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City Council <br />Meeting Minutes <br />June11 2019 <br />Page 9 of 15 <br />not enough to support the businesses He doesn't think downtown is doing as well as <br />people think it is, maintaining the downtown population is important. If we don't move <br />forward with this, this business or others may move elsewhere <br />Councilmember Leh asked Sinkey if funding at 50% would be sufficient to get the project <br />done Sinkey stated without the TIF the project assumptions show a return on equity of <br />15% and they need to be in the 8-12% range No one would put capital in this project at <br />that level of return With adding the TIF at 90%, the return on equity to 7 3% which is <br />below the threshold for private investment. The company still brought it forward to test the <br />question to know if this community will use this tool to see this project move forward 50% <br />TIF would put it to a 4-5% return on equity and that would be a very tough level for this to <br />succeed The company wants to build this in hopes of keeping their business in <br />downtown The goal is not just to keep Boulder Creek downtown but to get this building to <br />align the daytime population in downtown At 50% this project does not make sense <br />Mayor Pro Tem Lipton stated he is supportive of TIF at 50% for ten years with an <br />incentive to the developer if they are able to maintain retail tenancy, an increase to as <br />much as 90% He felt that is fair and demonstrated the willingness to use the tool <br />Councilmember Loo was willing to take a risk and do 90% to see if this can get built <br />noting even with this funding it may not move forward <br />Councilmember Leh stated he came to Council with fiscal sustainability of the City as a <br />goal and a frame through which to view this He has heard from businesses in the <br />blighted corridor that the financial situation is pretty precarious We have a wonderful <br />downtown but businesses are not doing as well as many think. Many complain about lack <br />of foot traffic. Nights and weekends are good but during the rest of the time it is negligible <br />This tool is a way to prevent blight from expanding if we end up losing more businesses <br />Councilmember Leh stated he is also thinking about what other communities do <br />Communities around us are beating us on some kinds of business development. If this <br />doesn't get built he wonders if other developers will bring anything forward He stated it is <br />short sighted saying there is no downside to denying this He wondered who will apply in <br />the future if we don't support proposals such as this Business people can't rely on a <br />sliding scale on this He supports 90% as that is what it will take to get this done and will <br />potentially energize others to do the same It is a risk worth taking <br />Mayor Pro Tem Lipton stated community character is to not have all office, approving this <br />will encourage more office buildings He wants to be a bit conservative on how we do this <br />or we could have a downtown of only office and discourage other users <br />Councilmember Stolzmann felt all the potential consequences of approving this had not <br />been analyzed We should not rush this through just to be reactive She does not support <br />the application, particularly at the higher level <br />