Agenda Packets - 2009/04/06 - Laserfiche WebLink

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Item Number: 4 Meeting Date: April 6, 2009 Type of Business: WS Administrator Review: _____ City of Mounds View Staff Report To: Honorable Mayor and City Council From: Heidi Steinmetz, Economic Development Specialist Item Title/Subject: Discuss The Mermaid Tax Increment Financing (TIF) Development Assistance Agreement Background In October 2001, the EDA entered into a Development Assistance Agreement with MoundsVista, Inc. (d.b.a. The Mermaid). Per the agreement, the EDA agreed to issue Tax Increment Financing (TIF) Revenue Bonds. The EDA took out a loan (bonds) on behalf of MoundsVista and then authorized selling the bonds to third parties (First Bank and Western Bank). MoundsVista received $631,897 in assistance and the bondholders received the interest earnings. The amount of assistance was based on MoundsVista’s May 2000 TIF application to the EDA. The total amount of assistance at the conclusion of the Development Assistance Agreement (payable 2002-2013) will be $1,278,006. The assistance paid for redevelopment activities (land acquisition, building demolition, site clearance, etc.) that allowed for the construction of the hotel and banquet center. The EDA makes semi-annual payments to the bondholders using the TIF revenue generated by the project. The outstanding balance of the bonds is about $409,000. Discussion On March 23, 2009, the City Council postponed consideration of The Mermaid’s 2nd Addition Final Plat. The plat would subdivide MoundsVista’s property into two lots (one for the hotel and another for the restaurant and banquet center). The reason for the Council’s postponement is that the EDA needs to first provide consent to the sale of the property. MoundsVista’s attorney provided a letter to Jim Ericson on March 20, 2009 stating that MoundsVista has started the process of selling the hotel and that MoundsVista is requesting that the EDA amend the Development Assistance Agreement. The amendment would allow for the sale of the hotel and the continuation of semi-annual payments to the bondholders.