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<br />Developer guarantees of tax revenue to the government <br />? <br /> <br />“Clawback” provisions in the development agreement to allow for the repayment of funds from <br />? <br /> <br />the private developer if certain conditions are not met <br />Debt protection measures, such as holding a debt service reserve fund and including a debt <br />? <br /> <br />coverage ratio to ensure there is a cushion against revenue shortfalls <br />Hypothetical Examples for a West Broadway Development Project <br />Attachment B includes a description of two hypothetical examples for a West Broadway development <br />These are hypothetical examples only and do not <br />project: a large-scale and a small-scale development. <br />represent actual figures for or agreements made with any particular developer or proposal. <br /> The <br />information below is only a summary. For more details, please refer to Attachment B. <br /> <br />Large-Scale Development: <br /> A hypothetical large-scale development is a project of about $185 million, <br />with a City investment of about $22 million (12% of the total project) and a private investment of about <br />$163 million (88% of the total project). The development would generate about $400,000 in <br />incremental taxes in the first year. Upon expiration of a Multi-Unit Property Tax Exemption, the project <br />would generate an additional $800,000 per year. <br /> <br />The Downtown District has the resources to provide all of the funding for the City’s investment with <br />existing tax increment revenues and cash balances. This is one way that the financial risk is mitigated, <br />because the financing plan does not rely on borrowing against incremental tax revenues that have not yet <br />been realized. Other financial risk mitigation measures would be built into the borrowing plans, such as <br />maintenance of a debt service reserve account and a sufficient debt coverage ratio. <br /> <br />Future tax revenues from this project could be used for future development projects in the district. Even <br />after the $22 million expenditure, the district could continue to provide assistance to other projects <br />during its remaining life through the loan program and through the incremental tax revenues provided by <br />the large-scale development and any other new development that occurs within the district. <br /> <br />In order to engage in the large-scale development, the City would have to amend the Downtown District <br />urban renewal plan to increase the spending limit (“maximum indebtedness”, as described in Attachment <br />A). It is also assumed that the district’s termination date is extended to June 2030. <br /> <br />Attachment C includes a yearly forecast of the Downtown District’s finances under the hypothetical <br />large-scale development. <br /> <br />Small-Scale Development: <br />A hypothetical small-scale development is a project of about $20 million, <br />with a City investment of about $2 million (10% of the total project) and a private investment of about <br />$18 million (90% of the total project). The development would generate about $150,000 in incremental <br />taxes per year. <br /> <br />The Downtown District has the resources to provide the funding for the City’s investment using existing <br />cash balances. There would be no borrowing required for this development. The Urban Renewal <br />Agency (URA) could accommodate this project within the existing urban renewal plan, without <br />undertaking an amendment. <br /> L:\CMO\2007 Council Agendas\M070425\S070425A.doc <br /> <br />