infrastructure. The property was situated next to a building that had been |
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vacant for a long time, which could be considered for inclusion in a |
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campus-style development. The proposal was put together because land |
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prices had died, and the City had been asking about $370k an acre for |
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their property. He was trying to come up with creative strategies to incent |
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development to go forward. He felt they had an opportunity to partner with |
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a developer and make the property competitive, and they were |
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considering bringing in a preferred developer. The City would control the |
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process, not the developer. The City could have many options for the |
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land if there was a preferred developer in place. It was all a matter of |
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negotiations and there would be a lot of flexibility, depending on the |
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tenants. If they wanted to own the building, they would, or they could lease |
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it. There could be a ground lease, or they could even make the land free. |
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They could sell the land to the developer at some point in the future, or |
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they could sell the land to the occupants. Each of the partners would bear |
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certain responsibilities and costs, which would be negotiated up front in |
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the deal. Both parties would initially enter into a memo of understanding. |
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The preferred developer would be a partner at the table. They would work |
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with the City, strategize, and determine what the best course would be to |
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get the property developed quickly and for the right types of use. The |
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land control models that were typical in those types of arrangements were |
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where the municipality owned the land initially, and they entered into a |
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Mr. Damone asked if they would subordinate the ground lease to any |
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financing that was on the property if they used a ground lease. Mr. Casey |
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said they probably would, and added that the ground lease terms could |
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be negotiated - as low as $1. Mr. Damone reminded that someone would |
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have to finance the buildings, and it was impossible to get funding for that |
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today. The lender would want a first position on the land, so if whoever |
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was in that position defaulted on the first mortgage, the City would lose the |
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land. Mr. Casey said that would be something negotiated, but Mr. |
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Damone did not really agree. Mr. Casey said it would depend on how the |
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development was being financed. Mr. Damone asked if the City was |
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prepared to finance the buildings, and Mr. Casey said that the LDFA |
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potentially could do that through bonds. |
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