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Item No. 17 Staff Report No. Meeting Date: 7/6/98 Type of Business: WK WK: Work Session;PH:Public Hearing; CA:Consent Agenda;EDAB:EDA Business City of Mounds View Staff Report To: Mayor and City Council Members From: Rick Jopke, Community Development Director Item Title/Subject: Discussion of the Mermaid Hotel/Banquet Facility Project Date of Report: July 2, 1998 BACKGROUND: City staff has previously discussed with the City Council the proposed Mermaid hotel/banquet facility project and the developers request for tax increment assistance. The preliminary numbers provided by the developer show a need for$700,000 of TIF assistance for the banquet facility and an 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. 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 as long as they don't exceed$800,000. An appraisal has been completed for the RentAll property which indicates that the market value of the property is $520,000. An additional appraisal is being completed for this property as well as the additional two properties to better determine total land acquisition costs. The appraiser has indicated that he will give staff market values for these properties on Monday July 6. Staff will provide these numbers to the City Council at the work session. The appraiser has indicated that the owner of the most westerly property to be acquired would not let him inspect the property and stated that he is not interested in selling the property. Everest has also stated that they are not interested in discussing the sale of the property that they own which have to be acquired for the Mermaid project. If these property owners continue to be uncooperative it may be necessary for the City/EDA to use it's eminent domain powers to acquire the properties. This could delay the project and add to project costs. Staff has requested that the city attorney provide a summary of the eminent domain process and time frames. City staff has asked the developer to review the concept plan to determine if the project could be redesigned to reduce the amount of land needed or if the project could be built in phases. Preliminary indications are that minor changes could be made and some phasing could be done