Grand Rapids
Michigan

City Comm Agenda
88357

Resolution authorizing execution of a consent to collateral assignment of up to $28,495,000 of tax increment revenues for the Studio C project

Information

Department:Economic DevelopmentSponsors:
Category:Agenda Action RequestFunctions:City Commission, Community Development Committee

Content A

Attached is a resolution authorizing the Mayor to execute the attached consent to collateral assignment of tax increment (the Consent) revenues on behalf of the City for the Studio C! project located at the property formerly known as Parking Area 5 and a portion of Parking Area 4 which is being undertaken by Jackson Entertainment, LLC (the Developer) and various development partners. 

 

In 2016, the City and the Downtown Development Authority (DDA) entered into a Development Agreement (the Agreement) with the Developer which provided for, among other things, reimbursement for certain DDA eligible activities from tax increment revenues generated by the project and captured by the DDA.  The project is well underway and significant portions of the public infrastructure improvements are complete

 

In connection with its financing of the project, the Developer has requested that the City and DDA consider approval of the attached Consent.  Approval of the Consent provides a security interest in the benefits that could be derived from the Agreement in the form of tax increment financing for the cost of various eligible activities.  The Developer and the Brownfield Redevelopment Authority have a separate Development and Reimbursement Agreement related to BRA eligible costs and reimbursement of tax increment revenues.  A consent to collateral assignment related to that agreement was approved by the BRA executive director on September 20, 2018.

 

Although the City is not regularly a party to Development Agreements, it is common for both the DDA and the BRA to consent to assignments in the same or similar format as attached in connection with the financing of development projects throughout the City.  The DDA approved the Consent at its meeting on November 14, 2018.  Staff recommends approval of the attached resolution.

 

Content C

              WHEREAS:

 

1.     The City, entered into a Development Agreement dated August 9, 2017 (the “Agreement”), with the City of Grand Rapids Downtown Development Authority (the “DDA”) and Jackson Entertainment, LLC (the “Developer”) related to the Studio C project (the “Project”); and

 

2.     The Agreement provides the Developer will be reimbursed for certain Eligible Costs (as defined in the Agreement) with Tax Increment Revenues (as defined in the Agreement); and

 

3.     In connection with the financing of the Project by Mercantile Bank of Michigan (the “Bank”), the Bank is requesting an assignment of Tax Increment Revenues in the event the Developer defaults and the Bank determines to assume completion of the Project in accordance with the requirements of the Agreement, or the Bank seeks reimbursement for Eligible Costs, which the Developer has not been reimbursed and which have been paid by a loan from the Bank; and

 

4.     The Agreement requires the City consent to such assignment of Tax Increment Revenues; therefore

 

              RESOLVED:

 

1.     That the letter consenting to the assignment of Tax Increment Revenues between the Developer, DDA and City in the form presented at this meeting is approved and the Mayor and City Clerk are authorized and directed to execute such consent upon approval as to form by the City Attorney or special counsel; and

 

2.     That all resolutions or parts of resolutions in conflict herewith be and the same are hereby rescinded.