Subject:
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Consider a Restated and Second Amendment to the Memorandum of Understanding for the development, ownership, and financing of a hotel and conference center
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Presented By: Chris Brown, City Attorney
Recommendation and Review
Over the last months representatives of the parties to the MOU negotiated the attached Restated and Second Amendment to Memorandum of Understanding (the Restated MOU). The most significant change to the structure of the transaction is how the financing funds for the conference center will move from the Foundation to the developer. This change is set out in paragraph 4 of the Restated MOU. The IDA will enter into a Development Agreement with the Foundation by which the Foundation will pay the $10,974,895 to the IDA (in draws) in exchange for a nonrecourse note from the IDA to the Foundation in that amount. The note will be payable only from Project Tax Receipts and will not be a debt of the city of Harrisonburg or IDA. The IDA will also enter into a Development Agreement with the developer and make economic development grants of the funds received from the Foundation to the developer. Repayment to the Foundation of the conference center financing funds will remain as previously approved by council.
The Restated MOU also reflects a few other changes as the original transaction structure has evolved. First, the conference center will now be owned by the developer. Previously, the Foundation was going to own the conference center and lease it to the developer. Second, JMU will now lease the real property occupied by the conference center to the developer. Previously, JMU was going to lease that property to the Foundation and the Foundation would sublease to the developer. Third, the cost of the conference center is held at $10,974,895. Finally, the interest rate set out in the Support Agreement signed by the city is reduced to a floor of 2% and a cap of 5%. Previously, it was 4% and 8%. The only document to be a...
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