HomeMy WebLinkAboutEDA AGN 05-23-06 Ehlers Memo
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Columbia Heights EDA
Stacie Kvilvang & Mark Ruff - Ehlers and Associates
I-Iuset Park Redevelopment - Schafer Richardson Costs to Date
May 22, 2006
As you are aware, development has begun as part of the Ruset Park Redevelopment project. This is a large
and complex redevelopment due to the high cost of site assembly (including relocation), remediation and
public improvements.
As you know, when Development Agreements are approved the budgets are determined utilizing estimates
based upon the developer and their consultant's knowledge of similar projects completed in the past. More
accurate estimates or actual costs cannot be determined until the actual bids are received and the work is
completed. In addition, when remediation is involved the extent of contamination may increase as building
walIs are opened for demolition or soil removal begins.
We have completed a preliminary review of expenditures to date for the above referenced project. Keeping
that in mind the project has performed overalI as expected, but there have been some cost increases that are
not atypical in redevelopment projects.
Use Original Estimate Updated Estimate InCI'ease
. Acquisition $8,515,000 $9,367,000 $852,000
** Remediation Not Funded by $600,000 $2,034,600 $1,434,600
Grants
Relocation $840,000 $1,905,000 $1,065,000
TOTAL $9,995,000 $13,306,600 $3,351,600
* Followillg properties illcreased over estimates: Bllck/es ($130,000), DllfJy($112,000), Smith ($277,800), alld SR ($510,000),'
and Gl'eifwas $203,000 less than estimated.
** The City will be submitting grant proposals to DEED and the Met Council to offset as !Illlch of the increased costs of
remediation as possible.
We expect other cost categories to be higher, but the actual costs are not yet known. For example, interest
costs may be higher due to the delays in construction from addressing remediation and to cover the higher
costs listed above. Overall, the cost increases included in the chart above do not constitute an absolute need
for more tax increment, but may be an indication that more assistance will be required. There are several
factors which will determine the need for additional TIF and/or a longer term of TIP:
I. Final costs are higherllower than current projected estimates
2. Reduction in overall tax rate will generate less TIP over time (City's tax rate has already decreased since
the district has been certified)
Columbia Heights EDA
I-Iuset Park Redevelopment - Schafer Richardson Costs to Date
May 22, 2006
Page 2
3. Unsuccessfal procurement of grants by the City to offset the increased costs associated with remediation.
4. Unit sales prices that are higher than anticipated can potentially reduce the term of existing or additional
TIT< required.
5. Interest rates on final debt may be higher 01' lower than estimates
Again, these costs are estimates at this time and final costs will be reviewed for use as qualified costs for
additional tax increment.
Please contact Mark or me at 651-697-8500 if you have any questions or require fmiher information.