Agenda - Council Work Session - 02/14/2017

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Timeframe: 25 Minutes Funding Source: Responsible Party(ies): Outcome: Provide staff with general high-level direction to: Alternative 1: Continue negotiating/ reviewing this proposal If it is determined that the City is generally interested in this proposal, and believes the basic/ preliminary deal terms are generally acceptable, then the City is willing to further discuss this opportunity. (A) Staff would suggest a follow up discussion occur RE the City's Comprehensive Sanitary Sewer Plan. If the 167/47 sewer line extension is officially considered a "trunk sewer line" staff would not consider that item direct city assistance to the Rum River Hills. However, if the 167/47 sewer extension is not considered an official "trunk" line, then staff would consider it direct City assistance. The City's Comprehensive Sanitary Sewer Plan has gone back -and -forth on this item over the years, and has never been 100% clear. This item would have a major direct impact on staffs recommendation for this project (as it's the most expensive single item for the City). (B) Staff would suggest Rum River Hills bring a developer to the table based on the currently proposed deal. Staff want's to know if this proposal is "real" and that a developer and/or equity investor is legitimately interested. Staff is concerned, even if the City was able to provide assistance as requested, the project still won't move forward. The City may also want to consider requiring Rum River Hills to open their financials for review. Although Rum River Hills won't be the primary developer on this project (i.e. they won't formally apply for a business subsidy), Rum River Hills will be directly involved, and will have a major stake in the success of the project. (C) Staff would suggest the Council provide general direction to negotiate an agreeable land transaction price. Depending on where we settle, this too will effect staffs recommendation on this project. At this point, Rum River Hills is offering about 31K per usable acre (200K total). (D) Staff would also note, we are concerned about equitable treatment to the City's two different golf courses. However, if we move forward with this project, the City assistance proposed should have clear community benefits beyond just the Rum River Hills' project (i..e. safe pedestrian connections across 47 via a second pedestrian underpass, new road entrance to Elmcrest Park, sewer available for 167/47 node and beyond, etc.). If the Council in not comfortable with how this project shows up from an equity perspective, it would be helpful to hear that now. (E) Staff would suggest this project be reviewed by the Planning Commission, EBP, EDA, and Parks Board before it comes back to the Council again. (F) The payback period for this project is unclear at this point. If the sewer line is considered formal City assistance, the payback for this project is very poor (25-30 years). If sewer is not considered City assistance, the payback will be cut in half, and may be reasonable. Another opportunity for improving the City's payback is considering using TIF. We can typically get 2-3 times the annual property tax generation from a project via TIF. If the Council wanted to further investigate this project, staff would suggest providing direction to further refine the City's proposed payback (i.e. cost -benefit). Alternative 2: Do not continue negotiating/ reviewing this proposal in it's current form If the City is not generally interested in this proposal, and the City is not willing to further discuss as -is, staff would suggest we provide Rum River Hills with feedback (i.e. only bring this proposal back to the City if....?)that would allow them to refine the proposal