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The hotel parcel would be conveyed upon entitlement approval, evidence of financing for <br />construction, permanent loan(s) and equity and issuance of all necessary building permits. <br />Operation of the Public Parldng: <br />Developer will manage the Public Parking <br />The City would enter into a Parking Operation Agreement with the Developer to manage and <br />operate the Public Parking and obligate the Developer to pay all costs including the debt service <br />on the financing for the Public Improvements. The Developer would set the parking rates and <br />either manage the parking directly or through a 3rd party. <br />The Developer would guarantee no negative costs of approximately $750,000 per year to the City <br />and would keep any net revenue unless the Hotel is converted to residential per the terms of the <br />DDA (see terms below). The Developer would guarantee the debt service and all operating costs. <br />The cash flow would be distributed in the following order: (1) Operator fee, (2) operating expenses, <br />(3) City debt service and (4) any net revenue to Developer. Only after the 30 year debt is paid off <br />at maturity, the City would receive 40% of the net parking revenue if the parking conversion from <br />hotel to residential has not occurred. In addition, if the Hotel is converted to residential, then 40% <br />of net revenue would go to the City (see terns below). <br />All the revenue and expenses arriving from the parking operations shall be verified through an <br />audit. <br />Conditional Conversion of the Rotel to Residential <br />At the time of issuance of the Certificate of Occupancy for residential use, the net cash flow from <br />the public parking would be split 60%/40% with 60% going to the Developer. The City has <br />independently prepared an estimate of the potential cash flow from a 60/40 split for 30 years based <br />on Public Parking revenue. <br />Option to Purchase the Public Parking <br />The developer would have the Option to purchase the Public Parking at the costs of $15 million <br />for the first 15 years, then the purchase price would be at appraised value or $15 million whichever <br />is higher. The parking will remain Public Parking in perpetuity regardless of the ownership. <br />Terms and conditions to the Option will be negotiated in the DDA. <br />Participation by the City in Profits upon sale of property: <br />-6- <br />