Safeguards and Performance Standards for Economic Development 2015 Annual Conference October 9, 2015 9:00 A.M. – 10:00 A.M. General Session Safeguards and Performance Standards for Economic Development

Safeguards and Performance Standards for Economic Development Dane Lee Springsted

The “Funk”

Safeguards and Performance Standards for Economic Development Jackie Maloney Spencer Fane David Bushek Gilmore & Bell Richard Wood Gilmore & Bell

What does the City want from the deal? Size and scope of project Type of incentive requested $$ amount of incentive requested Developer performance

Primary Issues In Negotiations Developer wants to deliver a finished project Municipality wants results Increased sales Increased property values Increased jobs, retained jobs High wages Staff discussions vs Developer expectations; later legislative approvals

Performance Standards – Incentivizing Performance Conditions to Unlocking Reimbursement Phased Reimbursement Hold-back Requirement Conditions of Debt Issuance Reimbursement of Private Interest Costs

Performance Standards – Penalizing Non-Performance Clawbacks Penalties Rescission

Performance Standards – Adjusting Reimbursement to Project Benefits Limits on Developer Profit Reimbursement True-Up – Public/Private Ratio

Safeguards – Compliance with Legal Requirements Prevailing Wages Competitive Bidding Release of Liens Performance and Payment Bonds

Safeguards – Protections after the Project is Built Developer, sub-developer or tenant construction of project improvements Restrictions on transfer of property Restrictions on changes to developer

Safeguards – Protections after the Project is Built Municipal review of private covenants Prohibition on Business Relocation Land Use Restrictions Approved Tenant List

Safeguards and Performance Standards – General Recommendations Anticipate problems Clarity – be specific in contracts Avoid later disputes Anticipate restructuring and work-out scenarios Who provides later municipal approvals