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Community Assets & <br /> Development Department <br /> <br /> MEMORANDUM <br /> <br /> <br />DATE: February 3, 2017 <br /> <br />TO: Manager Lotter <br /> Mayor <br /> Members of the Council <br /> <br />FROM: Janice Gundlach, Asst. Director of Community Assets & Development/Planning Director <br /> <br />SUBJECT: APi Option Extension <br /> <br />As the Council is aware, APi has/had an option to construct a third building in New Brighton Exchange. <br />That option ran through December 31, 2016. In September, APi informed staff they were not prepared <br />to exercise that option. Staff met with the EDC and Council in October, where direction was given to <br />continue to negotiate with APi on an extension to their option. Just before Christmas, APi requested an <br />additional month to evaluate the existing option and the option extension recommended by Council, <br />which was a 2-3 year delay and yearly option payments based on lost tax increment. Based on <br />information provided by Ehlers, yearly lost tax increment based on a 35,000 SF APi building is <br />approximately $66,000. <br /> <br />On January 26, 2017, APi sent an email to staff outlining a counter to the City’s original extension offer <br />from late October. This offer consists of the following: <br />• 10 year option <br />• Option payments each year of $35,000 <br />• Tiered system whereby their option payments would be credited towards purchasing the land <br />(the earlier they build, the higher percentage of the payments get applied to the land) <br />• Land price of $4/SF if they build within 3 years <br />• Request to negotiate further on land price after 3 years <br /> <br />As the Council is also aware, Pulte has expressed interest in this parcel to build townhomes and has <br />indicated they could start construction yet this year. When Council provided direction to staff in <br />October on an extension offer, the Council weighed the financials of both an APi and Pulte development <br />(see attached Ehlers spreadsheet). With APi now proposing up to a ten year delay, staff prepared the <br />attached table comparing the financial impacts of the various options. <br /> <br />Staff understands there are likely several factors to consider when making this decision: <br />• Jobs <br />o The City has many great employers, but APi’s position along the freeway and quality <br />buildings, brings quality jobs. Unfortunately, APi’s counter offer does not provide any <br />guarantee they will build a building and create more jobs at the end of ten years. <br />