11-28-2022 EDA - Laserfiche WebLink

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Discussion A Preliminary Development Agreement spells out the general guidelines and parameters for development. Although each party can opt out according to the agreement, the intent is for each party to cooperate in good faith with the goal of completing a final Development Agreement or Contract for Private Development. The agreement spells out addition terms such as the developers responsibilities i.e. preparation and submittal of construction plans, building permits, all land use approvals, permits, city fees like park dedication estimated to be $490,000, the securance of Low Income Housing Tax Credits from Minnesota Housing, etc. The agreement also provides for the EDA's responsibilities such as, the creation of a Tax Increment Financing District and drafting and executing a Development Agreement or Contract for Private Development. Key Terms: • This is a $45,889,986 project with $1,300,000 in acquisition costs and $35,053,900 in constructions costs. (This could change due to material price adjustments and other factors) The remaining balance is for professional services, financing costs, developer fee, and cash accounts/escrows/reserves. • The Conduit Bond is estimated to produce about $20,000 to the City. • It is estimated that about $490,000 will be paid to the City in park dedication fees. • The developer's initial ask was for $2,400,000 in TIF over 26 years, however Ehler's has reviewed the numbers and negotiated to a $1,817,000 TIF 3.9% of the total project costs, not to exceed 20 years. (This could change due to construction costs and other factor, however the 20 year maximum is part of the preliminary development agreement) • A minimum market value assessment of $28,700,000 for January 2, 2026 for taxes payable in 2027 is in the agreement which protects the City in case of a decrease in valuation. • Close by July 7, 2023 land, financing etc. • Construction must commence by August 1, 2023, and be completed by April 30, 2025. • A lookback clause has been included allowing the City to reduce public assistance by 50% of such deficiency if the total development costs actually incurred is less than the amount of estimated total development costs. The principal amount of the TIF Note will be adjusted accordingly. • The developer has made an initial escrow deposit to the City of $10,000 for legal and financial consultant services. The developer may be required to deposit up to $30,000 more for public subsidies, drafting of the Development Agreement or Contract for Private Development, analysis, and administrative fees associated with this project. • The developer is required to deposit $5,000 in fees incurred by the City or the EDA for bond counsel services. • The developer is also required to deposit additional funds in the initial escrow deposit or subsequent deposits as needed. • The City acknowledges that the developer is required to take certain actions such as zoning, land use and other land & development actions and is requesting public assistance and will review any TIF arrangement, or other business subsidy, as required by law. The EDA to review and consider 22-EDA-362, A Resolution Approving a Preliminary Development Agreement between Reuter/Walton and the Economic Development Authority, and ask any questions as necessary. The City's legal and financial consultants will be available for questions if needed.