Term Sheet and Full Report
I. Key Elements
II. Project Components and Financing
III. Workforce Partnership Plan Employment/Contracting Goals
IV. Authorizing Redevelopment and Tax Increment Plan Modifications and Project Analysis
V. Authorization to Sub-Grant Existing TBRA Funds to Ryan Companies, Inc. for Environmental Testing and Remediation of ACM at Midtown Exchange
VI. Waiver of the City Procurement Policy
Attachment 1: Term Sheet
Attachment 2: Pre-Development Timeline
Attachment 3: Chicago-Lake Redevelopment District Guidelines
On May 4, 2004, Minneapolis City Council approved the project's term sheet. The term sheet outlines the final development agreement with Ryan Companies US, Inc.
Contained in the term sheet are financial, employment and community development goals attached to the construction and operation of the Midtown Exchange.
Sources & Uses Schedule
I. Key Elements of the Term Sheet
Ryan Companies US, Inc. (Ryan) will develop all of the property offered in the Lake Street Center Request for Proposals except the 1964 building, which will be removed. In addition, the City lot at 2901-05 11th Ave So. will be leased to Ryan for surface parking.
Each component of the project must be developed by Ryan, a Ryan affiliate or a separate developer designated by Ryan and approved by the City of Minneapolis Community Planning and Economic Development (CPED) director (Assigned Developers). Each Assigned Developer must be approved before closing and the start of construction of the respective component. The CPED director's approval will be based upon:
- Satisfaction that the legal agreement between Ryan and the Assigned Developer appropriately obligates to the Assigned Developer to perform Ryan's responsibilities contained in the redevelopment agreement.
- Satisfactory construction plans.
- Qualifications necessary to fulfill Ryan's obligations.
- Sufficient financial capacity to warrant release of Ryan.
If the Neighborhood Development Center is unable to close on the Global Marketplace Development, Ryan must present an alternative concept acceptable to the CPED director.
Ryan and Metro Transit are negotiating an agreement to operate a bus transfer facility consisting of two or three shelters, with roadway easements for permanent operation of the hub.
Ryan will pay $2.2 million for the property, as is. Such proceeds will be used to repay the internal borrowing of $1.8 million.
Both Ryan and the City have closing contingencies which appear in sections 10 and 11 of the term sheet. The contingencies represent standard business practice by both parties and are a typical element of development agreements.
Construction Commencement and Completion
Ryan expects to begin construction by mid-July 2004, and must complete the project by December 31, 2006.
Ryan anticipates the City will provide the following types of public funds to the component parts of the project, subject to City review and approval in accordance to applicable policies and procedures:
Pay-go TIF; TIF supported revenue bonds; HUD 108 loan and EDI grant from the parking ramp; loans for rental housing from the Affordable Housing Trust Fund, NRP and EZ; housing revenue bonds; environmental grants and loans; a standby line of credit up to $11,550,000 to provide potential bridge financing to the rental and ownership components; a parking ramp loan of up to $1.1 million to cover a potential funding gap in the parking ramp; and a DEED grant for the parking ramp. CPED staff will return to the City Council for approval of any public financing.
Recent testing and analysis by Ryan has suggested that pollution costs may escalate beyond the initial $2 million estimate. The City's position is that Ryan assumes the risk, but the issue is unresolved.
Collateral and Performance Security
A right of reversion for each component will be contained in the City deed. Appropriate collateral and other requirements will be separately negotiated for any City funding.
Employment and Contracting Goals
Ryan proposes the following goals and CPED recommends: Construction (workforce): 5% Women, 15% skilled minorities, 20% unskilled minorities. SUBP: 12% MBE's, 11% WBE's. Pre-apprenticeships (Step-up): 5% of on-site construction worker-hours, estimated to be 45,000 construction worker-hours.
Ryan will be the master developer of the Midtown Exchange. As summarized in the table below, Ryan has identified several development participants and has secured Allina Health Systems as its anchor office tenant. Site plans are attached as Exhibit D to the Term Sheet (Attachment 1).
*Ryan expects Wischermann to participate
**Sherman expects the Lander Group to participate
Total development costs for Ryan's Midtown Exchange Project are expected to be $179 million (plus potential Met Transit investment of $2 million). The leverage ratios associated with Ryan's project are:
Private to City Investment 4.72 to 1
Private to Public Investment 3.04 to 1
Prior to the RFP process and the Ryan proposal, the City and Metro Council invested public funds in the Sears site. When those prior historic investments are considered the ratio of private to public funds is 2.46 to 1.