Minutes 12/11/2018 - Laserfiche WebLink

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December 11, 2018 Motion by Mr. Moody, and seconded by Mr. Clark, to adopt the following ordinance, and was adopted by the following vote: “ORDINANCE APPROPRIATING $5,150,000 FROM THE GENERAL FUND – UNASSIGNED FUND BALANCE FOR THE PURPOSE OF PROVIDING A SHORT- TERM LOAN TO THE ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF PORTSMOUTH, VIRGINIA.” Ayes: Clark, Lucas-Burke, Moody, Psimas, Smith, Rowe Nays: None 18 - 468 - Adoption of a resolution authorizing a short-term loan to the Economic Development Authority of the City of Portsmouth, Virginia in an amount not to exceed $5,150,000 for the purpose of acquiring certain property in settlement of litigation with Victory Crossing Developers II, LLC, and further authorizing the execution of agreements and documents related to same. Background:  In 2004 EDA entered into an agreement with Victory Crossing Developers II, LLC (the “Developer”) for the conveyance of property and development of a mixed use project.  While the Developer did construct certain infrastructure improvements, the project as a whole was not developed.  In 2016 EDA filed suit against the Developer to exercise the reverter rights set forth in the Development Agreement and reacquire the property conveyed to the Developer.  The Developer filed a counterclaim against EDA and also filed suit against the City. Discussion:  The parties have reached an agreement in principle to settle the litigation.  Under the settlement terms, the Developer would reconvey all of the property it currently owns (approximately 19.19 acres) to EDA.  In exchange, EDA would pay the Developer $5,123,929.42, which is roughly the assessed value of the property.  To fund EDA’s compliance with the settlement terms and acquisition of the property (including closing costs), the City would provide EDA a short-term loan in an amount not to exceed $5,150,000 (the “Loan”).  With the assistance of the City, EDA would then issue bonds or otherwise obtain financing to repay the Loan in full no later than March 31, 2019.  EDA will consider a Resolution to approve the settlement and Loan at its meeting on the morning of December 11.  The proposed Resolution for consideration by Council on the evening of December 11: (1) approves the settlement terms; (2) approves and authorizes the Loan; (3) approves and authorizes a Cooperation Agreement with EDA; and (4) authorizes the City Manager to execute all necessary documents and take all necessary further actions to effectuate the intent of the Resolution. Financial Impact:  The City will make a short-term loan of not to exceed $5,150,000 to EDA. The loan will be repaid no later than March 31, 2019.  EDA will obtain title to nearly 20 acres of property to be marketed for economic development. Next Steps Following Council Action:  The Settlement Agreement, Cooperation Agreement and other required documents will be executed and delivered.  The Loan will be made by the City to EDA.  It is anticipated that EDA will close on acquisition of the property no later than th December 14.  EDA will issue bonds or obtain other financing to repay the Loan no later than March 31, 2019.