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Item No: 7.A. Meeting Date: January 8, 2018 Type of Business: EDA Business Administrator Review: ____ City of Mounds View Staff Report To: EDA President and Commissioners From: Brian Beeman, Business Development Coordinator Item Title/Subject: Resolution 18-EDA-303 Approving a Preliminary Development Agreement with INH Property Management, INC. by the Mounds View Economic Development Authority Background: At their December 4, 2017 City Council Workshop the Council reviewed and discussed the preliminary development agreement for INH Properties at Crossroad Pointe. INH Properties is proposing to build an approximately 124 unit market rate apartment building with the number of units to be determined depending on approval or denial of the destination retail project. The developer has indicated that they will not have a need to ask for TIF assistance if the destination retail component is approved. However, the developer has notified the Council that they would like to keep the TIF option open for the apartments if the destination retail is denied. Further, the Council has indicated that they would prefer not to enter into another TIF if MWF Properties is also asking for a TIF. The Council suggested clarification in the predevelopment agreement that would not bind the EDA to a TIF later on in the processes and to update language in the agreement allowing the EDA to consider other destination retail options. The City Attorney has reiterated that a predevelopment agreement is really nothing more than an agreement to continue negotiation, and to do so exclusively. This agreement does not bind the EDA to approve the project or sell the land. In the private sector, a predevelopment agreement is called an access agreement which follows a letter of intent. The preliminary development agreement and the letter of intent/access agreement essentially serve the same purpose. It assures the developer that the land owner will not sell the property while a willing and engaged buyer is conducting the due diligence on the property with the intent to buy. For example, INH Properties has indicated that as a next step, they will have to spend several tens of thousands of dollars out-of-pocket with architects etc. to develop the site plans and other documents necessary to continue with this development. The developer is looking for some kind of assurance from the City that the property is not going to be sold from underneath them after having put forth such a large sum of money and taking on substantial risk. It is important to note that the EDA will have an opportunity to review the project and determine if it desires to approve a TIF plan if the developer requests it. However, the TIF plan is a separate issue, aside from the final creation of the development plan itself. The formal development plan is normally approved by the City and it addresses physical attributes of the project which are normally tied to the land use process. (i.e., the City will only grant preliminary/final plat approval on the condition that the developer enters into a development agreement with the City). In other words, the predevelopment agreement is really more about whether the EDA is going to sell the property to this developer than it is about how the development must be built (this would come later when the City approves the land use items, and when the EDA considers financial incentives).