Fiscal Note
(Please see also the spreadsheet attachment that summarizes the proposed/projected costs and sales revenues.)
The termination agreement will not increase the City’s loss exposure relative to its past and projected investments in the industrial site development project. The agreement will allow the City to recover its previous investments in the project and provide additional revenues that may be allocated to site improvements that will increase the marketability of the development.
The City’s initial cost for the acquisition of the 162 acre site was $1,330,000. As part of the termination agreement, the City will assume responsibility for the costs of infrastructure improvements (water and sewer mains and street and storm water improvements) already incurred, amounting to $1,114,802 on the acreage that CIC has already sold or taken down, plus $1,180,739 on the remaining acreage, for a total of $2,295,541. These special assessment costs will be paid (and recovered) as part of the future sales proceeds as lots are sold.
The City will incur additional expenses for future site improvements (streets and utilities) in order to enhance the marketability of the lots. A City-commissioned financial analysis estimated the cost of these improvements at $5,044,925, which represents the costs the City may incur over the next several years. Funding to support these costs will need to be included in future capital budgets, subject to Common Council approval.
In sum, the City’s total anticipated investment (incurred and projected) in the site is $8,670,466 ($1,330,000 initial purchase plus $2,295,541 special assessment expense plus $5,044,925 for future improvements and other expenses such as holding costs).
However, the realized and projected revenues the City may anticipate exceed the anticipated costs. CIC has paid the City $3,548,100 for the acreage it has sold or taken down. Additionally, City Real Estate estimates a market value of $3,163,762 for the ...
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