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I I I Council Meeting Minutes January 13, 1987 Council Business, continued Gunderman asked if the typewriter Schmidt had in mind could tie into a computer; Schmidt responded affirmatively, if the purpose of the typewriter dictated that decision. Gunderman withdrew his motion; action will be deferred until the ne t council meeting. Locke reviewed staff report concerning a Development Agreement for a downtown shopping center at Fifth Avenue and Tenth Street N.W. and noted that Dave Parkhill of Brighton Oaks Shopping Center was present to explain the project and answer any questions and that Debra Strehlow of O'Connor & Hannan was also present to answer any questions. Gunderman asked about time lines; Locke indicated the key items (1) developer has until May I, 1987, to get Letter of Credit for $500,000, design approval on building, and financing; (2) we would begin acquiring property, which will take about six months; (3) site would be sold to the developer and construction would begin; (4) with completion by January I, 1989. Schmidt asked for a review of the city's risk factors while the project is taking place; noting without the Assessment Agreement which will not be signed until closing when the transfer takes place we are really banking they are going to be able to lease the project, collect the rents, and pay the taxes at the point the Assessment Agreement is signed. Schmidt also asked what company's name would be on the Assessment Agreement. Locke explained four phases of the project: (1) Between now and May the city is at no risk. (2) Clearing the site before con- struction can start is the time of greatest risk because we are reducing the taxable value of property as buildings are torn down. Locke indicated, however, the counterweights are that the Letter of Credit is substantial (over three years of tax increments off the project) and we will not have started any aquisition until they have a financing commitment which involves many hurdles. (3) During construction we still have the Letter of Credit and the chance of non-completion is remote, even though nothing is risk-free. (4) The final risk, once the project is structurally complete, is whether or not it is adequately leased and function- properly and financially sound. Locke indicated the market analy- sis will be used to convince the bank it is a good project, and that suggests it is likely the project will reach fruition. Locke indicated the costs involved on the public side are very substantial in order to make it go; the City is not going to the point of subsidizing the project in the sense we are making someone able to do a marginal project. The project will have to prove it can stand on its own, regardless of what the City is spending up front. Locke noted the Assessment Agreement is the key safety valve -- when they guarantee they will pay the taxes. Page Ten Development Agree- ment: Brighton Oaks Shopping Center Report 87-18 Resolution 87-7