Item A: Beam Development - Laserfiche WebLink

Home Browse Search

desired outcome in this option is that the URA purchases the properties, sells to Beam; Beam moves forward with their proposed project and repays Loan #1 and Loan #2 within the proposed 10-year term. Option 1 includes some challenges. The URA would purchase the property prior to a clear demonstration from Beam that they will be able to finance, construct, and tenant the project. Beam has expressed concerns about the timing and risk of making a non-refundable deposit prior to reaching satisfaction on financing, including the URA’s inability to commit at this time to making Loan #2, and other contingencies. The URA would take ownership of the properties with no guarantee that Beam could satisfy the specific contingencies and purchase the properties. Although the URA would be holding an earnest money deposit, it does not guarantee Beam’s ultimate purchase. In the event that the project is completed, the URA’s repayment of the HUD Section 108 loan primarily relies on the ability of the project to generate cash flow sufficient to cover the debt service. In Option 1, it is possible that the URA would own the properties and Beam’s project would not move forward. With no other redevelopment proposal identified at this time, the URA could hold the property for an extended time. The repayment of HUD Section 108 acquisition debt and other property carrying costs could have negative financial implications for the Downtown Urban Renewal District. 2. Attempt to renegotiate purchase option timeline and assign purchase options to Beam In Option 2, the URA would work with Beam and the property owner to renegotiate the purchase option agreements to provide more time for Beam to satisfy financing, tenanting, and other project contingencies. Efforts to extend the timeline could be focused on an extension of the due diligence period and an extension of the closing date. Pending an agreement to extend the timeline, the URA would assign the purchase options at a later date, and Beam would be required to make a 10% deposit at the time of the assignment. The URA would work with Beam to finance their acquisition of the properties and construction of the project, consistent with the terms of Loan #1 and Loan #2 described above. The URA would condition the provision of Loan #1 and Loan #2 to assure that Beam moves forward in a timely manner with a project consistent with their proposal. There are challenges associated with option 2. The willingness of the property owner to extend the timeline in the purchase option agreements is unknown at this time. If an extension agreement can be reached, it is possible that Beam would take control of the property through an assignment of the purchase options but not move forward with the purchase. The purchase options on the properties would expire and control of the properties would revert back to the property owner. Option 2 may also require an updated HUD 108 application and approval process. If an extension agreement cannot be reached, or if Beam is unwilling to make a 10% non-refundable deposit prior to May 7, then the URA determines that acquisition is not feasible (for reasons also described in option 3 below) and the assignment option terminates. 3. URA determines during its due diligence period not to acquire the properties The URA is within a 45-day due diligence period that expires on May 8, 2008. If the URA determines that acquisition is not feasible, it can choose to disengage from the purchase process. These properties have environmental and structural challenges that could make development more expensive, and absent a legally binding agreement with Beam to purchase the properties, the URA could decide acquisition is not feasible given those environmental challenges. Under Option 3, the L:\CMO\2008 Council Agendas\M080416\S080416A.doc