01-08-2002 RA RPT 03 - Laserfiche WebLink

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People Serving People CITY OF RIVERSIDE AGENCY/COUNCIL /AUTHORITY MEMORANDUM Riverside tI'.tltd A1~America n ~ 1111. 1998 HONORABLE MAYOR, CITY COUNCIL, AGENCY MEMBERS AND PUBLIC FINANCING AUTHORITY DATE: January 8, 2002 ITEM NO: 3 SUBJECT: AUTHORIZE THE UNIVERSITY VILLAGE SIXTH IMPLEMENTATION AND AMENDMENT AGREEMENT - UNIVERSITY CORRIDOR/SYCAMORE CANYON PROJECT AREA - AGENCY PURCHASE OF PARKING GARAGE AT UNIVERSITY VILLAGE BACKGROUND: Upon approval of the Fifth Implementation Agreement, dated June 19, 2001, the Developer worked closely with two financial lenders to obtain financing for the University Village parking garage. According to the Developer, the potential lenders found the Fifth Implementation Agreement's deal terms complicated, proving it difficult for lenders to evaluate from an underwriter's point of view. As a result, neither lender was interested in making the loan and, ultimately, denied the developer's loan request. With the expectation that financing for the parking garage was forthcoming, the investors initiated construction of the garage utilizing investor equity. Construction was underway for approximately three months when construction ceased due to the lack of financing. The Developer has approached the Redevelopment Agency and requested that 1) The Fifth Implementation Agreement be amended to reflect a simplified agreement and 2) that the Agreement be written with provisions to obtain tax exempt financing. The Redevelopment Agency has worked with the developer and City staff over the past 6 months to negotiate a new agreement, which would enable to parking garage to move forward with tax exempt financing. The Sixth Implementation Agreement has been prepared and is attached for your review and approval. The Agreement includes a provision whereby the Agency would acquire the garage from the Developer enabling tax exempt financing initiated by the Agency. The Agency would use its various revenue sources from University Village to meet its payment obligations for the financing. CURRENT ISSUE: The Sixth Implementation Agreement provides new deal terms and Agency securities that contribute toward the simplification of the agreement. The core of the Agreement remains unchanged: 1) The Developer's payment schedule (represents supplemental land payment), 2) the Developer's schedule of performance, and 3) the Agency's debt service not to exceed $500,000 annually. Under the new deal terms, the most significant change is the Agency's proposed ownership of the parking garage. These deal points are necessary in order to obtain tax exempt financing and to achieve financial feasibility for the Developer. As a result of the changes, the Agency's securities have changed in the following manner: Agency's Parking Controls Under the Sixth Implementation Agreement, the Agency will own the parking garage and will have full control of the parking spaces. They will lease spaces to UCR, the Developer and the public. The Agency intends to contract with the Developer or any other management company the Agency selects to manage and maintain the parking garage. All lease revenue proceeds, less management and maintenance fees, would directly assist the Agency in meeting its debt service obligations. 3..1