2A, Presbyterian Homes Tax Increment Financing Contract

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• The contract will include a lookback mechanism for comparing projected costs with final actual costs, and potentially reducing the amount of the TIF Note if there are sufficient cost savings • Developer will pay the City's legal, financial advisor and any other out-of-pocket costs up to the approval and execution of the Contract. • The City will issue housing revenue bonds (conduit debt) for the project. The Developer will pay an up-front lump sum fee of 1%of total bond proceeds. • The Development District will be amended and will include all parcels south of a line running west on Highway 96 and northwest on Highway 10 to Interstate 3 5 W (see Attachment A) Nearly all of the issues listed above have been successfully negotiated and inserted into the TIF - Contract. Please see Item 6.13 in the regular City Council meeting agenda packet for the draft TIF Contract. As is common in large, complex redevelopment projects, a few items remain to be resolved prior to Council approval of the documents related to tax increment financing. The remaining issues are described in this memo and its attachments. Environmental and Title Concerns on Triangle Parcel Presbyterian Homes is clearing a title cloud on the triangle parcel. Discrepancies in the legal descriptions of the triangle parcel and the adjacent parcel to the north have resulted in a gap between the recorded legal descriptions of the two parcels. The gap is 1.32 feet at its widest point, narrowing to 0 feet. The legal descriptions of the two parcels will be corrected to eliminate the gap. The City has some indication that the triangle parcel was operated as a gas station in the 1950's. Presbyterian Homes believes that one or more buried fuel tanks may still be in place. Presbyterian Homes will order Phase I and II reports on the property. With the results of those reports, the City will direct Presbyterian Homes to initiate cleanup activities. Presbyterian Homes has requested a cap of$25,000 on their liability for cleanup. If cleanup costs will exceed $25,000, the City can either: 1. Close on the property and assume responsibility for the remaining cleanup costs 2. Decline to accept conveyance of the property Conduit Debt Issuance Fees At the December 6 meeting, staff and consultants presented that the City's conduit debt policy allows developers to choose between a fee that is either 0.125% (1/8 of 1%) annually of the outstanding bond amount, or an up-front lump stun fee of 1% of total bond proceeds. Upon further review of our policy, it is clear that while our policy allows for an up-front lump sum fee, the policy does not specify what that fee should be. The policy leaves the determination of the fee to the discretion of the City Council (Attachment B). City of Arden Hills City Council Special Work Session December 13, 2010 Page 2 of 4