Item 3: Resolution Authorizing HUD Section 108 Revenue Bonds

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through the summer, as the City and developers discuss key aspects of the development agreement. Once the City and developers come to a preliminary agreement and the financial information is refined, staff will bring a revised finance plan to council for approval (anticipated for September). The preliminary finance plan included a variety of financing sources, such as a Section 108 loan, a BEDI grant, urban renewal revenue bonds and cash contributions, Downtown Revitalization Loan Program funds, HOME funds, and general funds or a general fund guarantee. The finance plan assumed that the City’s financial participation in this public/private partnership will consist of several items: some contribution towards the land acquisition, public site-related costs (utilities, sidewalks, etc.), and purchase of a publicly-owned parking garage. For the housing portions of the project, the developers may request a low-income housing loan, which would be repaid over time. They may also request a 10- year Multi-Unit Property Tax Exemption or a 20-year low-income housing exemption. (This informa- tion is speculative, because the City and the developers have not yet negotiated specific financial arrangements.) Property purchased with Section 108/BEDI funds may be contributed to the project or sold to the developers depending on agreements that will be finalized in early fall. Next Steps There are three remaining steps in the process to access and use Section 108/BEDI funds for the West Broadway Redevelopment Project: 1) council approval to access (authority to borrow) the funds; 2) council approval to amend the urban renewal plan; and 3) council action related to the West Broadway Redevelopment Project to use the funds. Step 1 – Access to Funds: Prior to entering into any borrowing for an individual project, the council must approve access to the loan funds through adopting a project bond resolution, and the URA must approve a bond pledging tax increment as security for the Section 108. Action at tonight’s meeting will complete this step. Staff will then submit a project application to HUD. The HUD approval process is expected to take 30 to 60 days. Step 2 – Urban Renewal Amendments: The proposed Downtown Urban Renewal District Plan amendments need to be approved prior to entering into a loan with HUD. This is required because the district’s current maximum indebtedness limit is not large enough to secure the full Section 108 loan. Consideration of the plan amendments is scheduled for August 13. Step 3 – Use of Funds: The City will only have the ability to use the Section 108/BEDI funds after the council takes additional actions related to the West Broadway Redevelopment Project. Specifically, the council will need to a) review and approve the overall project, including consideration of any recom- mendations from the West Broadway Advisory Committee and b) approve a supplemental budget to authorize the use of funds. These actions are planned for September. The City will not borrow funds from HUD until council has taken all of the additional steps. An updated timeline for the West Broadway Redevelopment Project is included as Attachment G. RELATED CITY POLICIES Downtown development is guided by policies in the Downtown Plan and the Growth Management Policies. With regard to financial tools to assist with development, the Downtown Plan includes policies L:\CMO\2007 Council Agendas\M070723\S0707233.doc