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criv 1 REQUEST FOR COUNCIL CONSIDERATION Agenda Section 2- STAFF REPORT Report Number: al,- 17-7,W5 L)�ilJ(y j!DS Report Date: 7/2/96 WORK SESSION MEETING DATE • ` ('}; v, July 8. 1996 J5 J I S agtesx 'Partners�`P Item Description: Discussion of TIF Proposal for the Development of Building "N" & "K", Mounds View Business Park Administrator's Review/Recommendation: -No Comments to supplement this report -Comments attached. Explanation/Summary, (attach supplement sheets as necessary) Summary: Chuck and I have been working with Everest on proposals for the development of buildings "N" and "K" since April. I have attached all of the written correspondences between Everest and the City since April 5, { 1996 when we were first approached by Everest to develop a strategy on the final development of the park and a retention program. What followed was a proposal for the development of Building "N" in addition to a request for a $200,000 grant tied to the this development (proposal dated May 21, 1996). The proposal requested $1.3 pay-as-you- go revenue bond over 15 tax increment years with an interest rate of 7% and a 90/10 split. This proposal �ls approximately $4.28 per sq.ft. of assistance. After reviewing the proposal with Chuck and bond attorney Jim O'Meara a counter proposal was submitted offering an 8-year pay-as-you-go agreement at 7% interest which equaled approximately $2.75 per sq. ft. of assistance plus the willingness to negotiation on a low interest loan with the company that was tied to the agreement rather than a grant (letter dated June 3, 1996). Everest responded that the project would not proceed under the City's counter proposal and suggested that we provide them with approximately $435,000 from excess tax increment up front plus a pay-as-you-go note that would equal $850,000 (letter dated June 3, 1996). Staff and O'Meara met with Everest to discuss this proposal and it was recommended that Everest make a proposal that would tie in the Building "K" development as a package. On June 24, 1996 staff again met with Everest to discuss a combined proposal for Building "N" and "K". The combined proposal requested a 13-year pay-as-you-go revenue note at 7% interest for a total request of $1.8 million in assistance. This proposal equals $3.36 per sq.ft. of assistance plus the City's cost in acquiring the additional three properties which we estimated to cost $350,000. In response, the City ran some of our own numbers through Springstead and came up with an alternate proposal for separate Building "N" and "K"developments and combined developments. These figures are outlined in the City's letter dated July 1, 1996. Chuck will be meeting with verest later this week to further discuss the most recent offer. • Cathy Bennett,con. Dev. Coordinator\EDA Director