City of Cincinnati Interdepartment Correspondence Sheet For, tion September 11, 2003 TO: Mayor and Members of Council FROM: __ Valerie A. Lemmie, City Managed|[2— RE: ‘Vandercar Holdings Claim Regarding TIF Ordinances CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED DOCUMENT + ‘This memo is written to provide an update regarding pending claims by Vandercar Holdings, Inc, for TIF Project Funds related to the Center of Cincinnati. Counsel for Vandercar Holdings, Inc, (“Vandercar”) claims that TIF funds referenced in City Ordinances Nos. 335-2001, 336-2001 and 245-2002 are owed to his lient and should be released to Vandercar for purposes of infrastructure improvement at the Center of Cincinnati. The tax increment financing (“TIF”) ordinances are attached for your review. Tr bears noting that a development agreement was never implemented between the parties regarding the Center of Cincinnati ‘The project known as “Center of Cincinnati” consists of Vandercar's development in the Oakley North area, formerly known as the Old Milacron and Unova sites. Vandercar is in the process of developing numerous retail properties at that location. These properties include Sam's Club, Meijer’s and Target, which were built during Phase | of the project, fs well as PetsMart, Circuit City and Home Expo, which will be built during Phase 2. [Although preliminary descriptions of Phase 2 ofthe project included an office building, movie theater and smaller retail establishments, Vandercar now indicates that Phase 2 Vill consist of additional “big box" retailers] In order to mitigate the traffic impact from the retail developments at Center of Cincinnati, Vandercar constructed numerous {improvements to the infrastructure in that azea end plans additional infrastructure improvements as the project progresses. Vandercar’s claim regarding the TIF funds relate to reimbursement for those infrastructure improvements, ‘The City of Cincinnati previously made a settlement offer to Vandercar related to this claim, to which Vandercar recently made a counteroffer in the amount of $5.5 million ‘Vandercar states that its original claims are based upon several financial factors, as described below. ‘Vandercar states that its land acquisition costs for the Center of Cincinnati are '$6.250 400, of which $200,000 is an estimated cost for expenses not yet incurred. Such ‘costs include amounts used to purchase land for the purposes of widening Marburg and ‘Alamo Avenues, to build Vandercar Way, and to remove the parking lane on Alamo. © rae on pee‘The completed costs for Right ‘of Way Improvements in Phases 1, 2A and 2B are stated to be $1,617,645, $832,344 and $166,153, respectively. These costs include amounts Spent for architectural and engineering fees, esphalt paving, and hydrant relocation, ws Well as funds spent to install ornamental fencing, mast arms, decorative street lighting, and decorative light poles. “The projected costs for Right of Way Improvements in Phase 3A and for building the righthand turn lane a the intersection of Ibsen and Ridge are $556,001 and $300,000, respectively. Those projected costs include amounts intended to be used for demolition: cesrrorork landscaping, sidewalks, curbing, traffic signals, underground utility costs and and storm piping. Council previously expressed its intention to utilize the TIF funds from the North Oakley TIF district to fund the construction of the Kennedy Connector. The proposed road has been under discussion for several years due to the needs of the existing and proposed development in the eastern neighborhoods of Cincinnati. A pending development plan between the City, Halton County and the Ohio Department of Transportation identifies the Kennedy Connector as the number one priority in that area of the City ‘Atthough the City anticipates generating significant funding from the TIF district in ‘North Oakley, the total amount is speculative since the City is unable to predict the final value ofthe land after all proposed improvernents are completed. Currently, the City ntcipates generating $480,000 in TIF funds on an annual basis, of which 25% will be provided to the Cincinnati Public Schools System, per agreement between the City and fhe School System. Cincinnati is therefore anticipated to earn $360,000 annually as & result of the implementation of the TIF district. ‘Additionally, the cash flow of the TIF payments is dependent upon the future existence of the “big box” retailers currently envisioned at that site. Ifthose retailers decide not to buildin that location or subsequently relocate, the TIF payments may decline because of the resulting decline in property values. Finally, the TIF funds raised through the City’s exemption on real estate taxes will only be incrementally received by the City over & thirty year period. Due to such contingencies, some portion of any settlement of the Vanclescar claims will ikely be required to be paid from sources other than TIF funds. Moreover, TIF funds would not be immediately available to resolve the case, Given the previously expressed interest of Council in this matter and the significant impact ofthese negotiations, this information is provided for your consideration. If you have any further questions regarding Vandercar's claims related to the Center of Cincinnati, please do not hesitate to call me. ¢: J. Rita McNeil, City Solicitor