Item 6: Beam Development - Laserfiche WebLink

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staff has determined that it is in the best interest of the Agency to purchase the properties and sell them to Beam rather than to assign the purchase options to Beam. On May 7, 2008, the Agency and the properties owners extended the due diligence period to May 23, 2008, reduced the purchase prices. In consideration for this extension, Beam is set to provide $50,000 on May 23. The required 10% deposit and the additional $50,000 from Beam will become non- refundable after May 23. Prior to May 23, the URA and Beam will sign a binding PSA. The URA and Beam are in the process of negotiating terms to be included in the PSA. Below is an outline of key terms that the URA has pursued for inclusion in the PSA. 1. PSA Signing Date: Beam will be required to sign a binding PSA no later than May 22, 2008. 2. Deposit: Upon the signing of the PSA, Beam will be required to provide a non-refundable deposit equal to $50,000 plus a guarantee to pay the City $470,000 if the purchase is not completed by July 7, 2008, or shortly thereafter. 3. Closing: City shall purchase the property prior to July 7, 2008. Beam shall purchase the property from the URA immediately thereafter. 4. City Occupancy: Oregon Research Institute (ORI) announced on May 5 that they would locate in the Research Riverfront and not in the Beam project. Beam’s ability to finance the project is contingent on their pre-leasing a portion of the new development. Subsequent to the ORI announcement, Beam has engaged with a local broker to secure an anchor tenant. Should Beam be unable to sufficiently pre-lease to secure conventional financing, the City will be prepared to fill a limited amount of space for a specified rate. It is not the City’s or Beam’s intention to have the City tenant the project. However, the PSA will contain language indicating the back-up plan. 5. URA Loan #1: The URA shall provide financing for Beam’s purchase of the properties in an amount equal to the purchase prices of $3.6 million (less Beam’s $50,000). The financing terms would likely include a 20-year amortization schedule (interest-only during construction) with a 10- year balloon payment and an interest rate equal to the rate paid on the City’s HUD Section 108 loan. 6. URA Loan #2: The URA shall provide gap financing for Beam’s renovation of the Centre Court building and new construction on the vacant parcel in an amount equal to approximately $6.5 million. The financing terms would include a 20-year amortization schedule (interest-only during construction) with a 10-year balloon payment and an interest rate equal to the rate paid on the City’s HUD Section 108 loan. The URA is unable to commit to Loan #2 until City Council and HUD have approved the project-specific use of the borrowed HUD Section 108 funds. (The approval process takes approximately two and a half months.) If HUD approval is not granted, the City will agree to buy back the property. 7. Contingent Repayment of BEDI Proceeds: The portions of Loan #1 and Loan #2 derived from BEDI grant proceeds will be repaid on a contingent basis, only if Beam reaches its target return on investment. Y:\CMO\2008 Council Agendas\M080519\S0805196.doc