ACTION REQUESTED:
Title
Communication from the City Manager and Corporation Counsel with a Request to Authorize the City Manager to Enter into an EARLY WORK LOAN AGREEMENT, in an Amount Not to Exceed $3,000,000.00, for the Construction of the LOUISVILLE SLUGGER SPORTS COMPLEX SPECIAL SERVICE AREAS.
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BACKGROUND: Representatives of Twenty Four Corporation LLC (TFC), the developer of the Louisville Slugger Sports Complex, are actively pursuing construction and permanent financing for the Complex. TFC also purchased the property this summer for $3 million. As of this date, the financing for the Complex has not been fully secured. The developer is confident that financing will be available for the project in the next 90 to 120 days.
Groundbreaking has already taken place on the project. TFC is very interested in getting the ball field portion of the Complex open by June 1, 2015. The dome portion of the project would follow later in 2015. In order to meet this aggressive timetable, the developer has had to begin site work and preorder the turf for the ball fields. To keep the project on a timetable for completion in 2015, the developer has been discussing an Early Work Agreement with the City.
The attached Early Work Agreement would be a loan, in the amount of $3 million, which would allow the site work undertaken this fall and the ordering of the turf to be paid. The loan would be secured by a first position for the city on the entire 50.55 acres, and a personal guaranty of the developer, Mark Petersen. The interest rate on the loan would be 4%, and it would be due in full by December 31, 2015. Morton Community Bank currently has a note on the land in the amount of $856,552. The Bank has agreed to remove its first position on the property with the execution of the Early Work Agreement.
City staff has negotiated several other conditions as part of the Early Work Agreement that will clarify and further define the City's obligations under the First Amendment to the Annexation Agreement. Specifically, the parties acknowledge and confirm that the City shall have no obligation to create any Special Service Areas (SSA), levy or collect SSA taxes, provide the SSA funding, or incur the Debt Obligations described in the First Amendment until:
· TFC has provided to the City a commitment for debt financing, from a reputable financial institution or other reasonably acceptable lender, and/or cash equity for the Louisville Slugger Project and Holiday Inn (assuming the City contribution of $9.6 million);
· Upon the issuance of the bonds pursuant to this Early Work Agreement and the First Amendment, the City and TFC agree that the proceeds of the bonds shall first go to repay the outstanding balance, if any, on the Early Work Loan;
· After application of the bond proceeds to the payment of the Early Work Loan as provided above, disbursements from the bond proceeds shall be on a dollar for dollar basis with the private funds obtained;
· The nature of what can be paid for with SSA funds has been clarified, consistent with the definition of special services within the Westlake SSA;
· The Sports Complex shall be substantially completed and the intended operations thereof open to the public no later than July 1, 2016;
· Should the Sports Complex not be open by July 1, 2016, the City can terminate the obligations to create any SSAs, levy or collect SSA taxes, provide the SSA funding, or incur the Debt Obligations;
· TFC would have to obtain written consent from the City should they seek to sell the Sports Complex to a third party prior to the completion date;
· If any of the property within the Sports Complex SSA is sold to a third party subsequent to the completion date, TFC agrees to require the buyer to assume all obligations of the Sports Complex SSA, the First Amendment, and the Early Work Agreement. Another condition of the prospective buyer would be that the city would be a third party beneficiary and the obligations in the SSA would be enforceable by the City.
The City has funds available from the Other Post-Employment Benefits (OPEB) Fund. Currently, the interest rate that these funds are earning is less than 1%. At 4%, the fund would be earning significantly more interest income. The first position provides the additional guaranty that if the work is not complete and the note has not been repaid, that the City would be able to foreclose on the property and have 50.55 acres in northwest Peoria under the City's control. The site work being performed currently will improve the value of the land, thus making it more marketable for future development should the City obtain the property.
FINANCIAL IMPACT: If approved, the City will gain additional interest on the amount loaned through the Early Work Agreement, which would come from the OPEB Fund. Additional revenues from the early opening of the ball field portion of the Complex will also be realized.
NEIGHBORHOOD CONCERNS: None regarding the Early Work Loan Agreement.
IMPACT IF APPROVED: The Early Work Agreement will take place, allowing the Louisville Slugger Sports Complex to partially open by the target date of June 1, 2015.
IMPACT IF DENIED: The Louisville Slugger Sports Complex will not partially open by the target date of June 1, 2015.
ALTERNATIVES: The Council could not act on the Early Work Agreement and wait for the permanent financing to be obtained. The effect would be to delay the opening of the Complex.
EEO CERTIFICATION NUMBER: N/A
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL'S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Grow Peoria: Businesses, Jobs, and Population
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Grow employers and jobs.
DEPARTMENT: Legal