Agenda Packets - 1988/06/06 - Laserfiche WebLink

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m5,, 7 MEMO TO: MAYOR AND CITY COON n FROM: CLERK-ADMINISTRAT DATE: MAY 24, 1988 SUBJECT: MOUNDS VIEW BUSINESS PARK PUBLIC IMPROVEMENTS CONSTRUCTION MANAGEMENT AGREEMENT During the last several months I have been in discussions with Bill Franke of Everest Development regarding his proposal that the City enter into an agreement with Everest Development compensating them for their costs in acting as a construction manager for the public improvements installed in Mounds View Busiress Park. I have reviewed the E._rosed agreement with our Bond Counsel, Bob Dieke and City Attorney Richard Meyers. Both have had comments with respect to this agreement which have been incorporated into the final draft and Mr. Dieke has advised that the payment of construction management costs to the developer would be a legitimate use of tax increment funds. You will note that the agreement is a standard agreement for construction management with modi- fications. Essentially, the agreement provides that the City of Mounds View would compensate Everest Development for their services as construction manager at a cost not to exceed the lesser of $72,000 or 4% of the final construction costs for the public improvement project. It should be pointed out that the construction management contract proposed does not include the costs for Everest's engineer or the City's engineer. This would be an additional cost above and beyond the engineering expenses for these public improvements. It should further be pointed out that although on its face this agreement might appear to be questionable, it has been determined by our Bond Counsel to be a legal use of tax increment funds and irrespective of how the money is received, ultimately Everest Development will receive all of the funds from the bond issue excluding the costs of issuing bonds, capitalized interest, and City expenses directly related to this project which are taken off the top of the initial $6 million bond issue. Therefore, if Everest does not receive the money for construction management it will receive the money in land buy -down or some other means during the development of this project. It would appear, therefore, that the issue before the Council is whether or not you wish to compensate Everest Development for their efforts in overseeing the construction of the public improvements or tell them that that is part of the cost putting in a development and they will have to obtain their tax increment monies through the stance rd means already outlined in the contract for private redevelopment. Your direction in this matter would be greatly appreciated. DFP/MJS