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some parallel construction) before McDonald's will close on the parcel. In order to meet the timelines specified in the contract, it is important to start the official process. Alternative #2 - Do not advertise for bids. This is not Staffs recommended alternative. Per the real estate contract, McDonald's possesses a right to cure provision. Essentially, if the HRA does move forward with the improvement, McDonald's could choose to still proceed to closing, hold land sale proceeds in escrow (at 1.5 times the cost of completing the improvements), and could choose to complete the improvements using said escrow funds. In addition, the real estate contract does specify that the HRA shall construct the improvements. Staff advises the HRA, after discussion with legal counsel, that Alternative #1 provides the HRA the most security and control over the installation of the improvements. Recommendation: Staff recommends that the HRA adopt Resolution 13 -05 -080 accepting plans and specifications and authorizing advertisement for bids for the COR TWO (Sunwood Retail) Stage 1 improvements. Staff also recommends approving bidding the construction of the temporary stormwater improvements at this time as this will significantly reduce initial construction costs while allowing for greater flexibility for future site development proposals. Note: The project is not authorized for construction with the action this evening. Bids will need to come back for Council approval at a future meeting. Funding Source: The latest known estimated construction cost for the improvements is $327,467.73 which included 10% contingency and 20% indirect costs. However, staff believes the actual construction costs will be significantly less than this since city staff will provide construction staking to reduce indirect costs, and since the estimated cost above includes $5,645 for clearing vegetation from the site, on which there is none, plus another $39,000 for the permanent underground stormwater storage chamber. Therefore, assuming that the temporary stormwater ponding is constructed and that no significant changes to final plans are needed, the actual construction costs should be less than $300,000. Staff will be able to provide more accurate estimated construction costs at the time bids are brought back for consideration of awarding a contract. Ultimately, the funding for the Stage 1 (common) improvements will be the land sale proceeds from the sale of property to McDonald's USA, LLC; however, the project will require an interim funding source. Per the Real Estate Contract with McDonald's USA, LLC, the HRA must begin construction on the improvements prior to closing with McDonald's. Therefore, an interim funding source is required. The interim funding source is proposed to be The COR Revolving Fund. Based on this interim loan, the interim funding will experience a negative interest. The HRA can then pay itself back through additional land sales of the two remaining COR TWO parcels, with the intent being to split the construction costs for the Stage 1 improvements between the three parcels on a pro -rata basis, which McDonalds has previously consented to. Action: Motion to adopt HRA resolution 13 -05 -080 accepting plans and specifications and authorizing bids for COR TWO (Sunwood Retail) Stage 1 improvements. HRAres CORTWO stage' bids Attachments Form Review Inbox Reviewed By Date Tim Gladhill Tim Gladhill 05/09/2013 09:33 AM Diana Lund Diana Lund 05/09/2013 09:57 AM Kurt Ulrich Kurt Ulrich 05/09/2013 04:13 PM Form Started By: Bruce Westhy Started On: 05/09/2013 08:50 AM Final Approval Date: 05/09/2013