2016.11.02 EDC Combined - Laserfiche WebLink

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$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. Gundlach reported 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 opportunities, it is in the City’s best interest to repay as much of the principal loan amount as possible. There are no other avenues to replenish the City’s Municipal Redevelopment Fund, except to borrow from it and repay with interest, as we are doing now, and/or levying for additional funds. Gundlach stated another financial factor to consider is whether APi would be willing to make yearly payments to reserve their option for three years. These payments could be based on lost tax increment had they built their third building in 2017. These payments could be directed towards the purchase price, or not. Ehler’s is prepared to provide a monetary figure should the Commission request that information in making a recommendation. However, there would still be some uncertainty at the end of three years whether or not APi would be ready to build a third building. It is also unknown what the market conditions would be at that time. Gundlach explained the City is aware of other development interests for this block, specifically for either townhome or multi-family housing. The biggest interest is from a multi-family housing developer who would be interested in constructing an approximate 70 unit building, four stories high, with underground parking. This developer is specifically interested in providing these units to families making at or below 60% of the area median income. This is similar to the 12 Pulte townhomes that were reserved for families at or below 80% of the area median income. A concept drawing was submitted by this developer and is attached to this memo. Ehler’s is prepared to provide the projected tax increment these two development prospects might generate, compared to the 30,000 SF building APi originally anticipated building in 2017. Again, staff is looking for the Commission to make a recommendation that can be forwarded to Council on whether the City should entertain a three year option extension, or not, and if so under what terms. Ms. Vogt discussed the financial information with the EDC noting how the City would be financially impacted by each of the scenarios. Commissioner Garcia-Perez asked if APi has asked for any other extensions. Gundlach reported this was the first extension request from APi for this option. Chair Zisla questioned the significance of the difference in the estimated total TIF. He understood with either scenario the City would be able to cover the third party debt. Ms. Vogt further described the tax increment implications these scenarios would have on the City and Fund 460. The class rate and tax base for commercial developments versus residential properties was discussed. Gundlach commented on the value of the land noting the land was owned by the City. She indicated the value of the land could vary based on the development that is allowed to proceed. She explained the City is going to be responsible for zoning and guiding all land within the City in such a way that approximately 140 affordable housing units could be added over the next 20 to 25 years as per the Comprehensive Plan. She then discussed the benefits of both the Pulte and APi developments for the community.