Item B: URA - West Broadway Preliminary Financing Plan

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project. Risk is also mitigated by using a 1.5 times debt coverage ratio and a debt service reserve fund. The financings, however, are not risk free, even with these protections in place. Tax increment revenue is less predictable than the City’s property tax revenues, and therefore, urban renewal borrowings are considered more risky than general City borrowings. The protections built into preliminary finance plan provide a cushion in the event that any adverse event reduces urban renewal revenues, such as one of the major taxpayers in the district relocates outside of the district, other property values significantly decrease, or in the case of a recession and the subsequent failure of businesses in the district. BEDI Grant Funds:HUD has awarded the City a $2 million Brownfields Economic Development Initiative Grant. This grant must be used in connection with a HUD Section 108 Loan. It is assumed that the property acquisition and other site related costs qualify as eligible projects for the HUD Section 108 Loan. Urban Renewal Cash: The cash balances in the urban renewal funds, plus cash that becomes available over the next few years, would be used to pay for development costs. Downtown Revitalization Loan Program:A portion of a potential affordable housing loan to the developers could be made from the DRLP. The remainder of the DRLP funds could be used to assist with the cost of purchasing the turnkey garage. Once this development project is complete, the DRLP can resume making loans from the revolving loan fund payments. HOME Funds: This preliminary plan assumes $800,000 of HOME funds are used to make an affordable housing loan to the developers.Each year the City issues a Request for Proposals (RFP) for the development of low-income housing projects. HOME funds are the largest resource for funding affordable housing and the City typically allocates about $800,000 of HOME funds each year for housing development. RFP responses are reviewed by the Housing Policy Board and staff. The HPB recommends projects to receive HOME funding and other resources to the council for their consideration. The RFP is generally issued in late fall and council typically takes action by June of the following year. General Funds/General Fund Guarantees: In this example finance plan, there would be a small contribution from the City’s general funds for the project. An alternative would be for the urban renewal agency to take on a higher level of debt, but that debt would be also guar- anteed by the City’s full faith & credit. These decisions do not have to be made until the City is ready to purchase the turnkey garage. A number of factors may change between now and that time. Uses of Funds Property Acquisition and other Site-Related Costs: The City would either purchase the property and re-sell to the developers at a lower cost or provide a payment to reduce the cost to the developers of purchasing the properties. It also includes the cost of options to purchase the properties. In addition,KWG’s initial submission indicated that it would like for the City to pay for utility off-site costs and a buy down for profit. In order to simplify the transaction, these