Minutes - Council - 04/27/2004 - Laserfiche WebLink

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Further discussion: City Attorney Goodrich stated he wants to be sure the Council is aware of what is being done with the letter of agreement, as it is a change from the Master Development Agreement. Mayor Gamec questioned if the letter of credit will be in phases. Assistant Public Works Director Olson explained there are four parks included in the original proposal. In total there is a dedication of 21.5 acres of land that is upland and not encumbered with water. If the developer were to default on the Master Development Agreement that land has value, and they are using that value as a surety to make sure the improvements are done in those parks. The land will be transferred to the City by title as an Outlot. 4.2 million dollars is the improvement cost, and the improvements would be phased starting with East Town Center Park and South Park. The developer will be able to add the value of the land that can be put forward toward the construction. Councilmember Cook clarified after the developer completes one park the value of that park and the improvements on it are escrow for the next park they work on. Assistant Public Works Director Olson responded that is correct. They would have the building value on top of the land and would receive more credit for the improvements they put within the parks. The credit would continue to build as the rest of the parks get built out. This credit would only be used for the improvements in the parks; not the value of any other part of the work being considered. Mayor Gamec asked where the credit is for the development of the first park. Assistant Public Works Director Olson replied the developer will be paying for the improvements. Mayor Gamec questioned how that is lcnown. Assistant Public Works Director Olson explained the City has only approved two developments so far, which are the PACT Charter School and D.R. Horton. An escrow for those improvements, which is about $250,000 of park escrow, would be set up. In staff's opinion there is enough security with the land value and the City is not really at risk. The park and trail fees would come forward to pay for the improvements in the park system. He indicated the developer has already invested 21.5 acres and that is available for credit against the development. Otherwise the City should give Pact Charter and D.R. Horton their money back. There is a value in what the developer is giving the City and as the developer gets approval in the future staff will keep track of how much is available as far as credit. That can be applied towards the development that comes forward. Once they reach that level he hopes to have some of the improvements done within the East Town Center Park and South Park, and the value will build. Councilmember Cook indicated in the worst possible scenario West Park could be sold and the other three parks could be constructed from the funds. Councilmember Elvig noted the developer is still under performance obligation in the Master Agreement, and there is a letter of credit with additional securities and lands. In addition, the 4.2 million dollars in improvelnents are all hard costs, and the City is not seeing any soft costs, which are likely more than two million dollars just to develop the parks. Councilmember Kurak questioned what language is included in the development agreement to protect the City from future councils or staff selling off property, if the City were to acquire it from the developer. City Attorney Goodrich explained the land would be coming to the City free of encumbrances. There is no obligation other than that the new council would be going against the City ordinance to require parkland dedication for development. This is really the same as the North Fork Park development agreement that was done over 25 years ago and they are still working off of that. The land is being used as security so in the worst case it could be sold for something other than a park. Councihnember Strommen questioned if selling the parkland would be the only fall back for the City. Assistant Public Works Director Olson explained if something were to happen and City Council/April 27, 2004 Page 33 of 35