2001 AGN DEC 04 I16 - Laserfiche WebLink

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Report to Redevelopment Agency Board regarding EVLC Agreement November 26, 2001 Page 3 of 5 offset by more sizable losses in sales tax revenue with the net result that the City/RDA benefit declined by a substantial margin. Options Analysis Summaries of the three potential Options are attached hereto as Exhibit B. The first spreadsheet illustrates the sources and uses of funds followed by a summary of the major terms of each Option and a savings comparison. Options 1 and 2 are compared from a savings perspective with Option 3, the current agreement terms. The basis for the lump sum buyout negotiations was a cashflow analysis prepared by Keyser Marston and Associates attached hereto as Exhibit C. The Amended Participation Agreement is structured to vary the terms of consideration depending upon the bundle of benefits secured by the Developer and Agency. The worst case outcome for the Agency is basically the terms of the current agreement (Option 3). Option 1/EDA Grant and Lump Sum Contribution The preferred Option is to obtain a$1 million EDA Grant and Infrastructure Bank Financing for the Agency's lump sum contribution of $1.5 million (Option 1A). The Agency would make debt service payments on the $1.5 million loan from the Infrastructure Bank or tax allocation bonds and continue to make the sales tax rebate payments to the Developer until June 30, 2020 or until the Developer recovers excess public improvement expenses and City fees. Option 1 B assumes that subordinate tax allocation bonds are issued to fund the lump sum contribution at a slightly higher interest rate than the Infrastructure Bank loan. The Agency's present value contribution to the development is $1.5 million and $1.8 million respectively for Options 1A and 1B versus $2.3 million for Option 3(the benchmark). The present value cash savings compared to the current agreement is therefore $0.8 million and $0.5 million respectively. The City also receives an added project valued at approximately $0.5 million (Cooley Drive) for total savings/benefits of $1.3 million and $1.0 million for Options 1A and 1 B respectively. Option 2/No EDA Grant and Lump Sum Contribution Option No. 2 assumes that the City/Agency does not secure (or accept) the $1 million EDA Grant but the Developer and the Agency choose to buy out the incentive payment obligation anyway. The Agency makes a lump sum contribution of $1.1 million toward the public improvements using infrastructure bank or bond financing. The Developer is not obligated under this Option to construct the Cooley Drive improvements. The Agency's present value contribution is $1.3 million and $1.5 million respectively for Options 2A and 2B versus $2.3 million for Option 3(the benchmark). The present value cash savings compared to the current agreement is $1.0 million and $0.8 million respectively. Option 3/Current Agreement Option No. 3 is a simplified version of the current agreement provisions. If either Options 1 or 2 are unsuccessful, the approach automatically defaults to Option 3. This Option requires the Developer to raise all of the remaining capital to finance the public improvements with