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<br />there will be a chance for this dialogue. It is important for the City to get the action started <br />before the foreclosure sale so that if there are multiple purchasers they are taking title subject to <br />that action. If they start that action and the bank bids for the property, there is not any reason to <br />vigorously pursue the declaratory judgment action. They can pause and have time for <br />discussion. With the notice of record before July 9th Council is in control to decide how <br />vigorously they want to pursue that. <br /> <br />Councilmember Elvig stated Mr. Bushman says the Development Agreement is flawed, but 23 <br />banks bought into this knowing all the powers the banks have to decipher numbers, and to plan <br />and forecast. When the Development Agreement started it was not flawed. Something happened <br />with the way it was managed, the way the sales were done, who financed more bridge notes, etc. <br />In his opinion, the Bank is now coming back and saying because it did not work out the way the <br />financers and owners wanted it to work out, they are now calling foul that the Development <br />Agreement is wrong and that the City put them into that predicament. They now want skin out <br />of the City because financially people who now own it cannot make it work. Councilmember <br />Elvig stated he has some disagreement with that. The City and the Bank together can make this <br />more valuable than one of them can. The action the Bank is taking is a sheriff's sale and <br />challenging a Development Agreement that has not been challenged so far. <br /> <br />Mr. Bushman stated regarding the Development Agreement and buying into it, they can talk <br />about how it is that a development agreement that is 50 some pages gets approved by the <br />Council, drafted by attorneys, and the loan closed within how many hours of that final drafting, <br />and how that is digested by a large group of banks. Without trying to get too far into it, he does <br />not know that the Bank as a participant at the time received adequate disclosure or was properly <br />represented. In terms of financers being able to absorb what is in that document, he would say <br />the absorption time was not there for a large group of the participants. In terms of talking about <br />whether the Development Agreement is flawed, there is an economic reality to the Development <br />Agreement, and that is that you cannot build it for what that the Development Agreement wants <br />it be built and create that kind of value for the cost that will be put into it. <br /> <br />Councilmember Dehen stated it can be built if there is a hit taken on the money. His guess with <br />the foreclosure is that someone will beat up the Bank, and then it will be workable. This process <br />is going through, and presumably the Bank will be holding some kind of bag; the bag they hold <br />may be what is needed to break even, but he is not convinced that will happen at the sheriff's <br />sale. At some point the project will be able to go to someone for less than the Bank has in it, and <br />that might be the amount it will take to roll the project. <br /> <br />Mr. Bushman stated there was a comment earlier by the City Attorney about a request for follow <br />up or deliverables in the letter sent by Mr. Bray; however, the letter does not include a request <br />for information. <br /> <br />Mr. Bray indicated there was not any information requested in the letter; if that was said it was a <br />mis-statement. <br /> <br />City Attorney Goodrich indicated the intent was to state that there as been no response to the <br />letter. <br /> <br />City Council Work Session / June 5,2007 <br />Page 9 of 12 <br />