Agenda - Council - 07/14/2015 - Laserfiche WebLink

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OBSERVATIONS Based on the attached and adopted City Housing Assistance Policy (and Policy for the Sale of City Owned Land), below are the next steps in this process: 1. Council consider project concept and willingness to conceptually provide financial assistance to the project. This step would require that the City would sign the LOI with Dominium. NOTE: this would not legally obligate the City to any specific level of assistance. With this step, staff will also recommend review of a concept plan by the Planning Commission. 2. Dominium submits a formal business subsidy/housing assistance application for detailed review and underwriting by Ehlers. A formal recommendation for the actual "required/ needed" level of financial assistance is provided by Ehlers. NOTE: this could be different than what was agreed upon in the LOI. 3. Both Dominium and the City review the formal recommendation provided by Ehlers. Both parties consider if they would like to move forward with a Purchase Agreement (PA) based on the suggested level of City assistance. A PA would lock in both parties to certain performance items (i.e. a specific City Financial Assistance number). It should be noted, Dominium is willing/ interested in applying for Metropolitan Council and Anoka County HRA funding. However, it is their position, a commitment from the City is needed before a PA is executed; and before they apply for other funds. Dominium is interested in a 2016 project if their identified financing gap can be addressed. However, if Metropolitan Council funding is needed for this project, it may be pushed to 2017 (due to application and award timing). ALTERNATIVES Staff is looking for direction on two general items: 1. Does the general project concept fit the property/ is the overall development concept acceptable? 2. What level of financial assistance is the City Council comfortable with considering from a preliminary/ conceptual perspective? Below are alternatives for item #2 (A) Counter offer Dominium before moving forward with step 1 above --staff recommendation (see next section for details). Staff would like the City assistance request to be adjusted within the LOI to comparable projects within the Twin Cities market. If the City's requested adjustment is made by Dominium, staff would bring this case back to the Council for consideration of executing the LOI. (B) Accept the LOI as presented and move forward with step 1. (C) Do not accept offer and end negotiations. Funding Source: NA Recommendation: STAFF: Staff has reviewed this project and process with Ehlers. Staff has asked that Ehlers provide recommended guidelines for "maximum" City participation in a housing project. Please see attached. Ehlers was in attendance at the EDA meeting to discuss this MEMO. This recommendation is based on review/ comparison of several other projects located within the Twin Cities market; including Dominium projects. Based on the attached MEMO, it is Staffs perspective that the City should counter offer Dominium before moving to "Step 1." In other words, Staff believes the Dominium proposal for City financial assistance is currently too high ($2.2M - $2.6M, or 9.12% to 10.77% of total project costs from the City). Staff supports using 15 years of TIF as a maximum threshold as outlined by Ehlers; and/or potentially discussing the sale price of land. NOTE: depending on how the number is calculated, 15 years of TIF is expected to range from $850,00-$1.2M in present value terms.