1992-10-28 - Laserfiche WebLink

Home Browse Search

I I I Council Meeting Minutes October 28, 1992 Page 2 Council Business, If the assessment agreements are released, the developer may petition for a lower tax valuation, If an agreement is dropped, the City would not be at great risk for projects which the County Assessor has valued substantially higher than the minimum value stated in the assessment agreement, Mr, Bubul said the development contract is relevant at the time the building is under construction, but once the building is completed the contract is less significant, If Council feels the City should move forward with the bonds, the next step is to cancel the agreements on Districts 5, 6, 7, 10 and possibly District 9. Childs said because District 9 is in receivership, this may cause its value to be reduced. He noted that the City's Development Counsel, Jim Casserly, feels the releasing of the agreements for Districts 5, 6, 7, and 10 is not considered a risky situation, The correct mechanism to move forward is creation of a document which releases the developers from all obligations under the development contracts, The key to retaining tax exempt status is for the City to release its ability to enforce these contracts. Childs said the other option is to cancel the bond sale which would result in some expenses incurred by the City. Childs noted that the City of Coon Rapids is in the same situation, but at a much larger scale, Because most of Coon Rapids' districts have multiple developers it is impossible to extricate all the agreements. Coon Rapids decided not to proceed and canceled the bond sale and they incurred some costs, He said many cities are in the same situation, but added that bond counsels did not advise the cities incorrectly, the new IRS letter has caused this recent problem, Rebelein asked if any incurred costs could be recouped, if the City did go through with the bond sale, Egan verified that costs would be incurred only if the sale was not completed. Benke noted that if the City proceeds with the investment, it would be considered an excellent decision because the City locked in at a much lower interest rate, Gunderman asked what situations caused the IRS memorandum, Bubul said the memorandum came about from an audit of the holder of a note from another municipality, Mr. Bubul said this is a dramatic change in law and will have national repercussions throughout the bond community, Gunderman asked the possibility of requesting an extension, Egan said the closing date is scheduled for November 4 and is unaware of any methods to extend that date. Mr. Bubul said the buyer would have to agree to extend the date and it is extremely unlikely that they would do so, In regards to Gunderman's question, Childs noted that even if tax values went down on these projects, there is still enough revenue to pay the bonds, Council Business Bond Sale Resolution 92-119