02/28/12 - Laserfiche WebLink

Home

Commissioner Backous stated he had voted against this in September and remembers the Subordination Agreement was left open and there were discussions and concerns expressed about the Subordination Agreement. Now the HRA is being told this has been the agreement all along and the HRA has to accept the agreement because they are running out of time. Development Director Lazan stated the deal between the HRA and Flaherty & Collins has been done since September, 2011. The Subordination Agreement is between the City and PNC, was mentioned during earlier discussions, and the current approved documents act as a vehicle to address concerns related to TIF. Development Director Lazan explained this Subordination Agreement is not an amendment to the purchase agreement or change to the deal but an agreement to provide a "road map" in case everything goes wrong; to provide a process in what the HRA can do. He noted that as much as it may limit some portions, it also adds assurances to provide a process so the HRA knows when it can step into the process. This is a side agreement with PNC that started with a template agreement written by PNC and the Development Team made monumental progress, from both the PNC's and HRA's perspective. Development Director Lazan clarified this Subordination Agreement was contemplated in all of the other documents and any time constraint has come from the extent of discussions, number of revisions, and additional considerations given to the document. Commissioner Backous stated that while he loves the project, he does not support the Subordination Agreement. Commissioner Elvig stated this is a grand project and he believed the HRA was "stepping out" a long ways, noting it had been mentioned during the Work Session that it took 17 years for a similar project to recover funds. He noted the Right of Reverter would allow the HRA to take over an empty shell but the bank can drain all of the money out of it. He would rather Flaherty & Collins give latitude in the Right of Reverter in return for actual cash. Commissioner Elvig felt, at the end of the day, the project will get built and ultimately pay taxes some day. His concern is if the project is not sized out appropriately with the rents, the appraisal may come up short. Development Manager Lazan stated it is reasonable to ask; however, there is a danger with redealing so the Development Team wants something in hand with which to negotiate. Commissioner Elvig agreed the HRA would need to negotiate with Flaherty and Collins, not PNC. Commissioner Strommen stated if something can be done to better the City's position, she would be in support of that effort. She stated she likes the project but the extent of the City's role is not within her personal comfort zone so consistent with past votes, she will not support approval. Commissioner Tossey stated this consideration is against everything he wanted to do and he had only voted in support of doing an appraisal. He explained that to him, it was a matter of semantics and he knows the HRA entered into a contract in September saying it would agree with a Subordination Agreement. Commissioner Tossey stated it is his understanding that if the Housing and Redevelopment Authority / February 28, 2012 Page3of7