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ARDEN HILLS CITY COUNCIL WORK SESSION—DECEMBER 13, 2010 5 2.A Presbyterian Homes Tax.Increment Financing Contract (continued) Councilmember Grant suggested the deed restriction be written that open space would be pursued only if the site cannot be cleaned due to unforeseen circumstances. Councilmember Holmes questioned if notice would be given to the current tenants. Community Development Director Hutmacher indicated the current tenants had a month-to- month lease. Presbyterian Homes will indemnify the City against any liability for relocation costs. Mayor Harpstead asked how the Council wanted to proceed with Item 2, the conduit debt discussion. City Administrator Klaers felt this issue came down to cost. He stated there was a gap between expectations at this time, and a policy change may be needed to find an amount that works for all parties involved. _ Community Development Director Hutmacher explained the City could reduce the conduit debt lump sum issuance fee. The budgeted amount by the developer was .25% of the total amount of bonds. TIF assistance would need to increase to allow the fee to be 1%. Staff feels the TIF package has a lot of benefits to the City and the developer. The pooling funds would assist with redevelopment in the B2 district. She understands the triangle parcel is important to the City and this would be the most cost effective method. Further discussion ensued regarding the benefits of TIF and the repayment of TIF to the City. Councilmember Holden indicated there was more of an expense than $500,000 because the development would not be paying county or school district taxes either. This discrepancy would have to be absorbed by the residents in the end. Finance Director Iverson stated if the City were to take the 20% administrative expense these funds would assist with absorbing the lack of taxes paid to the County and school district. City Administrator Klaers indicated if the Council cannot reach an agreement, the public hearing could be held and approval could be delayed until a future time. He suggested it be determined at the December 20th Worksession. Staff did not want the item to be delayed into the New Year. He stated he didn't think the Council would want to negotiate this issue at a public meeting from the dais. The Council was in agreement with this suggestion. Mayor Harpstead reviewed the summary of conduit fee rates used in other municipalities. He indicated Arden Hills has not used TIF a great deal and was unfamiliar with the mechanics. He felt a staged fee made sense as has been done in Bloomington and Blaine.