11-07-01 Council Special Minutes

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MINUTES CITY COUNCIL NOVEMBER 7, 2001 The City Administrator indicated that there is the ability to overcome some of the numbers utilized in his analysis. LaValle suggested that the Administrator's analysis shows the worst case scenario. The City Administrator agreed that his analysis was conservative. He also noted that there may be other options for reducing costs such as zero interest lows from the County for affordable housing and/or grant dollars. The City Administrator also pointed out that he was utilizing a master lease rate of $8.00 per square foot for the commercial space. If the City utilized direct lease, there is the potential for increased rents for this space which would have a positive impact on the project. The Administrator emphasized, however, that the City cannot afford to build the retail space without a lease commitment of some type. LaValle asked about R. J. Marco leasing the space. The City Administrator reported that he talked to Bob Grootwassink about a master lease, and he indicated an interest. While an $8.00 per square foot master lease is a very good rate, the City Administrator pointed out that whoever takes the master lease absorbs the risk. The Administrator cautioned the Council that there are risks involved in the City undertaking a project such as this. These include leases, limited experience, market factors, interest rate uncertainty, and the potential for strikes during construction. The Administrator pointed out that another possibility to improve the financial feasibility of the project is for the charities operating in the City to conduct a fund-raising efforC to generate dollars that will offset costs. This could be done whether the project was done by the City or privately. Brad Farnham indicated that based on his conversations with the City Administrator and the Accountant, the adjustments made in the numbers appear to be wise. Farnham stated that even though there are some negative numbers, there are ways to overcome them, such as reducing the number of affordable units in the project. The Administrator reported that he took the number ofone-bedroom units down from 16 to 10. It may be possible to reduce this number further, however, the Administrator indicated that he would like to discuss this with Maxfield Research first. Scalze pointed out that the rents would be $ 150 to $200 per month less if the project is done by the City. Farnham agreed pointing out the City's easier access to capital.