Public education
Agreeing that we need some form of education reform is easy, however, deciding what reform is not.
-Bryan
M E M O R A N D U M
Date: June 20, 2006
To: Mayor & City Council
From: Richard A.
Wollangk, City Manager
Subject: FIVE RIVERS
City staff has completed due diligence work on the commitment letter submitted by Five Rivers LLC on May 31st. We cannot find it meets the provisions of Section III, Subsections F and G of the Term Sheet document where the developer was to submit financing commitments in a form and substance satisfactory to the City/RDA. This determination is based upon what was learned in a meeting that Jackson Kinney and I had with CD Smith Construction on Tuesday, June 20, 2006 based upon the lack of cooperation from the Five Rivers group in assisting the city in completing its due diligence work on the submittal.
At the City Council Meeting on June 13th, Jackson pointed out that while the letter appeared to meet the submittal requirement, we needed to meet with the parties to ensure a common understanding of the commitment. As was pointed out in a memo to the RDA and Council this past Friday, the city made a concerted effort, beginning on June 1st, to seek Five Rivers cooperation in setting up an overall meeting of the Five Rivers group, including CD Smith Construction. The overall meeting that had been scheduled for June 13th was cancelled by Five Rivers.
Also at the June 13th meeting, Jackson indicated that there were various items that we needed to address in order to arrive at a satisfactory determination on the submittal. One of the items was to ensure that the commitment would provide the financial backing to cover all costs associated with completing the project up to, and including, opening the doors for occupancy. In our discussion with CD Smith, it was clear there were a number of project costs CD Smith did not intend to cover. These project costs included, among others: marina facilities; furniture, fixtures and equipment; restaurant, kitchen buildout allowance; telephone system; parking area north of Marion Road; and architectural and engineering fees.
While the commitment letter did not include a specific stipulation on take out financing on their loan, CD Smith indicated they expected to see a combination of lender and/or equity commitments from the developer within the context of the Developer’s Agreement. CD Smith officials indicated at today’s meeting that they had not previously been provided with a copy of the term sheet document by Five Rivers. The city appreciated CD Smith agreeing to meet and discuss their role in the project. As was pointed out at the June 13th Council Meeting, the city was very pleased to see CD Smith’s participation in the proposed project. While the commitment letter does not meet the intended substance of the financial commitments sought in the Term Sheet document, it did represent a significant offer by CD Smith.
I would note that the meeting that city staff had with CD Smith on June 20th was a meeting requested by the city. Again, we appreciated CD Smith’s willingness to meet and discuss their proposed role in the project.
Prior to today, a meeting had been scheduled with the RDA for Wednesday, June 21, 2006, at 4:00 p.m., where city staff will review the status of the project and ask for recommendations for proceeding with redevelopment efforts in the Marion Road/Pearl Avenue Redevelopment Area. That meeting will occur in room 404 of City Hall.
RAW/jdc
Cc: Community Development Director Jackson Kinney