2012-02-22 CC Packet - Laserfiche WebLink

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MEMORANDUM To: Mayor & City Council From: Dallas Larson, City Administrator, and Kurt Glaser, City Attorney Date: February 16. 2012 RE: Richard Carlson /Hunters Crossing III — modification of financial security requirements of development agreement with City Recommendation: Staff recommends granting Mr. Carlson's request to release some of its financial security as required by the development agreement with the City, and that the Council enter into the attached Agreement. The specific recommendation is contained later in this memo. Discussion: Given the effect of the economic downturn on housing construction within the City, it is in the City's best interests to assist Developers where possible. The Carlson request to modify the financial security requirements of the development agreement is a good example where the City can make reasonable accommodations to help reduce the carrying cost of undeveloped properties. The economy has greatly increased the amount of time undeveloped will remain on the market — and this increases costs to developers. This increased time on the market can also lead to problems for the City. As properties remain vacant or undeveloped, irresponsible developers may not maintain their property. Properties sold by the developer to 'investment' buyers still present the same potential problems once construction finally begins. Accordingly, any change to a developer's financial security requirements cannot increase the financial risk to the City. In the Carlson request, Staff considered several factors before reaching its conclusion that some lower amount of financial security would be appropriate in this case. This conclusion is not universal for all developers who may seek a similar reduction. The principals considered in this case could be used as a general guide in the future if other developers seek relief from the City. Those principals where: • Of the forty -four lots originally part of this development, twenty -seven remain undeveloped and owned by the Developer. • Several of the lots that were sold are being developed by builders where security to assure proper lot maintenance is placed with the city at the same time as building permit fees are paid. • The developer has five lot sales pending. • By entering into the attached Agreement, there is low risk to the City for partial release of developer's security because covenants connected to each lot sold to an investment owner allow the City to enforce the development agreement or Code violations against them and /or the developer. • In the event of the failure of the developer to maintain the property, the city has the option of specially assessing the costs incurred. • The developer has quickly resolved all maintenance issues that have been brought to his attention by the city. • The developer has no history of Code violations or violations of the development agreement. • The calculation of required security takes into account past developer performance and the relative risk that the city might incur costs associated with the remaining lot development, as well as the total dollar amount of security relative to the remaining responsibility of the developer under the terms of the agreement. Page 1 of 2 14