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Home My WebLink About9C - Crystal Care Financial MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: CITY COUNCIL AGENDA REPORT APRIL 2, 2001 9C DONALD RYE, PLANNING DIRECTOR CONSIDER APPROVAL OF A RESOLUTION APPROVING IN CONCEPT FINANCIAL ASSISTANCE TO FUND AN ASSISTED LIVING PROJECT FOR SENIOR CITIZENS PROPOSED FOR THE PARK NICOLLET PROPERTY KNOWN AS CRYSTAL CARE History Staff has been working with the developers of this property for several months. On May 1, 2000, the developers met with the Council in a workshop and presented their preliminary plans. As part of this discussion, the developers proposed that the City provide TIF assistance in the range of $500,000 to $700,000. Subsequently, the Council decided it did not wish to provide TIF assistance. In addition, there was a question whether the project would qualify for assistance. On March 19, the developers made a presentation to the Council with an amended project that requested $200,000 in assistance. Issues Does the proposal provide too much public assistance? The developers request is for $200,000 for a project estimated to cost $6,000,000. This level of assistance is 3.33% of the total project cost, which is a relatively low level of assistance. The developer has yet to provide a detailed pro forma or a "but-for" worksheet and will still have to provide this information demonstrating that the project is not feasible without public assistance. Will the developer have a significant showing of equity in the project? The developer is seeking financing through HUD but the amount of equity they bring to the project is not known. What are the public benefits provided by this project which justify public assistance? The proposed project meets the Comprehensive Plan goal of providing a variety of affordable quality housing. It also satisfies the Livable Communities goals of providing life-cycle housing for residents of the community. This project will also generate 162~HY~ligl12~~WAW~~~~%~;<jVti'ffrie'gc)fcir~~2'~1on4 / Ph. (952) 447-4230 / Fax (952) 447-4245 T-- AN EQUAL OPPORTUNITY EMPLOYER i . 1 -'iT AL TERNA TIVES: RECOMMENDED MOTION: REVIEWED BY: property taxes immediately to offset the City's cost of providing services to the facility. Are City taxpayers at risk if the project fails? Under this financing scenario, the City would offset the cost of certain fees up to a maximum of $200,000. Depending on the mechanism that is used, there may be no City money provided up front. If the City were to simply forego certain fees, there would be no impact. If the City advanced money, there could be a possibility the money would be lost. The development agreement to be negotiated if this project proceeds would address this issue among others with the idea that the City's interests are well protected. CondHsiofl The City Council should determine whether it could support this project with the public assistance discussed in this report. If the Council decides this is appropriate, passage of the attached resolution will provide a framework for negotiating the development agreement. 1. Adopt the attached Resolution. 2. Adopt the Resolution with modifications as may be deemed appropriate. 3. Take no action. Alternative 1 L:\O I files\O I eda\C1TY COUNCIL AGENDA REPOR TcrystaI care04020 I ',doc 2 RESOLUTION 01-XX A RESOLUTION APPROVING IN CONCEPT THE USE OF CASH CONTRIBUTIONS TO FUND AN ASSISTED LIVING PROJECT RECITALS WHEREAS, the City has been approached by Messrs. Larry Johnson and Mike Lewis dba Crystal Care LLC (collectively "Developer") with a project to construct an assisted living facility with 40 units of assisted living and 20 units of memory care (hereinafter "Project"); and WHEREAS, the aforementioned Project is known as CRYSTAL CARE; and WHEREAS, the Developer maintains that the Project is not economically viable without the assistance of public financing; and WHEREAS, to encourage and facilitate the development of housing to meet the life-cycle needs of the residents of the City consistent with the objectives of the City's Comprehensive Plan, the City is willing to work with responsible developers on qualifying projects; and WHEREAS, the Developer agrees to bear all risks associated with legislative changes or resulting from statutory requirements which the Developer is unable to meet; and WHEREAS, both the City and Developer understand that both time and costs are associated with the preparation and evaluation of plans and related documents necessary to develop and analyze the proposed Project and determine whether the Project meets the City Economic Development Incentives Goal Targets Policy; and WHEREAS, both the City and Developer wish to avoid the unnecessary expenditure oftime and money on projects that are not of interest to the City. NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA THAT: 1. The Recitals set forth above are incorporated herein as if fully set forth. 2. The Developer is encouraged to submit to the City an application for Economic Development Incentives for the Project referred to as Crystal Care. Along with the application, the Developer will deposit with the City the amount of Twelve Thousand Dollars ($12,000) which monies shall be used by the City solely to pay for legal, financial and staff costs associated with the analysis, review and facilitation of the Project. 1629Q:It<r!jJ~t=reek Ave. S.E., Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245 AN EQUAL OPPORTUNITY EMPLOYER I if it fJ1 3. The Developer will design the Project to be compatible with all applicable zoning, subdivision and other land use regulations of the City and other governmental entities having jurisdiction. 4. The Developer will provide the City with a plan for financing the Project that includes a maximum cash contribution by the City of no more than Two Hundred Thousand Dollars ($200,000). 5. The Developer must demonstrate to the City that it has the capacity to successfully complete the Project and that the City's financial assistance is necessary for the proposed Project to occur. 6. All determinations regarding the suitability of the site for the proposed Project are the sole responsibility of the Developer to determine for itself. The City makes no representations or warranties that the site under consideration by the Developer is suitable or will sustain the proposed Proj ect. 7. The City will analyze the documents, plans, materials and data supplied by the Developer (the "Application") and determine if the Project qualifies for the contribution by the City. 8. If the Project meets all the criteria discussed herein the City will negotiate an Economic Development Incentives Financing Agreement with the Developer. The City Council will act reasonably in determining whether the Project meets applicable criteria, including but not limited to financing, statutory requirements, City policy and zoning requirements. 9. Notwithstanding Paragraphs 1 through 8 above, nothing in this Resolution is intended to bind the City Council to provide the Developer with a cash contribution. This Resolution is intended to dernonstrate the City's interest in moving forward with the Developer. Passed this 2nd day of April, 2001. YES NO Mader Mader Ericson Ericson Gundlach Gundlach Petersen Petersen Zieska Zieska Attest: Frank Boyles, City Manager ------~-- L:\01 files\01 eda\RESOLUTION crystal care.docL:\01 files\01 eda\RESOLUTION crystal care,doc: