1988-03-08 - Laserfiche WebLink

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Council Meeting Minutes March 8, 1988 I end of this week. Jim O'Meara, the city's bond counsel, put together a draft document (some refinement needs to be done) in order to allow a mortgage to be placed on the property, in terms of the revision of the development agreement. - O'Meara explained the developer has proposed to get permission from the city to put approximately a $600,000 mortgage on the pro- perty (the proceeds of the loan will be used by the developer to acquire the land and possibly to do some minor public improve- ments); the entire first phase would be subjected to this mortgage interest other than the individual sites as and when they might be developed (they would have to be released from the mortgage so the individual projects could obtain construction financing). There are some provisions in this proposed commitment that the developer obtain and set up certain escrows and make certain provisions for paying off the mortgage, but the bottom line is that Phase I of the property is being leveraged in order to provide some addition- al assistance to the developer to meet its acquisition obligations and/or its construction of public improvements. It will create an encumbrance on the part of Phase I that remains vacant pending the completion of the entire phase and, therefore, is different from the project that was approved in December (the development proper- ty is being leveraged to assist the developer in performing under the agreement which makes the entire performance somewhat more difficult because it will take funds to release the mortgage). From the City's perspective, OIMeara stated the bottom line is also different from December (original agreement stated the devel- oper would use $600,000 of its own money to buy Phase I property; in the worst case situation, the City would be looking at poten- tially $600,000 of eXgense). This particular development agreement is quite flexible in allow- ing the developer, even in a particular phase, to take a parcel and either develop it itself or sell it to a third party and have that third party assume the development obligations with respect to the sub-part of the Phase; the City would have reversionary rights on some of the property and, given the uncertainty of who would own the property and when, it's likely a very successful mechanism could be designed for having the property automatically come back to the City, subject to mortgage interest. Locke summarized that the City is prepared to acquire property for Phase I; and the developer has met a number of requirements and is very close to completing the last hurdles. The action proposed is a motion authorizing staff to complete the revision of the devel- opment agreement as it relates to allowing a mortgage against the property. J Benke asked for clarification that the motion would leave in place the requirements that the other conditions be fulfilled before there is actually an acquisition; Locke confirmed. Benke further stated that the City begins to incur the major costs when the City begins to acquire; Locke confirmed. Page 21