05-26-1998 EDA - Laserfiche WebLink

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Item No. 5A Staff Report No. Meeting Date: 5/26/98 Type of Business: EDAB WK: Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business Mounds View Economic Development Authority Staff Report To: Mounds View Economic Development Authority From: Rick Jopke, Community Development Director Item Title/Subject: Update of the Mermaid Hotel/Banquet Facility Project Date of Report: May 22, 1998 BACKGROUND: At the April 6, 1998 work session staff discussed the current status of the of the proposed project involving the expansion of the Mermaid to include an 11,700 square foot banquet facility and a 185-room hotel. The preliminary numbers provided by the developer show a need for$700,000 of TIF assistance for the banquet facility and additional $1,000,000 for the hotel. Project costs show a total of $800,000 for land acquisition. This may be low based on the amount of land to be acquired. The hotel developer has indicated that TIF assistance for the hotel must be structured to be of"direct benefit"to the hotel development and financial program. To use the TIF funds to acquire land only is not considered to be of"direct benefit." Some TIF assistance will be needed for financing eligible building and development costs. In reviewing the project as shown on the preliminary concept plan, big unknowns at this point are the costs of acquiring three parcels and a portion of a fourth parcel and relocating existing businesses. To assist in determining these costs, staff has contracted with the acquisition and relocation consultant firm of Evergreen Land Services. The acquisition and relocation consultant will handle negotiations with the property owners and work with the businesses which would be displaced by this project to fmd other sites and insure that they receive the benefits which are required by federal and state laws. The developer has indicated that if the City were to acquire the RentAll site and provide it to them at no cost,they could cover the remaining acquisition costs as part of the $1,700,000 TIF assistance. An appraisal has been completed for the RentAll property which indicates that the market value of the property is $520,000. This means that the total assistance that would need to be provided to meet the developers request would be $2,220,000. As previously indicated the amount of assistance that the projected tax increment could support would be $1,525,000. Staff will be prepared to discuss alternatives with the EDA at the May 26, 1998 meeting. This matter will also be discussed with the EDC at their May 28, 1998 meeting.