08-12-1985 CC MIN - Laserfiche WebLink

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City Council Minutes August 12, 1985 Page Three 5. Consideration of Feasibility Report on Industrial Park Improvements Mr. Terry Maurer, the City's Engineer, reviewed the feasibility study for utilities and street construction for the Elk River Industrial Park. He reviewed the proposed sanitary sewer improvements, the proposed water main improvements, and the proposed street improvements. He noted the report divided the improvements into those necessary to make the Industrial Park usable now and also those required in the future. He also reviewed the site grading comprehended by the project. Mr. Maurer then reviewed the cost summary of the project which totaled $651,500. He next reviewed a letter from Mr. Ron Langness, the City's Bond Consultant, which addressed the use of tax increment bonds and assessment bonds for finan- cing the project. Mayor Hinkle requested Mr. Langness to address the financing options for the project. Mr. Langness stated that, once the tax increment district is estab- lished, the City would have eight years, or ten increments, to conclude the project. He added that the assessments could be delayed for a year but this would entail more capitalized interest. He pointed out that the City could use tax increment to abate the assessments and treat the project the same as for an improvement bond. Mayor Hinkle recognized Mr. Dick Gongoll, who stated that the Investors Group began the discussion with the City regarding the Industrial Park in 1983, that in 1984 they requested the City to take over the property and at that time dis- cussed the deferral of assessments for three years. He added that he is re- questing the City to take the property over or put in the utilities. He added that the Investors Group would establish a wholesale price for the property. He pointed out that the Investors Group now has a negative cash flow on the pro- perty and that he does not know that the Group could take additional assessments. Mayor Hinkle inquired of Mr. Langness what kind of building would be needed to generate a tax increment of $111,000, the amount required to make the project work. Mr. Langness replied that a building of approximately 3.5 million dollars in value would be required. In response to a question from the City Admin- istrator, Mr. Langness stated that it would be difficult to make the site meet the test of extending the tax increment district to a 24 year period. Councilmember Engstrom suggested that the Council get a reaction from the Investor's Group regarding the proposed assessments. Councilmember Gunkel inquired whether the area could be considered a blighted area. Mr. Langness replied that, in order to qualify, 70% of the parcels must be blighted. Mr. Maurer commented that the area is not platted to date and Mr. John Oliver stated that the total area is approximately 35 acres. Mayor Hinkle again recognized Mr. Dick Gongoll who inquired whether there was any chance to see whether the assessments could be deferred or whether the Council would look at what it would take to purchase the property. He added that the Investors Group would sell it for what it would take to recover what they have invested in the project, but that he does not know what is owed on the platted part.