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1 not initiated at the same time as Phase I, if Phase I was to fail, the City and HRA were left with 2 a relatively square piece of property that could be re-platted with frontage available on two 3 different streets, and townhomes or single-family homes could constructed as a fallback plan. 4 However, Mr. Bilotta noted that, once the infrastructure was in place, everyone was 5 committed, and if the decision was to go forward with a Developer’s Agreement, the HRA and 6 City would want to have tight pre-salerequirements before jumping into Phase II, which he 7 thought would also be preferable for the bank. Mr. Bilotta advised that constructing Phase I 8 only instituted “cherry picking” since it generated the most profit, which was beneficial to a 9 developer to capture the larger profit on Phase I whether or not Phases II or III went through or 10 not. However, Mr. Bilotta noted that GMHC still had skin in the game, since they would not 11 realize a profit until the end of Phase III, as detailed in the staff report, and as indicated in 12 staff’s requirement of GMHC in developing their proforma and breaking out Phase I 13 proportionally for land so only those pieces being worked on at that time were transferred. 14 15 Mr. Bilotta reviewed the payback on other items, risk and time, with Phase I townhome 16 construction on Cope Avenue potentially possible yet in 2015 depending on the pre-sale 17 market versus delaying overall completion if seeking another Request for Proposals (RFP). 18 While it was possible that another developer could befound to take on the entire project, Mr. 19 Bilotta admitted this remained an unknown at this time. Mr. Bilotta advised that this was why 20 staff did not make a defined recommendation, since they felt it was a policy issue for the HRA 21 and City Council to make. 22 23 Mr. Bilotta clarified that the fire station property was a City Council decision in its entirety, 24 and since it was not part of Phase I, the City may not wish to destroy any value in the existing 25 building without assurances that something would go forward. 26 27 Since Phase I took the cream of the crop, Chair Maschka asked how that changed the 28 economics and dynamics of Phases II and III. 29 30 Mr. Bilotta responded that it would depend on how excess income was captured for Phase I, as 31 outlined in the Developer’s Agreement, and what was available for whatever developer came 32 in for Phases II and III, whether GMHC or not; all mechanisms that could be worked out if and 33 when staff got into that type of detail if and when the project moved forward. 34 35 Chair Maschka noted how fast townhomes sold in Roseville; however, he advised that his 36 personal concern was what happened if Phase I sold out and what was left for Phases II and III. 37 38 Member Lee opined that pre-sales should benefit Phases II and III, and regardless of who the 39 developer is for the next phases, a plan should be sought that is similar to this one that was 40 supported by the neighborhood. 41 42 Mr. Bilotta noted that BMHC is s non-profit developer whosemission provides certain 43 advantages, but allows for little equity to play with. Mr. Bilotta noted that, obviously, staff 44 had not solicited any other developers at this point, but advised that small projects like this are 45 often difficult to finance through banks; however, private developers often had an equity 46 financial partner or other ways to leverage financing. Mr. Bilotta noted that another non-profit 47 developer would be in the same financial position as GMHC, but a for-profit developer would 48 be a different model. 49 50 51 Ms. Olson opined that this issue had been discussed by GMHC with staff, and if pre-marketing 52 the townhomes indicates that the market is not there for single-family homes, the product 53 could be changed to one-level townhomes, which would be successful on Cope. Ms. Olson 54 noted that GMHC was not interested in doing a project that would fail, and it the market