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'I . I . . REPORT: Redevelopment Agency, April 22, 1996 - Redevelopment Agency Executive Director Church presented the staff report. "1. This agreement would have the Agency make the entire payment to the developer for 1994-95, rather than a contribution by the Agency and City, as the DDA originally envisaged. In exchange for the Agency agreeing to take on this obligation, the agreement proposes that the City forgive annually a portion of an Agency debt to the City's Parking Assessment District of $434,204. Each annual payment to the developer will reduce the amount of this debt. 2. This agreement would be in effect until the Agency pays up to $434,203 of what would otherwise be the City's obligation. When this cap is reached this agreement terminates. It is estimated that the cap will be reached in the 1997-98 fiscal year. 3. It is anticipated that when the project sells, the assessed value of the project will increase and the part of the developer subsidy coming from sales tax (the City's portion) will be reduced or eliminated." Director Church said the proposal before the Council was to have approximately $130,000 of City debt incurred as part of the Sequoia Station agreement transferred to the Redevelopment Agency, and amend the budget to reflect that transfer in the Redevelopment Agency budget to change the line item from $170,000 to $300,000. According to the DDA the developer would receive up to $300,000 per year for 15 years from property tax generated by the project. If there was a shortfall, the City agreed to contribute up to 50% of the sales tax generated by the project. This was done because the '----' Agency did not have the money to put into the project, and the project alone would not produce enough in tax increment to pay the entire subsidy. Shortfalls would not carryover to the next year. In response to Council questions, Director Church advised this agreement was between the City and the Redevelopment Agency only and did not effect the agreement with Sequoia Station. Director Church said although no current project would be affected by this increased obligation by the Agency, it would limit funds, to that extent, for future projects. Director Church said had the Agency had the necessary resources at the time of the agreement "the Agency would have paid the entire freight." However, at the time of the agreement the Redevelopment Agency did not have the resources to fund the entire subsidy and therefore the City was asked to participate. Director Church said the purpose of this action was "to move the debt from the City to the Redevelopment Agency to increase the amount of debt the Agency pays on an annual basis to Sequoia Station...and take that burden from the City." In response to Council questions, Director Church described the formulae used in determining the subsidy payment and the current property tax assessment. He answered questions regarding the possible sale of Sequoia Station after the clean-up of the former gas station property and the maturing of the development and its tenants, possibly within a '----' few years. He stated that a new, higher assessment based on the sale price would result in MINUTE BOOK NO. 54 Regular Meeting Minutes Page No. 205 April 22, 1996 Page 7