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�`��"]��?�v�'��-��~'.� � . � Ta: Mayor arad Caunc�l Bzll Ma�inen, City Manager From: Chris Miller, F�inance Directar Date: November 8, 2007 Date: � 2/03107 Xtem: ll.b Ryan Companies Centre Poin�e Re: Requ�st by Ryan Companies far Cantractual Relief in the Centre Poir�te Redeveloprnent Agreement Background YnfQr�natron Zn �997, tk�e Ci�y o�Raseville er�ter�d i�to a Redevelopment Agxeeme�t wit� Ryan Compa�ies to redevelop t�e City's Centxe �'ainte A.rea. T�is Axea wa� e�cozn.passed wztk�in a�n e�isfiing Tax Ir�crement Finanee (TTF) Districi. Under the tez�s of the Agreement, Ryan Companies reeeived two ad�vance payrr�en�s (lnans) tntalir�� $2.S rrrillion, frorri the City ta off-set a partian nf the infrasiruc�ure and en�iranmental remediation eosts paid by Ryan. The Agree�nent abligated Ryan Companies to repay a par�ion of t�e loans with t�eir a1lo�ted share o�' t�e future cap��'ed tax increment. The laan repayments are due �y Decerz�ber 31, 2007. In 20Qp and 2001, majox s�ructural changes were made to the State's Property Tax Systez� whic� substantially reduced the amount aft prqperty taxes colleated by loca� govaz-�z�rzez��s. T�is in t�na reduced the ability af T�F Disiricts to g�nerate captured dollars (i.e. property ta�es) to pay %r distz-ict-r�lated e�penses by as a�xauc� as SO%. As a res�lt, i�o�h �he City and Ryart Carripanies realized far less increment than nriginally e��cted. It shou�d be noted ihai t�ese i�x�pacts ware �ot unanticipated. The Agreement s�ated that these �ypes of proper�y tax refortns could take place and that Ryan Companies wo�zlei bear t�at rislc if it did. Nan�theless �hey have requested some relief on its obligation to repay ihe loans ta the City. Ryaan Cazx�panies has developed other parcels in the City including the Tr�in Lakes Medical Bu�ilding and Tr�vin Lakes Office Park Buildin�. Howev�r, it is believed that the Centre Pointe development was t1�c single largcs� contiguo�s area. Property Tax Reform I�npact n� R�an Ca�npa�ies The i�npacti due to changes in the State's Proper€y Tax System res�lted 'z� Ryaz� Ca�npanies realzzing a revenue strea� that was severa� �nillion dollars less than expecte�. As a result, r�at only did Rya�� Co�npa�ies reeeive far less t�an they �xp�cied, current projectzans suggesi fi�at the captured increme�t vvill be insuf�cier�t to pay off the loans to the Czty. If �lais ha�d.s iz-ue, Ryan Companies would be ec�ntrac�ually abligated to provide reiznb�sea�aezat f'rorn other cnmpany f�ds.