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Page 2 — <br /> ♦ If the developer doesn't make the expected improvements which will in turn <br /> increase the value of the mall, then, due to his own shortcomings, tax increment <br /> will not be generated in an amount sufficient to repay the developer the total <br /> amount of the note. <br /> ♦. If the developer decides, for whatever reason, to NOT pay the property taxes <br /> owed on the mall in a given year, then there wouldn't be any tax increment <br /> available to make a payment to the developer on the note. <br /> • There is very little overall financial risk to the City and taxpayers in this project. <br /> • The City is not "bailing out" US Bank on this proiect: <br /> ♦ The developer began negotiation on the purchase of the property prior to knowing <br /> whether the City was interested in providing tax increment to the project. <br /> ♦ US Bank was not originally motivated to discuss the sale of the property:- <br /> ♦ The developer is proposing to pay for the value of the land only, recognizing that <br /> the building itself in its current state, actually "de-values" the property. <br /> Regardless of the lack of financial risk, there are a couple other risks associated with this project identified <br /> in the following scenarios: <br /> • Scenario A: An agreement is made with the City and the purchase of the site is <br /> completed, then the developer does absolutely nothing. (Chance of this happening is <br /> minimal—Why would the developer spend $3 million to purchase the site to simply <br /> hold it?) <br /> • Result of Scenario A: <br /> ♦ Still no financial risk to the City, but it looks bad. <br /> ♦ New owner of the.mall — Hillcrest Development. <br /> • Scenario B: Developer purchases site, completes the $1 million storm water <br /> improvements, receives $300,000 from the HRA, and then does absolutely nothing <br /> additional to the property. <br /> • Result of Scenario B: <br /> e The City will have received $1 million worth of storm water improvements at a <br /> total cost to the City of$300,000. <br /> There also are some risks associated with NOT doing this project. The primary one being that the building <br /> may remain in its current state for quite some time prior to another redevelopment opportunity being <br /> presented. It is important to note the likelihood that ANY redevelopment proposal for this site, given current <br /> economic conditions, will require the use of tax increment financing. Other issues to consider: <br />