Loading...
HomeMy WebLinkAbout1988/11/14 - ADMIN - Minutes - Economic Development Authority - RegularMICROFILMED MINUTES SPECI AL MEETI NG ECONOMIC DEVELOPMENT AUTHORI TY Monday, November 14, 1988 - 6:00 p.m. Council Chambers 1. Call to Order President Duffy called the meeting to order at 6:00 p.m. 2. Roll Call ( ) Members Present: President Duffy, Commissioners Strand, Battaglia, Friedman, and Hanks Staff Present: Bill Dixon, Attorney Jim Steilen, Carmen Kaplan, and Sharon Anderson 3. Approval of agenda 4. Executive Session: On the Avenue Project Commissioner Hanks moved that the EDA recess to Executive Session. Commissioner Friedman seconded the motion which passed 5-0 with Strand, Duffy, Battaglia, Friedman, and Hanks voting in favor of the motion. Commissioners Meland and Mitchell joined the group in Executive Session and were present when the meeting reconvened. The EDA reconvened in regular session at 7:30 p.m. President Duffy stated that Mr. Steilen had indicated that Fred Ratter had held a partnership meeting in the afternoon and asked Mr. Ratter to bring the EDA up to date. Fred Ratter stated that they have a number of lenders who have expressed an interest in underwriting the project but whose hands are tied because they don't know the EDA's position in terms of indemnification. The partners discussed that process as a group today and felt that the best way to attempt to move forward is perhaps the same as it was at the time negotiations were underway for the redevelopment agreement. The redeveloper could put together a group and perhaps the City could do the same who could then meet together as a task force to work on an indemnification agreement and then within about sixty days everyone could meet again as a total group. Essentially, the lenders need information as to the EDA's position. Mr. Ratter stated they would be concerned, particularly with their lenders, if they were not moving forward toward a solution that the lenders could see and toward some documentation they can be reviewing as a part of the process to determining just what their final position will be on indemnification. The lenders cannot operate in a vacuum. They need to. be looking at some ideas, and they need to understand what the EDA's position is. Paul Ravich, attorney for the partnership, stated that they would involve the lenders directly in those discussions. The lenders could then tell the EDA what type of indemnification they would need to move forward. Economic Development Authority Minutes of November 14, 1988 Page 2 <I For the sake of the EDA members who are new to this project, Commissioner Strand asked the redeveloper if it is true that the only standstill is that they are waiting to hear from the EDA relative to the EDA's position on the indemnification. The redeveloper's attorney stated this is essentially the case. Commissioner Strand made several points relative to clean-up. He feels that based on the material presented by experts at the previous meeting, that the magnitude of clean-up costs is probably not even near the amount of the mortgage loan. He further feels it would be valuable to talk out several issues with the lenders and get their input. Fred Katter explained that they are not dealing with a lender for the entire project but only on the first phase. Commissioner Hanks moved that the EDA direct its attorney and the City Finance Director to review the State Law regarding the amount of debt the City can incur-in total-and that this be brought back for the EDA to look at next week. If there is reason to believe the EDA can move forward, a session would be held to direct staff to come forward with a company who could gather some data and number "crunching", with the redeveloper's assistance in terms of what they would be bringing into the project, so the EDA would know what would be coming in the tax increment district to pay off amounts which the EDA might commit itself to in the indemnification. Commissioner Fried man seconded the motion. Commissioner Hanks spoke to the motion, stating that it is futile for the EDA to discuss indemnification if the City has a legal limit in terms of indebtedness. If it is decided that there is some "moving" room, then the EDA needs to look at if the $22,000,000 phase is built and some type of indemnification is agreed to, what would the figures be. The City needs to have some slack in terms of indebtedness. The City would not want to put itself in a position of any 'possibility of being faced with bankruptcy. These issues must be addressed before any indemnification can be decided upon. He does feel that it would be beneficial to meet with the lenders. Fred Katter stated that the Housing and Redevelopment Authority had reviewed in great detail the financial statements that were a part of the initial proposals to redevelop the water tower site and further stated that there are, within the City files, fairly thorough analyses of the amount of tax increment that the project generates between the year 1988 and 1997. As a part of the initial HRA's solicitation, it was required that the bond utilized by the HRA for this program--for land acquisition and for land development-be fully repaid by 1997 and a number of computer runs were made and presented to the City that clearly demonstrated the tax increment out of the program and that c7 Economic Development Authority Minutes of November 14, 1988 Page 3 c] in 1988 dollars, the fully developed additional incremental tax on the project was estimated in 1986 of being about $1,262,000 per year. That incremental addition to the taxes more than paid off the bond issue for the HRA commitment as to the year 1997. Mr. Katter's recollection was that it resulted in a surplus of about $685,000 over that time frame. At the time that the redeveloper began to deal with the HRA on this contamination problem, Mr. Katter stated that they suggested that to the degree that there are bond funds remaining from the bonds sold in 1984, that those be considered for use as a part of a fund which would be available for clean-up, thereby eliminating the need to sell m ore bonds. M r. K atter stated that they also suggested to the HRA--and they would make that suggestion to the E D A at this tim e-that the EDA consider holding the tax increm ent open beyond the 1997 date. That w as to some degree an artifi cial date, and M r. Katter stated that it is his understanding that, under current legislation w ithout any change, that the tax increm ent district would be open at least until the year 2002. It w ould then seem that holding the District open longer could, w ithout any additional strain to the C ity taxpayers, other than the project itself, result in $6,000,000 to $10,000,000 of funds being avail able for fu ture clean-up or other needs. M r. K atter em phasized that they have tried to propose that fu nds avail able and through prior bond sa les, an extension of the tax increm ent district be view ed as a m eans fo r the redevelopm ent team and the E DA to share in the cost of the clean-up. M r. K atter further stated that the partnership is com m itt ed to that. M r. Katter stated that they have had som e research w ork done by counsel, and it is his understanding that it is both possible to utili ze those funds for environm ental clean-up and to extend the tax increm ent district. M r. Katt er stated that he says this not as a law yer but as a laym an. The vote on the m otion was 7-0 with B att aglia, D uffy, Friedm an, Hanks, M itchell, M eland, and Strand voting in favor of the m otion. Com m issioner H anks m oved that the am endm ent to the contract be extended to February 1, 1989. Com m issioner M eland seconded the m otion. In response to a question of Com m issioner Strand if the redeveloper found the m otion acceptable, F red K atter stated that they condition their acceptance of such a m otion to the E DA 's form ing a task force betw een now and Decem ber 15 to m ove fo rw ard in negotiation. P resident D uff y stated the problem with com m itting to that request is that the ED A m ust fi rst resolve the issue relative to debt lim it with the City. H e felt , how ever, that the answ er to that question could com e wit hin a w eek's tim e. Economic Development Authority Minutes of November 14, 1988 Page 4 MICROFILMED J Commissioner Hanks stated that his intent for the motion would be that once the debt limitation is resolved that getting the lender involved would be an exciting point and that the EDA is as eager as the redeveloper is to move this project forward. The redeveloper's attorney stated that they would hope that by next week this answer might be available and at that time, a task force could then be formed. If that is to happen, they would have no problem with this plan of action. He feels that the only way to get to a point of signing an agreement by February 1 is to have groups start working on negotiations within the week. Fred Katter asked a question about the meeting schedule. President Duffy stated that the EDA would plan to meet just prior to the Council meeting--at 6:30 p.m. on Monday, November 21 to review this issue and determine if the EDA can move forward discussing indemnification. Commissioner Hanks stated that following that meeting, the EDA's attorney could contact the redeveloper with the results of that meeting. Fred Katter stated they would be present at that meeting. The vote on the motion was 7-0 with Battaglia, Duffy, Friedman, Hanks, Meland, Mitchell, and Strand voting in favor of the motion. 5. Reports: None 6. Unfinished Business: None 7. New Business: a. Meeting Dates President Duffy asked that commissioners review the memorandum from Bill Dixon and fill in the portion as outlined relative to availability for meetings within the next 4-6 weeks. 8. Adjournment Commissioner Friedman moved that the meeting be adjourned. Commissioner Meland seconded the motion which passed 7-0 with Battaglia, Duffy, Friedman, Hanks, Meland, Mitchell, and Strand voting in favor of the motion. The meeting adjourned at 7:50 p.m. Respectfully submitted, L e Hanks ecretary