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Housing and Redevelopment Authority Meeting Minutes September 14, 2004 Page 2 1 taxable) that LaNel should pay the City its share of loss of tax revenue for 2005. 2 She noted that Staff and the City Attorney prepared a new Purchase Agreement reflecting the 3 following: 4 1. Payment of$285,000 for the land and set a closing date of not later than October 30, 5 2004. 6 2. Payment of a non-refundable deposit of$23,500 (loss of City portion of tax 7 revenue). 8 3. Payment to the City of$5,000 for attorney and consultant fees. 9 4. Begin project by July 1, 2005 and completion of the project by July 31, 2006. 10 5. Payment of$21,600 annually for every year they do not construct the project (this is 11 the amount the City loses annually on the project). 12 6. HRA Right of First Refusal to purchase the property what they sold it for 13 ($285,000). 14 Ms.Kvilvang indicated that after review of the purchase agreement by LaNel Financial,they agreed 15 to all above listed items,except for#4 and#5,adding that they state that their desire is to develop the 16 property for multi-family housing, but that vacancies in the City are still an issue and they are 17 concerned with the competition of the senior units being constructed by Dominium in the Northwest 18 Quadrant. She noted that due to these two factors,they do not want to have to place a timeline on 19 the development,nor do they think they should be financially penalized if the market is not there to 20 construct the units, adding that they have stated that they are motivated to develop the site when 21 market conditions allow so they.can construct a new common area facility for the entire site within 22 the new building and to be able to provide a return to their equity investors who are "fronting" the 23 cash to purchase the land. 24 Ms. Kvilvang reviewed the primary issues for the HRA to consider and provided an analysis of each 25 issue as follows: 26 1. What do they intend to do with the land in the interim? 27 LaNel Financial intends to invest around$20,000 to"clean up"the existing site 28 by killing existing weeds, grading the site and planting sod and/or grass seed. This 29 way the site will look more attractive in the interim,be maintained by them and made 30 to look like it is a part of the Autumn Woods community. 31 32 2. Under this scenario, when would the HRA recapture 33 its investment? 34 The HRA expended at total of$444,803 from 1996 to 1999 to acquire the five (5) 35 parcels.Under this scenario the HRA has to assume the worst-case scenario that 36 the land is never developed and that they only recapture$308,500 of their original 37 investment (purchase price of the land by the developer). The City will receive 38 taxes on the undeveloped land annually(approximately$1,850),but this amount 39 is negligible to the repayment of the HRH's outstanding balance of$136,000. 40 If LaNel does develop the site,then the HRA will recapture its full investment 41 within six (6) years of the development being completed.