Agenda - Council - 04/28/2020 - Laserfiche WebLink

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CC Regular Session Meeting Date: 04/28/2020 Submitted For: Sean Sullivan, Community Development By: Sean Sullivan, Community Development Information 6. 1. Title: PUBLIC HEARING: Adopt Resolution #20-082 Approving a Business Subsidy, Authorizing Execution of a Tax Increment Finance (TIF) Agreement, Right of Re -Entry Agreement and Terms of an Interfund Loan; Case of Ramsey Hotel Group, LLC Cobblestone Hotels) Purpose/Background: The purpose of this case is to consider final approval of the Business Subsidy, Tax Increment Financing (TIF) Development Agreement, Right of Re -Entry Agreement and the Terms of an Interfund Loan related to the Cobblestone Hotel Project. Tax Increment Financing Agreement A Public Hearing is required for the requested business subsidy of $311,020 by the Developer for the land cost write -down. Part of the TIF Subsidy process involves the authorization of an inter fund loan which allows the City to reimburse itself through TIF for the land cost write -down ($311,020) and project legal and administrative costs (up to $25,000) plus 5% interest. Once the public hearing is completed for the above aspects of the business subsidy for the project, further discussion relating to specifics relating to the land transaction (Right of Re -Entry Agreement) will occur and is included in the attached Resolution #20-082 for City Council consideration. Land Sale - Right of Re -Entry Agreement Ramsey Hotel Group, LLC has requested that the City close prior to site plan approval in order to guarantee financing of its project. Due to COVID-19 most lenders have become tighter with the issuance of loans in business sectors relating to retail and hospitality. Ramsey Hotel Group, does not want to proceed with formal submittal of its site plan and the purchasing of the architectural drawing plan set without signed loan documents from its lender. Typically, a commitment letter is sufficient for borrowers as to the their comfort level moving forward. The Lender is requiring that the Ramsey Hotel Group, LLC own the land (additional equity) in order to close on the financing. Due to the uncertainty in the lending environment Ramsey Hotel Partners requires that its financing is guaranteed and requesting that it close simultaneously on the city land and its financing prior to site plan approval. A reminder that the Purchase Agreement spells out an initial transaction of $1, with the City recouping the sales price through Tax Increment Financing (TIF). Protection from the scenario where a project does not occur, meaning tax increment is not generated, is key in this instance. Additionally, the City's standard policy to wait until Site Plan Approval before closing retains leverage to experience the desired design. Staff does not want to lose this leverage. A Right of Re -Entry Agreement has been drafted to protect the City's interest in the property in the event that the Developer does not perform. A compromise scenario is outlined below. Notification: Notification is not required. Observations/Alternatives: