R2010-199 AUTHORIZING AMENDMENT TO REDEVELOPMENT AGREEMENT

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DEVELOPMENT SERVICES MEMORANDUM Memo No. 10-92 October 18, 2010 TO: Honorable Mayor Michael T. McElroy and City Council FROM: Ryan P. McCrady, City Manager Greg C. Crowe, Assistant City Manager SUBJECT: Amendment to Existing Redevelopment Agreement with Reynolds Development and Receiving and Filing a new Development Agreement SUMMARY RECOMMENDATION: Staff recommends approval of the resolution authorizing the Mayor to sign the amendment to the current Redevelopment Agreement with Reynolds Development, LLC (RDLLC) and Receiving and Filing a new Development Agreement. BACKGROUND: Current Development Agreement On October 16, 2006, the City Council approved a Redevelopment Agreement with RDLLC to facilitate the construction of a three-story building with a minimum of 67,200 square feet at 350 N. Water St. at an expected cost of over $12 million. The City agreed to reimburse RDLLC a portion of the TIF and Municipal Sales Tax increment produced by the new development for a not to exceed amount of$3.8 million. RDLLC finished construction of the 75,000 square foot building and Regions Bank moved into the building November of 2008. Since that time RDLLC has been marketing the building for other tenants to go along with locating their own company Dansig/Consociate Insurance Group. Currently, they are negotiating a purchase agreement with ADM to purchase the building from RDLLC to move hundreds of ADM employees to Downtown in addition to the employees currently at the Global Training Center. ADM expects to utilize all of the remaining space in the building for their employees. Regions Bank has a long term lease that will allow them to stay in the building at their option. As part of the purchase contract, RDLLC is requesting the City to prepay its reimbursement obligations instead of paying them out annually. The request is necessitated from ADM purchasing the property at a discounted price equal to the prepayment of City reimbursement incentives. The current Agreement allows the City to prepay all or a portion of its obligations. A net present value, discounted at 5 percent, of the City's total obligation requirement of$3.8 million over the next 14 years was calculated at $2,635,478. City staff and RDLLC agreed to a total prepayment amount of $2,529,037. The City has already reimbursed RDLCC $199,386 for 75% of the 2008 and 2009 Real Estate Tax Increment deposited into the TIF Fund which leaves $2,329,651 to be prepaid to RDLLC. The amendment to the current Agreement allows for the City to prepay RDLLC the negotiated amount not to exceed $2,539,037. Also, the amendment allows the City to reimburse RDLLC a greater amount for some of the expense line items such as Planning and Engineering because of