Agenda Item Ref. #: LF013118-16

Legal & Finance Committee

01/31/2018

02/05/2018

Pauline Sumption & Wade Nyberg

Authorization for the Mayor and Finance Officer to sign this Agreement was approved at the Council’s 1/16/2018 meeting. The Agreement was not attached to the agenda, which led to some confusion. The City and Red Rock Development Company (then known as Buntrock-Graziano-Ward Development Company) entered into an Infrastructure Development Partnership Fund (IDPF) loan agreement in 2000. The agreement provided that the Development Company would borrow $870,773 from the City’s IDPF fund to build water and sewer improvements to serve what would become the red rock development. The agreement also contemplated an additional $528,500 of IDPF funds being utilized for a water main extension in Sheridan Lake Road, which was to be repaid by connection fees (not by the Development Company). The agreement was later amended to add an additional $90,000 to the loan, which brought the total loan to $960,773. The Agreement called for a long-term repayment plan, where the Development Company would pay a portion of the principal and accrued interest for each lot platted. Repayment would be complete upon final platting of the last phase of development, or ten years after substantial completion of the infrastructure to be built, whichever is later. Substantial completion was determined to have taken place in July of 2008, which would make July of 2018 the timeframe for the final amounts to be due. Red Rock is not in default of the Agreement, and Finance records show that approximately $196k is owed for principal on the Agreement, plus an additional amount for accrued interest, which is approximately $38k for a total of approximately $234k. The Assignment Agreement does not change anything other than allowing the Development Company to plat first, and make their payment from the proceeds from the sales of the lots, instead of paying prior to plat approval. The lots have to be platted in order to be sold, so this allowed the Development Company to raise the funds to pay from lot sales. There is a lien given on each lot to guarantee payment upon sale. The Assignment Agreement was not linked to the 1/16/2018 agenda, as staff had not received the final ok for the agreement language. Red Rock Development Company and staff had an agreement in principle, but the final language of the agreement had not been approved by Red Rock. Normally, the agreement would have been removed from the consent agenda, and a recommendation made to either continue the item or move forward with authorization to execute the agreement. That was not done in this circumstance, which was an oversight. Council President Salamun asked that the Agreement be placed on this agenda to make sure the Council was fully informed of the situation.

Approve