AGREEMENT FOR CREAMERY PROJECT
"PRACTICALLY RISKLESS VENTURE" FOR VICTORIA
Councilmembers voted 3-2 on June 14^th to execute an agreement for the de-velopment of the Creamery property in downtown Victoria.  The contract for private development is between the Eco-nomic Development Authority of the City of Victoria and the Victoria Creamery.
The EDA is the membership of the Victoria City Council.  The developers are Mary Meuwissen and Barbara Zadeh. Those voting in favor of the agree-ment were the three men, Councilmem-bers Richard Tieden, Jim Paulsen, and Tim Amundsen.  Those voting against the agreement were the women, Mayor Mary Thun and Councilmember Kim Roden.
Stated Mayor Thun, "I've been asked why is the city putting $1.75 million or $2.2 million, or whatever that number is going to be, into a private project.  The city will grow.  Why wouldn't we wait for someone else to come along with a better deal?  Bigger cities maybe give $2.2 million, but not small cities … This is an awful lot to commit to, Tax Increment Financing for 18 years."
The mayor compared the Creamery project to the recent downtown Swap Land Proposal by Matt Crowe and CEI Ventures.  But Councilmember Tim Amundsen, countered, "This is entirely different.  It's like comparing an apple and  an orange.  We're talking here about a process for financing a project."  Mary Meuwissen owns the Creamery property and she is at risk, not the taxpayer, whereas Matt Crowe does not own the Swap Land property and the city (the taxpayer) is at risk.
Also, it's not a matter of "giving" to Mary Meuwissen.  It's a matter of return-ing a portion of what she will be paying in increased property taxes, in order for the city to acquire much needed downtown public parking.
Stated Councilmember Roden, "I'd like to see an independent financial re-view.  This seems way too vague … I see a pattern here with big projects that we can't pay for.  I want to say it's a mistake and to go on record against it."  She said there were "no assurances" and that she was "uncomfortable."
City Attorney Mike Norton explained the purpose of the development agree-ment.  "The intent is to control the rela-tionship between the developer and the city," he said. 
He tried to make more clear:  "This project will only receive what it contrib-utes.  Only what it generates [in increased property taxes] will be returned to the project.  The developer is only eligible to recoup costs from the public parking they are building.  Only eligible expenses can be reimbursed."
Continued the city attorney, "The developer will indemnify the city should hazardous materials be found on the site.  The developer will provide an easement for public parking during normal business hours.  If they don't complete the project, we stop the TIF payments.  A certificate of completion is issued when you're satis-fied the project is completed.  Once they complete the public parking, we give them the TIF note for  $1.75 million or $2.2 million as requested by the develop-er.  If they don't meet all the conditions, then they can't get the note.  If the proper-ty gets sold to a third party, we have some control over who that third party will be.  The developer can sell it once it's com-pletely built.  Basically, the transferee would have to meet the conditions in the developer's agreement."
City Attorney Norton was asked what happens if the project is a failure.  He replied, "A failure to generate increment means we don't have to pay any ... But for this project, the city wouldn't have any TIF money.  The city is not out any money.  It's not coming from the taxpay-er's pocket." 
Stated Paul Donna, the city's finan-cial consultant with Northland Securities, about the proposed TIF package, "It's a very typical structure, like I've seen in the past.  It's practically a riskless venture for the city."
Jay Lindgren, the developer's attorney with the Dorsey Whitney law firm, reported that Kraus Anderson will be the general contractor on the Creamery project, which consists of two three-story brick buildings for retail/office/condos with underground parking.  At least 50 spaces in the underground parking will be free to the public on a first come-first served basis, at least for 18 years.
"Initially we talked about a maximum amount of the TIF note as  $1.75 million," said Mr. Lindgren.  "Krause Anderson told us there is $2,187,500 of qualified cost, which makes room for a contin-gency.  It's a maximum amount.  We hope it's not that high."
He reminded councilmembers, "There is a real property interest being given by the developer to the city."
For a better understanding of Tax In-crement Financing, see City Scoop pages in the June 2007 issue of the Gazette archived at www.VictoriaGazette.com

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