Item A: Downtown Update - East Broadway Development Project

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Upgrade and/or Relocation of Utilities: The alleys on the development site contain a storm water line and a steam line. These utilities will need to be either upgraded or relocated in order to complete the development project. The costs for the utilities will be shared between the City and the developer. The amount shown in the chart represents the City’s share of the costs. It is assumed that the City will pay for costs of rehabilitating the storm line, the developer will pay for alley assessments (not included in the City’s financing strategy), and the City and developer will share equally the cost of relocating the steam line. Debt Issuance Costs: There are costs to the Urban Renewal Agency for entering into debt, which could include items such as preparation of offering documents, rating agency fees, bond counsel fees, financial advisor fees, and loan fees. Miscellaneous/Contingency: This is a small amount (less than 1% of the City’s total costs) to allow for potential changes in the project or for City costs that have not yet been identified. The developer included a separate contingency in the overall project budget. Debt Service Reserve Fund: The Urban Renewal Agency’s lender will probably require funds to be held in reserve to protect bondholders during the time the debt is outstanding. That amount is normally equal to 10% of the amount of the borrowing, or one year of debt service. Funding Sources To the extent possible, staff recommends that the Riverfront Urban Renewal Agency should pay for as much of the garage as it can afford. That includes both a cash contribution of available funds at the time of purchase and issuance of urban renewal revenue bonds. The proposed financing strategy for Option 4 is set out in the chart below. Option 4 260 spaces with retail Urban Renewal Contribution -Urban Renewal Revenue Bonds $4,000,000 -Reprogram of Funds to Purchase Riparian Area 400,000 -Cash Available in FY06 & FY07 1,110,000 Total Urban Renewal Contribution 5,510,000 City Contribution -Stormwater Funds (for upgrading storm line) 250,000 -Library Debt Service Fund – Debt Service Reserve 475,000 -Facility Reserve 1,800,000 Total City Contribution 2,525,000 Totals $8,035,000 Descriptions of the specific funding sources suggested for inclusion in the financing plan are described below. Urban Renewal Revenue Bonds: The Agency will issue revenue bonds backed by the future tax increment revenues in the Riverfront District. Existing tax increment revenues are about $0.5 million per year. The Whole Foods development is estimated to add $0.15 million L:\CMO\2006 Council Agendas\M060315\S060315A.doc