3.0. EDSR 02-08-1999 ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY
MEMORANDUM
TO: Economic Development Authority
FROM: Paul Steinman, Director of Economic
Development
DATE: February 8, 1999
SUBJECT: Discuss Bohlen Mixed Use
Redevelopment Project
Issue
The issue before the EDA at this worksession is to participate in a discussion
regarding the various aspects of the Hohlen redevelopment project. This
discussion will include the developers - Tony Gleekel, Rick Martens, Jim
• Winkels, and City Attorney Peter Beck and city staff- as well as EDA
members.
Background
The issue which has presented the greatest challenge for staff these past
several months is the timing of all the various project components. These
major components are as follows:
• Council decision on phasing the project versus doing the entire
project all at once -subsequently award the bid for project
• Eastern Area Utility Expansion
- specifically construction and completion of lift station, sewer
and water, and Tyler Street south of County Road 12 to
service the commercial/industrial areas
• Approval and Execution of TIF Development Agreement
• Condemnation Proceedings -Mevissen/Warden (Peter Beck to
discuss timing of this activity)
• Final Platting of Commercial Property
• Sale of Tax Increment Bonds
• Start Date and Completion of First Phase of the Commercial
Project
II • Start Date and Completion of First Multi Tenant Industrial
Building
13065 Orono Parkway • P. O. Box 490 • Elk River, MN 55330-1743 • (612) 441-7420 • Fax (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
• Receipt of First Full Year of Tax Increment
• — relates to overall cash flow for payment of city TIF bonds and
developer pay-as-you-go note
As you can see there are numerous activities and events moving forward on
this project, all of which relate to one another in some fashion. Staff sees the
starting point for most of these activities being the date when the City
Council awards the bids for the utility project. This action would trigger a
number of activities related to the commercial/industrial development
projects. Please see the attached memo from City Engineer Terry Maurer
regarding dates and time schedule for completing the utility and street work
for the eastern area.
As indicated in Mr. Maurer's memo, construction of Tyler Street would likely
not begin until late 1999 with a completion date scheduled for summer or fall
of the year 2000. This schedule has a significant impact on the timing of
construction of the commercial and industrial components of the Hohlen
development project. Obviously the commercial and industrial buildings
need to have full access provided prior to completion of construction. There
may be the possibility of constructing a temporary Tyler Street by this fall,
however, this may be unacceptable to the commercial/industrial developers.
The developers will be present at this meeting to discuss their needs related
• to the timing of street construction.
The timing of completion of the first industrial building is crucial to the
overall cash flow of TIF District No. 19. The completion of this industrial
building triggers the EDA's payment to the developer of$300,000 up front as
part of their approximately $2.9 million incentive package. Staff is currently
discussing with the developer that completion of the first industrial building
would also trigger the start of interest on the pay-as-you-go note in the
amount of approximately$2.6 million.
$2.9 million developer TIF incentive
$300,000 - up front dollars
$2.6 million EDA pay-as-you-go note to developer
An ideal situation, strictly from a cash flow perspective, would be for the
commercial component to be constructed one year prior to completion of the
first industrial building. Therefore, the EDA would save potentially one year
of interest on the pay-as-you-go note and also delay our provision of the
$300,000.
Staff is prepared to discuss these issues in more detail at the worksession. If
you have any questions or comments regarding this memo prior to the
40 worksession, please feel free to call me at 441-4905.