2014/05/14 Council Agenda Packet

EVERETT CITY COUNCIL AGENDA ITEM COVER SHEET 1 PROJECT TITLE: Authorization to Proceed with Consent COUNCIL BILL# Use of New Markets Tax 5.14.14 Action Originating Department Public Works/Legal Credits for Hampton Inn First Reading Contact Person Richard Tarry Tim Benedict Project(NMTC Loan# 1) Second Reading Phone Number 425-257-8922 425-257-8669 Third Reading FOR AGENDA OF 5.14.14 Briefing Initialed by: Department Head .. CAA Council President Location Preceding Actions Attachments Department(s)Approval (2.24.09)Resolution Re:New Markets Tax Credits Public Works,Legal,Admin (11.18.09)Authorize Mayor to Sign Allocation Agreement (8.1.12)Resolution Re:Expansion (4.17.13)Resolution Re:Hampton Inn (12.10.13)Resolution Re:Whidbey Island Bank Amount Budgeted -0- Expenditure Required -0- Budget Remaining -0- Additional Required -0- DETAILED SUMMARY STATEMENT: In November 2009, the City received $25 million in New Markets Tax Credits from the U.S. Treasury to foster private business and development. These credits must be used by November 2014. In late 2013, the City was approached by Whidbey Island Bank with a proposal to use the New Markets Credits for business loans. In essence, the funds generated from the tax credits will allow the bank to market lower-than-market rate loans to businesses. This is a nationally well-accepted,but underutilized,method of using the tax credits. The City Council approved this use of the tax credits in December 2013. (As mentioned at the briefmgs in December 2013, Whidbey Island Bank has merged with another Washington/Oregon community bank,and so as of May 1,2014, its name is Heritage Bank.) The City-Bank program is now in place, and so the next step is to start authorizing specific loans to businesses. Under the program, the Bank vets potential borrowers and presents loans to New Markets Tax Credit Advisory Board (which is a board composed of members approved by City Council), which then makes recommendations to City Council. The purpose of this action item is to authorize the first loan,which is a loan to Everett Hospitality Concepts,LLC, the developer of the Hampton Inn Hotel project, which is currently under construction at the corner of Wetmore and West Marine View Drive. The hotel will be an extended-stay concept,mostly catering to Navy families. The loan is a 7 year interest-only loan at 3% fixed interest. This is significantly below market and will allow the project to start business on a strong financial foundation. This loan is recommended to City Council by the New Markets Tax Credit Advisory Board The Hampton Inn Hotel project was previously approved for New Markets Tax Credits by City Council in 2013, but the complexities of the tax credits hindered closing. The new, simpler program and the public/private partnership between the City and the Bank have overcome these challenges and the loan is ready to close. City staff expects to bring a series of additional business loans to City Council during the next 2-3 months. RECOMMENDATION: Authorize the Mayor on behalf of City of Everett CDE LLC and its subsidiaries to take all actions and execute all documents necessary to close the loin with Everett Hospitality Concepts,LLC.