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Home My WebLink About2020-10-13 CC Packet Enclosure a5 Oak Park Heights Request for Council Action Meeting Date: October 13th, 2020 Agenda Item Title: Consider Request from Central Automotive—Deferment of Connection& Park Dedication Fees Time Required: 5 minutes Agenda Placement: New Business Originating Department/Requestor: Eric Johnson, City Administrator Requester's Signature li"'0 Action Requested: Discussion/Possible Action Background/Justification(Please indicate any previous action, financial implications including budget information and recommendations). Please see the attached memo and related documents. Page 23 of 44 441 City of Oak Park Heights 14168 Oak Park Blvd. N•Oak Park Heights,MN 55082•Phone(651)439-4439•Fax(651)439-0574 1019120 MEMO TO: Mayor and City Council Members FROM: Eric Johnson,City Administrator RE: Central Automotive—Connections I Park Dedication Fees Summary: As part of the continuing effort to amass financing for the Central Automotive construction, the City has received the attached request from First State Bank and Trust, on the behalf of Central Automotive; they are requesting delayed payments of the required Utility Connection and Park Dedication Fees over a period of 36 months. In this instance the fees total$109,215.38 as shown in the figure and would typically be due and payable at the time of the final plat and signatures of the Development Agreement. The total project cost is approximately$2,000,000 and to date Central Automotive has secured all Zoning Permits necessary to construct the facility as presented. 2020 Rates Connection Charges and Park Dedication Fees: Rate Per"Acre" Total Acres Connection Fee As we know, the City collects these Fees as they support the necessary Water $ 14,571.00 $ 2.60 $ 37,884.60 290.40 long-term utility infrastructure in the City and is a method by which the City Sanitary $ 22,273.00 $ 2.60 $ 57,90980 Storm $ 2,273.00 $ 2.60 $ 5,909.80 can apportion associated costs for access to such infrastructure. In other Total Utility Connection $ 51,084.80 words, as development occurs these are benefitted by such systems and also have a duty to share in the cost of such systems. Park Dedication 1.The rate per acre also includes a density value based on type of land use-commerical,residetlal,multi family,etc. works in a similar fashion,as development proceeds—along with it comes density,traffic, noise,etc.so cities mayimplement efforts to mitigate these Park Dedication y p g Fair Market Value impacts including the establishment of parks or in lieu of this apply costs to of Property 10%of FMV Park Dedication Fee benefit current systems. Of course, no one desires to pay these taxes, but $ 581,300.00 10.00% $ 58,130.58 they do correlate to the development and seeks to not burden other taxpayers for the subsidy of others. Fundamentally it is a Loan: Perhaps for lack of a better classification the delay requested, in-effect would be a three-year loan. The City's policy on Financial Assistance typically requires an application fee of$3,000, closing fees and annual servicing fees. However, the City has not engaged in loan parameters in this"small"magnitude—typically they have been multi-million issuances(Nolle, VSSA revenue bonds)where these fees are comparatively small and where the City has continuing reporting obligations. As this is a COVID-19 year and many cities are exploring ways to induce business operations, the application of a lower interest rate would seem reasonable. And, considering the request for a delay or partial deferral, the City does not have an immediate need for the payment and a limited delay would not cause a cash-flow burden to the City's Parks or Utility Operations. At this time the City is earning around .01%for its one or two-year securities. EXAMPLE:A three-year loan at 5.0%with no early payments would result in total interest payments of approximately$11,099.Of course, 0.0% interest would be zero;and points in-between with varying interest rates or payment dates... But at least that is the scale. Recommendation: Authorize an amendment of the Developer's Agreement to waive any application fees and allow up to a 36-month payment timeline at zero(0%)interest with three equal payments,the first payment due at building occupancy and one-half remaining balance being due on the first anniversary of such first payment (occupancy) and the total balance due on the second anniversary.Any amounts not paid to the City would be enforceable under the general terms of the Developer's Agreement,but would be clarified to also be assessable against the property with interest penalties of applied retroactively at 5.0%APR and associated City costs to enforce. Page 24 of 44 .4111111111111/ Base Loan Amount Required by the City 103,218.00.«-Alterable Issuing Fees(3%) Capitalized Interest(added to Base Loan Amount(5%) - • Total Bond 109,218.00, Estimated Bond Interest rate-Annual _ 0.0014;cc-Alterable Payments Per year Term(years) 3«-Alterable Annual Payment $36,406.00<-Formula-do not alter Total Payments $109,218.00<-Formula-do not alter Total Interest $0.00 <-Formula-do not alter Payment a Balance Total Payment Intent Component Principal Component Cumulative Principal Cumulative Interest Cumulative Payment 1 5 109,218.00 $ 36,406.00 $ - $ 36,40600 5 36,406.00 $ - $ 36,406.00 2 $ 72,81200 $ 36,406.00 $0.00 $ 36,406.00 $ 72,812.00 $ - $ 72,812.00 3 $ 36,406.00 $ 36,406.00 $ - $ 36,406.00 $ 109,218.00 $ - $ 109,218.00 Base Loan Amount Required by the City 109,21800«-Alterable Issuing Fees(3%) - - Capitalized Interest(added to Base Loan Amount(5%) - - Total Bond 109,218.00 Estimated Bond Interest rate-Annual 5.00%«-Alterable Payments Per year Term(years) «-Alterable Annual Payment $40,105.79-c-Formula-do not alter Total Payments $120,317.36<-Formula-do not alter Total Interest $11,099.36<-Formula-do not alter Payments Balance Total Payment Intent Component Principal Component Cumulative Principal Cumulative Interest Cumulative Payment 1 $ 109,218.00 $ 40,105.79 $ 5,46090 $ 34,644.89 $ 34,644.89 $ 5,460.90 $ 40,10579 2 $ 74,573.11 $ 40,105.79 $3,728.66 $ 36,377.13 $ 71,022.01 $ 9,189.56 $ 80,21157 3 $ 38,195.99 $ 40,105.79 $ 1,90980 $ 38,195.99 $ 109,218.00 $ 11,099.36 $ 110,317 36 City of Oak Park Heights -Financial Assistance— Listing of Fees Application Fee Any conduit revenue bond.financial note or other financial assistance tool.including TIF assistance.requested to be provided by the City shall require the payment of an Application Fee of S3,000.This fee is payable at the time of the formal submission of any financial assistance request.This fee is not refundable Escrow Deposit la addition to Application Fee the applicant shall also provide the City necessary•cash to be deposited into an escrow fund and in an amount estimated to adequate to secure all City out-of-pocket expenses including but not limned to.attorney's fees.auditing fees,planning fees,etc., to complete the project This amount will be determined by the City at the time of the submission of any application Any unused hinds shall be returned to the Applicant Closing Fee Pnor to the City executing any final resolutions authorizing the sale of bonds.notes or other financial assistance tools,a Closing Fee payable to the City shall be determined and incorporated into the project.The Closing Fee shall be a maximum 1 0 percent of gross proceeds The City Council may determine a lower amount but may not be less than 0 5 percent Closing Fees shall be due and payable at closing. Annual Sersicing Fee The Applicant shall also pay to the City an Annual Servicing Fee and is equal to O.l°e of the average balance of all outstanding funds as calculated on Jan 1 of each year following the issuance of any financial tool or obligation The first year Servicing Fee shall be pro-rated Page 25 of 44 I Rapport Oak Berl Heights Ft:+;-:=..•,t'il TM). `Knra AVE I, rBouiwetls Landing i? Farr a� , Hudson 214 2nd S trel MN ?k;gt. M'J' (14k Pil*K 11ert i Hutson WI 4 ik FIRSTSTATE65;.439719' 65<5? 349.t. (A1,141"0.0 6'1?/'V1,1 St Andrew's Yittign • I-47,i9W6183 HOS 'Not Services Stillwater BANK ,AND '' mo rant . Woodland Hill r TRUST s,7� VJ G5'?,1 Z?tr: 925 Nth't y�ar.i FI Mahn-scary53 5 f 44 atp,4 r f,[.':i<+3835 :tikrnlr PAN 550,0, rluis�ra ivi EST 1914 j 1'65127591osrl � September 22,2020 Mayor and City Council Members C/O Eric Johnson,City Administrator Re:Central Automotive,LLC Project: develop the property known as Lot 1, Block 1,Oak Park rleights Auto Plaza 2"d Addition Dear Mayor and City Council Members, First State Bank and Trust and another financial institution are working toward a financing package for the above-mentioned project(development). Due to extra project costs(excavating, Sac/Wac,park dedication),financing has been very difficult based on the recent appraised value. To secure financing,Mr.Triemert is asking the City of Oak Park Heights to spread the fees over a period of 36 months.Mr.Triemert has made similar requests to other parties associated with the project so that it can become a reality. While approving some form of payment plan will not guarantee final approval,it will help towards achieving the goal of getting the property developed. Should you have any questions,please do not hesitate to call the undersigned or Mr.Triemert with questions. Sinter colt W Faust, Sr.Vice President of First State Bank and Trust 1;51-430 453cosq On behalf of David C.Triemert 145' 1:1 i 4.FF 800.848.4:19e ,wu''w tsbt.c;;:,m taint:ileal i Wont 1 SAW felt 61 \IJ� Page 26 of 44