Jan 2007: RDA: Part II:

The Economy Store--the Movie---Part II, RDA, January 2007, Developers Agreement between City of Evansville and Dysis II Partners for The Economy Store Restoration




At the Redevlopment Authority meeting in January, the RDA presented the draft developers agreement for review and discussion with Dysis II, the developers for the Economy Store.

Presenting for the City of Evansville was the new Evansville City Administrator, Dan Wietecha.

Readers will well remember the famous meeting on December 7th, where it became clear that the parties had some homework to do regarding the details of the development financing and the developers agreement.As the meeting opened, Greg, the representative from Ehlers and Assocates, the financial advisors for the City of Evansville, presented the finanical analysis that showed that the project would support the investment of the city for TIF #5 of about $500,000. For purposes of the analysis, he assumed that there was ZERO inflation. Greg also stated that considering that there is a ramp up period of the investment for revenue purposes, for the purposes of the CDBG, Community Development Block Grant, it was usual and customary for the first 5 years to be no payment.

After considerable discussion, it was agreed that the term would be 5 years of no payment, followed by 25 years of payments on the Block Grant, assuming that it was approved by the Department of Commerce. Mr. Berg stated that the developers had every intention of complying with the requirements of the Bacon-Davis Act, and all the other requirements of the Block Grant. It was essential that this grant be secured for the project to go forward.He wanted to make sure that all the parties understood that if for some reason, the Block grant was not secured, there might be a delay of the project for a month, a year or whatever, but that this would not be a breach.

The developers would seek the TIF and the Block Grant money when the project was completed, so a delay would not affect the dispersal of funds. The dispersal of funds for the Block Grant would be on the "Occupancy Permit" being approved. Chris Eager reviewed the fact that this was a profitable venture and not non profit, and indeed that was in incentive for developers to do the project and for others to do more. Also, he went over the fact that the projections by Ehlers were assuming ZERO inflation.

Greg from Ehlers said that he expected the figure to be 2% or higher. Readers who do the numbers can see that a project that would assess at 1,600,000 upon completion, would over 27 years assuming a constant inflation factor of 4% would be valued at$4,613,387. The problem with this of course, as pointed out many times by the developers in both meetings, is that regardless of inflation, the critical measure of value in a commercial building for appraisal purposes, and thus sale purposes, is the RENTS, and in downtown Evansville, the rents have been sub-par. This is something that this cornerstone project is hoping will be the turning point of that problem-----however---there are no guarantees as to this happening.

With respect to the bills for legal, financial advisor services, and engineering services, City Administrator Dan Wietecha said that he could not speak for the past, but for the future, and developers would pay for these bills, and indeed the developes agreement currently being drafted for the biodiesel plant had the very same conditions. In short, all developments were being treated the same.

With respect to the possiblity that a member of the developer-owners might not live for the full term of the TIF period of 27 years, it was pointed out that the city had their name on the deed and had the ability to control future change of ownership.Mr. John Decker did ask that language be inserted in the agreement that specified that in the event of any breach during the TIF period of 27 years that in addition to remedies of equity, there would also be given to the city, the remedy of cash damages. "The Economy Store---the Movie" is currently in production. It will be placed on The Evansville Observer when it is completed.