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Mounds View EDA November 28, 2005 Regular Meeting Page 2 Community Development Director Ericson explained that staff wants to present information for the EDA’s consideration as a discussion item. He advised that Medtronic may want to accelerate Phase 2 and construct it concurrently with the Phase 1 development. He reviewed that one of the concerns raised through the Medtronic process is that the City may never see Phase 2. However, the growth of Medtronic is such that they are looking at options to provide additional office space and the possibility of doing Phases 1 and 2 together to save some costs. Staff would like to talk about that option and ask if the EDA would like staff to “open that door” and talk with Medtronic about possibly accelerating their phasing. Director Ericson advised that today staff received a letter from Medtronic confirming they are looking at accelerating their project and asking the City if it would be interested in negotiating for Phase 2 now and amending the development agreement to do Phases 1 and 2 at the same time. Director Ericson stated staff is requesting no action to be taken other than to provide direction to staff if it would like staff to meet with Medtronic. He noted the benefits are obvious in bringing in 380,000 square feet of office space that may have been out another 7 to 8 years. It would also result in 4,400 employees rather than 3,000 employees. Commissioner Gunn stated her support for staff to discuss this option with Medtronic. Vice President Stigney questioned the form of greater revenues to the City. Director Ericson explained that the City gets a percentage of TIF dollars generated and a share of the increment for administrative fees. In addition to TIF, there would be a greater market value assigned to the project. If Phase 1 is $65 million for the first two buildings, then Phase 2 would be about $96 million dollars. Director Ericson noted the impact to the City’s levies, school board levies, and that Medtronic would take a larger percentage of bonds that are market based so taxes to residents and others would be decreased by a consistent amount above and beyond a $65 million project. Director Ericson noted this would also bring the market value back on line to property taxes that much sooner rather than waiting 8-9 years for Phase 2. Vice President Stigney asked about the impact to the current $11.8 million cap. Director Ericson explained it is actually a $14.8 million cap and that is completely negotiable. He stated staff is looking at eligible costs for a Phase 2 expansion such as the additional two stories on the Phase 1 ramp. Director Ericson explained there may not be a lot of eligible expenses for Phase 2, which makes it more appealing to get on line sooner. Vice President Stigney asked about the interest being paid and whether it would go back to them or be waved on this Phase. Director Ericson stated staff will explore that avenue. Commissioner Flaherty stated his support to open dialogue, which poses no risk. He pointed out Phase 2 is inevitable, but this is sooner than anticipated.