It could be called horse trading, with horses worth millions.
It's a simple description of what Wayzata City Council members called a complex amendment to the Wayzata Bay Center redevelopment agreement.
The changes could be seen as a step forward for the Bay Center, but the changes pose risks for the city and the developer, Presbyterian Homes & Services.
"This is obviously a very big project for us and exciting and we want to continue moving forward," said John Mehrkens, vice president of development for Presbyterian Homes, after the City Council agreed 3-1 to changes at its Oct. 6 meeting.
There were several changes made in what was called the first amendment to the redevelopment agreement.
The issue of the gas station property seems to be resolved. More tax increment financing (TIF) will go to the developer if all goes according to plan. And road improvements - making a T intersection at Superior Boulevard and Lake Street as well as infrastructure work - will generally precede work on buildings within the redevelopment.
"I think we need to step forward with this infrastructure project irregardless of whether the Bay Center goes forward," said Council Member Andrew Mullin.
Mayor Ken Willcox said the road project has been discussed by several different city councils.
"This was pure serendipity that the Bay Center came along and we weaved that together," Willcox said.
The city has long wanted to straighten the intersection, but the gas station property was in the way.
The steed trading relates to exactly how the gas station property will trade hands.
In the original redevelopment agreement, it was the city's job to purchase the property.
Instead, on Oct. 2, Wayzata Bay Redevelopment Co. (WBRC) closed on it for $2.35 million, which includes a $1.4 million balloon payment.
Presbyterian Homes is using WBRC to manage the redevelopment project.
In order to move ahead with the road construction, WBRC will sign the contract for deed to the city, the city plans to pre-pay the $1.4 million to clear the title and allow work to go forward on the road.
Then WBRC would be obligated to pay the city the $1.4 million.
That's what some said is the risky part.
The risk to the city is that if the redevelopment didn't happen, the city could be out the money. Of course, it could also sell the land in that case.
"You would have to make that up somehow," said Jay Lindgren, an attorney on the city's negotiating team. "Again, from my standpoint you would have lots of ways to make that up."
Regardless, the city is now on its way to getting a T intersection, plus other infrastructure improvements that were promised as part of the TIF agreement.
The city will also end up with a new piece of land on the west side of Superior Boulevard that it could sell in the future.
At the Oct. 6 meeting that remnant parcel was a topic that set off more discussion because WBRC would have the right of first refusal, which means generally that WBRC would have the chance to buy it before any other parties.
There are signs that WBRC is interested in buying the parcel, according to a letter sent to the city by WBRC Managing Director Ed Briesemeister.
"We see the new parcel as important in establishing Lake and Superior as a 'gateway' intersection," Briesemeister stated in the letter.
Council Member Mary Bader cast the lone vote against the amendment. She said she wanted more investigation done into the terms of the agreement and was against giving the right of first refusal.
"I want this explored more thoroughly. It's extremely complex," Bader said.
Council Member Jack Amdal recused himself because his architectural firm had been hired in another state by an entity of Presbyterian Homes.
What the city would do with the third of an acre parcel is yet to be decided.
The land could be used as leverage.
"We could certainly sit for the next year and not do anything with the remnant parcel until they pay the [$1.4 million]," said Greg Soule, an attorney on the city's negotiating team, in response to a question by Bader.
As if that wasn't enough to think about, the council also learned that because of the year delay in the start of the project, it can't be required to leave the site it leases for its municipal restaurant and liquor store until Sept. 15, 2010, at the earliest.
And don't forget about granting more TIF.
The council agreed to changes to the TIF terms that could result in about $7.1 million more for the developer, bringing the total TIF up to a present value of about $30 million if all goes as planned.
The $7.1 million increase is roughly the amount it's cost to delay the redevelopment plus costs related to the current shopping center, which remains open.
Although negotiations for the gas station land have been long running, specific items were in flux all the way up until the City Council meeting.
Council members who voted for the changes said they thought it was in the best interest of the city, given the recession.
"I've thought a lot about what would happen if we didn't approve this. And I'm just not willing to make that decision," said Council Member Sue Bangert.
Still, there was a sense of letdown and hope that there aren't annual amendments to the redevelopment agreement.
"The Bay Center was going to be a beacon," Willcox said, adding that it was supposed to bolster retail and revitalize the city. Moving forward on the roadwork is important for that reason, he said. "People need to see some good things happening here in Wayzata."
