04-27-11 LPRDA/TIRZ - Laserfiche WebLink

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La Porte Redevelopment Authority Board Memorandum April 27, 2011 To: Board of Directors From: David W. Hawes, Executive Director Agenda Item: 5. Consider request from Port Crossing for an amendment to Development Agreement extending the interest receipt term by three additional years Background: The La Porte Redevelopment Authority currently has a Development Agreement with Port Crossing Limited for the purpose of constructing Tax Increment Reinvestment Zone public infrastructure on behalf of the City of La Porte and TIRZ. As cited below in the development agreement, developer interest accrues from the date that the developer expends the money for public infrastructure for a period not to exceed five (5) years. Section 6.1 (b) ... Interest (as defined in Subsection 6.1(F)) on each Developer Advance made pursuant to this Subsection shall accrue from the date the Developer expended the funds and shall accrue for a maximum period of five (5) years from such date. At such time as funds are available to pay all or any portion of the Developer Advances made hereunder, the La Porte Authority, at its expense, shall hire a certified public accountant to calculate the amount due Developer and shall prepare and submit a report to the La Porte Board and send a copy to the City Manager certifying (1)the amount due Developer for the Developer Advances being repaid with interest calculated thereon as specified herein and (2) that funds are available to make such payment. Upon receipt of such report, the La Porte Board shall promptly authorize and make payment to Developer. Issue: The developer believes they have performed in every aspect of the agreement and that several factors occurred that mitigated their ability to be reimbursed in accordance with the development agreement causing them undue hardship. The first factor is the downturn in the economy resulting in the Authority's inability to issue notes, bonds or enter into other obligations that would result in reimbursement to the developer as contemplated. The second factor is the lack of construction by the Lakes at Fairmont Green. By not constructing homes in accordance with their development agreement, this also has resulted in a negative impact on the Authority's ability to issue debt. This factor has resulted in the concentration of the majority of TIRZ Increment within the Port Crossing development. Staff will stipulate that the lack of diversity in Tax value increment has been the leading cause of the Authority's inability to issue debt or enter into other notes, bonds or obligations. As a result, while Port Crossing has preformed and created substantial increment, the concentration of increment is so high within their development, no private placement may be obtained or public debt be issued to provide reimbursement to Port Crossing. Request: Due to the above factors, Port Crossing is requesting an amendment to their development agreement with respect to Section 6.1 (b) to increase the limitation on term of interest from five (5) years to eight (8) years.