01-28-1999 - Laserfiche WebLink

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To: Economic Development Commission Members From: Kevin Carroll, Economic Development Coordinator MEMORANDUM R IOtlf'IMDUM • Subject: Discussion of the Mermaid Hotel/Banquet Center [Development Agreement] Date: January 25, 1999 As you will recall, the entire EDC meeting on December 10th was devoted to a discussion of various aspects of the Mermaid proposal. At that time, staff members were in the process of reviewing some revisions(suggested by the Developers)to the initial draft of the Development-Agreement. The comments and suggestions that were made by the EDC members during the 12-10-98 meeting were incorporated into a revised draft of the Development Agreement,which was then forwarded to the Developers and their attorney for review and comment. I subsequently met with John Seibert, Dan Hall and his attorney (Mr. Chris Berndt)on January 7, 1998 to discuss the revised Development Agreement. A �.. copy of that Agreement has been enclosed for your review. The provisions that are underlined represent, for the most part, changes that were suggested by the EDC and/or city staff members. During that meeting, it became apparent that the Developer had no objection to most of the new provisions that had been suggested by the EDC and city staff. However, the Developer have some concerns about the language requiring an unspecified cash equity "injection" by the Developer, and personal guarantees on the part of the Developer's principals, as prerequisites to the use of TIF(tax increment financing) proceeds for the reimbursement of [some of]the Developer's project costs. At my request, the Developer's attorney summarized his client's position on this matter in a letter dated January 22, 1999, a copy of which has been attached for your review. As you will note,the letter also addresses certain other aspects of the proposed project, induding the identity of the "Developer,"the revised project costs, and potential "spinoff" benefits. An important issue for the EDC (and, ultimately, for the City Council)to address relates to the propriety, nature and amount of financial assistance from the City. Much of the discussion to date has focused on the Developer's request that the City contribute up to $550,000 toward the cost of acquiring the Rent All site. The proposed source of the funds in question would be the City's "pooled TIF account," which consists of tax increments received by the City in excess of the amounts needed by the City to make bond payments and other fixed obligations related to the existing TIF districts. Some concerns have been expressed regarding the impact(on existing and planned programs)of a "one-time" $550,000 deduction from the pooled TIF account. In the interest of exploring other options and reexamining some of our original financial assumptions, I recently contacted Public Financial Management •' (PFM), one of the City's financial consultants. PFM was asked to generate financial information regarding these two new "scenarios": ■