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� . � " �i �i Memo To: Mayor and City Council Nea1 Beets, City Manager From: Chris Miller, Finance Director Date: March 29,2004 Re: Discussion on the Financing Concerns for Twin Lakes Date: 03/29/04 Item: 8.b Financing Concerns for T w h Lxkes Introduction On March 15, 2004 the Council received a report and heard a presentation from Jim Casserly, from the firm of Krass Monroe, who has been in the process of developing a proforma on the Twin Lakes Redevelopment Area. The report was a culmination of two years of study and analysis of various development scenarios. Contained within the report was the most recent estimate of financing sources and uses based on the Twin Lakes Master Development Plan. A copy of the proforma is included as Attachment A. The report identified a financing gap of $75 million for the entire redevelopment area. These gaps are assuming that the City captures the maximum allotted tax increment revenue. It has been known for many years that the Twin Lakes Redevelopment Area is financially challenged. This is evidenced by the fact that the area has seen little redevelopment in the past decade, despite its prominent location. The current financing gap, as recently reported, raises strong concerns over the viability of the project in its current form. In fairness to citizens and potential developers, the Council is advised to address the financing gap sooner, rather than later. This should not place any less value on the Twin Lakes Stakeholders Panel Study. The Stakeholders deserve to have their thoughts, suggestions, and concerns heard and documented for future consideration. In the report, a number of potential strategies were identified that could potentially reduce or eliminate the gap. However, these strategies would require a significant policy shift on many fronts, which leads to a number of financial concerns. These policy shifts and related concerns include: a� The proposed use of Tax Increment Financing (TIF) is substantial and requires a change in policy. �} Funding for Twin Lakes Parkway outside of the project is problematic. �.j The proposed use of special assessments may require a change in policy. �} Reducing monies set aside for contingency purposes is ill-advised under circumstances which are at great risk for cost fluctuations. c� Issuing large amounts of debt, places the City's credit rating and overall financial strength at risk The type of debt scheduled to be issued would require a change in policy. f� Taking Fiscal Disparities outside the TIF District would require a change in policy. �p Condemnation may be necessary, but it carries risk, and might require a change in policy.