EDC 11-16-2010 - Laserfiche WebLink

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EDC Meeting November 16, 2010 Page 3 Look Back Provision A look back provision is a mechanism for re -visiting certain terms under the redevelopment agreement to make sure that the developer is not receiving an unreasonable benefit or windfall. This is especially relevant because the City is both providing cash assistance to the developer and financing the land. Look Back #1: Development Savings As part of the development agreement, the developer will submit a line item budget delineating the anticipated expenses for the project. This also includes a $500,000 allowance for developer profit. At completion of construction, the developer will submit a complete list of costs for the project in accordance with generally accepted accounting principals. After deducting all expenses and the developer profit ($500,000), the City is entitled to recover the first $200,000 to pay for the park dedication fees. Any remaining funds after that calculation would be split 75% (developer) and 25% (City). The City's portion of the savings would have to be invested in the adjacent park. Look Back 42: Early Sale of Property The second look back would only be invoked if the redeveloper sells the building within 10 years (December 31, 2022). At the time of the sale, the redeveloper would prepare a description of sales proceeds, equity invested, and annual cash flow (excluding depreciation). If such a calculation results in cash proceeds in excess of a 16% internal rate of return, the remainder will be split between the City and the redeveloper at a 500/o/50% level. Development Option for Block G The developer has requested an exclusive right to develop the adjacent parcel, which is referred to as Block G. These types of arrangements are not unusual, although they can be structured in a variety of ways. In this case, the developer wants the ability to develop on the property for specific period of time. The language in the agreement means that the City cannot sell the property or otherwise convey development rights to someone else until at least the end of 2013. This provision is similar to the option that DSI (formerly Transoma) received from the City for Block D. Enhanced Service Sharing The City plans to create a mechanism (either a special service district or master association) for maintenance and capital replacement of certain public enhancements. For example, the center median in Old Highway 8 includes landscaping and irrigation; there are stone columns