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FA- <br />PAL has subsequently contracted for the services of a construction management firm, <br />Swinerton Management and Consulting, to assist with cost control, construction schedules <br />and critical paths. With Swinerton's help, a realistic construction schedule has been <br />created that anticipates completion of the building in late February of 2004. <br />PAL has initiated a conversation with Bay Area Bank in regards to bridge financing for the <br />community center so that construction will not have to stop when rAL can no longer pay <br />the contractor. Bay Area Bank is willing to fund a short term loan —cne to two years —for <br />the $1,500,000 provided that PAL has a guarantor on the loan. The loan would be "interest <br />only ", payable monthly, at a low variable interest rate equal to the Prime Rate. The loan is <br />subject to Bay Area Bank's and the City's approval of PAL's capital fundraising plan. Bay <br />Area Bank's initial proposal (Attachment 1) and PAL's Capital Campaign plan (Attachment <br />2) are both attached. <br />Alternatives <br />1) Council can decide not to approve this resolution. This alternative will require PAL to <br />find a different guarantor for the loan. It is unlikely PAL will do so resulting in an immediate <br />construction shutdown until PAL raises $1,500,000. <br />2) The City could loan the money to PAL directly. <br />3) The City could grant the money to PAL. <br />Fiscal Impact <br />If PAL's capital campaign yields the expected results, PAL will repay the loan within one to <br />two years and the city will incur a $50,000 per year cost to carry the $1,500,000. If PAL is <br />unsuccessful in raising the anticipated funds, there is the possibility of up to a $1,500,000 <br />fiscal impact to the City. <br />Alternate Fiscal Impact <br />Should PAL default on repaying all or a portion of their loan from the Bay Area Bank, the <br />City would be responsible for repaying the unpaid balance to the bank. If the City Council <br />authorizes staff to refinance the Public Financing Authority bonds on November 3, 2003, . <br />this will include the authority to borrow $1.5 million that will be set aside for the purpose of <br />providing the financial resources to repay this loan should the City need to do so. If PAL <br />repays their loan these funds will then be used to "call" or retire the $1.5 million of <br />outstanding Public Financing Authority bonds. <br />If PAL defaults on their loan from the bank, the City Council will then need to decide <br />whether the City's payment to the bank on PAL's behalf will constitute a grant to PAL or <br />whether the City will require PAL to eventually repay these funds to the City. <br />Scott D Warner <br />Police Captain <br />I � <br />Carlos G. Bolanos <br />Police Chief <br />d Everett <br />City Manager <br />Attachments <br />1) Bay Area Bank Initial Proposal <br />2) PAL Capital Campaign Draft Plan <br />