Minutes: Redevelopment: Jan 2007

Evansville Redevelopment Authority

Board of Commissioners

Regular Meeting

Tuesday, January 16, 2007, 7:30 pm

City Hall, 31 S. Madison Street, Evansville, Wisconsin

MINUTES

Call to Order. The meeting was called to order at 7:30 pm by Chair Chris Eager. Present: John Decker, Tom Calley, Chris Eager, Bill Hammann, Betsy Ahner (arrived 7:35), Tony Wyse, and Roger Roth (arrived 7:40). Also present: Executive Director Dan Wietecha, Mayor Sandy Decker, Greg Johnson (Ehlers & Associates), Roger Berg, Ed Francois, Jeff Farnsworth, and Dick Woulfe.
Declare Quorum. There being a majority of the commissioners present at call to order, a quorum was declared by the chair.
Approve Agenda. The agenda, as distributed, was approved without objection.
Approve Minutes of December 6, 2006 Meeting. Minutes, as distributed, were approved without objection.
Old Business. The commissioners discussed the Eager Building Historic Renovation Project.
Greg Johnson noted that Ehlers and Associates had reviewed the developer’s construction bid documents from subcontractors and a competitive bid from another general contractor. The bid prices were valid and used in the TIF projections.
Johnson distributed a memo and presented projections for the tax increment financing based on $2 million in increased valuation. The debt service schedule is based on a loan from the Taxable State Trust Loan Fund. Discussion noted that a lower equalized valuation would result in less increment revenue and need to be covered by the developer. It was also noted that any appreciation in the property’s value over time would work to the benefit of the financial projections.
Dan Wietecha noted receipt of a letter from Dean Peters of Associated Appraisal Consultants. The letter indicated, “After consideration of the construction costs and potential net operating income that the building is likely to produce, I have arrived at a range of value between $1,300,000 and $1,600,000.” Discussion noted that the comparatively low rental rates in Evansville are driving the lower appraised value. The developer would need to cover the difference if the finished product is unable to generate tax increment sufficient to service the debt.
In February 2006, the Common Council had approved providing TIF funds to the project conditioned on there being a written development agreement. Noting that the draft agreement is a more complete version of the draft discussed by the board at its December meeting, Wietecha presented the proposed agreement for discussion. Emailed comments from City Attorney Mark Kopp were also noted.
Discussion of the Recitals section noted that the project costs are $2,012,000. The five conditions previously required by the Common Council will be listed explicitly. The city’s intent program income from the CDBG funds to be capitalized into a revolving loan fund. There was also a request to check with the city attorney about the language incorporating the recitals as part of the agreement.

Discussion of the Improvements section noted the need to reference the plans and specifications approved by the State Historical Society and that there would be no change from the architect’s elevation without prior authorization.

Discussion of the Tax Increment section approved monthly draws of the funds to be handled through a title company with the architect’s verification of completed construction. Expenses associated with the title company will be borne by the developer. No draws will be made until after the CDBG funds have been approved. There will be personal guarantees by the developer’s principals to cover any shortfall between the actual increment and the projected increment.

Discussion of the CDBG Funds section made it explicit that the city would not be in default of the agreement if the Department of Commerce did not award the grant. The developer indicated that without the CDBG funds, the project may not proceed immediately; in order to avoid a problem, the city will withhold disbursing any of the TIF funds until the CDBG status is known. Disbursement of the funds would be tied to the occupancy permit for the apartments. In addition to the mortgage, a personal guarantee would also be required of the principals of the developer.

John Decker moved, seconded by Tony Wyse, to set the terms for the loan of the CDBG funds with a five year deferral and a twenty-five year payment schedule for a total amortization period of thirty years. Motion approved unanimously.

Discussion on the Events and Remedies of Default section provided that any uncontrollable delays to the construction will not throw the TIF guarantee off schedule. The possibility of monetary damages for default was also included.

Discussion of the Miscellaneous section noted that any professional out-of-pocket expenses paid by the city in preparation for the development agreement must be reimbursed by the developer. The agreement was also modified to require the city’s consent before any assignment of the developer’s obligations, such consent to not be unreasonably withheld.

Bill Hammann moved, seconded by John Decker, to approve the development agreement as modified. Motion approved with all voting in favor, Chris Eager abstaining.

Wietecha noted that the alley and parking lease mentioned on the agenda is an issue for next week’s Public Works Committee, not the Redevelopment Authority.
New Business. None.
Adjournment. Chris Eager moved, seconded by Bill Hammann, to adjourn the regular January meeting. Motion approved unanimously at 9:35 pm.