EDC 10-16-2013 - Laserfiche WebLink

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October 16,2013 EDC Meeting Supplemental Notes Page 2 years. As an aside, in the initial negotiations with APi, the City proposed an up front cash payment for the option, but APi balked and wanted the language stricken. The eventual compromise to get the deal done was elimination of the option payment, but a right to buy the north parcel through December 31, 2015 and start construction a year later. APi now wants 9 additional months to exercise the option term (September 30, 2016), and a deferred cash payment that could tie up the site for 2 more years. Typically, extended option terms require up front cash that compensates the land seller for holding the property off the market. Lastly, the company is offering to make an additional PILOT payment of $17,300 in 2014 in recognition that there have been project delays. The parties met on September 26th with their legal counsel and the City's financial advisor present to review the agreement. At that meeting, staff told APi that the changes in business terms had financial impacts for the City and that one way to help offset those costs is to advance more cash up front. One concept discussed was for APi to pay the 2014 PILOT upon execution of the redevelopment agreement (i.e. demonstration of good faith) and the option money ($69,000) at closing in 2014. This strategy would essentially utilize the dollars APi has offered to pay, but on a slightly different (accelerated) schedule. The company is still reviewing the proposal at this time, however they reiterated their commitment to the project. Any feedback from the EDC to Council and staff would be helpful as the negotiations continue. Staff will keep of the EDC advised of any new details on Wednesday. C. Marketing Efforts Attached is a copy of the marketing report for the month of September from Colliers. Staff and officials from Colliers and Ryan held a monthly conference call on October 1st and not much new information was reported. Colliers is continuing to track prospects, however demand for new construction is still soft given the availability of existing office space. Also attached is information from Colliers on the bigger picture for the office and land markets. o Office Market Report(Q2-2013) 7 page document summarizes the office market (including submarkets) in terms of vacancy rates, rental rates and new development prospects. Key findings: o Rental rates firming; fewer landlord concessions (i.e. improvement in leasing rates). o No new development, except for three large users expanding on or nearby existing corporate offices.