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Whether or not we would want to purchase the property now and do a project <br /> as soon as possible(scenario 1) or we purchase the property now and hold it <br /> for 366 days (scenario 2) depends mainly on the financial ramifications for <br /> holding the land for over one year. Lori Johnson has done the financial <br /> analysis of the two different scenarios and will be in attendance on May 6 to <br /> update the HRA on her findings. In general, the city supports scenario 1 <br /> because we want a new facility constructed as soon as possible for the benefit <br /> of the downtown area, there is less risk to the city (compared to holding the <br /> land for over one year), the school and county continue to receive tax <br /> revenues based on the tax capacity currently on the property, the total <br /> project cost that needs to be recaptured is about $58,000 less, and it is <br /> possible that the TIF district would be decertified a year earlier than under <br /> scenario 2. With that being said, it should be noted that scenario 2 also <br /> works financially. The project under scenario 2 would take either 7 or 8 <br /> years to recapture our investment, depending upon interest rates and site <br /> preparation costs. The penalty under both scenarios is in the $11,000 range. <br /> However, if we need to go to an extra year for scenario 2, the penalty may be <br /> $16,000. Either way, the penalty is something that appears to be able to be <br /> handled by the HRA through use of its fund balance. <br /> Staff has met with Denny Chuba to discuss this project since the April 17, <br /> 1996, meeting. As the HRA knows, Denny was the most interested in the <br /> RFP that was sent out in 1994 and we are working with him based on the <br /> good experience we have had on the east Main Street redevelopment projects. <br /> Nonetheless, before the city proceeds in actually purchasing the property, it <br /> should get some level of commitment from Mr. Chuba that he will complete a <br /> project of$1 million total valuation by January 1, 1998, or as soon as possible <br /> if the project is to proceed in 1996. I think Denny would also like a <br /> commitment from the city so that he can market and invest in the project and <br /> know that the city will be working with him. Likewise, the city needs a <br /> commitment from Denny so that we know we will not have to hold the land <br /> too long and that the debt will be manageable and a facility will be built. A <br /> draft letter regarding Mr. Chuba's commitment to the project will be <br /> distributed on Monday. This letter from Mr. Chuba needs to be reviewed by <br /> the city attorney and signed off on within the next couple of weeks. <br /> Mr. Chuba needs at least one and most likely two commitments from future <br /> owners in order to proceed with the project. One owner that is possible, but <br /> is premature to discuss in any detail, is the municipal utilities operation. <br /> Currently the utilities building is being evaluated from a "building health" <br /> point of view. The results of this environmental evaluation will not be known <br /> for 20 days or so. There are lots of reasons for the utilities to relocate at,this <br /> King/Main site, but if their facility is relatively healthy and the cost of <br /> repairing the building is not significant, then this relocation is unlikely. On <br /> the other hand, if the cost of fixing up the building is substantial and ADA <br />