Revitalization Commission Agenda and Packet 2022 06 01

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SUBJECT: PUBLIC INFRASTRUCTURE ASSISTANCE AGREEMENT SPLIT MOUNTAIN COMMERCIAL 4 LLC DATE: JUNE 1, 2022 PAGE 6 OF 7 Should the LRC wish to advance this application, the City Attorney has prepared a draft Public Infrastructure Assistance Agreement with Split Mountain Commercial 4 LLC, which is included as Attachment #3. The proposed agreement has been structured consistent with prior agreements, such as the agreement with 824 South Inc. that was adopted by the LRC in 2020. The applicant is required to perform the planned work, obtain appropriate warranties, and submit the improvements for inspection and approval by the City. The applicant will then submit a request for reimbursement after receiving Construction Acceptance and including documentation of all paid invoices. As the applicant provides the project warranty, the agreement outlines the LRC will provide the financial guarantee ($980,916 multiplied by 1.15 = $1,128,053). After the warranty period expires, the additional 1.15 of the guarantee will go back to the LRC if it has not been used. Because of the current market uncertainties and significant construction cost increases, staff is suggesting a total not -to -exceed cost above the contingency amount and the financial guarantee. The proposed not -to -exceed amount of $1,178,053 would allow the applicant to progress the project even if there are some changes. However, if the project appears it will exceed the not -to -exceed amount, the applicant would need to request a First Amendment to the Agreement to guarantee full reimbursement. Procedurally, the $1,128,053 will be deposited with the City when the project has advanced to receiving a building permit. Upon Construction Acceptance, the LRC would pay from its Special Fund, directly to the developer, the actual cost of approved improvements. Concurrently, the City would release the $980,916 from the guarantee back to the LRC but hold the additional amount for warranty work that may be required. Because the LRC will be approaching $3M in fund balance by the end of 2022, there is sufficient funding to accommodate this process. Staff has also developed a standard reimbursement request form that the applicant will use when Construction Acceptance is received, in order to start the reimbursement process. Since the applicant has indicated the project is scheduled to be completed in phases in 2023, staff proposes a termination clause in the agreement of July 31, 2024. Though the LRC will carry this project as a financial obligation, staff does not expect a payment to occur before the end of 2023 or early 2024. If LRC desires to advance the application and agreement, staff can prepare this item to be presented for City Council approval on June 21, 2022. The agreement would then return to LRC for final approval, contingent on Council action, at the Commission's July 13 regular meeting. RECOMMENDATION: Staff seeks direction on the Application for Public Infrastructure Assistance with Split Mountain Commercial 4 LLC for a project at 950 Spruce Street/725 Front Street. LOUISVILLE REVITALIZATION COMMISSION Agenda Packet P. 18