04-13-2004 CC RPT 07 - Laserfiche WebLink

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People Serving People CITY OF RIVERSIDE AGENCY MEMORANDUM Riverside lI-Amerlca 1998 HONORABLE MAYOR AND AGENCY MEMBERS DATE: April 13, 2004 ITEM NO: 7 SUBJECT: CONSIDER AGENCY FINANCIAL PARTICIPATION AND/OR BUSINESS TERMS RELATED TO PARKING GARAGE OWNERSHIP CONVEYANCE~ ALL IN CONNECTION WITH STUDENT HOUSING TOWER CONSTRUCTION AT UNIVERSITY VILLAGE - UNIVERSITY CORRIDOR/SYCAMORE CANYON PROJECT AREA BACKGROUND: University Village has been developing in phases since the project's development agreement was approved in 1995. Most recently, construction of two buildings was started late last year, but in both cases, progress has stopped in recent weeks due to the inability of the developer to sustain progress payments to the respective contractors. The two buildings in question are the single-story retail building on Iowa Avenue, known as Building F/G, and the eight-story student housing tower. Construction financing and equity placement for both buildings is in progress, but has not been finalized. Construction of the student housing tower is also related to the Agency's interest in the University Village Parking Garage. The Agency currently holds the debt that was the basis for construction financing of the garage. The student housing development will retire about half of the Agency's debt. The remainder will be retired from future project tax increment. Because the parking garage is currently owned by the developer, it may be in the Agency's interest to establish new business terms that would have the garage conveyed to the Agency in the interim as student housing financing is being finalized. CURRENT ISSUE: The challenges facing the development are greatest with the student housing tower due to completion schedule demands. Because students' housing decisions are usually made at the beginning of the academic year, the housing tower needs to open this summer, or otherwise face a year-long delay. Although the student housing project faces many logistical and financial challenges, two construction- related activities represent "critical-path" issues. They are forming steel procurement, and completion of concrete flooring on the 8th level. The cost of completing these two items is approximately $800,000. Construction financing and equity placement would normally have taken care of this matter, but financing and equity structuring for the project are being impeded by conflicting security interests between phases of the overall University Village development, including interest in the parking garage. In order to help meet project completion targets while construction financing is being structured, both the developer and the project contractor have verbally requested the Agency to consider playing a role in facilitating continued construction of the student housing tower. The Agency's role could be direct financial padicipation up to a maximum of $800,000 toward construction and/or structuring business terms that facilitate conveyance of the parking garage to the Agency, thereby helping to resolve competing interests. Any financing would only be in the form of a market rate loan. Parking garage conveyance would not require any financial outlay on the part of the Agency. 7-1