EDC 11-16-2010 - Laserfiche WebLink

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NOTES TO ECONOMIC DEVELOPMENT COMMISSION AGENDA November 16, 2010 IV. Northwest Quadrant Report Apartment Developer Discussions The City and Stuart Development Company continue to work on plans for a 124 unit, market - rate apartment project, which is now named The View Apartments at Long Lake. Efforts are underway on a number of different fronts, which are summarized below. Unit Count/Density The developer is currently planning to build 124 units. The unit mix will be refined in the months ahead, but generally will be comprised of 45% one bedrooms, 45% two bedrooms, 5% three bedrooms and 5% efficiencies. Land Price The developer had initially wanted to pay $500,000 for site, claiming that land values are down around the metro area and they cannot afford to pay more at this time. The City pushed back and argued that the land is worth more, but more importantly a low land price could have implications elsewhere in the NWQ. The developer was willing to work with the City on concept to pay more for the site, but have some portion forgiven over time. The agreed upon purchase price is $1.250 million, of which the developer will pay $200,000 at closing. The remaining amount ($1.050 million) will be amortized as a loan at 3% interest for 20 years with annual principal and interest of $70,576. In order for the developer to meet their cash flow needs, they have asked the City to forgive the annual payments during the first ten years, which amounts to $705,764. Beginning in Year 11, the developer will start making annual payments of $70,576 for 10 years, which amounts to $705,764. As a result, the City will net $904,764 for the site after 20 years. While the loan will be unsecured (i.e. no mortgage), it will be backed up by a personal guarantee from Stuart Nolan, the owner of Stuart Development Company. The personal guarantee will also cover repayment of the deferred park dedication fees (described below). In the event of non-payment, the City can make a legal claim against the assets of Mr. Nolan. Cash Assistance The developer initially sought $1.5M of cash assistance for the project. These fiznds are intended to reduce the overall cost and thus the amount of equity or debt needed. The City has offered $1.2M of cash assistance, which is surplus money from existing TIF districts that is not needed for debt service or other obligations. In addition, these funds cannot be used for general government purposes, so the dollars would essentially remain unused until the end of each district. Under the 2010 Jobs Bill, the State Legislature loosened the restrictions on TIF funds in an effort to jump start economic development. Cities can tap into these resources, but only