HomeMy WebLinkAbout13.F.1. Letter of Credit for Dean Lakes
City of Shako pee I'. F./,
Memorandum
TO: Mayor and City Council
Mark McNeill, City Administrator
FROM: Kris.Wilson, Assistant City Administrator
SUBJECT: Letter of Credit for Dean Lakes
DATE: June 14, 2006
Introduction
The Council is asked to consider a request from Ryan Companies to amend the developers
agreement for Dean Lakes relative to the letter of credit guaranteeing payment of the
special assessments.
Background
As part of the developers agreement between the City and Ryan Companies for the
development of the Dean Lakes development, Ryan Companies has provided the City with
a letter of credit backing the special assessments resulting from improvements to County
Rd. 83 and County Rd. 16 and the installation of streets and utilities within the
development. The language of the developers agreement states that the letter of credit can
only be reduced by the amount of the assessments that have been paid and that Ryan may
request a reduction only once per calendar year.
Ryan Companies has approached staff with the request that when a certificate of
occupancy has been issued for an improved commercial property that Ryan's letter of
credit be reduced. by the amount of the remaining assessment against that property.
Ryan's position is that the improvements on an individual parcel back any outstanding
assessments on that parcel, therefore allowing for a reduction in their letter of credit by a
corresponding amount. Should the a$sessments on such a parcel go unpaid, the City could
seek to collect as it would for unpaid taxes.
Staffhas discussed this issue with the City Attorney and he advised that Ryan's request is
something the Council could choose to grant via an amendment to the developers
agreement. The advantage of agreeing to Ryan Companies' request is that it may help
facilitate the continued development of Dean Lakes. The potential disadvantage is that if
the assessments on an improved parcel gounpaid, it will be more difficult and time
consuming for the City to collect through the tax forfeiture process than it would be to
draw down a letter of credit. Additionally, if the Council agrees to this change for Ryan
Companies on the Dean Lakes project, it should be prepared to receive similar requests
from other developers in the future.
A representative of Ryan Companies will be attending the City Council meeting to further
present their request and answer questions.
Relationship to Vision: This item relates to Goal E: Fiscally Strong.
Requested Action: The Council is asked to provide direction to staff as to whether it wishes
to amend the development agreement for Dean Lakes relative to when and how Ryan
Companies' letter of credit can be reduced. If Council wishes to adopt such an
amendment,.language to that effect will be drafted. and brought back at a future meeting.