AgdaPkt 2005-01-24 - Laserfiche WebLink

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~ I REPORT To the Honorable Mayor and City Council And Redevelopment Agency Board From the City Manager nt Executive Director And Redevel January 24, 2005 Subject Loan Agreement between the City of Redwood City and the Redevelopment Agency Recommendation It is recommended that the City Council and- Agency Board approve a loan agreement under which the- City will lend the Redwood City Redevelopment Agency (Agency) $3,000,000 to finance various downtown improvements. Background At the September 8, 2003 Council meeting, the City Council and the Agency board conceptually approved a plan to finance various downtown improvements which relied upon bonds being issued by the Agency and a loan ($3 million) from the City to the Agency. The projects being financed were included in the budget which the Agency board approved on August 11,2003. (See Attachment I - Downtown Funding Plan.) On October 15, 2003 pursuant to City Council and Agency board authorization, staff sold Agency bonds which resulted in the Agency obtaining $32.625 million in net proceeds to fund the Agency's projects. The balance ($3 million) will be loaned from the City's capital projects fund to the Agency as conceptually approved by Council. This loan will not cause the delay or cancellation of any capital projects as sufficient funds are available in the City's capital projects fund to finance this loan and all current projects included in the FY 2004/05 budget. Terms of the Loan The following are the key business terms of this proposed loan: . Interest rate - 4.12% . Term - June 2019 or until all outstanding principal, including accrued interest is paid . Prepayment option - the Agency has the ability to pay all or a portion of the outstanding principal (including any accrued interest) at the Agency's option without incurring any prepayment penalties or fees. . Payments will be made semi-annually on December 31 and June 30. . Only interest payments will be made until June 2009 when principal payments will begin. Alternative The Council may elect not to enter into this loan agreement. Doing so will require the Agency to either reduce its approved list of projects or identify an alternate source of funds. This latter option may be very difficult to accomplish as the Agency presently has very limited capacity to issue additional debt.