City Council Minutes 1991 08 20 - Laserfiche WebLink

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up with so~e improvements to the original draft of the letter of assurance that would enhance the protection of the City's interest. I acquired the assistance of Barbara Banks a real estate attorney. Barbara has reviewed the letter of assurance; and changes to the subdivision agreement. She has been on telephone conversations I have had with both the developer and with the bank trying to resolve these concerns. Banks has made a number of suggestions that have enhanced the quality of the protection that would be afforded the City. Underlying all this, again, no matter how long we draft these documents the basic underlying concepts will not be as protective of the City as would a letter of credit or cash. What you are being asked to do tonight is to approve a series of amendments to the standard subdivision agreement, which would apply only to the Louisville Plaza, Inc. Griffiths reviewed the recommendations of how the City should proceed if it wishes to have an alternative to the cash or letter of credit. The conclusion is that the letter of assurance is not as protective of the City as cash or a letter or credit. However, given a variety of factors which are mentioned in the memo, it is the attorney's conclusion that this approach will provide a reasonable assurance. Approval of this agreement will not be harmful to the City's interest. The level of guarantee under these documents is far less than the letter of credit, but we think there are some reasonable assurance that the City's interest won't be substantially harmed if it follows this approach. Some of the reasonable assurances are; findings of the City Auditor regarding the financial stability of the personal guarantors of the loan agreement (the loan between Louisville Plaza, Inc. and the bank). However, it also personally guaranteed by four individuals. The City Auditor reviewed the financial statements of those four individuals and came to certain conclusions which is in the letter from Bondi & Co. (Attachment A); secondly the public improvements are site specific, that is, they relate principally to that one area. Failure to complete those improvements within that one area would not have a substantially detrimental affect on any other portion of the City. They are scheduled to be completed in the early part of the project. The loan itself is a portion of what is being set aside under the letter of assurance. The letter itself does not come due until June, 1992. These improvements are to be completed on December 24, 1991. We have amended the subdivision agreement to state that it shall be completed by December 24, 1991 or there will be a default in the subdivision agreement. The City can then pursue the various remedies that it has under the letter of assurance and other documents. There are series of things that should be drafted in the initial documents to take those actions in lieu of the letter of credit or cash; subdivider would provide the City $15,000 of the guarantee in cash (the total public improvements to be guaranteed are estimated to be approximately $350,000); all those improvements with the exception of $15,000 in landscape improvements, are to be completed early in the project and certainly by December 24, 1991, leaving the landscaping improvements, some of which might be completed next spring. The $15,000 in cash would cover those landscape improvements. The agreement was to be amended in the following manner; any interest must be repaid to the City if it is required to advance the cost of completing any of the improvements. The