1999 AGN SEP 07 I14 - Laserfiche WebLink

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On August 17, 1999, the Agency approved Resolution No. 741 which approved an OPA with Dominguez Plaza, LLC. Since the OPA contained various changes which impacts the previous Loan Agreement approved by the City and Agency in connection with the Vanir OPA, the Loan Agreement must be modified to conform with the amended and restated OPA with Dominguez Plaza, LLC. Discussion Those changes approved in the Dominguez OPA that impact the Loan Agreement with the Agency are summarized as follows: TOT Reimbursement: Certain reimbursement provisions of the agreement for the off-site improvement costs have been extended from two (2) to three (3) years. As proposed, the change would provide that 100% of the Transient Occupancy Taxes (TOT) will be used to reimburse the Participant for the cost of off-site improvements for three (3) years instead of the original two years in the Vanir OPA. This change will delay the receipt of any TOT revenues generated from the project by the City of Colton for one additional year. This difference is estimated at $55,000. The Participant is requesting that 100% TOT reimbursement be extended by one additional year to help insure that he is fully reimbursed for the cost of all off-site improvements. 2. Allowed Reimbursable Expenses: Eligible reimbursement expenses were modified to provide reimbursement to the Participant/Developer for the costs of maintaining one (1) permanent on-site sign and two (2) permanent off-site signs, in addition to the off-site improvements and annual billboard advertising expenses which were included in the previous OPA. 3. Third Party Beneficiary: At the request of the Participant, the Loan Agreement was modified to acknowledge that the Participant is a third -party beneficiary to the Agreement. This statement has important legal ramifications for the City. If for any reason the City fails to make the loans to the Agency necessary to make reimbursements to the Developer, the Developer will have a course of action against the City directly rather than just against the Agency. This potential legal exposure is a mute point; however, if the City fulfills its obligations to make the loans to the Agency as provided for in the Loan Agreement. This additional provision was requested and is required by the Participant to give him some certainty that future reimbursements will take place given the fact that the Agency does not have sufficient resources to make the reimbursements itself. Financial Impact By adding one additional year of 100% TOT reimbursement and increasing the eligible costs which are reimbursable under the revised OPA, the amount of money that is loaned to the Agency under the Loan Agreement will be increased somewhat. Based upon projections which are attached as Exhibit "A", the additional amount of reimbursement in the third year is estimated at $55,000. The actual cost of the on-going maintenance for the on and off-site signs has not been determined and should not be a significant amount. Nevertheless, the maximum reimbursement allowed in subsequent years is limited to 50% of the TOT collected by the City.