1. Prepay TIF Notes-BloombergMEMORANDUM
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TO:
Todd Gerhardt, Executive Director
FROM:
DATE:
RE:
Justin Miller, Assistant to the Executive Director
July 7, 2004
Authorization to Pre-Pay Tax Increment Notes Payable to
Bloomberg Companies and Chanhassen Properties, LLC
BACKGROUND
The Chanhassen Housing and Redevelopment Authority (predecessor to the
Economic Development Authority) issued tax increment notes to Bloomberg
Companies in 1998 and Chanhassen Properties, LLC (the Chanhassen Cinema) in
1997 for improvements to their buildings. These notes were issued with a 9%
interest rate - far above current interest rates. The City Council is contemplating
pre-paying these notes and reissuing bonds to take advantage of current low rates.
Language in the original notes gives the EDA the authority to pre-pay these notes
at any time. In order to do this, approval is needed from the issuing authority,
which in this case is the Economic Development Authority.
Bonds in the amount of $1,170,000 will be issued with an estimated average rate
of 6%. The net present value of the interest savings over the next 18 years is
expected to be $215,000.
RECOMMENDATION
Staff recommends that the Chanhassen Economic Development Authority
approve pre-paying the tax increment notes payable to Bloomberg Companies
(original amount $360,000) and Chanhassen Properties, LLC (original amount
$540,000).
The City