2016.10.25 WS Packet - Laserfiche WebLink

Home Browse Search

Community Assets & Development Department MEMORANDUM DATE: September 29, 2016 TO: Economic Development Commission FROM: Janice Gundlach, Asst. Director of Community Assets & Development/Planning Director SUBJECT: APi Group, LLC Option Extension As has been communicated to the Commission previously, APi has an option to construct a third building (minimum square footage of 30,000 SF) on the approximately two acre parcel immediately north of their training center. The option term, as outlined in their Contract for Private Redevelopment, runs thru December 31, 2016. Staff reached out to APi a few months back to remind them of the option deadline and to initiate discussions on whether or not they intend to move forward. Staff met with APi representatives last week, where APi disclosed they are not yet ready to build a third building and would like to request a three year extension on their option. After discussing internally, staff felt this was an issue the EDC should discuss and then forward a recommendation to the City Council. Staff suggests there are three main factors in evaluating whether to extend APi’s option, those being: 1) APi’s already huge investment into New Brighton Exchange, 2) the financial impacts of waiting three years, and 3) other development interests. These factors are discussed in more detail below. APi’s Investment into New Brighton Exchange It is important to remember that APi has been a development partner of the City since 2007, when they built their headquarters building. They made future commitments to build a second building and followed through with construction of the training center in 2015. As a company, APi has brought 160 permanent jobs to the City. Between the two buildings and helipad, APi has created $10,690,000 in market value in New Brighton Exchange. Staff felt it was important to recognize this already huge investment in making a recommendation to extend the option. Financial Impacts of an Extension One of the biggest hurdles in recouping the City’s investment into New Brighton Exchange has been time. This is because the City can only collect tax increment through year 2035. The longer the City waits for development, the less tax increment is collected. As noted with the dashboard discussion, the City is currently in a financial “break-even” position, meaning we’ve realized enough development to make our debt service payments. However, based on current development there isn’t enough tax increment being generated through year 2035 to repay the principal loan from the City’s Municipal Redevelopment Fund. If there is interest in continuing to engage in future redevelopment