Agenda - Council - 01/23/2018 - Laserfiche WebLink

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costs over the course of about eight years via TIF). This arrangement is ideal for the city as it eliminates the risk of issuing a bond or upfront financing, and is paid on performance (i.e. we only pay TIF after property taxes are collected). BUSINESS SUBSIDY? Based on discussions with the city's financial advisor, Ehlers, this arrangement is not considered a formal business subsidy. This cost share arrangement is based on past practice and informal city policy (i.e. the 60/40 split). TIF is being used to fund the city's portion of costs only --not the developers portion. Attached is the city's business subsidy policy for reference. As outlined in Section E on page 5, items #2, #3, and #7 apply here. This means this project (i.e. TIF Agreement) doesn't require a formal public hearing, formal underwriting (i.e. reviewing the developers pro -forma), and no formal application from the developer (i.e. no fee). However, Ehlers is recommending the city still complete a "But -For Test" for this project. This will be important for public transparency and to formally document that TIF is justified. TIF AGREEMENT, Next Step The attached MOU is an informal agreement. The next step in the process is to complete a formal and detailed TIF Agreement for this project. The TIF Agreement will include a note, payable to Affinity. This agreement will be recorded at the closing of the land transaction. Notification: Observations/Alternatives: NA Funding Source: TIF District #14 Recommendation: STAFF The attached MOU is generally consistent with past direction provided by the City Council and the EDA via the attached purchase agreement (i.e. the 60/40 cost -share). The MOU is also consistent with previous staff input to the Council and EDA, that TIF District #14 would be staffs targeted funding source for the city's share of infrastructure. What's new for the City Council and EDA is this agreement identifies the specific financing arrangement: 100% developer upfront, then repayment of only city's portion of costs via TIF District #14, over the course of eight years. Structuring TIF as a reimbursement tool, rather than requiring the city to provide upfront funding or financing (i.e. TIF Bonding) is good for the city --as it eliminates risk/ liability. The attached MOU has been reviewed by the City Attorney and Ehlers. Both the City Attorney and Ehlers recommended/ preferred the financing arrangement outlined in this MOU, versus other methods (i.e. using upfront funding, or bonding, inner -fund loans, etc.). EDA The EDA reviewed the attached agreement on 01/11, please see attached minutes. The EDA was generally supportive of the agreement, and felt it was consistent with the purchase agreement and past direction. UPDATES Staff did not receive final formal review comments from the developer until after EDA review. Listed below is a log of changes since EDA review. The attached MOU highlights these change areas in yellow. Most of the changes