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City Council Regular Meeting Minutes September 9, 2003 Page 4 Ms. Kvilvang stated the developer would construct and furnish a new municipal liquor store 2 within the commercial development. She noted it was anticipated the liquor store would be 3 constructed prior to demolition of the existing store so as to cause minimal disruption to the 4 City's liquor operation. She added the City would work with Tires Plus to find a suitable 5 relocation site since they would be required to relocate their business. She indicated the 6 developer would pay the cost to relocate the existing Tires Plus building and the cost to construct 7 the new liquor store, up to an amount not to exceed $1.7 million. 8 9 Councilmember Horst asked if the current liquor store and Tires Plus were being removed to 10 accommodate parking. He noted possible variations of parking had been discussed with the 11 Planning Commission. Ms. Kvilvang responded sometimes the retailers had parking standards 12 in excess of a city's standards. She agreed the removal of the liquor store and Tires Plus was to 13 make sure there was adequate parking. 14 15 Ms. Kvilvang stated the developer had a signed Purchase Agreement for the existing Cub Foods 16 store for$10.85 million, inclusive of the restrictive property covenants. She noted the developer 17 intended to rehabilitate the store to upgrade its appearance to the quality of the new commercial 18 development and the estimated cost of this"face lift"was $580,000. She explained the agreed- 19 upon purchase price of the store did not allow the developer to obtain any more debt on the 20 property; therefore, the City would provide the developer full TIF assistance for the store's 21 rehabilitation as a qualified redevelopment cost. 22 Ms. Kvilvang indicated the developer had requested City assistance in acquiring the three 0 commercial properties upon which the Phase IA For Sale housing units would be located. She 25 noted the development team had discussions with Fannie Mae to assist in providing the"up 26 front"money needed to acquire these properties. She added Fannie Mae was willing to provide 27 the assistance but would require, as collateral, the land, Developer Guarantee and the City's 28 pledge of its General Obligation Taxing Authority. 29 30 Ms. Kvilvang felt the City assistance would indicate a partnership with the development team 31 and would say"we are in this with you." She added financing would be cheaper with Fannie 32 Mae; however, the risk would be if there was a downturn in the markets. She stated the City 33 could say"no"; however, the developer then would probably want to be compensated for the 34 higher risk they were taking. 35 36 There was further discussion involving risks involved. Councilmember Faust stated he liked the 37 idea of partnering but thought the City was a bigger partner than the developer. Ms. Kvilvang 38 responded the City's risk would be responsibility for the loan if the developer walked away. She 39 noted another option was to have the developer help the City with some of the needed $2.7 40 million, leaving the City with the need for a bond and being left with the land. She noted the 41 City would be putting its faith in the development team. 42 43 Councilmember Faust stated he had confidence in the development team, especially if more 44 commitment came from them. He noted the City was using its credit to obtain lower rates now 0 and when refinancing would be done in the future.