Title
Funding for Kennedy Homes Acquisition and Demolition (NB)
This item relates to a recommendation to the City Commission to reallocate Capital Improvement Revenue Bonds Series 2005 proceeds and General Capital Projects funds to cover the cost of acquisition and demolition of the Kennedy Homes structure.
Explanation
In January of this year, the City Commission allocated $3 million of its Capital Improvement Revenue Bonds, Series 2005 (CIRB 2005) tax exempt bond proceeds to the Southeast Gainesville Renaissance Initiative (SEGRI). The largest portion of this SEGRI appropriation was intended for the acquisition of the Kennedy Homes property.
Initially staff was evaluating 3 alternatives for the acquisition and development of this property:
- Acquiring options on the property, evaluating and selecting a developer
and then passing the property through to the selected developer. This
option would not require a net significant upfront acquisition expense on
the City's part;
- Acquiring the property, maintaining City ownership and developing the
property internally;
- Acquiring and taking ownership of the property, issuing a request for
proposals, and selling the property to a third party for development.
The City settled on alternative 3 for development of the property. Under this scenario ownership of the property will pass to a private third party. IRS private use regulations governing the use of tax exempt debt restrict the amount of bond proceeds that can be used to acquire or construct a project that will be ultimately privately owned at 5% of the net proceeds of the issue. In the case of the CIRB 2005 this translates to $1,120,083.
Acquisition cost alone of the Kennedy Homes property was initially estimated at $1,980,178, to be funded through a combination of sources: CIRB 2005 proceeds -$1,120,083; HOME funds - $361,471; and, General Fund loan - $498,624.
At this juncture in the proc...
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