Title
Request to Solicit Terms for Bank Note for NW 5th Ave Commercial Building and Model Block Project (NB)
Explanation
This item describes the proposed process for borrowing for the 5th Ave Commercial Office/Retail Building and construction for the Model Block project.
5th Ave Commercial Building (Retail Portion only)
On November 17, 2008, the CRA approved 802 NW 5th Ave as the site for a new mixed-use (office and retail) building. The building will be two stories, with the second-floor serving as office space for CRA staff and the ground floor will housing some retail/commercial use that is to-be-determined. The proportional (based on square footage) cost of the building with CRA office usage will be financed by cash investments from each of the four development trust funds. The proportional cost of the ground floor retail/commercial space must be financed by the Fifth Ave/Pleasant Street trust fund. The preliminary budget presented on November 17, 2008 included $270,000 in debt to finance the retail/commercial portion of the building. The Architects, Construction Manager, and staff are in the process of finalizing the total project cost. Once the project costs are final, the actual amount needed to be financed through debt will be determined. The anticipated term of the loan is 20 years.
Model Block Site C, E, and F
On June 22, 2009 the CRA was given an update on the Model Block project. The plan is to construct three new houses at 412 NW 4th Ave (Site C), 410 NW 4th Street (Site E), and 412 NW 4th Street (Site F) simultaneously. In the past, the CRA has utilized a combination of financing through a Line of Credit (LOC) from the National Trust for Historic Preservation and cash from the FAPS Trust fund. The NTHP LOC has expired and NTHP is not currently accepting applications. Staff would like to secure either a line of credit or a traditional construction loan to finance construction of the new houses. The Architect, Construction Manager, and staff are working finalize construction cost, but it is estimated that approximately $350,000 in total financing will be needed. The debt will be in form of a short-term (less than 12 months) note and the financial impact to the CRA is limited to the interest accrued during construction and until each house is sold.
Given the relatively small size of the borrowing staff is proposing soliciting a request for a bank loan in order to acquire capital for both projects. Once proposals are analyzed, staff will come back with terms for an agreement in August and October 2009.
Fiscal Note
Debt service associated with the debt issue will be paid from the Fifth Ave/Pleasant Street Trust Fund. These debt service costs will be included in the FY10 budget.
Recommendation
The CRA Board direct the CRA Executive Director to prepare and issue a request for terms for a bank loan for CRA Office Building and Model Block and authorize the CRA Executive Director to retain professional services, if necessary, to implement this debt issue.