Net Present Value of increment generated would equal$253,769. Sixty percent of this would be approximately $152,261 of which Kenmark Partnership would receive a maximum of $150,000 as noted in the development assistance agreement. The cash flow projection keeps the tax rate constant anticipating that there will be increases and decreases over time. I have tried to provide you with sufficient information regarding the important aspects of the development agreement and legal obligations by both parties. If you have additional questions . please feel free to contact me prior to the meeting. This is a pretty straight forward agreement that is well within meeting the public purpose requirements under the State Statutes for providing tax increment financing and is recommended for approval by staff and tax increment consultant.