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In response to Councilman Greenalch's questions regarding Page 29 of the DDA, the agency subsidy, Director Church advised that the developer would segregate the subsidy from loans the developer would receive, and the Agency would receive a prorated portion of the interest earned on the net deposit. Councilman Greenalch requested that the Agency subsidy not be commingled with the developers loan. MEMO 10/25/94 Councilman Greenalch expressed his concerns regarding enforcement of the Redevelopment Agency policy of requiring prevailing wages at the time when the Certificate of Completion is issued if the internal improvements have not been done. Councilman Greenalch cited policy violations during construction of tenant improvements at Sequoia Station, and stated for the record, "that since the project is being done with a subsidy from the Redevelopment Agency, when that time comes and those tenant improvements are made and if they cross the threshold that is necessary to invoke the Agency's position on prevailing wages, that just because the Certificate of Completion has been handed out, does not mean the developer using our subsidy can have the work done at less than prevailing wages." Director Church advised that the prevailing wages policy takes effect when tenant improvements reach the $100,000 threshold, and explained why that threshold is unlikely on the Mezes project. CONSENSUS: Mayor Buchan determined that it was the consensus of the Council to require adherence to the Redevelopment Agency prevailing wage policy which requires prevailing wages be paid when the cost of tenant improvements reaches the threshold of $100,000 or more. City Attorney Schricker directed that both the record of the Council and the Redevelopment Agency reflect concurrence with the prevailing wage policy as stated above. MINUTE ORDER NO. 94-225 City Attorney Schricker addressed the issue of the construction loan and the Agency's subsidy stating that the DDA very clearly specifies that those funds may not be used to discharge prior debts nor any liens on the project property. City Attorney Schricker stated that the intent was for those funds to be used for construction and that was one of the reasons the agreement was drafted in that fashion - to ensure that those funds not be put up front or used for any other purpose, but would be used for construction The construction loan itself must stand on its own terms and conditions. Staff will have to look into whether placing the subsidy with the construction loan would provide a windfall for the construction lender (accrued interest), but that will be a matter of financing: More likely it will be an independent document, the construction loan will be for a specific amount under certain terms and conditions. The construction lender is not a party to this agreement nor to the subsidy. MINUTE BOOK NO. 52 Regular Meeting Minutes Page No. 417 October 24, 1994 Page 6