AR 051507 Retail Development Group

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Redevelopment Agency Meeting May 15, 2007 Property Acquisition -- APN 0162-281-04, 0162-281-14, 0162-281-34, 0162-281-52 — Retail Development Group (Gary Schafer) Page 3 Staff anticipates that the HCP activities should be completed by the end of FY 07/08 with entitlement and permitting supporting commencement of development within the Colton Super Block in FY 08/09. Once these activities are completed and development ensues, development mitigation fees from the Super Block are anticipated to fund the habitat maintenance activities. City staff brought forward to the Agency Board a request to enter into negotiations to purchase the Retail Development Group property. At the December 19, 2006 meeting, the Agency Board authorized staff to negotiate a purchase for a sum not to exceed $4 million. The purchase and sale agreement that staff brings forward this evening (Attachment 1) for Agency consideration proposes a phased payment of $3,650,000 to purchase the Retail Development Group property. The general terms of the agreement call for a $2,000,000 payment at the close of Escrow, a $1,000,000 payment on or before July 1, 2008, and a final payment of $650,000 on or before July 1, 2009. FINANCIAL IMPACT: The Agency currently does not have the resources to purchase the property. Staff is recommending that the City General Fund loan the Agency the necessary funds to acquire the property. Other funds such as the Colton Public Finance Authority Fund and Capital Projects Fund will advance proceeds to the General Fund which in turn will loan the required cash to the Agency to acquire the property. A Redevelopment Cooperation Loan Agreement is included as a separate item for consideration on this agenda. Funding is available from various city funds for the immediate purchase including: 1) FY07 CDBG Allocation -- $260,481 2) Undesignated Fund Balance transfer from various city funds -- $3,389,519 There are additional funding opportunities that City staff is pursuing including federal Section 6 funds, contributions from other local government agencies, and potential development impact fees. The repayment of the loan is not expected to begin until such time as either the Agency has sufficient tax increment resulting from the Super Block or funding is obtained from other sources as mentioned above. An SB -211 ordinance for the West Valley Redevelopment Area is included as a separate item for consideration on this agenda. An SB -211 ordinance eliminates the deadline for a redevelopment area to incur debt repayable from tax increment revenues in the West Valley Redevelopment Project allowing the West Valley Redevelopment Project to commit future tax increment to repay this obligation to the General Fund. RISK MITIGATION / FINANCIAL ANALYSIS: The nature of this transaction involves risk both to the Agency and the General Fund. Currently, the Agency owes funds to the Water Department as a result of the acquisition of the FrontierTown site. By approving this transaction, an additional obligation of the Agency would be created — this time to the General Fund. While staff believes that the Agency will have significant tax increment as a result of the Colton Super Block development, the Mayor and City Council should be aware at this time that insufficient tax increment is available to complete this land acquisition or to repay a loan from the General Fund. However, it is staff's opinion that without securing the Retail Development Group property, staff may be unable to bring the highest and best uses to the lands within the Colton Super Block and the West Valley Redevelopment Project.