Final TIF Request (11-8-2017)
105 South Fifth Avenue
Suite 513
Minneapolis, MN 55401
Tel: 612-252-9070
Fax: 612-252-9077
www.landform.net
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November 8, 2017
Mr. Adam Flaherty
City Administrator and Finance Director
City of Otsego
13400 90th Street NE
Otsego, MN 55330
RE: Financial Assistance Request – Riverbend North PUD
Mr. Flaherty,
As you are aware, on August 15, 2017 Landform submitted a request for consideration of financial
assistance on behalf of our client, the Darkenwald Corporation, for the Riverbend North project. As part
of the initial application, we proposed two options for a proposed TIF structure. After review by the
city’s consultant we now understand that the site has met the standard of blight, and that the city is
comfortable moving forward with a redevelopment TIF district on the three development parcels
comprising the proposed development project.
The proposed initial phase of the project contemplates approximately 166 units of multi-family market-
rate housing with roughly 25,000 sq. ft. of commercial storage constructed simultaneously replacing the
existing storage. A later phase of the project would include two commercial parcels each contemplated
to contain roughly 7,500 sq. ft. of retail space. A private roadway maintained by the underlying CIC
structure would be constructed to serve all four parcels, with an intersection at River Road being
potentially signalized at some point when warrants are met. Additional information on the project
proposed has been provided under separate transmittal.
Full development of the Riverbend North PUD as currently proposed would require the
decommissioning and removal of an existing private sewer treatment facility and connection of both the
new project and the existing 199 mobile home units to the city’s public sewer system. Without the TIF
assistance, the removal of the plant and connection of the existing 199 units in Riverbend would not be
possible.
As part of this process, we have been provided with two TIF computations prepared by Nick Anhut with
Ehlers, the city’s financial consultant. The first considers the increment generated by the initial phase
of the project only (Multifamily and storage), while the second contemplates complete build-out of the
Riverbend North PUD adding the two commercial parcels requested by the city. Based on these
assessments, we understand that the initial phase is anticipated to generate roughly $6mm over 25
years, while the full buildout contemplates an additional $800,000 in proceeds over the life of the
district.
Financial Assistance Application Amendment 2
November 8, 2017
With this updated request, we have presented a list of proposed TIF eligible expenses that consist
predominantly of the utility and traffic improvements necessary to decommission the existing plant, and
develop the project in the proposed manner. These expenses are listed below:
While the expenses have increased since our last estimate, it should be noted that the proposed
eligible expenses are infrastructure related costs comprised predominantly of utility connection fees and
traffic improvements, with a small allowance for architectural upgrades to the building exterior to meet
the updated code requirements.
Based on our review of the Ehlers TIF projections, we believe the increment generated over the 25-
year life of the district is sufficient to cover the itemized $2.8mm in present value development costs.
We also believe the remaining increment generated over the life of the district is sufficient to cover the
deferred connections fees in the amount of $1.6mm.
Financial Assistance Application Amendment 3
November 8, 2017
Based on the above information, Darkenwald Corporation respectfully requests their application for
financial assistance be revised to include the following:
• Developer is issued a $2.8mm TIF pay-go note bearing 4.75% interest capturing 100% of the
TIF proceeds from the project until repaid.
• That the remaining increment generated within the district be directed either to deferred
Riverbend connection fees in the amount of $1,618,283, or towards repayment of inter-fund
loans in the same amount, whichever is deemed the best solution for the city.
Darkenwald Corporation, and Landform appreciate the diligent efforts of staff, council, and their
consultants in consideration of this application. We believe the proposed structure provides a very
reasonable solution to a challenging situation, and provides numerous benefits to the community,
including:
• De-commissioning and removal of the existing private treatment plant.
• $1.8mm in new connection fees upon construction of the proposed project.
• 169 new customers on the public sewer and water system with the proposed project.
• $1.6mm in deferred connection fees over the life of the district that couldn’t otherwise be paid.
• 199 new customers on the public sewer system that likely could never otherwise be connected.
• Traffic and infrastructure improvements that make commercial parcels potentially viable.
• Potential additional increment and upside from appreciation of approximately $18mm in new
development that could be utilized outside the district.
We would appreciate any comments you may have, and look forward to meeting with council on
Monday night.
Sincerely,
Landform
Darren B. Lazan, RLS
President
COPY: Casey Darkenwald
ENCL: