Agenda - Council - 11/27/2018 - Laserfiche WebLink

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The City and Developer have been working to find a solution that would allow the project to move forward. A summary of the proposed financing structure is outlined here. The Developer will spend in excess of $1,500,000 in land development work (defined as "Stage I Improvements" from the Development Agreement). The Developer now intends to self -finance the purchase price of the land as well as the Stage I Improvements resulting in $1,500,000 in development equity. There will be an additional $3,000,000 in home construction needed before the Right of Re -Entry is released. The Developer will be providing 20% of the home construction costs and the lender will provide 80% of home construction costs. This results in a total equity cost investment by the Developer of $2,100,000 for the initial 15 housing units constructed. Under the newly proposed terms and language in the amended Right of Re -Entry Agreement ( the "New Agreement"), the Developer will have over $2,100,000 invested into the neighborhood development before any Re -Entry rights by the City are released. The revised penalty of $20,000 (can be special assessed) per lot undeveloped by the Developer under the Construction Deadline Schedule gives the City up to $300,000 in security (revenue) rather than the $75,000 under terms of the executed Agreement. The Developer has indicated that without this modification and the ability to use the equity in the construction of homes in their Line of Credit, the Developer would likely not be able to perform according to the terms of the current Agreement. The proposed material changes by the developer to the Agreement are as follows: Current: 1) The City has the Right of Re -Entry for all undeveloped lots and has the ability to put a special assessment of $5,000 on up to 15 lots that have not recived a certificate of occupany according to the Construction Deadline Schedule. Proposed: 1) The City has the right of Re -Entry for all undeveloped lots until the Stage I Improvements are completed and the City has conducted an inspection of those improvements and found them to be satisfactory. 2) The City has the ability to put a $20,000special assessment on up to 15 lots that have not received a certificate of occupancy according to the Construction Deadline Schedule. Funding Source: N/A Recommendation: Consider adoption of Resolution #18-250 Amending Approved Right of Re -Entry Agreement Action: Motion to adopt Resolution # 18-250 Amending Approved Right of Re -Entry Agreement subject to City Attorney approval as to legal form. Resolution #18-250 Right of Re Entry (Executed) Attachments Form Review