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Home My WebLink About1978/07/25 - ADMIN - Minutes - City Council - Joint .. MINUTES CITY COUSTNC. LOUIS ,IL / HOUSPARKITAEETING AUMNNESO July 25 , 1978 1 . Call to Order A joint meeting of the City Council and Housing and Redevelopment Authority was called to order by Mayor Stern at 8 : 35 p . m . 2 . Roll Call The following Councilmen were present at roll call : Martha Elstrom Lyle Hanks Keith Meland Jerrold Martin Irving Stern The following Housing Authority Commissioners were present at roll call : Jane Tschida Dudley Moylan Joel Glotter Also present was the City Manager . 3 . Cherne Proposal Guarantee - Mayor Stern stated that the developer is not interested in providing a guaranteed tax increment for necessary supplemental payment equal to the projected tax increment for the project , and since this has been the past intent of the Council and Authority , the issue should be addressed . Councilman Martin stated that he understood the intent for guarantees should be based on the size of the building and the tax increment according to the current tax levy . He continued that the Council and Authority must determine what should be included in the guarantee ; he stated that the City should be willing to take some risk with the development also . The City Manager explained that the lease presented to the developer provides for a guarantee according to a formula based on present projected taxes for the property in order to meet the expected tax increment . The City Attorney explained that the initial lease also incorporated land acquisition and administrative costs to the City and calculations were based on project completion . Tony Cherne stated that he is guaranteeing the City delivery of a building within a designated amount of time , and from then on the taxes can be collected as levied by appropriate authorities . He continued that if the project should fail in the future , the mortgage company would assume payment of taxes . Chairman Glotter stated that once the tax increment is established , I the mill rate or evaluation is reduced , the community would have to IL up the difference between the figure ; he stated that the Council and reduced taxes and the original tax inc. r ,. should not commit ` 2 8 0 - r...,,. .... _ .'"� City Council / Housing Authority minutes , July 25 , 1978 `t � o; unity to such an obligation from general tax revenues . He continued . Li• la he did not feel the developer was being subject to excessive requirements , and that it is necessary to guarantee the public that 0 no tax will be levied if the project fails . Tony Cherne explained that the development should generate large ✓ eserves , and does not see a risk for the City in the future . , In response to a question from Councilman Martin , the City Attorney e xplained that the guarantee provides for an adjustment in the tax increment if it is not being generated as anticipated , and that the guarantee is a relatively new concept being used in the State . Tony Cherne stated that he would like to see examples of these guarantees as included in executed sales or leases . It was moved by Councilman Hanks , seconded by Councilman Martin , to defer the item of a guarantee until the Council , Authority and developer have had an opportunity to review existing guarantees . The motion passed 8 - 0 . Lease or Sale of Property - Councilman Hanks stated that he is not willing 1 to write down the cost of the property currently owned by the developer , . however , he would consent to write down on the purchase of the other parcels involved in the project . He continued that development in this area has occurred over the past five years , and the write down of property should be used as a tool to aid developers who would not otherwiset A develop in this area . t Councilman Martin stated that if another developer wanted to purchase the ! property already owned by Cherne , the City would most likely assist this M developer with a write down , and it is not fair to penalize Cherne for i already owning the property . He continued that another viewpoint might t be that the intent of the law is to encourage development where it is • not economically feasible and development may be f easible for Mr . Cherne because he already owns the land , where it would not be feasible for another developer who does not own the property . He indicated that he would like to have information from other communities with regard to what has been done with other owner / developers . Mayor Stern stated that the Council and Authority must deal with the moral issue of using this tool to help the owner develop his own land . He continued that the policy has been determined that reuse appraisals should be used to determine the resale value of the property and the of these appraisals . Council and Authority should authorize the retention1 given to Councilman Hanks wondered what other types of tools can be giv e feasible the developer within the tax increment district to make the projet. w ithout writingdown the cost of his own land , such as , the City assuming 4 assemblage He arcels . some costs for relocation , demolitionenalizedand eforaalready opening the agreed that the owner should not be p 4 vacant land . - 281 - 4 ., s�ws� minutes , 25 , 1978 .44 City Council / Housing Authority July Councilman Martin , seconded by Councilman Hanks , to It was moved by uisition appraisals and two reuse authorize staff to obtain two acq project . appraisals for all parcels involved in this The motion passed 8- 0 . with Chairman Glotter stated that the Council should beusedAuthority forthis project h the policy of whether a lease or sal He continued that in evaluating the options , eand wouldconsidering thethe saZeexposure to the City , as well as return to the City , h the property for the following reasonsortta obtain holdegoandood f lshouldgthethe mortgage must be subordinated to the m g mortgage project fail with a lease option , the City would be without the funds expected from this lease . He explained that although a lease option appears more attractive because of its larger return , the sale is a much more secure investment . It was moved by Chairman Glotter , seconded by Councilman Hanks , to approve the use of a sale option for the Cherne proposal . Chairman Glotter clarified that the motion pertained to the Cherne proposal only , and that under certain guaranteed situations , a lease i may be acceptable for other projects . 1 The motion passed 8 - 0 . 004 Financing - The City Manager stated that , in effect , the issuance of tax exempt bonds is similar to industrial revenue bonding , although \' only one issue is involved . He continued that the Council may want to obtain information relative to the amount of the proposed note _ ..4 and the fiscal agent prior to approval of such financing . Tony Cherne stated that if preliminary approval is granted , the action could be rescinded later , or final approval denied ; he stated that the issue would be for $ 2 , 250 , 000 . It was moved by Councilman Hanks , seconded by Councilman Meland , to grant preliminary approval of tax exempt mortgage notes for the Cherne development . Mayor Stern indicated that all information must be presented to the Council and Authority before final determination of the financing can be made . The motion passed 8- 0 . 4 . Adjournment Upon a motion by Councilman Meland , Seconded 6 by Councilman Hanks , the meeting was adjourned at 9 : 45 p . m . . an 8- 0 vote . Iry ► g M Stern Atte . t : Mayo -t%J2G Wendy Born - 2R2 . _.r..w•^s