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NOTES TO ECONOMIC DEVELOPMENT COMMISSION AGENDA May 21,2013 IV. New Brighton Exchange As previously reported to the EDC, over the course of the last few months, staff has been working diligently with both Pulte Homes and APi Group on potential development projects in New Brighton Exchange. The talks have taken longer than anticipated, but we can report that we are making good progress. In fact,we anticipate bringing forward more definitive agreements/term sheets in the next few weeks for Council review and consideration. Staff is seeking feedback from the EDC on the major business terms, which are described in this report. Attachment 1 is a framework plan map that references the parcels in question. A. Update on Pulte Homes Negotiations Pulte Homes (Pulte) originally contacted the City in April 2012 about interest in the site. Due to the potential departure from previous guide plans which called for much higher density townhomes and condominiums, Council directed staff to work with the Planning Commission and EDC to seek feedback on Pulte's proposal. That effort took place in the summer of 2012 and both groups expressed interest in the concept. Eventually, Pulte and the City entered into an Exclusive Negotiations Agreement that gave the company until October 31, 2012 to investigate the site. It is not clear how much due diligence work was actually done, since the company did not do any environmental or geo-technical testing. Pulte subsequently submitted a Letter of Intent to purchase the site and then met with the City Council last December to discuss their offer. Pulte indicated at the time that they wanted a more formal agreement with the City before investing substantial resources in additional testing and due diligence efforts. Typically,the City uses a Term Sheet to start the negotiations, which becomes the framework for a more comprehensive redevelopment agreement. We have also used access agreements to allow interim site access for environmental testing. Pulte is used to working with private parties and standard purchase agreements, so the two sides had to compromise on the form of agreement to keep the process moving along. As previously reported, we have been working on a Redevelopment Agreement that outlines the business terms and legal issues. Due to time constraints, Pulte would like to have the agreement presented to the City Council on May 28th and if approved, start the site investigation process/due diligence phase shortly thereafter. The attorneys are still working on the draft document and staff does not have finalized a agreement to share with the EDC. However, we can provide a summary of the business terms that affect the economics of the project. Development The plan calls for 86 single family homes with an average sales Scope : price of$385,000 (but not less than$365,750) and 34 townhomes with an average sales price of$170,000 (but not less than $161,500). The design of the townhomes is still yet to be determined. At least 12 of the townhomes would be priced to make them affordable, consistent with our Met Council grant agreement.