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Economic Development Congultant Mulrooney explained that the Tax Increment District hag <br />jurisdiction. He stated that he does believe that taxes will be paid on the property because C2 <br />and Zero Zone are purchasing the company to expand their business. <br /> <br />Councilmember Kurak inquired if the key issue before them was the job requirements. <br /> <br />Economic Development Consultant Mulrooney replied that that is one of the key issues that need <br />to be resolved. The Minnesota Department of Trade and Economic Development feels that it is <br />the best scenario to achieve the rest of the goals set out in the original agreement. C2 and Zero <br />Zone are willing to agree to all agreements, with exception to the 50 new job requirement. <br /> <br />City Attorney Goodrich noted that the annual increment paid to the City during the term of the <br />loan is $92,850 over 12 years. <br /> <br />Councilmember Hendriksen stated that the $592,000 is the amount of benefits the City gave <br />Mateski Properties under the assurance they would give the City additional jobs. He inquired as <br />to what the penalties are if they default on that requirement. <br /> <br />City Attorney Goodrich explained that by State Statute if the goals are not met the developer is <br />required to pay all or part of the subsidies provided. <br /> <br />Councihnember Hendriksen questioned if the developer would be obligated, under the <br />agreement, to repay some portion of the $592,000, depending on how many jobs above and <br />beyond the 38 jobs achieved according to State Statute. <br /> <br />City Attorney Goodrich replied that because of the deficiency agreement that is in place the <br />developer would be required to pay back all of the $592,000. <br /> <br />Councilmember Hendriksen questioned the value of the building. <br /> <br />Economic Development Consultant Mulrooney explained that the first mortgage was done on an <br />80 percent loan to value basis. The $300,000 loan Mateski Properties received from the City was <br />used to purchase equipment. He expressed that it was inaccurate, that the assets are worth less <br />than what is owed on the property presently. <br /> <br />Councilmember Hendriksen replied that, based on his calculations, they are within $100,000 of <br />being 100 percent mortgaged. <br /> <br />Mayor Gamec inquired if both the City Attorney and Mr. Mulrooney were recommending the <br />change in agreement. <br /> <br />Economic Development Consultant Mulrooney replied yes. <br /> <br />City Council/January 8, 2002 <br /> Page 10 of 27 <br /> <br /> <br />