Item A: Downtown Site Development

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previously made to Beam for new construction on the Vacant Parcel, the City’s lease commitment would be reduced if sufficient private lease commitments are achieved.)  A potential DRLP loan in an amount needed to assist BMC in closing gaps in meeting the bank’s loan-to-value and cash flow coverage underwriting criteria. For BMC to move forward with the proposed project, the City and Urban Renewal Agency (URA) will need to consider the following actions: 1.Approval of the ownership transfer for the vacant parcel from Beam to BMC, along with the assignment of development rights under Beam’s Purchase and Sale Agreement. 2.Designation of a “Recovery Zone,” which would provide BMC the opportunity to utilize Recovery Zone Facility Bonds to access lower-cost tax-exempt interest rates for the project. 3.Authorization for the City to issue the Recovery Zone Facility Bond in support of the project. Transfer of Ownership and Development Rights The URA purchased and sold the Vacant Parcel to Beam in July 2008 for $454,000 (appraised value). The URA provided DRLP financing to Beam in the amount of $404,000 for the purchase. The Purchase and Sale Agreement associated with the Vacant Parcel specifies that on or before May 1, 2011, Beam shall submit conceptual plans, a construction budget, and firm commitments for debt and equity financing and other information deemed reasonably necessary by the URA for its determination as to whether Beam can viably redevelop the Vacant Property. The redevelopment proposal is subject to review and approval by the URA. Beam’s redevelopment of the adjacent Centre Court building is underway and they have been working on strategies to move forward with the redevelopment of the Vacant Parcel. Beam has concluded that the best way to move forward is to convey the property for a compatible development plan. Beam’s compensation for the sale of the property to BMC would be the transfer of the $404,000 DRLP loan to BMC. Recovery Zone Bonds BMC has asked that the City assist the project by providing access to tax-exempt interest rates. The City can do this by using a limited-term opportunity provided through the American Recovery and Reinvestment Act of 2009 (ARRA) federal stimulus program. The ARRA revised the Internal Revenue Code to create Recovery Zone bonds in order to promote job creation and economic recovery in areas impacted by employment decline. The City received two Recovery Zone bond authorizations: Recovery Zone Facility Bonds (RZ Facility Bonds) of $11,083,000 and Recovery Zone Economic Development Bonds (RZ Economic Development Bonds) of $7,389,000. RZ Facility Bonds may be used by private companies to access tax-exempt financing. RZ Economic Development Bonds may be used by public entities for infrastructure and facilities, among other items. Recovery Zone bonds must be issued inside a Recovery Zone, which is an area designated by the government issuing the bonds. The proposed new commercial office building is an eligible use (residential development is not eligible). Considerable latitude is given to governments in designating the Recovery Zone boundaries. The City’s bond counsel recommends that for maximum flexibility in the use of these tools, the City consider drawing the City limits as the boundary for the Recovery Zone designation. Z:\CMO\2010 Council Agendas\M100811\S100811A and att's A and B.doc