1. A Handshake is Not Enough: Good Redevelopment Agreement
The Importance of a
Good Redevelopment Agreement
Presented by:
Mark Spykerman
Gilmore & Bell, P.C.
Phone: (314)
Joe Palumbo
Gilmore & Bell, P.C.
Phone: (314)

2. Overview That sounds crazy. Why would the City ever agree to that?
OK, maybe it’s not that crazy. What exactly are you proposing?
Fine, we’ll do it – but it will be on our terms.

3. Reasons to Provide Incentives
Remove Blight
Create Jobs/Taxes
Bring Prestige to the Community
These are the 3 most common reasons I hear from communities as to why they think it is appropriate to provide incentives.
As mentioned, I always represent the City/County providing incentives. So in that case, they are making policy decisions about (1) whether to provide incentives, (2) what incentives to offer, (3) how much to offer and (4) conditions that must be fulfilled in order to receive the incentive.
As lawyers, our job is NOT to make the policy/business decisions for our clients. Rather, our job is to (1) inform out clients about the options available to them, (2) advise them about pros and cons of different alternatives, and (3) assist them in carrying out their decisions.

4. The Proposal – Tax Redirection
TIF, tax rebate agreements, municipal appropriations
Taxes are “redirected” from other taxing districts (or other City funds) and used to pay project costs
Municipality concerns
Project completion
Successful operation of project
Limiting sources of redirected funds
“But for” test

5. The Proposal – Tax Abatement
Taxes on property are abated
Developer uses tax savings to fund the development and/or reduce operating costs
Municipality concerns
Project completion
Successful operation of project
“But for” test

6. The Proposal – Tax Addition
CID, TDD, NID, SBD
District levies sales tax, property tax or special assessment
Developer is reimbursed to the extent of District Revenues
Municipality concerns
Infrastructure/Services
Limiting tax increases

7. Types of Agreements Redevelopment Agreements
Memorandums of Understanding
Preliminary Funding Agreements
Intergovernmental Cooperation Agreements
District Project Agreements
Performance Agreements
Easements/Licenses/Etc.

8. The 11th Commandment

9. Basic Elements of a Redevelopment Agreement
Representations
Expenses
Obligations
Defaults
Assignability
Indemnification

10. Developer Representations
City
Representations
Power to act
No litigation
Developer Representations
Power to act
No litigation
Control of property

11. Other Representations
Accuracy of project data
Zoning
Clean title
No delinquent taxes
All project financing in place

12. Other Representations – Ability to Complete the Project

13. Expenses
Who pays? Not you… …at least not right away

14. Obligations - What gets built?

15. Obligations – How Much Money Do They Want and When Do They Want It?
Type of incentive
Duration of incentive
Notes vs Bonds vs Pay-as-you-go

16. Obligations – Building and Operating the Project
Utility improvements
Streetscape
Architecture
LEED
Condemnation
Relocation
Tenant restrictions
Reporting
Union labor
MBE/WBE participation
Make-whole payments
If you don’t ask, you won’t get it

17. Events of Default City Defaults Developer Defaults
Failing to pay incentive
Failing to collect/account for revenues
Developer Defaults
Failing to complete the project
Improper use of project
Failing to satisfy reporting requirements

18. Assignability Parent corporations Affiliates and subsidiaries
Arm’s length purchasers
Tenants
Who remains responsible to perform the obligations?
Who gets the benefit of any on-going incentives?

19. Indemnification
Rule Number 2: The City should not indemnify the Developer
Rule Number 1: Developer should indemnify the City, its governing body, officers, employees and agents

20. Questions?