City Council Study Session Agenda and Packet 2013 04 23

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CITY COUNCIL COMMUNICATION SUBJECT: TERM SHEET FOR HIGHWAY 42 CORE PROJECT AREA IMPROVEMENTS DATE: APRIL 23, 2013 PAGE2 OF 6 DELO’s property is identified in the Urban Renewal Plan as one that contributes to eight of the blighting factors identified within the Urban Renewal Area. Among other things, the area’s faulty street layout has limited any development within this subarea of the Urban Renewal Area. DELO, LLC applied to the LRC for financial assistance in January 2013 to construct public infrastructure that would remediate the faulty street layout for the area. Generally, the scope of the public infrastructure needed for DELO’s development and other properties within the area are:  Construction of new streets and sidewalks o Cannon from South to Griffith o Short from Cannon to Highway 42  New water utilities within the following streets; o Cannon Street from Lafayette to South o South Street From BNSF to Highway 42  New storm water utilities within the following corridors; o Lafayette from BNSF to Highway 42 o Cannon from Griffith to Lafayette  New sanitary sewer utilities within the following streets; o Lafayette from BNSF to Short o Short from Cannon to Highway 42  Landscaping and public amenities along streets  Street lighting, earthwork, traffic control, surveying, project management (10%), contingency (10%) DELO has estimated the public infrastructure to cost $3,500,000. The Public Works staff has reviewed initial cost estimates. The final scope of the public infrastructure will be identified through the DELO entitlement process. This new public infrastructure will not only be used by the DELO project, the new streets and utilities will remove access barriers for all adjacent property owners, particularly between Cannon Street and Highway 42. The LRC provided direction to staff at their January 28, 2013 meeting that the LRC 1) is willing to help finance public infrastructure improvements in the subarea; 2) understands the funds will be borrowed from investors found by DELO, LLC; and 3) requests a term sheet be prepared outlining the financial components of the borrowing. The LRC doesn’t have current funding available to finance the project. A TIF revenue bond must be issued to generate the capital necessary to construct the infrastructure. City staff worked with DELO to develop a term sheet consistent with the LRC’s direction. That term sheet outlines the financial terms of such a bond. The draft term sheet is attached and the following is a description of the main provisions: 16