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11/29/2004 . . . COMMUNITY REDEVELOPMENT AGENCY CITY OF CLEARWATER November 29,2004 Present: Brian J. Aungst Frank Hibbard Hoyt P. Hamilton William C. Jonson Carlen Petersen Dwight Metheny Chair/CRA Trustee Vice-Chair/CRA Trustee CRA Trustee CRA Trustee CRA Trustee Ex Officio Also present: Garry Brumback Pamela K. Akin Geri Campos Cynthia E. Goudeau Patricia O. Sullivan Assistant City Manager City Attorney CRA Executive Director City Clerk Board Reporter The Chair called the meeting to order at 9:07 a.m. at City Hall. To provide continuity for research, items are in agenda order although not necessarily discussed in that order. Approval of Minutes Trustee Petersen moved to approve the minutes of the October 18, 2004, meeting, as recorded and submitted in written summation by the City Clerk to each Trustee. Community Redevelopment Aaency Items: 1. Consider Developer's reauest for an amendment to the Development Aareement. which would allow the CRA to release its riaht to repurchase the Station Sauare Parkina Lot property in order for Developer to obtain interim financina CRA Executive Director Geri Campos reviewed the request. The CRA (Community Redevelopment Agency) and Station Square LLC (Developer) entered into a Development Agreement and Disposition of Property (Station Square Parking Lot Site) in February 2004. The Developer closed on the property in August 2004, and the CRA received a note for the purchase price of $720,000 to be repaid when the Developer receives construction financing. Prior to obtaining construction financing, the Developer is seeking interim financing for the project to payoff the mortgage to the City, the current mortgage on the Cassano property, and to prepare construction drawings. It is the Developer's position that the project cannot move forward without interim financing. Before the Lender will provide interim financing, the provision in the Development Agreement for the CRA to repurchase the property must be released. The interim financing is not a construction loan. The Lender is not committing to construction financing or building the project. The Lender will be bound by the Development Agreement. Community Redevelopment Agency 2004-11-29 1 . . . The developer, therefore, requests that the CRA release its right to repurchase the property as provided in Section 8.07 of the Development Agreement (in the event the Developer does not commence construction of the project within twelve months from closing date, the CRA has the option to repurchase the property for the amount of sale). This is a high-risk proposal for the CRA, because the agency can lose control of a key redevelopment property in the Downtown Core. However, if the amendment is not approved and the request denied, the project is in danger of not proceeding. Nick Pavonetti, representative, said construction financing is based on presales and they are one-third of the way there. This loan will keep the project moving forward. He said $1.5- million has been spent for plans and marketing. Units began selling in October. Plans are 60% completed. He believed construction could begin in January. In response to a question, the City Attorney said approval proposes no additional protections. The worst-case scenario is the CRA would lose control of the property. The property would still be subject to the Development Agreement but the City would no longer own it. In response to a question, Mr. Pavonetti said the interim loan would be slightly more than $2 million and would payoff the existing mortgage and pay for plans. Discussion ensued in regard to moving forward with the project without losing control of the property. Attorney David Platte said the bridge loan would move the project faster. He said the agreement would put the CRA in the same position it will be in when the construction loan is closed and the agency's right to repurchase the property is terminated. Discussion ensued with concerns expressed that project financing may be inadequate without this loan. Mr. Pavonetti said the project's budget and amount of investment are on track. He said the developer always planned to obtain a bridge loan. The problem is not one of assets but one of liquidity. He said this request is a small technicality and will keep the architects from being demobilized until presale targets are met, which would delay project completion by up to four months. Mr. Platte said the development agreement includes penalties related to the construction commencement date, but not to the completion date. He suggested a guarantee could be negotiated to provide more comfort to the CRA. The City Attorney said if the CRA approves this request, it gives up its leverage to enforce a project commencement date. The development agreement remains in place for 10 years. Discussion ensued regarding consequences related to the request and it was commented that denying this request would delay the project by only a few months. Council member Hamilton moved to deny the developer's request to amend the Development Agreement which would allow the CRA to release its right to repurchase the Station Square Parking Lot property in order for Developer to obtain interim financing. The motion was duly seconded and carried unanimously. Community Redevelopment Agency 2004-11-29 2 . Executive Director Verbal Reports - None. . . Other Business Ms. Campos was congratulated on her new position. Adiourn The meeting adjourned at 9:45 a.m. Community Redevelopment Agency 2004-11-29 -~t/ -Chair, Community Redevelopment Agency 3