HomeMy WebLinkAbout08-460NOVEMBER 25, 2008 08 -460 RESOLUTION
(CARRIED 6 -1 LOST LAID OVER WITHDRAWN )
PURPOSE: APPROVAL OF MASTER DEVELOPER AGREEMENT
TERM SHEET WITH 1900 JACKSON STREET LLC FOR
DEVELOPMENT IN TIF 22 FAIR ACRES DEVELOPMENT
INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT
BE IT RESOLVED by the Common Council of the City of Oshkosh that the
proper City officials are hereby authorized and directed to enter into a Developer
Agreement with 1900 Jackson Street LLC for a mixed -use development at 1900
Jackson Street to include construction of a new Shopko Store, with substantially the
same terms as attached hereto, and to carry out all actions necessary to implement the
City's obligations under the Developer Agreement.
TERM SHEET FOR DEVELOPMENT OF FAIR ACRES SHOPPING CENTER
BY AND AMONG
CITY OF OSHKOSH, WISCONSIN AND
1900 JACKSON STREET, LLC
November 25, 2008
I. Project
A. Development Site/Parcel — The Project covers all new development on the
Development Site/Parcel, which is defined as Tax Parcel #91514970400 generally
bounded on the north by Viola Avenue, on the east by N. Main Street, on the west by
Tax Parcel #91514970200, and on the south by Tax Parcel #91514970300 and
#91514970500, and which consists of the Phase I Site, the Phase II Site and the Phase
III Site as depicted on Exhibit A. See Attached Exhibit A
B. Development Approach/Projects-
1. 1900 Jackson Street, LLC Development Proposal. As generally set forth in
the proposal submitted by 1900 Jackson Street LLC, October, 2008 and
included in the TID #22 Project Plan.
2. Refined Project Proposal: 1900 Jackson Street LLC proposes to undertake a
mixed use project in three phases (collectively, the "Development Project ").
The Phase I Development Project will entail construction of a 54,000 square
foot Shopko Store on the Phase I Site. The Phase II Development Project will
entail the construction of a 15,000 square foot mid -box retail store, and a 5,000
square foot restaurant on the Phase II Site. The Phase III Development Project
will entail construction of two duplex structures on the Phase III Site. Phases
II and III are subject to future Development Plan approval by Common
Council. See attached Exhibit B which shows the Phases of Development.
C. Schedule of Development
1. Phase I Development Project —1900 Jackson Street LLC will begin
construction of the Shopko Store in December 2008 with completion by June,
2009.
2. Phase II Development Project —1900 Jackson Street LLC proposes to begin
Phase II development subsequent to completion of Phase I development.
3. Phase III Development Project —1900 Jackson Street LLC proposes to begin
Phase III development within no later than 24 months from the completion of
Phase I development.
1900 Jackson St LLC Term, Sheet
Nov 25, 2008
D. Estimated Project Values. Based on representations of the developer in the initial
project proforma, it is estimated that the value of the Phase I Site upon completion of
the Phase I Development Project will be approximately $3.1 million while the
estimated aggregate value of the Phase II and III Sites upon completion of the Phase II
and III Development Projects will be approximately $2.9 million.
E. Pay /Go Commitment by City for Phase I, II, and III Development Projects in the form
of a taxable tax increment revenue bond (the "TIF Bond ") in the amount of not to
exceed $2,150,264 or such lesser amount as identified in the Development Agreement
to reimburse the owner, of Development Site/Parcel for costs of the Phase I, II, & III
Development Projects.
L The TIF Bond will be issued and delivered to 1900 Jackson Street LLC only
upon completion of the Phase I Development Project by no later than
December 31, 2009 and submission of documentation satisfactory to the City
reflecting actual costs expended on such work, and subsequent information to
the City Assessor's Office to value the Development Site/Parcel and to
establish the Phase NPV (defined below). Interest and principal will be paid
each year by the City to 1900 Jackson Street LLC pursuant to the schedule set
forth on Exhibit C attached hereto, as adjusted by the City from time to time
based on the Phase NPV established for each Phase, but only to the extent
Available Tax Increment (defined below) exists and only if appropriated by the
City Council. If there is no Available Tax Increment from the Development
Site/Parcel, then the City is not required to pay 1900 Jackson Street LLC on
the TIF Bond.
2. Payment on the TIF Bond shall be subject to the following conditions:
a. The existence of Available Tax Increment from the Development
Site/Parcel.
b. Provision of such financial information by the developer to the City to
determine capitalization rate and reimbursement.
C. Future annual appropriation of the payment by the City Council, and
d. 1900 Jackson Street LLC, not being in default under the Development
Agreement.
If the Developer owes the City a penalty for closure of the existing Shopko
store (as described below) and does not promptly pay such penalty, the City
may reduce the amount of any payment to be made on the TIF Bond to recover
said penalty.
1900 Jackson St LLC Term Sheet
Nov 25, 2008
3. "Phase NPV" means the net present value, as calculated by the City's financial
advisor, of the tax increment revenues projected to be generated during the
remaining term of the TIF Bond by the Phase I Site, Phase II Site or Phase III
Site, as applicable, based on property values determined by the City's assessor.
The Phase NPV calculated for each Phase shall be the principal amount the
Developer is entitled to draw on the TIF Bond upon completion of each Phase,
and the aggregate of the Phase NPV amounts shall establish the maximum
amount of principal that the Developer is entitled to draw on the TIF Bond.
4. "Available Tax Increment" means an amount equal to the annual gross tax
increment revenues actually received and retained by the City which is
generated in the immediately preceding calendar year by improvements made
after January 1, 2009 to the Development Site/Parcel, less up to $5,000 for the
City's administrative expenses in connection with the Development Agreement
and TIF Bond.
5. "Annual Gross Tax Increment Revenues" equals the full equalized value (real
estate and personal property) of the Development Site/Parcel minus the full
equalized base value of the Development Site/Parcel as certified by the State
for the Tax Increment District, multiplied by the interim tax rate as determined
by the tax increment calculation worksheet completed annually by the City for
the Wisconsin DOR.
6. A more detailed description of the provisions of the TIF Bond is attached
hereto as Exhibit D.
II. Miscellaneous Provisions
A.
Payment of all taxes and fees.
B.
Limitation on use.
C.
Insurance.
D.
Indemnification.
E.
Defaults.
F. Remedies.
G. Force majeur.
H. Nondiscrimination.
L No personal liability of City officials.
J. Right of inspection.
1900 Jackson St LLC Term Sheet 3
Nov 25, 2008
K. Representations and warranties.
L. Termination — survival of certain provisions.
M. Severability.
N. Additional miscellaneous provisions
1. Penalties for closure of existing Shopko store at 1300 S. Koeller Street.
a. If the Shopko store located at 1300 S. Koeller Street closes operations
within one year after occupancy at the Project Site, the Developer shall
pay to the City a $150,000 penalty.
b. If the Shopko store located at 1300 S. Koeller Street closes operations
within two years after occupancy at the Project Site, the Developer
shall pay to the City a $100,000 penalty.
C. If the Shopko store located at 1300 S. Koeller Street closes operations
within three years after occupancy at the Project Site, the Developer
shall pay to the City a $50,000 penalty.
1900 Jackson St LLC Term Sheet 4
Nov 25, 2008
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EXHIBIT D
Terms of TIF Bond
The principal amount evidenced by the TIF Bond may be drawn by the Developer from time
to time upon completion of each Phase of the Development Project and submission by the Developer
of documentation sufficient to allow calculation of the Phase NPV for the completed Phase. The
amount of principal drawn shall equal the Phase NPV for the completed Phase. The TIF Bond shall
bear interest at the rate of 4.5% per annum, which interest shall begin to accrue on the date of
issuance of the TIF Bond. The TIF Bond shall mature and the City's obligation to repay all or any
portion of the TIF Bond shall terminate on November 1, 2029. Principal and interest on the TIF
Bond will be due and payable on November 1 of each year during the term of the TIF Bond,
commencing in the calendar year in which interest begins to accrue on the TIF Bond. The amount of
the annual payment of principal and interest due on November 1 of each year shall be equal to the
amount shown on the schedule attached hereto as Exhibit C, as adjusted by the City from time to time
based on the Phase NPV established for each Phase of the Development Project. Each payment of
principal and interest shall be applied first to interest, then to principal.
The TIF Bond shall be subject to the following provisions:
(a) The TIF Bond shall be a special and limited revenue obligation of the City
payable solely from Available Tax Increment generated from the Development Site/Parcel which is
appropriated by the City Council, and shall not be a general obligation of the City or a charge against
its general credit or taxing powers. Only funds appropriated by the City Council from the special
fund of Tax Increment District No. 22 of the City (the "TIF District ") shall be used to pay principal
and interest on the TIF Bond. The City Council shall, in a resolution, state that it fully expects and
intends that, to the extent Available Tax Increment generated from the Development Site/Parcel is
available in the special fund of the TIF District, it will appropriate such funds for the payment of the
principal of and interest on the TIF Bond; however, such payment shall be subject to future annual
appropriations,
(b) City staff shall include in each annual City budget submitted to the City
Council for consideration, the payment from the TIF District special fund of the principal and interest
on the TIF Bond, but only to the extent of Available Tax Increment generated from the Development
Site/Parcel. If the budget is approved by the City Council, the City Council shall, at the time of and
as part of the approval of the annual City budget, direct to payment of the TIF Bond, such Available
Tax Increment generated from the Development Site/Parcel. All payments on the TIF Bond shall be
applied first to interest, then to principal.
(c) If the aggregate amount of Available Tax Increment generated from the
Development Site/Parcel that is available and appropriated to make payments on the TIF Bond during
any budget year is less than the aggregate principal and interest payments payable on the TIF Bond
during that budget year, the amount due but not paid shall accumulate and the City shall pay
accumulated amounts from Available Tax Increment generated from the Development Site/Parcel if,
as and when it is available and appropriated for that purpose during the term of the TIF Bond. If the
amount available for transfer from the TIF District special fund for any budget year exceeds the
amount of the principal and interest due and payable on the TIF Bond on the TIF Bond payment dates
occurring during said budget year, then the City shall be entitled to use such excess funds for any
other statutorily eligible TIF District project cost.
1900 Jackson St LLC Term Sheet
Nov 25, 2008
(d) On November 1, 2029, if there remain amounts outstanding and unpaid on the
TIF Bond, then all interest accrued but unpaid and the remaining balance of principal of the TIF
Bond shall be deemed paid in full, it being understood that upon November 1, 2029, the liability of
the City to make any payments on the TIF Bond shall also terminate. The City shall have no
obligation to pay any amount of principal or interest on the TIF Bond which remains unpaid as of
November 1, 2029, and the owner(s) of the TIF Bond shall have no right to receive payment of such
amounts. All increments received by the City generated from the Development Site/Parcel from the
TIF District following November 1, 2029 may be used by the City in any manner the City, in its sole
discretion, chooses.
If for any reason (other than by voluntary resolution of the City), the TIF District terminates
prior to November 1, 2029, and there remain amounts outstanding and unpaid on the TIF Bond, then
all interest accrued but unpaid and the remaining balance of principal of the TIF Bond, shall be
deemed paid in full, it being understood that upon such early termination of the TIF District, the
liability of the City to make any payments on the TIF Bond shall also terminate. The City shall have
no obligation to pay any amount of principal or interest on the TIF Bond which remains unpaid upon
such early termination of the TIF District and the owner(s) of the TIF Bond shall have no right to
receive payment of such amounts.
(e) The actual principal amount of the TIF Bond will be determined following
completion of construction of the project based on the calculated net present value of the Available
Tax Increment through the period ending in 2029 generated from each phase of the development. If
the calculated net present value, of the Available Tax Increment of the redevelopment project is less
than the initial principal amount of the TIF Bond, then the final principal amount of the TIF Bond
shall be reduced to the calculated net present value of the project based upon the most recently
completed project phase. The final valuation shall for each phase be determined by the City Assessor
following each phase and shall be the basis for the calculation of the projected Available Tax
Increment and net present value. The calculation of the net present value and bond payment amount
shall be performed by the City's Financial Advisor.
(f) The City shall have no obligation to make any payments on the TIF Bond
while 1900 Jackson Street LLC is in default under the Development Agreement.
1900 Jackson St LLC Term Sheet
Nov 25, 2008
QfHKOlH
ON THE WATER
TO: Honorable Mayor and Members of the Common Council
FROM: Jackson Ki ey
Director of ity Development
DATE: November 20, 2008
RE: Approval of Developer Agreement Term Sheet with 1900 Jackson Street LLC for
TID # 22 Fair Acres Development
BACKGROUND
On October 28 the Council approved creation of TID # 22 Fair Acres Development Project Plan
and boundaries to facilitate development of the remainder of the Fair Acres shopping center that
will include construction of a 54,000 square foot Shopko store. The Joint Review Board
approved TID #22 on November 3rd.
ANALYSIS
The attached Term Sheet sets forth the parameters for development agreement between the
City and 1900 Jackson Street, LLC, relative to issuance of the $2.15 million Taxable Tax
Increment Revenue "Pay Go" Bond. The Term Sheet identifies the phases of development,
estimated values, and includes mechanisms detailing the reimbursement of the Pay Go Bond.
Additionally, the Term Sheet includes a financial penalty provision relating to closing of the
Koeller Street Shopko store within a specified period of time after completion of the new Shopko
department store at Fair Acres, which provision was recommended by the Joint Review Board.
FISCAL IMPACT
The Term Sheet serves as the basis for which the developer will be reimbursed for development
costs related to implementing the TID Project Plan. As this is a Pay Go form of reimbursement,
it is performance based and will only be paid after the positive tax increment is generated and
taxes paid on new development within the development area.
RECOMMENDATION
Staff recommends approval of the Development Term Sheet.
Approved,
City Manager