Agenda Packets - 1987/11/09 - Laserfiche WebLink

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MEMO TO: MAYOR AND CITY COUNCI FROM: CLERK -ADMINISTRATOR DATE: SEPTEMBER 16, 1987 SUBJECT: PARK DEDICATION FEE AND LETTER OF CREDIT FOR MOUNDS VIEW BUSINESS PARK Representatives of Everest Development have requested the opportunity to appear before the Council at your September 21, 1987 Agenda Session to discuss the Park Dedication Fee and Letter of Credit being requested by Staff during contract negotiations for this project. As you know, Staff has taken the position that the Park Dedication Fee of $2501 000, which is the amount called for in the City's ordinances. Staff has taken the position, that the full amount of the fee will be paid by the Developer as it is required by the Code and the City is providing the Developer with substantial assistance in this project, namely tax increment financing and the Park Dedication Fee should be considered the City's fee for providing this assistance. The Developer has taken tha position that a $250,000 fee, although it is a fee amount they have known for several months, is excessive and would place extreme burden on the project and will be requesting the Council authorize a lower fee amount. Staff would not recommend that the fee of $260,000 be reduced. +� With respect to the Letter of Credit being required for this project as part of the tax increment financing agreement, Staff his taken the position that a Letter of Credit in the amount of approximately $1,000,OUO will be required in the 4th, 5th end 6th year of the debt service of the bond issue which will be the first three years that principle and interest is paid on the bond issued. The amount is equivalent to the annual principle and interest payment for the bonds and staff feels that this is a reasonable amount of security needed by the City to assure us that buildings are up, occupied and paying property taxes. Staff has also taken the position that this Letter of Credit can be contractually obligated at the time that the agreement is signed but will not need to be provided until just prior to the beginning of the 4th year so that the Developer will not need to be paying interest on the Letter of Credit during the time it is not needed as a Letter of Credit is handled by lending institutions as a loan upon which interest is charged. The Devaloper is taking the position that due to lending limits they will be able to obtain one Letter of Credit equal to approximately $8U0,000 and it is not their desire to go to a second lending institution to obtain the additionai $200,000. Based on discussions that the Staff has had with our consultants in this matter and a general